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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
October 27, 1996 1-3822
CAMPBELL SOUP COMPANY
NEW JERSEY 21-0419870
State of Incorporation I.R.S. Employer Identification No.
CAMPBELL PLACE
CAMDEN, NEW JERSEY 08103-1799
Principal Executive Offices
TELEPHONE NUMBER: (609) 342-4800
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT
THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO .
--------- --------
THERE WERE 233,643,861 SHARES OF CAPITAL STOCK OUTSTANDING AS OF
DECEMBER 2, 1996.
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PART I. FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS
(unaudited)
(million dollars except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
----------------------
OCTOBER October
27, 1996 29, 1995
-------- --------
<S> <C> <C>
Net sales $2,052 $1,990
- ----------------------------------------------------------------------------
Costs and expenses
Cost of products sold 1,112 1,143
Marketing and selling expenses 396 358
Administrative expenses 83 83
Research and development expenses 18 20
Other expense 38 24
Restructuring charges 216 -
- ----------------------------------------------------------------------------
Total costs and expenses 1,863 1,628
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Earnings before interest and taxes 189 362
Interest, net 29 35
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Earnings before taxes 160 327
Taxes on earnings 72 108
- ----------------------------------------------------------------------------
Net earnings $ 88 $ 219
============================================================================
Per share
Net earnings $ .36 $ .88
============================================================================
Dividends $ .345 $ .31
============================================================================
Weighted average shares outstanding 246 249
============================================================================
</TABLE>
See Notes To Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
BALANCE SHEETS
(unaudited)
(million dollars)
<TABLE>
<CAPTION>
OCTOBER July
27, 1996 28, 1996
-------- --------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 52 $ 34
Accounts receivable 888 618
Inventories 852 739
Other current assets 218 227
- ----------------------------------------------------------------------------------------------------------------
Total current assets 2,010 1,618
- ----------------------------------------------------------------------------------------------------------------
Plant assets, net of depreciation 2,717 2,681
Intangible assets, net of amortization 1,967 1,808
Other assets 521 525
- ----------------------------------------------------------------------------------------------------------------
Total assets $ 7,215 $6,632
================================================================================================================
Current liabilities
Notes payable $ 1,832 $ 865
Payable to suppliers and others 552 568
Accrued liabilities 893 593
Dividend payable 86 86
Accrued income taxes 227 117
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Total current liabilities 3,590 2,229
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Long-term debt 1,041 744
Nonpension postretirement benefits 454 452
Other liabilities, including deferred
income taxes of $269 and $274 482 465
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Total liabilities 5,567 3,890
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Shareowners' equity
Preferred stock; authorized 40 shares;
none issued - -
Capital stock, $.075 par value; authorized
280 shares; issued 271 shares 20 20
Capital surplus 235 228
Earnings retained in the business 3,213 3,211
Capital stock in treasury, at cost (1,879) (779)
Cumulative translation adjustments 59 62
- ----------------------------------------------------------------------------------------------------------------
Total shareowners' equity 1,648 2,742
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and shareowners' equity $ 7,215 $6,632
================================================================================================================
</TABLE>
See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(million dollars)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
OCTOBER October
27, 1996 29, 1995
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 88 $ 219
Non-cash charges to net earnings
Restructuring charges 216 -
Depreciation and amortization 79 78
Deferred taxes (61) 6
Other, net 46 26
Changes in working capital
Accounts receivable (237) (226)
Inventories (79) (147)
Other current assets and liabilities 115 134
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 167 90
- ------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of plant assets (69) (79)
Sales of plant assets 16 6
Businesses acquired (227) (107)
Sales of businesses 73 -
