FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number: 1-3203
CHESAPEAKE CORPORATION
Incorporated under the I.R.S. Employer
laws of Virginia Identification
No. 54-0166880
1021 East Cary Street
P. O. Box 2350
Richmond, Virginia 23218-2350
Telephone Number (804) 697-1000
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 .
The number of shares outstanding of each of the issuer's classes of common
stock, as of the close of period covered by this report:
Common stock of $1 par value 23,762,670 shares.
Page 1 of 50 Pages.
PART I
<TABLE>
CHESAPEAKE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE FIRST QUARTER ENDED MARCH 31, 1995 AND 1994
<CAPTION>
First Quarter
1995 1994
(In millions, except
per share data)
<S> <C> <C>
Net sales $291.1 $212.0
Costs and expenses:
Cost of products sold 201.7 158.7
Depreciation and cost of timber harvested 18.9 18.1
Selling, general and administrative expenses 31.9 25.3
Income from operations 38.6 9.9
Other income and expenses, net 2.4 1.7
Interest expense (8.0) (8.3)
Income before taxes 33.0 3.3
Income taxes 12.2 1.3
Net income $ 20.8 $ 2.0
Earnings per share $ .87 $ .09
Weighted average number of common shares and
equivalents outstanding 24.0 23.5
Cash dividends declared per share of common stock $ .18 $ .18
</TABLE>
See accompanying notes.
<TABLE>
CHESAPEAKE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
March 31, 1995 Dec. 31, 1994
(In millions)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 32.5 $ 33.2
Accounts receivable, less
allowances for doubtful
accounts of $4.1 and $3.8 130.3 127.1
Inventories, at lower of cost
or market 103.6 89.8
Deferred income taxes 15.9 15.9
Other 5.4 5.6
Total current assets 287.7 271.6
Property, plant and equipment, at cost:
Land, buildings, machinery
and equipment 1,262.4 1,228.8
Less accumulated depreciation (641.4) (622.7)
621.0 606.1
Timber and timberlands, net 40.4 40.3
Net property, plant and equipment 661.4 646.4
Goodwill, net 43.3 43.6
Other assets 52.2 51.5
$1,044.6 $1,013.1
</TABLE>
<TABLE>
<CAPTION>
March 31, 1995 Dec. 31, 1994
(In millions)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 122.5 $ 116.8
Current maturities of long-term debt .9 1.0
Dividends payable 4.3 4.3
Income taxes payable 11.1 5.2
Total current liabilities 138.8 127.3
Long-term debt 364.0 364.0
Postretirement benefits other than
pensions 23.7 23.3
Deferred income taxes 108.2 105.2
Stockholders' equity:
Preferred stock, $100 par value,
issuable in series;
authorized, 500,000 shares;
issued, none
Common stock, $1 par value;
authorized 60,000,000 shares;
outstanding 23,762,670 and
23,753,706 shares 23.8 23.8
Additional paid-in capital 107.2 107.1
Retained earnings 278.9 262.4
409.9 393.3
$1,044.6 $1,013.1
</TABLE>
See accompanying notes.
<TABLE>
CHESAPEAKE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FIRST QUARTER ENDED MARCH 31, 1995 AND 1994
<CAPTION>
1995 1994
(In millions)
<S> <C> <C>
Operating activities
Net income $20.8 $ 2.0
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation, cost of timber harvested and
amortization of intangibles 19.4 18.9
Deferred income taxes 3.0 1.6
Gain on sale of property, plant and
equipment (.9) (.1)
Changes in operating assets and liabilities,
net of acquisitions:
Accounts receivable (3.2) (8.4)
Inventories (13.8) (3.7)
Other assets (.2) (5.6)
Accounts payable and accrued expenses 5.7 (2.1)
Income taxes payable 5.9 (1.4)
Other payables .4 .3
Net cash provided by operating activities 37.1 1.5
Investing activities
Purchases of property, plant and equipment (34.0) (9.8)
Acquisition (net of notes issued to sellers of $15.8) - (16.2)
Proceeds from sale of property, plant and
equipment 1.0 .2
Net cash used in investing activities (33.0) (25.8)
Financing activities
Net borrowings on credit lines - 13.1
Payments on long-term debt (.6) (32.1)
Proceeds from long-term debt - 49.0
Dividends paid (4.3) (4.2)
Other .1 ( .9)
Net cash provided by (used in) financing activities (4.8) 24.9
Increase (decrease) in cash (.7) .6
Cash at beginning of period 33.2 .7
Cash at end of period $32.5 $ 1.3
Supplemental cash flow information:
Interest payments $ 8.5 $ 8.2
Income tax payments, net of refunds $ 3.7 $ 1.4
</TABLE>
See accompanying notes.
CHESAPEAKE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements included herein are
unaudited, except for the December 31, 1994 consolidated balance
sheet, have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission, and, in the
opinion of management, reflect all adjustments, all of a normal
recurring nature, necessary to present fairly the Company's
consolidated financial position, results of operations and cash
flows. It is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated financial
statements and the notes thereto included or incorporated by
reference in the Company's latest Annual Report on Form 10-K. The
results of operations for the 1995 interim period should not be
regarded as necessarily indicative of the results that may be
expected for the entire year. The 1994 results have been restated
to reflect the change in method of accounting for certain
inventories to the LIFO method effective January 1, 1994.
<TABLE>
2. Inventories:
<CAPTION>
Mar. 31, 1995 Dec. 31, 1994
(In millions)
<S> <C> <C>
Inventories consist of:
Finished goods $ 37.1 $26.6
Work in process 17.8 21.5
Materials and supplies 48.7 41.7
Totals $103.6 $89.8
</TABLE>
3. Commitments and Other Matters:
At March 31, 1995, commitments, primarily for capital expenditures,
approximated $72 million. These commitments include anticipated
expenditures of $6 million in 1995 related to environmental
protection in connection with planned expansions and upgrades
mainly at the Company's paper mills in West Point, Virginia and
Menasha, Wisconsin. The remaining commitments of $66 million are
for various capital projects, none of which is individually
material.
Uncommitted environmental protection projects may cost the Company
another $8 million during the next several years. Additional
non-determinable environmental protection expenditures could be
required in the future when facilities are expanded or if more
stringent standards become applicable. See Note 6.
3. Commitments and Other Matters (continued):
Two one-time charges are expected in the second quarter of 1995. In
March 1995, Chesapeake Paper Products Company announced the
offering of an enhanced retirement package to hourly workers at the
West Point mill, which is expected to reduce employment levels by
40-50 people. Elections to participate will be made in the second
quarter. During 1993, Chesapeake conveyed its wood treating
operations to Universal Forest Products. Certain indemnification
obligations related to that conveyance are expected to be resolved
in the second quarter. The combined pretax charge for these two
items is expected to be less than $8 million.
Wisconsin Tissue Mills Inc., a wholly owned subsidiary of
Chesapeake Corporation, has agreed to purchase the assets of the
Flagstaff, Arizona, mill of Orchids Paper Products Company.
Orchids Paper Products Company is operating under a Chapter 11
petition in bankruptcy. The agreement to purchase the assets was
approved by the Bankruptcy Court on May 1, 1995, with closing
scheduled for late May. This proposed acquisition will add
approximately 30,000 tons per year of tissue papermaking capacity.
4. Litigation:
On June 23, 1994, Wisconsin Tissue Mills Inc., a wholly-owned
subsidiary of the Company, received a notice from the United States
Fish and Wildlife Service that it had been identified as a
potentially responsible party ("PRP") under the Comprehensive
Environmental Response, Compensation and Liability Act with respect
to possible natural resource damages liability relating to
polychlorinated biphenyls in the Fox River and Green Bay system.
The notice invites the PRPs to participate in the development and
performance of a natural resource damage assessment with respect to
the alleged discharges. Wisconsin Tissue and the four other PRPs
have requested that the U.S. Fish and Wildlife Service delay the
proposed damage assessment to permit voluntary restoration and
remediation to proceed. The U.S. Fish and Wildlife Service has not
yet commenced the natural resource damage assessment process. The
ultimate cost to Wisconsin Tissue, if any, associated with this
matter cannot be predicted with certainty at this time, due to: the
unknown magnitude of any contamination; the varying costs of
alternative clean-up methods; the evolving nature of clean-up
technologies and governmental regulations; the inability to
determine the Company's share of any multi-party clean-up; the
extent to which contribution will be available from other parties;
and the scope of potential recoveries from insurance carriers and
prior owners of Wisconsin Tissue.
4. Litigation (Continued):
In December 1994, the Company's Wisconsin Tissue Mills Inc.,
subsidiary was notified by the United States Department of Justice
of a civil antitrust investigation into possible agreements in
restraint of trade in the commercial and industrial markets for
sanitary tissue products. The Department of Justice requested
information and documents related to the investigation for the
period commencing January 1, 1990. Wisconsin Tissue has cooperated
in the investigation by providing a response to the request for
information.
The Company is a party to various legal actions which are ordinary
and incidental to its business. While the outcome of legal actions
cannot be predicted with certainty, the Company believes the
outcome of any of these proceedings, or all of them combined, will
not have a materially adverse effect on its consolidated financial
position or results of operations.
5. Income Taxes:
The Company's effective income tax rate was 37.0% in 1995 compared
to 39.4% for first quarter 1994. The differences between the
Company's effective income tax rate and the statutory federal
income tax rate are primarily due to state income taxes and
purchase accounting adjustments resulting from acquisitions.
6. Environmental Matters:
Chesapeake operates under, and believes that it is in substantial
compliance with, the terms of various air emission and water and
effluent discharge permits and other environmental regulations.
Wisconsin Tissue Mills Inc., a wholly-owned subsidiary of the
Company, has received a notice from the United States Fish and
Wildlife Service that it had been identified as a PRP with respect
to possible natural resource damages liability relating to
polychlorinated biphenyls in the Fox River and Green Bay system.
See Note 4 to the consolidated financial statements for further
information regarding this notice.
The U.S. Environmental Protection Agency ("EPA") has published
draft rules under the Clean Water Act and the Clean Air Act which
would impose new air and water quality standards for pulp and paper
mills (the "Cluster Rules"). The EPA has indicated that it intends
to issue the final Cluster Rules in the fall of 1995. The
definitive Cluster Rules are expected to require compliance within
three years after the date of their adoption. Based on the
6. Environmental Matters:
Company's preliminary estimates, if the Cluster Rules were adopted
in substantially their present form, compliance would require
capital expenditures totaling approximately $55 million at the
Company's two paper mills. The Company has joined with the
American Forest & Paper Products Association and most of its
members in stating that they believe that the Cluster Rules, as
proposed, are inappropriate, unjustified and do not comply with
applicable law. The eventual capital expense impact on the Company
of compliance with the definitive Cluster Rules is not presently
determinable, and will depend on a number of factors, including:
the scope of the standards imposed and time permitted for
compliance; the Company's strategic decisions related to
compliance, including potential changes in product mix and markets;
and developments in compliance technology. The additional effect,
if any, on the Company's business of compliance with the definitive
Cluster Rules will depend on a number of other factors, including:
the domestic and international competitive effects of compliance;
and the effect of evolving consumer demands related to
environmental issues on the Company and its competitors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
1st Quarter 1995 vs. 1st Quarter 1994
Net sales for the three months ended March 31, 1995, were a record $291.1
million, 37% higher than net sales of $212.0 million in the first three months
of 1994. Higher shipments for all three of the Company's segments--packaging,
kraft products and tissue-- and improved selling prices for all major products
were responsible for the increase.
Net income for the first quarter was a record $20.8 million, or $.87 a
share, compared to first quarter 1994 net income of $2.0 million, or $.09 a
share. Strong sales, continued improvements in operating performance and
effective cost control lowered cost of products sold as a percentage of net
sales by nearly 6% compared to the first quarter of last year. Selling, general
and administrative expenses as a percentage of net sales were down about 1%.
Depreciation and cost of timber harvested were up 4% over 1994's amount as a
result of capital spending. Other income and expenses, net was up $.7 million,
due in part to the sale of land that was no longer of strategic importance.
Interest expense approximated prior year amounts.