Net change in other assets and liabilities (1) (6)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (208) (186)
- ------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Long-term borrowings 300 -
Repayments of long-term borrowings (3) (5)
Short-term borrowings 979 322
Repayments of short-term borrowings (19) (104)
Dividends paid (86) (77)
Treasury stock purchased (1,101) (40)
Treasury stock issued 1 11
Other, net (4) -
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 67 107
- ------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (8) 5
- ------------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents 18 16
Cash and cash equivalents - beginning of period 34 53
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents - end of period $ 52 $ 69
==================================================================================================================
</TABLE>
See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
(unaudited)
(million dollars)
<TABLE>
<CAPTION>
Earnings Capital
Retained Stock Cumulative Total
Preferred Capital Capital in the in Translation Shareowners'
Stock Stock Surplus Business Treasury Adjustments Equity
------- ------- ------- --------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 30, 1995 $ - $20 $165 $2,755 $ (550) $78 $2,468
Net earnings 219 219
Cash dividends ($.31 per share) (77) (77)
Treasury stock purchased (38) (38)
Treasury stock issued under
Management incentive and Stock
option plans 6 7 13
Translation adjustments (1) (1)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at October 29, 1995 $ - $20 $171 $2,897 $ (581) $77 $2,584
==================================================================================================================================
BALANCE AT JULY 28, 1996 $ - $20 $228 $3,211 $ (779) $62 $2,742
NET EARNINGS 88 88
CASH DIVIDENDS ($.345 PER SHARE) (86) (86)
TREASURY STOCK PURCHASED (1,101) (1,101)
TREASURY STOCK ISSUED UNDER
MANAGEMENT INCENTIVE AND STOCK
OPTION PLANS 7 1 8
TRANSLATION ADJUSTMENTS (3) (3)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 27, 1996 $ - $20 $235 $3,213 $(1,879) $59 $1,648
==================================================================================================================================
</TABLE>
Changes in Number of Shares (unaudited)
(thousands of shares)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Issued Outstanding In Treasury
------ ----------- -----------
<S> <C> <C> <C>
Balance at July 30, 1995 271,245 249,231 22,014
Treasury stock purchased (833) 833
Treasury stock issued under Management incentive and Stock option plans 540 (540)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at October 29,1995 271,245 248,938 22,307
=================================================================================================================================
BALANCE AT JULY 28, 1996 271,245 247,228 24,017
TREASURY STOCK PURCHASED (13,805) 13,805
TREASURY STOCK ISSUED UNDER MANAGEMENT INCENTIVE AND STOCK OPTION PLANS 353 (353)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 27, 1996 271,245 233,776 37,469
=================================================================================================================================
</TABLE>
See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(millions)
(a) The financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of the
results for the indicated periods. All such adjustments are of a
normal recurring nature.
(b) Net earnings per share are based on the weighted average shares
outstanding during the applicable periods. The potential dilution
from the exercise of stock options is not material.
(c) Inventories
<TABLE>
<CAPTION>
OCTOBER July
27, 1996 28, 1996
-------- --------
<S> <C> <C>
Raw materials, containers and supplies $349 $323
Finished products 547 461
- --------------------------------------------------------------------------------------------------------------
896 784
Less - Adjustment of certain inventories
to LIFO basis 44 45
- --------------------------------------------------------------------------------------------------------------
$852 $739
==============================================================================================================
</TABLE>
(d) Restructuring Program
A special charge of $216 million, $160 million after tax or $.65 per
share, was recorded in the first quarter of fiscal 1997 to cover the costs
of the restructuring program approved September 4, 1996 by the company's
Board of Directors. The restructuring program is designed to provide
funding for the company's strategic growth plan by reconfiguring or closing
various plants to improve operational efficiency, reducing administrative
and operational staff functions and divesting non-strategic,
under-performing businesses with sales of approximately $275 million. The
restructuring includes the elimination of approximately 2,100 administrative
and operational positions from the company's worldwide workforce.