<TABLE>
BUSINESS SEGMENT HIGHLIGHTS
<CAPTION>
First Quarter Fourth Quarter
1995 1994 1994
<S> <C> <C> <C>
Net Sales:
Packaging $106.9 $ 74.0 $ 99.7
Kraft products 104.7 71.1 93.0
Tissue 78.2 64.7 80.8
Corporate 1.3 2.2 1.2
$291.1 $212.0 $274.7
EBIT:
Packaging $ 7.0 $ 4.1 $ 7.5
Kraft products 27.7 2.9 18.8
Tissue 8.9 7.2 8.8
Corporate (2.6) (2.6) (3.4)
$ 41.0 $ 11.6 $ 31.7
</TABLE>
The packaging segment achieved an 18% increase in shipments over first
quarter 1994. Net sales were up 44% and EBIT (earnings before interest and
income taxes) was up 71%. Each of the three packaging businesses realized
improved shipments, sales revenues and earnings over 1994's first quarter. The
largest sales gains were in point-of-sale displays and corrugated containers,
each up approximately 50%. Graphic packaging sales were up 10%. Further sales
growth is expected, particularly in the graphic packaging business, with the
start-up of Color-Box's manufacturing facility in Visalia, California, later in
the year and additional planned capital investments throughout the packaging
group.
Shipments of kraft products improved to a first quarter record 211,000
tons. Productivity and quality gains continued, with average production up 7%
over last year's first quarter to over 2,300 tons a day. This business achieved
record quarterly sales and EBIT in the first quarter of 1995, due primarily to
higher prices for all major product lines, offset in part by higher raw material
costs. Average selling prices were up more than 50% compared to first quarter
1994. Bleached market pulp prices were up over 100%. White top paperboard
shipments increased to almost 90% of the paperboard mix. Recovered paper costs
were 180% higher than in the first quarter of last year, adding approximately
$13 million to costs versus 1994. Results of the building products business
were similar to the prior year. This segment benefited from the sale of land
that was no longer considered to be of strategic importance.
Tissue shipments were a strong 52,000 tons during a quarter that is
normally the seasonal low point for this business. This represented a 7%
improvement over the first quarter of 1994. Strong shipments, improved product
mix and price increases late in 1994 and in March 1995 resulted in record
quarterly sales for this business. EBIT for this segment improved 24%. Average
selling prices were up 15% compared to the first quarter of last year. The
recent price increases were driven by the rapidly escalating cost of recovered
paper. This raw material cost more than doubled compared to the first quarter
of 1994 and added approximately $8 million to costs. Net sales of the consumer
products business improved versus last year's first quarter; however, earnings
were somewhat lower due primarily to product mix.
1st Quarter 1995 vs. 4th Quarter 1994
Net sales for the first quarter of 1995 were up $16.4 million, or 6%, from
net sales of $274.7 million for the fourth quarter of 1994. First quarter is
normally the seasonally slowest for Chesapeake; however, strong first quarter
shipments approximated those of the fourth quarter. Sales price improvement
helped to further offset much of the seasonal effect and accounted for most of
the increase in net sales.<PAGE>
Net income for the first quarter of 1995 was up $4.5 million, or 28%, from
net income of $16.3 million for the fourth quarter of 1994, primarily because of
further improvement of selling prices for major product lines. Both cost of
products sold and selling, general and administrative expenses as percentages of
net sales decreased slightly. Depreciation was up $2.9 million. Other income
and expenses, net increased by $1 million primarily because of the sale of land
that was no longer considered strategic. Interest expense was slightly higher
than fourth quarter amounts.
Sales volume for the packaging segment for the first quarter of 1995 was up
2% compared to the fourth quarter 1994. Net sales for the packaging segment
increased 7% and remained the highest in terms of segmental revenues, reflecting
Chesapeake's commitment to grow this business. Further sales growth is expected
from planned capital investments in 1995. For the most part, the packaging
segment was able to maintain profit margins despite the rapidly increasing cost
of containerboard during the quarter. Profit margins are expected to be under
pressure during the first part of the second quarter resulting from another
containerboard price increase effective as of April 1.
Shipments of kraft products for the first quarter approximated those of the
last quarter of 1994. Productivity and quality improvements continued, with
average daily production up 7% over the prior quarter. EBIT improved $8.9
million, or 47%, as the average selling price of kraft products increased 13%.
Further price increases were implemented for containerboard and paper grades on
April 1, and increases for pulp have been announced for later in the second
quarter. Rising recovered paper costs added $8.5 million of additional costs to
the quarter compared to the fourth quarter of 1994. The second quarter will be
impacted by a planned maintenance shutdown at the West Point, Virginia kraft
products mill in April. Results of the building products business improved over
those of the fourth quarter.
Tissue shipments were down 3% compared to fourth quarter 1994, but were
strong for what is normally a seasonally slower quarter. Average selling prices
were up 7% from the fourth quarter and are now at record highs following a March
1 increase of 10-12%. Recovered paper costs were up 25% compared to fourth
quarter and added $3 million to costs. Results of the consumer products
business were down from the seasonally stronger fourth quarter.
The second quarter is expected to be impacted by two one-time
charges. See Note 3 to the consolidated financial statements for additional
informational.
Capital Expenditures
Capital expenditures for the first three months of 1995 totaled $34.0
million and related primarily to the expansions for the packaging and kraft
businesses announced in 1994. These expenditures were up $24 million compared to
the first quarter of last year when spending focused on maintenance and
reliability rather than growth projects. Capital expenditures for 1995 are
expected to be approximately $125 million and include a new manufacturing plant
to be located in Visalia, California, for the Company's Color-Box graphic
packaging business, additional equipment at the existing Color-Box plant in
Richmond, Indiana, modernization of the North Tonawanda, New York corrugated
container plant and an upgrade of the No. 2 paper machine at the West Point
kraft products mill. No other 1995 capital projects are individually more than
5% of the total planned spending. Capital expenditures for 1995 are expected to
be financed with internally generated cash supplemented by proceeds from
borrowings.