Restructuring charges include approximately $113 million in cash charges
primarily related to severance and employee benefit costs, substantially all
of which will be paid in fiscal 1997. The balance of the restructuring
charge relates to non-cash charges for the estimated losses on the
disposition of plant assets and business divestitures. The company plans
to complete the program in fiscal 1998.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
CAMPBELL SOUP COMPANY
RESULTS OF OPERATIONS
OVERVIEW
Campbell achieved record sales for the first quarter ended October 27, 1996.
Net sales of $2.05 billion were up 3% over $1.99 billion for the same period
last year. Net earnings of $88 million were down from $219 million last year
and earnings per share declined to $.36 from $.88 due to a special charge
recorded in the quarter to cover the costs of a restructuring program. The
restructuring program, which resulted in a pre-tax charge of $216 million ($160
million after-tax or $.65 per share), is designed to provide funding for the
company's strategic growth plan by reconfiguring or closing plants to improve
operational efficiency, reducing administrative and operational staff functions
and divesting non-strategic, under-performing businesses. Before the special
charge, net earnings increased 14% and earnings per share increased 15% versus
the prior year.
RESULTS BY DIVISION
U.S.A. - U.S. sales for the quarter were $1.24 billion, up 4% over $1.19
billion for the comparable period last year. The sales increase was primarily
driven by an 11% growth in wet soup sales and a 4% growth in wet soup volume.
Operating earnings after the special charge were $189 million versus $288
million last year. Before the charge, operating earnings grew 19% to $341
million.
Wet soup volume was led by the traditional Red & White icons, Chicken Noodle,
Tomato and Cream of Mushroom, and the successful launch of 98% fat-free cream
soups. Strong sales and volume performances were also achieved by "Prego"
spaghetti sauces and "Swanson" traditional frozen dinners. "Pace" retail
Mexican sauce volume declined, due primarily to the timing of promotional
programs.
New "Prego" lasagna and frozen soups helped Food Service achieve double-digit
earnings growth.
BAKERY & CONFECTIONERY - Bakery & Confectionery sales increased 7% to $466
million from $435 million last year. The sales increase was driven by
Pepperidge Farm cracker and cookie volume and Godiva Chocolatier volume.
Operating earnings after the special charge were $.5 million versus $53 million
last year. Before the special charge, operating earnings grew 7% to $57
million.
Pepperidge Farm's "Goldfish" crackers volume continued its strong growth
through new packaging initiatives, expansion into the grocery store snack
aisle and new channels such as club stores. "Milano" cookies reported excellent
volume growth fueled by increased marketing and
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advertising. Godiva reported strong volume growth from continued expansion in
the U.S. and Asia. Arnotts' earnings were down due to start-up costs
associated with the new Huntingwood manufacturing facility and increased
marketing investment in the core Australian market.
INTERNATIONAL GROCERY - International Grocery reported sales of $375 million,
down 2% from last year's sales of $383 million. The decline is primarily
attributable to lower sales of beef products. Operating earnings after the
special charge were $22 million, down 40% versus $37 million last year. Before
the special charge, operating earnings were down 20% to $29 million.
Argentina experienced a sales decrease versus prior year due to the continued
decline in the demand for beef products in Europe. The grocery business in
Germany was down significantly versus the prior year due to a sluggish German
economy and lower demand for gourmet food products.
Wet soup volume outside the U.S. was up 9% led by Canada, the United Kingdom
and Asia. The acquisition of the Erasco Group of Companies, Germany's leading
soup company, was completed in the last month of the quarter with minimal
impact on sales and earnings.
STATEMENTS OF EARNINGS
Net sales increased 3% over the prior year, with sales of ongoing businesses up
6%, driven principally by a 4% increase in worldwide soup volume based on
strength of U.S. condensed soup and growth in Canada, the United Kingdom and
Asia.
Gross margins improved 3.1 percentage points to 45.8% compared to the first
quarter last year. Improvements resulted primarily from higher selling prices
and cost productivity programs.