Liquidity and Capital Structure
Working capital increased $4.6 million during the first quarter of 1995
primarily as a result of increased accounts receivable and inventories offset in
part by higher payables. Accounts receivable increased $3.2 million from year
end amounts due to higher sales; however, the average collection period for the
quarter was down 3 days compared to first quarter 1994's average. Inventories
increased $13.8 million during the first quarter of 1995 due to the seasonal
build of tissue products and higher roll stock inventories for the packaging
segment, but the inventory turnover rate for the quarter showed a slight
improvement compared to the first quarter of 1994. Accounts payable and accrued
expenses increased $5.7 million during the quarter as a result of higher capital
spending. Income taxes payable was $5.9 million higher than at year end due to
higher earnings. The ratio of current assets to current liabilities was 2.1 at
the end of first quarter 1995, first quarter 1994 and year end 1994.
"EBIT + D" (earnings before interest and income taxes plus non-cash charges
for depreciation, cost of timber harvested and amortization) was $60.4 million
for the first quarter of 1995, or 101% higher than $30.1 million for the first
quarter of 1994. Improved income before taxes was primarily responsible for
this increase. EBIT + D for the first quarter of 1995 was 25% higher than EBIT
+ D of $48.2 million for the fourth quarter of 1994. Net cash provided by
operating activities for the first quarter of 1995 was $37.1 million, or $35.6
million more than in the first quarter of last year, primarily due to improved
earnings.
At the end of the first quarter, long-term debt totaled $364 million and
temporary cash investments totaled $32 million, the same as year-end amounts.
The Company was able to strengthen its balance sheet during the quarter despite
increased capital spending. The ratio of long-term debt to total capital was
lowered to 41% at the end of the first quarter of 1995 compared to 42% at year
end 1994 and 45% at the end of the first quarter of last year. The ratio of
long-term debt to stockholders' equity was 89% at the end of the first quarter
compared to 93% at year end 1994 and 104% at the end of the first quarter of
1994. Out of a total of $100 million committed and $90 million uncommitted
credit lines available at the end of the first quarter, none were utilized.
PART II
Item 1. Legal Proceedings
Reference is made to Note 4 of the Notes to Consolidated
Financial Statements included herein.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders on April 26, 1995, the
following business was transacted:
<TABLE>
(1) All nominees for election to the Board of
Directors were elected.
<CAPTION>
Number Number
of of Shares
Shares Authority
For Withheld
<S> <C> <C>
Paul A. Dresser, Jr 20,246,138 96,694
M. Katherine Dwyer 20,236,437 106,395
J. Carter Fox 20,259,625 83,207
Robert L. Hintz 20,245,733 97,099
Frank S. Royal 20,238,347 104,485
</TABLE>
(2) The appointment of Coopers & Lybrand L.L.P. as
independent accountants for the fiscal year ending
December 31, 1995 was ratified. There were
20,278,529 votes for the proposal and 28,180
against with 36,123 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3.1 - Amended and Restated Bylaws
Exhibit 11.1 - Computation of Net Income Per Share of
Common Stock.
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
None
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.
CHESAPEAKE CORPORATION
(Registrant)
Date: May 8, 1995 BY: /s/Christopher R. Burgess
Christopher R. Burgess
Controller
Date: May 8, 1995 BY: /s/Andrew J. Kohut
Andrew J. Kohut
Group Vice President - Finance
& Strategic Development & Chief
Financial Officer
EXHIBIT INDEX
Page
Exhibit 3.1
Amended and Restated Bylaws 18
Exhibit 11.1
Computation of Net Income per Share of
Common Stock 49
Exhibit 27.1
Financial Data Schedule 50
EXHIBIT 3.1
AMENDED AND RESTATED BYLAWS
of
CHESAPEAKE CORPORATION
(as adopted 2/13/90, with amendments through 2/14/95)
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation in the
Commonwealth of Virginia shall be in the City of Richmond or such other location
as may be designated by the Board of Directors from time to time.
Section 2. Other Offices. The Corporation may have offices at such other place
or places as the Board of Directors may from time to time designate or appoint.
ARTICLE II
Capital Shares
Section 1. Certificates. Shares of the Corporation shall be evidenced by
certificates in forms prescribed by the Board of Directors and executed in any
manner permitted by law and stating thereon the information required by law.
Transfer books in which shares shall be transferred shall be kept
by the Corporation or by one or more transfer agents appointed by it. A record
shall be kept of each share certificate that is issued. The Corporation shall
have the right to appoint at any time or from time to time one or more
registrars of its capital shares.
Section 2. Transfer of Shares. Shares of the Corporation shall be transferable
or assignable only on the books of the Corporation by the holder in person or by
an attorney on surrender of the certificate representing such shares duly
endorsed and, if sought to be transferred by an attorney, accompanied by a
written power of attorney. The Corporation will recognize, however, the
exclusive right of the person registered on its books as the owner of shares to
receive dividends and to vote as such owner.
Section 3. Lost, Destroyed and Mutilated Certificates. After receiving notice
from a shareholder of any loss, destruction or mutilation of a share
certificate, the Secretary or his nominee may in his discretion cause one or
more new certificates for the same number of shares in the aggregate to be
issued to such shareholder upon the surrender of the mutilated certificate or
upon satisfactory proof of such loss or destruction and the deposit of a bond in
such form and amount and with such surety as the Secretary or his nominee may
require.
Section 4. Record Date. For the purpose of determining shareholders entitled
to notice of or to vote at any meeting of shareholders or any adjournment
thereof, or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
(70) days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notices of the meeting are first mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
ARTICLE III
Shareholders
Section 1. Annual Meeting. Subject to the Board of Directors' ability to
postpone a meeting under Virginia law, the annual meeting and all other meetings
of shareholders shall be held on such date and at such time and place as may be
fixed by the Board of Directors and stated in the notice of the meeting. The
annual meeting shall be held for the purpose of electing Directors and for the
transaction of only such other business as is properly brought before the
meeting in accordance with these bylaws. To be properly brought before an
annual meeting, business must be (i) specified in the notice of annual meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the annual meeting by or at
the direction of the Board of Directors, or (iii) otherwise properly brought
before the annual meeting by a shareholder. In addition to any other applicable
requirements for business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary. To be timely, a shareholder's notice must be in writing and
delivered or mailed to and received by the Secretary not less than sixty (60)
days before the first anniversary of the date of the Corporation's proxy
statement in connection with the last annual meeting. A shareholder's notice to
the Secretary shall set forth as to each matter the shareholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of the
shareholder proposing such business, (iii) the class, series and number of the
Corporation's shares that are beneficially owned by the shareholder, and
(iv) any material interest of the shareholder in such business. Notwithstanding
anything in these bylaws to the contrary, no business shall be conducted at the
annual meeting except in accordance with the procedures set forth in this
Article III(1); provided, however, that nothing in this Article III(1) shall be
deemed to preclude discussion by any shareholder of any business properly
brought before the annual meeting. In the event that a shareholder attempts to
bring business before an annual meeting without complying with the provisions of
this Article III(1), the chairman of the meeting shall declare to the
shareholders present at the meeting that the business was not properly brought
before the meeting in accordance with the foregoing procedures, and such
business shall not be transacted.
Section 2. Special Meetings. Special meetings of the shareholders may be held
at any time and at any place designated in the notice thereof, upon call of the
Chairman of the Board of Directors, the President or a majority of the Board of
Directors.
Section 3. Notice. Notice in writing of every annual or special meeting of the
shareholders, stating the date, time and place, and, in case of a special
meeting, the purpose or purposes thereof, shall be mailed not less than ten (10)
nor more than sixty (60) days before any such meeting to each shareholder of
record entitled to vote at such meeting, at his address as it appears in the
share transfer books of the Corporation. Such further notice shall be given as
may be required by law, but meetings may be held without notice if all of the
shareholders entitled to vote at the meeting waive such notice, by attendance at
the meeting or otherwise, in accordance with law.
Section 4. Quorum. A majority of the votes entitled to be cast by any voting
group on any matter, represented in person or by proxy, shall constitute a
quorum of such voting group with respect to action on such matter. If at the
time and place of the meeting there be present less than a quorum, the meeting
may be adjourned from time to time by the vote of a majority of the shares
present in person or by proxy without notice other than announcement at the
meeting.
Section 5. Voting. Except as otherwise specified in the Articles of
Incorporation or the Virginia Stock Corporation Act, at all meetings of the
shareholders, each holder of an outstanding share may vote in person or by
proxy, and shall be entitled to one vote on each matter voted on at such meeting
for each share registered in the name of such shareholder on the books of the
Corporation on the record date for such meeting. Every proxy shall be in
writing, dated and signed by the shareholder entitled to vote or his duly
authorized attorney-in-fact.
Unless a greater vote is required pursuant to the Articles of
Incorporation or the Virginia Stock Corporation Act, if a quorum exists, action
on a matter (other than the election of Directors) by a voting group is approved
if the votes cast favoring the action exceed the votes cast opposing the action.
Unless otherwise provided in the Article of Incorporation, Directors shall be
elected by a plurality of votes cast by shares entitled to vote in the election
at a meeting at which a quorum is present.
Section 6. Presiding Officer. All meetings of the shareholders shall be
presided over by the Chairman of the Board of Directors or, in his absence or at
his request, by the President. In case there be present neither the Chairman of
the Board of Directors nor the President, the meeting shall elect a chairman.
The Secretary or, in his absence or at his request, an Assistant Secretary,
shall act as secretary of such meetings. In case there be present neither the
Secretary nor an Assistant Secretary, a secretary may be appointed by the
chairman of the meeting.
Section 7. Inspectors and Tellers. An appropriate number of inspectors and
tellers for any meeting of the shareholders may be appointed by or pursuant to
the direction of the Board of Directors. Inspectors and tellers so appointed
will open and close the polls, will receive and take charge of proxies and
ballots and will decide all questions as to the qualifications of voters,
validity of proxies and ballots and the number of votes properly cast.
ARTICLE IV
Directors
Section 1. General Powers. The business and the affairs of the Corporation
shall be managed under the direction of the Board of Directors, and, except as
expressly provided by law, the Articles of Incorporation or these bylaws, all of
the powers of the Corporation shall be vested in such Board of Directors.
Section 2. Number and Election of Directors. The number of Directors
constituting the Board of Directors shall be twelve (12), who shall be divided
into three classes, Class I, Class II and Class III, as nearly equal in number
as possible. Directors of each class shall be elected by the shareholders to
serve for the terms specified in the Articles of Incorporation and, unless
sooner removed in accordance with the Articles of Incorporation and applicable
law, shall serve until their respective successors are duly elected and
qualified. The Board of Directors may increase the number of Directors by two
(2) during any twelve month period and may decrease the number of Directors by
thirty (30) percent or less of the number of Directors last elected by the
shareholders. Any vacancy, including a vacancy resulting from an increase in
the number of Directors as specified above, may be filled by the affirmative
vote of a majority of the remaining Directors, though less than a quorum of the
Board of Directors, and Directors so chosen shall hold office until the next
meeting of the shareholders at which Directors are elected. At such meeting of
the shareholders, the shareholders shall elect a Director to fill the vacancy,
and the newly elected Director shall hold office for a term expiring at the
annual meeting of the shareholders at which the term of the class to which he
has been elected expires.
Subject to any rights of holders of preferred shares, only persons
who are nominated in accordance with the procedures set forth in this Article
IV(2) shall be eligible for election as Directors. Notice of nominations made
by shareholders entitled to vote for the election of Directors shall be received
in writing by the Secretary not less than fifty (50) nor more than seventy-five
(75) days before the first anniversary of the date of the Corporation's proxy
statement in connection with the last meeting of shareholders called for the
election of Directors. Each notice shall set forth (i) the name, age, business
address and, if known, residence address of each nominee proposed in such
notice, (ii) the principal occupation or employment of each such nominee, and
(iii) the number of capital shares of the Corporation beneficially owned by each
such nominee. The Secretary shall deliver all such notices to the Corporation's
Nominating Committee, or such other committee as may be appointed by the Board
of Directors from time to time for such purpose, for review. The Nominating
Committee shall thereafter make its recommendation with respect to nominees to
the Board of Directors. The chairman of any meeting of shareholders called for
the election of Directors may, if the facts warrant, determine that a nomination
was not made in accordance with the foregoing procedures, and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded.