Marketing and selling expenses increased 10.3%, compared to the prior year,
reflecting the launch of the 98% fat-free cream soups in the U.S. and increased
marketing efforts at Arnotts and Pepperidge Farm. Overall, these expenses
increased 1.3 percentage points as a percent of sales from 18% last year.
Administrative expenses were flat versus last year and as a percent of sales.
Other expense rose 58% due to the effect of the increase in Campbell's share
price on the company's long-term incentive plan obligations.
The effective tax rate was 45% compared to 33% last year due to the timing of
the restructuring charges. Before the special charge, the company expects its
effective tax rate for fiscal 1997 to approximate 34% due to tax planning
strategies, including utilization of tax loss carryforwards.
SPECIAL CHARGE
On September 4, 1996 the company's Board of Directors approved a special
charge of $216 million ($160 million after-tax or $.65 per share) to cover the
costs of a restructuring program. The restructuring program is designed to
provide funding for the company's strategic growth plan
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<PAGE> 9
by reconfiguring or closing various plants to improve operational efficiency,
reducing administrative and operational staff functions and divesting
non-strategic, under-performing businesses with sales of approximately $275
million. The program includes the elimination of approximately 2,100
administrative and operational positions from the company's worldwide
workforce.
Restructuring charges include approximately $113 million in cash charges
primarily related to severance and employee benefits, substantially all of
which will be paid in fiscal 1997. The balance of the charge relates to
non-cash charges for the estimated losses on the disposition of assets and
business divestitures. The restructuring program is expected to generate
approximately $200 million in savings over the next two years. These savings
are from reductions in employee salaries and benefits, plant overhead,
depreciation and amortization. The company plans to complete the program in
fiscal 1998. Cash outflows do not adversely affect the company's liquidity.
LIQUIDITY AND CAPITAL RESOURCES
The company generated cash from operations of $167 million compared to $90
million last year. Continued tight management of working capital has been
instrumental in improving the company's cash generation performance.
Capital expenditures were $69 million, a decrease of $10 million from fiscal
1996. The decline is due primarily to the start-up of the new Huntingwood
manufacturing facility by Arnotts in the first quarter of 1997. Capital
expenditures are projected to be approximately $400 million in fiscal 1997.
In the first quarter the company acquired the Erasco Group of Companies,
Germany's leading soup company, for approximately $210 million. In addition,
Arnotts acquired the assets of Kettle Chip Company, a Sydney, Australia based
potato chip concern.
In the first quarter the company repurchased 300,000 shares in the open market
and completed its "Dutch auction" tender offer by repurchasing 13.5 million
shares at $80 per share. The total shares repurchased were 13.8 million versus
833,000 shares during the same period of fiscal 1996. The repurchases were
funded by short-term borrowings of approximately $800 million and a long-term
debt issuance of $300 million at 6.9% due in fiscal 2007.
PART II
ITEM 1. LEGAL PROCEEDINGS
In management's opinion, there are no pending claims or litigation, the outcome
of which would have a material effect on the consolidated financial position of
the company. In October 1995, the United States of America filed a complaint
against Campbell at the request of the Environmental Protection Agency in the
United States District Court for the Eastern District of
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California relating to certain air emission permits at the company's
Sacramento, CA facility. The suit seeks monetary and injunctive relief for
alleged violations of the Clean Air Act claiming that the Sacramento
Metropolitan Air Quality Management District, the responsible state agency,
allowed plant modifications without the appropriate permits and pollution
control equipment. Campbell has also received a notice of violation from the
United States Environmental Protection Agency relating to air emissions from
the can-making operations at its Sacramento, CA facility. Campbell is disputing
these alleged violations.
The company has also been named as a potentially responsible party in a number
of proceedings brought under the Comprehensive Environmental Response,
Compensation and Liability Act, commonly known as Superfund. The ultimate
impact of these proceedings cannot be predicted at this time due to the large
number of other potentially responsible parties, and the speculative nature of
clean-up cost estimates, but it is not expected to be material either
individually or in the aggregate.