Section 3. Annual Meeting. A regular annual meeting of the Board of Directors
shall be held following the adjournment of the annual meeting of the
shareholders at such place as the Board of Directors may designate. The regular
annual meeting of the Board of Directors then just elected by the shareholders
shall be held for the election of officers of the Corporation and the
transaction of all other business as shall come before the said meeting.
Section 4. Special Meetings. Special meetings of the Board of Directors may be
called at any time by the Chairman of the Board of Directors, the President or
by any two members of the Board of Directors on such date and at such time and
place as may be designated in such call, or may be held on any date and at any
time and place without notice by the unanimous written consent of all the
members or by the presence of all of the members at such meeting.
Section 5. Notice of Meetings. Notice of the time and place of every meeting
of the Board of Directors shall be mailed, telephoned or transmitted by any
other means of telecommunication by or at the direction of the Secretary or
other officer of the Corporation to each Director at his last known address not
less than twenty-four (24) hours before such meeting, provided that notice need
not be given of the annual meeting or of regular meetings held at times and
places fixed by resolution of the Board of Directors. Such notice need not
describe the purpose of a special meeting. Meetings may be held at any time
without notice if all the Directors waive such notice, by attendance at the
meeting or otherwise, in accordance with law.
Section 6. Quorum; Presence at Meeting. A quorum at any meeting of the Board
of Directors shall consist of a majority of the number of Directors fixed from
time to time in these bylaws. Members of the Board of Directors may participate
in any meeting of the Board of Directors by means of a conference telephone or
similar communications equipment whereby all persons participating in the
meeting may simultaneously hear each other, and participation by such means
shall be deemed to constitute presence in person at such meeting.
Section 7. Voting. If a quorum is present when a vote is taken, the
affirmative vote of a majority of Directors present is the act of the Board of
Directors, unless the Articles of Incorporation or these bylaws require the vote
of a greater number of Directors. A Director who is present at a meeting of the
Board of Directors or any committee thereof when corporate action is taken is
deemed to have assented to the action unless (i) he objects at the beginning of
the meeting, or promptly upon his arrival, to holding it or transacting
specified business at the meeting, or (ii) he votes against, or abstains from,
the action taken.
Section 8. Compensation of Directors. Directors, as such, shall not receive
any stated salary for their services, except that, by resolution of the Board of
Directors, Directors may be paid (i) a retainer in an amount determined by the
Board of Directors for their services as such, (ii) an additional retainer in an
amount determined by the Board of Directors for their services as Chairman of
the Board of Directors or chairman of any special or standing committee of the
Board of Directors, and (iii) a fixed sum and expenses for attendance at each
regular, adjourned, or special meeting of the Board of Directors or any special
or standing committee thereof. Nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 9. Eligibility. Except as hereinafter provided, no person shall be
elected or re-elected to the Board of Directors if at the time of any proposed
election or re-election he shall have attained the age of 70 years; provided,
however, that the foregoing provision shall not apply to persons who were
members of the Board of Directors on January 1, 1966. Any Director who (i)
separates from employment with the business or professional organization by
which he was principally employed as of the date of his most recent election or
re-election to the Board of Directors, or (ii) ceases to serve as an officer in
any of the capacities in which he served with such business or professional
organization as of the date of his most recent election or re-election to the
Board of Directors, shall be deemed to have submitted his resignation as a
Director effective upon such separation from employment or cessation of service
as an officer. Such resignation shall be considered by the Board of Directors
at its next regularly scheduled meeting.
ARTICLE V
Executive and Other Committees
Section 1. Creation of Executive Committee. The Board of Directors may,
whenever it sees fit, by a majority vote of the number of Directors fixed from
time to time in these bylaws, designate an Executive Committee which shall
consist of three (3) or more Directors, including the Chairman of the Board of
Directors and the President, provided that the President shall be a member of
the Executive Committee only if designated the Chief Executive Officer. The
Chairman of the Board shall be the Chairman of the Executive Committee. The
members of the Executive Committee shall serve until their successors are
designated by the Board of Directors or until removed or until the Executive
Committee is dissolved by a majority vote of the number of Directors fixed from
time to time in these bylaws.
Section 2. Powers of Executive Committee. Except as otherwise provided by the
Articles of Incorporation or these bylaws, the Executive Committee, when the
Board of Directors is not in session, shall have all powers vested in the Board
of Directors by law, by the Articles of Incorporation or by these bylaws;
provided, that the Executive Committee shall not have the authority to take any
action that may not be delegated to a committee under the Virginia Stock
Corporation Act. The Executive Committee shall report at the next regular or
special meeting of the Board of Directors on all action it has taken since the
last regular or special meeting of the Board of Directors.
Section 3. Committee of Outside Directors. The Directors who are not employees
or former employees of the Corporation ("Outside Directors"), shall constitute
the Committee of Outside Directors. The Committee of Outside Directors shall
(a) evaluate the performance of the Chairman of the Board and the Chief
Executive Officer, (b) recommend, when appropriate, a successor for the Chairman
of the Board and the Chief Executive Officer, (c) in consultation with the
Chairman of the Board, consider and make recommendations to the Board of
Directors for the election of the other officers of the Corporation and (d)
perform such other duties as may be delegated to the Committee of Outside
Directors by the Board of Directors. The Committee of Outside Directors shall
at the annual meeting of the Board of Directors elect from their number by a
majority vote of the number of Outside Directors a Chairman of the Committee of
Outside Directors who shall preside at meetings of the Committee of Outside
Directors and perform such other duties as may be assigned by the Committee of
Outside Directors. No Director shall be elected Chairman of the Committee of
Outside Directors for more than three (3) consecutive full terms, provided that
a director shall be eligible for election as Chairman if he has not served as
Chairman during the immediately preceding eleven (11) months.
Section 4. Audit Committee. The Board of Directors, by resolution adopted by a
majority of the number of Directors fixed in accordance with these bylaws, shall
elect an Audit Committee which shall consist of a Chairman and not less than two
(2) Directors, all of whom shall be Outside Directors. The Audit Committee
shall review and discuss with the corporation's independent accountants the
financial records of the Corporation and report to the Board of Directors with
respect thereto, and shall perform such other duties as may be assigned by the
Board of Directors. The Audit Committee shall report regularly to the Board of
Directors all action which it has taken.