ITEM 5. CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements which are based on
management's current views and assumptions regarding future events and
financial performance. These statements are qualified by reference to the
section "Cautionary Statement on Forward-Looking Statements" in Item 1 of the
registrant's Annual Report on Form 10-K for the fiscal year ended July 28,
1996. See Item 1 for a description of important factors that could impact the
company's strategic growth plan goals and cause actual results to differ
materially from those expressed or implied in the forward-looking statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
No.
3(ii) Campbell Soup Company's By-Laws, effective November 21, 1996.
4 There is no instrument with respect to long-term debt of the company
that involves indebtedness or securities authorized thereunder
exceeding 10 percent of the total assets of the company and its
subsidiaries on a consolidated basis. The company agrees to file a
copy of any instrument or agreement defining the rights of holders
of long-term debt of the company upon request of the Securities and
Exchange Commission (the "SEC").
27 Financial Data Schedule.
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b. Reports on Form 8-K
(1) A Form 8-K containing the Financial Statements of Pace Foods
Ltd. for the years ended December 31, 1994 and 1993 and Report of
Independent Auditors was filed with the SEC on September 3, 1996.
(2) A Form 8-K containing copies of press releases announcing
Campbell's Strategic Growth Plan initiatives including the
acquisition of the Erasco Group of Companies, the authorization of
a share repurchase program, brand building initiatives and
reconfigured operations was filed with the SEC on September 5,
1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMPBELL SOUP COMPANY
Date: December 11, 1996 By: /s/JOHN M. COLEMAN
-----------------------------------------
John M. Coleman, Senior Vice President -
Law and Public Affairs
Date: December 11, 1996 By: /s/BASIL L. ANDERSON
-----------------------------------------
Basil L. Anderson
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
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INDEX TO EXHIBITS
Exhibit Number
3(ii) Campbell Soup Company's By-Laws, effective
November 21, 1996
27 Financial Data Schedule
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EXHIBIT 3(ii)
CAMPBELL SOUP COMPANY
-----------------------
BY-LAWS
-----------------------
EFFECTIVE NOVEMBER 21, 1996
<PAGE> 2
CAMPBELL SOUP COMPANY
BY-LAWS
-----------------------
ARTICLE I.
Stockholders
Section 1. The annual meeting of the stockholders of the Corporation
shall be held at the principal office of the Corporation in New Jersey, or at
such other place, within or without New Jersey, as may from time to time be
designated by the Board of Directors and stated in the notice of the meeting,
on the third Thursday in November in each year (or if said day be a legal
holiday, then on the next succeeding day, not earlier than the following
Tuesday, not a legal holiday), at such time as may be fixed by the Board of
Directors, for the purpose of electing directors of the Corporation, and for
the transaction of such other business as may properly be brought before the
meeting.
Section 2. Special meetings of the stockholders shall be held at the
principal office of the Corporation in New Jersey, or at such other place,
within or without New Jersey, as may from time to time be designated by the
Board of Directors and stated in the notice of the meeting, upon the call of
the Chairman of the Board or of the President, or upon the call of a majority
of the members of the Board of Directors, and shall be called upon the written
request of stockholders of record holding a majority of the capital stock of
the Corporation issued and outstanding and entitled to vote at such meeting.
Section 3. Notice of the time and place of every meeting of
stockholders shall be delivered personally or mailed at least ten but not more
than sixty calendar days before the meeting to each stockholder of record
entitled to vote at the meeting.