Section 5. Executive Compensation Committee. The Board of Directors, by
resolution adopted by a majority of the number of Directors fixed in accordance
with these bylaws, shall elect an Executive Compensation Committee which shall
consist of a Chairman and not less than two (2) other members, all of whom shall
be Outside Directors. The Executive Compensation Committee shall approve
officers' incentive awards and stock option grants, recommend to the Board of
Directors remuneration levels for executive officers, and perform such other
duties as may be assigned to it by the Board of Directors. The Executive
Compensation Committee shall report regularly to the Board of Directors all
action which it has taken.
Section 6. Nominating Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed in accordance with these bylaws,
shall elect a Nominating Committee which shall consist of a Chairman and not
less than two (2) other members, all of whom shall be Outside Directors. The
Nominating committee shall review annually the attendance and performance of
the Directors, review the compensation of Directors and make recommendations to
the Board of Directors as to such compensation, recommend nominees for election
to the Board of Directors and perform such other duties as may be assigned to it
by the Board of Directors. The Nominating Committee shall report regularly to
the Board of Directors all action which it has taken.
Section 7. Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed in accordance with these bylaws, may
establish such other standing or special committees of the Board of Directors as
it may deem advisable, consisting of two (2) or more Directors. The members,
terms and authority of such committees shall be set forth in the resolutions
establishing the same.
Section 8. Meetings. Regular and special meetings of any committee established
pursuant to this Article may be called by the Chairman of the Board, the
President, the Chairman of the committee involved or any two (2) members of the
committee involved and held subject to the same requirements with respect to
date, time, place and notice as are specified in these bylaws for regular and
special meetings of the Board of Directors.
Section 9. Quorum and Manner of Acting. A quorum of the members of any
committee serving at the time of any meeting thereof for the transaction of
business at such meeting shall consist of (i) one-third (but not fewer than two
(2)) of such members in the case of any committee other than the Executive
Committee, and (ii) a majority of such members in the case of the Executive
Committee. The action of a majority of those members present at a committee
meeting at which a quorum is present shall constitute the act of the committee.
Section 10. Term of Office. Members and the chairman of any committee,
excluding the Committee of Outside Directors, shall be elected at the annual
meeting of the Board of Directors and shall hold office until the next annual
meeting of the Board of Directors and until their successors are elected by the
Board of Directors, or until such committee is dissolved by the Board of
Directors.
Section 11. Resignation and Removal. Any member of a committee may resign at
any time by giving written notice of his intention to do so to the Chairman of
the Board or the Secretary, or may be removed, with or without cause, at any
time by such vote of the Board of Directors or, in the case of the Committee of
Outside Directors, by such vote of the Committee as would suffice for his
election.
Section 12. Vacancies. Any vacancy occurring in a committee resulting from any
cause whatever may be filled by a vote of a majority of the number of Directors
fixed by these bylaws.
ARTICLE VI
Officers
Section 1. Required Officers. The officers of the Corporation shall be a
Chairman of the Board, a President and a Secretary, together with such other
officers, including one or more Vice Presidents (whose seniority and titles may
be specified by the Board of Directors) and a Treasurer, as may be elected from
time to time by the Board of Directors. Any two or more offices may be held by
the same person.
Section 2. Election of Officers; Compensation. The officers of the Corporation
shall be elected by the Board of Directors and shall hold office until the next
annual meeting of the Board of Directors and until their successors are duly
elected and qualified; provided, however, that any officer may be removed and
the resulting vacancy filled at any time, with or without cause, by the Board of
Directors. The salaries or compensation of all officers of the Corporation
shall be fixed by or pursuant to the direction of the Board of Directors.
Section 3. Chairman of the Board. The Chairman of the Board shall preside at
all meetings of the shareholders, Directors and the Executive Committee and
shall have such other powers as may be conferred upon him by the Board of
Directors. If the Chairman of the Board is not the Chief Executive Officer, he
shall, in the absence of or inability of the Chief Executive Officer to act, be
the Acting Chief Executive Officer until such time as another person is
designated by the Board of Directors as Chief Executive Officer or Acting Chief
Executive Officer. He may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments except in
cases where the signing and the execution thereof shall be expressly and
exclusively delegated by the Board of Directors or by these bylaws to some other
officer or agent of the Corporation or shall be required by law otherwise to be
signed or executed.
Section 4. President. The President shall perform such duties as shall be
required of him by the Chairman of the Board or the Board of Directors. If the
President is not the Chief Executive Officer, he shall, in the absence of or
inability of the Chief Executive Officer to act, be the Acting Chief Executive
Officer until such time as another person is designated by the Board of
Directors as Chief Executive Officer or Acting Chief Executive Officer. He may
sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly and exclusively delegated
by the Board of Directors or by these bylaws to some other officer or agent of
the Corporation or shall be required by law otherwise to be signed or
executed.
Section 5. Chief Executive Officer. The Board of Directors shall designate one
of the officers of the Corporation as the Chief Executive Officer of the
Corporation. The Chief Executive Officer shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the business and operations of the
Corporation and its divisions, if any, subject only to the ultimate authority of
the Board of Directors.
Section 6. Vice Presidents. The Vice Presidents shall perform such duties as
shall be required of them by the Chairman of the Board, the President or the
Board of Directors. Any Vice President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments authorized
by the Board of Directors, except where the signing and execution of such
documents shall be expressly and exclusively delegated by the Board of
Directors, the Chairman of the Board or the President to some other officer or
agent of the Corporation or shall be required by law or otherwise to be signed
or executed.
Section 7. Secretary. The Secretary shall prepare and maintain custody of the
minutes of all meetings of the Board of Directors and stockholders of the
Corporation. When requested, he shall also act as secretary of the meetings of
the committees of the Board of Directors. He shall see that all notices
required to be given by the Corporation are duly given and served; he shall have
custody of all deeds, leases, contracts and other important corporate documents;
he shall have charge of the books, records and papers of the Corporation
relating to its organization and management as a Corporation; and he shall in
general perform all the duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the Chairman of the
Board, the President or the Board of Directors. An Assistant Secretary may
exercise any of the functions or perform any of the duties of the Secretary.