Section 4. The holders of record of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders. If there be no such quorum present, the holders
of a majority of such shares so present or represented may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
such quorum shall have been obtained, when any business may be transacted which
might have been transacted at the meeting as first convened, had there been a
quorum. Once a quorum is established, the stockholders present in person or by
proxy may continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
<PAGE> 3
Section 5. The Board of Directors shall in advance of each meeting of
stockholders appoint one or more inspectors of election, to act unless the
performance of the inspector's function shall be unanimously waived by the
stockholders present in person or represented by proxy at such meeting. Each
inspector, before entering upon the discharge of his duties, shall first take
and subscribe an oath or affirmation to execute the duties of inspector as
prescribed by law at such meeting with strict impartiality and according to the
best of his ability. The inspector or inspectors shall take charge of the polls
and shall make a certificate of the results of the vote taken. No director or
candidate for the office of director shall be appointed as such inspector.
Section 6. All meetings of the stockholders shall be presided over by
the Chairman of the Board, or if he shall not be present, by the Vice Chairman
of the Board. If neither the Chairman of the Board nor the Vice Chairman of
the Board shall be present, such meeting shall be presided over by the
President. If none of the Chairman of the Board, the Vice Chairman of the Board
and the President shall be present, such meeting shall be presided over by a
Vice President, or if none shall be present, then by a Chairman to be elected
by the holders of a majority of the shares present or represented at the
meeting.
The Secretary of the Corporation, or if he is not present, an
Assistant Secretary of the Corporation, if present, shall act as secretary of
the meeting. If neither the Secretary nor an Assistant Secretary is present,
then the Chairman shall appoint a Secretary of the meeting.
Section 7. The Board of Directors shall fix in advance a date, not
exceeding sixty nor less than ten calendar days preceding the date of any
meeting of the stockholders or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of stock shall go into effect, as a record date for the determination
of the stockholders entitled to notice of and to vote at any such meeting, or
entitled to receive payment of any such dividend, or any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of stock, and in such case only stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting, or to
receive payment of such dividend, or allotment of rights, or exercise such
rights, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
2
<PAGE> 4
ARTICLE II.
Directors
Section 1. The business and property of the Corporation shall be
managed and controlled by a board of fifteen directors. This number may be
changed from time to time by amendment of these By-Laws, but the term of office
of no director shall be shortened after his or her election by reduction in the
number of directors.
Upon election each director shall be the holder of at least one
hundred shares of the Corporation's capital stock. Within one year of
election, each director shall be the holder of at least one thousand shares of
capital stock and within three years of election shall be the holder of at
least three thousand shares of capital stock. In the event the number of shares
of capital stock is increased at any time after January 28, 1993, by a stock
split, stock dividend, or by any other extraordinary distribution of shares,
the above share ownership requirements shall be proportionately adjusted. The
director, upon ceasing to hold the required number of shares, shall cease to be
a director.
The directors shall hold office until the next annual meeting of the
stockholders and until their successors are elected and shall have qualified.
Section 2. Regular meetings of the Board of Directors shall be held
at such times and at such places as may from time to time be fixed by
resolution of the Board of Directors. Special meetings of the Board of
Directors may be held at any time upon call of the Chairman of the Board or of
the Vice Chairman of the Board or of the President or of three directors.
Oral, telegraphic or written notice of the time and place of a special meeting
shall be duly served on, or given or sent or mailed to, each director not less
than two calendar days before the meeting. An organizational meeting of the
Board of Directors shall be held, of which no notice shall be necessary, as
soon as convenient after the annual meeting of the stockholders. Notice need
not be given of regular meetings of the Board of Directors held at the times
fixed by resolution of the Board of Directors. Meetings may be held at any time
without notice if all of the directors are present or if those not present
waive notice of the meeting in writing.
Section 3. Six members of the Board of Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of the
directors present may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall have been
obtained, when any business may be transacted which might have been transacted
at the meeting as first convened, had there been a quorum.
3
<PAGE> 5
Section 4. Any vacancy occurring among the directors may be filled by
the affirmative vote of a majority of the remaining members of the Board of
Directors at the time in office; provided that in case of an increase in the
number of directors pursuant to an amendment to these By-Laws made by the
stockholders, the stockholders may fill the vacancy or vacancies so created at
the meeting at which such amendment is effected or may authorize the Board of
Directors to fill such vacancy or vacancies.
Section 5. The Board of Directors, by an affirmative vote of a
majority of the members of the Board of Directors at the time in office, may
appoint an Executive Committee to consist of such directors as the Board of
Directors may from time to time determine. The Executive Committee shall have
and may exercise, when the Board of Directors is not in session, all of the
powers vested in the Board of Directors, except as otherwise provided by law.
The Board of Directors shall have the power at any time to fill vacancies in,
to change the membership of, or to dissolve, the Executive Committee. The
Executive Committee may make rules for the conduct of its business and may
appoint such committees and assistants as it shall from time to time deem
necessary, unless the Board of Directors shall otherwise provide. A majority
of the members of the Executive Committee at the time in office shall
constitute a quorum for the transaction of business. A record shall be kept of
all proceedings of the Executive Committee which shall be submitted to the
Board of Directors at or before the next succeeding meeting of the Board of
Directors.
Section 6. The Board of Directors may appoint one or more other
committees, to consist of such number of the directors and to have such powers
as the Board of Directors may from time to time determine. The Board of
Directors shall have power at any time to fill vacancies in, to change the
membership of, or to dissolve, any such committee. A majority of any such
committee may determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide.
Section 7. In addition to reimbursement of reasonable expenses
incurred in attending meetings or otherwise in connection with his or her
attention to the affairs of the Corporation, each director as such, as Chairman
or Vice Chairman of the Board and as a member of the Executive Committee or of
any other committee of the Board of Directors, shall be entitled to receive
such remuneration as may be fixed from time to time by the Board of Directors,
in the form either of fees for attendance at meetings of the Board of Directors
and committees thereof or annual retainers, or both; but no director who
receives a salary or other remuneration as an employee of the Corporation or
any subsidiary thereof shall receive any additional remuneration as a director
or member of any committee of the Board of Directors.
4
<PAGE> 6
ARTICLE III.
Officers
Section 1. The Board of Directors, at its organizational meeting or
as soon as may be after the election of directors held in each year, shall
elect one of its number Chairman of the Board and one of its number President,
and shall also elect a Secretary and a Treasurer, and from time to time may
elect or appoint one of its number Vice Chairman of the Board, one or more Vice
Presidents, a Controller, and such Assistant Secretaries, Assistant Treasurers
and other officers, agents and employees as it may deem proper. More than one
office may be held by the same person.
Section 2. The term of office of all officers shall be until the next
organizational meeting of the Board of Directors or until their respective
successors are elected and have qualified, but any officer may be removed from
office at any time by the affirmative vote of a majority of the members of the
Board of Directors at the time in office.
Any other employee of the Corporation, whether appointed by the Board
of Directors or otherwise, may be removed at any time by the Board of Directors
or by any committee or officer or employee upon whom such power of removal may
be conferred by the By-Laws or by the Board of Directors.
The Board of Directors shall have power to fill for the unexpired term
any vacancy which shall occur in any office by reason of death, resignation,
removal or otherwise.
Section 3. The Chairman of the Board shall preside at all meetings of
the stockholders and of the Board of Directors and shall perform such other
duties as shall from time to time be prescribed by the Board of Directors.
The Vice Chairman of the Board shall in the absence of the Chairman of
the Board preside at all meetings of the stockholders and of the Board of
Directors and shall perform such other duties as shall from time to time be
prescribed by the Board of Directors or the Chairman of the Board.
The President shall be the Chief Executive Officer of the Corporation
and shall perform such duties as are usually performed by that officer; he
shall, in the absence of the Chairman and Vice Chairman of the Board, preside
at all meetings of the stockholders and of the Board of Directors; and shall
perform such other duties as shall from time to time be prescribed by the Board
of Directors.
The other officers of the Corporation shall have such powers and shall
perform such duties as generally pertain to their offices respectively, as well
as such powers and duties as shall from time to time be conferred by the Board
of Directors.
5
<PAGE> 7
Article IV.
Indemnification of Directors and Others
Section 1. The Corporation shall indemnify to the full extent from
time to time permitted by law any present, former or future director, officer,
or employee ("Corporate Agent") made, or threatened to be made, a party to, or
a witness or other participant in, any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative,
legislative, investigative, or of any other kind, including by or in the right
of the Corporation ("Proceeding"), by reason of the fact that such person is or
was a Corporate Agent of the Corporation or any subsidiary of the Corporation
or, while serving as a Corporate Agent of the Corporation or any subsidiary of
the Corporation, serves or served another enterprise (including, without
limitation, any sole proprietorship, association, corporation, partnership,
joint venture or trust), whether or not for profit, at the request of the
Corporation as a director, officer, employee or agent thereof (including
service with respect to any employee benefit plan of the Corporation or any
subsidiary of the Corporation), against expenses (including attorneys' fees),
judgments, fines, penalties, excise taxes and amounts paid in settlement,
actually and reasonably incurred by such person in connection with such
Proceeding or any appeal therein. No indemnification pursuant to this Article
IV shall be required with respect to any settlement or other nonadjudicated
disposition of any threatened or pending Proceeding unless the Corporation has
given its prior consent to such settlement or other disposition.
Section 2. Expenses incurred in connection with a Proceeding shall be
paid by the Corporation for any Corporate Agent of the Corporation in advance
of the final disposition of such Proceeding promptly upon receipt of an
undertaking by or on behalf of such person to repay such amount unless it shall
ultimately be determined that such person is entitled to be indemnified by the
Corporation. Such an undertaking shall not, however, be required of a nonparty
witness.
Section 3. The foregoing indemnification and advancement of expenses
shall not be deemed exclusive of any other rights to which any person
indemnified may be entitled.
Section 4. The rights provided to any person by this Article IV shall
be enforceable against the Corporation by such person, who shall be presumed to
have relied upon it in serving or continuing to serve as a Corporate Agent. No
elimination of or amendment to this Article IV shall deprive any person of
rights hereunder arising out of alleged or actual occurrences, acts or failures
to act occurring prior to such elimination or amendment. The rights provided
to any person by this Article IV shall inure to the benefit of such person's
legal representative and shall be applicable to Proceedings commenced or
continuing after the adoption of this Article IV, whether arising from acts or
omissions occurring before or after such adoption.
6
<PAGE> 8
Section 5. The Corporation's Board of Directors may from time to time
delegate
(i) to a Committee of the Board of Directors of the Corporation or
to independent legal counsel the authority to determine whether a
Director or officer of the Corporation, and
(ii) to one or more officers of the Corporation the authority to
determine whether an employee of the Corporation or any subsidiary,
other than a Director or officer of the Corporation,
is entitled to indemnification or advancement of expenses pursuant to, and in
accordance with, applicable law and this Article IV, subject to such conditions
and limitations as the Board of Directors may prescribe.
ARTICLE V.
Fiscal Year
The fiscal year shall begin in each calendar year on the Monday following the
Sunday which is nearest to July 31, and shall end on the Sunday which is
nearest to July 31 of the following year.
ARTICLE VI.
Corporate Seal
The Board of Directors shall provide a suitable seal, bearing the name of the
Corporation, which seal shall be in the charge of the Secretary; provided that
the use of a facsimile of such seal is hereby authorized.
ARTICLE VII.
Amendment
The Board of Directors shall have the power to make, amend and repeal the
By-Laws of the Corporation by a vote of a majority of the members of the Board
of Directors at the time in office at any regular or special meeting of the
Board of Directors. The stockholders, by a majority of the votes cast at a
meeting of the stockholders, may adopt, alter, amend or repeal the By-Laws,
whether made by the Board of Directors or otherwise.
7
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