Section 8. Treasurer. The Treasurer shall have custody of the moneys and
securities of the Corporation, shall sign or countersign such instruments as
require his signature and shall perform such other duties as may be incident to
his office or are properly required of him by the Chairman of the Board, the
President, or the Board of Directors. An Assistant Treasurer may exercise any
of the functions or perform any of the duties of the Treasurer.
ARTICLE VII
Limit on Liability; Indemnification
Section 1. Definitions. In this Article:
"applicant" means the person seeking indemnification pursuant to
this Article;
"expenses" includes counsel fees;
"liability" means the obligation to pay a judgment, settlement,
penalty, fine, including any excise tax assessed with respect to an
employee benefit plan, or reasonable expenses incurred with respect
to a proceeding;
"party" includes an individual who was, is or is threatened to be
made a named defendant or respondent in a proceeding;
and "proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal.
Section 2. Limitation on Liability. To the full extent that the Virginia Stock
Corporation Act, as it exists on the date hereof or may hereafter be amended,
permits the limitation or elimination of the liability of Directors and
officers, no Director or officer of the Corporation shall be liable to the
Corporation or its shareholders for monetary damages with respect to any
transaction, occurrence or course of conduct, whether prior or subsequent to the
effective date of this Article.
Section 3. Indemnification. The Corporation shall indemnify (a) any person who
was or is a party to any proceeding, including a proceeding brought by or in the
right of the Corporation, by reason of the fact that he is or was a Director or
officer of the Corporation, and (b) any Director or officer of the Corporation
who is or was serving at the request of the Corporation as a director, trustee,
partner or officer of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against any liability incurred by him
in connection with such proceeding unless he engaged in willful misconduct or a
knowing violation of the criminal law. A person is considered to be serving an
employee benefit plan at the Corporation's request if his duties to the
Corporation also impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan. The Board of Directors
is hereby empowered, by a majority vote of a quorum of disinterested Directors,
to enter into a contract to indemnify any Director or officer in respect of any
proceeding arising from any act or omission, whether occurring before or after
the execution of such contract.
Section 4. Application; Amendment. The provisions of this Article shall be
applicable to all proceedings commenced after the adoption hereof by the
shareholders of the Corporation, arising from any act or omission, whether
occurring before or after such adoption. No amendment or repeal of this Article
shall have any effect on the rights provided under this Article with respect to
any act or omission occurring prior to such amendment or repeal. The
Corporation shall promptly take all such actions, and make all such
determinations, as shall be necessary or appropriate to comply with its
obligation to make any indemnity under this Article and shall promptly pay or
reimburse all reasonable expenses, including attorneys' fees, incurred by any
Director or officer in connection with such actions and determinations or
proceedings of any kind arising therefrom.
Section 5. Termination of Proceeding. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the applicant engaged
in willful misconduct or a knowing violation of the criminal law.
Section 6. Determination of Availability. Any indemnification under
Section (3) of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the applicant is proper in the circumstances because he did
not engage in willful misconduct or a knowing violation of the criminal law.
The determination shall be made:
(a) by the Board of Directors by a majority vote of a quorum
consisting of Directors not at the time parties to the proceeding; (b)
if a quorum cannot be obtained under subsection (a) of this section, by majority
vote of a committee duly designated by the Board of Directors (in which
designation Directors who are parties may participate), consisting solely of two
or more Directors not at the time parties to the proceeding;
(c) by special legal counsel:
(i) selected by the Board of Directors or its committee in the
manner prescribed in subsection (a) or (b) of this section; or
(ii) if a quorum of the Board of Directors cannot be obtained
under subsection (a) of this section and a committee cannot be
designated under subsection (b) of this subsection, selected by majority
vote of the full Board of Directors, in which selection Directors who
are parties may participate; or
(d) by the shareholders, but shares owned by or voted under the control
of Directors who are at the time parties to the proceeding may not be
voted on the determination.
Any evaluation as to the reasonableness of expenses shall be made in the same
manner as the determination that indemnification is permissible, except that if
the determination is made by special legal counsel, such evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of this section to select counsel.
Notwithstanding the foregoing, in the event there has been a change in
the composition of a majority of the Board of Directors after the date of the
alleged act or omission with respect to which indemnification is claimed, any
determination as to indemnification and advancement of expenses with respect to
any claim for indemnification made pursuant to this Article shall be made by
special legal counsel agreed upon by the Board of Directors and the applicant.
If the Board of Directors and the applicant are unable to agree upon such
special legal counsel, the Board of Directors and the applicant each shall
select a nominee, and the nominees shall select such special legal counsel.
Section 7. Advances. (a) The Corporation may pay for or reimburse the
reasonable expenses incurred by any applicant who is a party to a proceeding in
advance of final disposition of the proceeding or the making of any
determination under Section (6) if:
(i) the applicant furnishes the Corporation a written statement of his
good faith belief that he has met the standard of conduct described in
Section (3); and
(ii) the applicant furnishes the Corporation a written undertaking,
executed personally or on his behalf, to repay the advance if it is
ultimately determined that he did not meet such standard of conduct.
Section 8. Indemnification of Others. The Board of Directors of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
cause the Corporation to indemnify or contract to indemnify any person not
specified in Section (3) of this Article who was, is or may become a party to
any proceeding, by reason of the fact that he is or was an employee or agent of
the Corporation, or is or was serving at the request of the Corporation as
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, to the same extent as
if such person were specified as one to whom indemnification is granted in
Section (3). The provisions of Sections (4) through (7) of this Article shall
be applicable to any indemnification provided hereafter pursuant to this
Section (8).
Section 9. Insurance. The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against any liability asserted against or incurred by him in
any such capacity or arising from his status as such, whether or not the
Corporation would have power to indemnify him against such liability under the
provisions of this Article.
Section 10. Further Indemnity. Every reference herein to Directors, officers,
employees and agents shall include former Directors, officers, employees and
agents and their respective heirs, executors and administrators. The
indemnification hereby provided and provided hereafter pursuant to the power
hereby conferred on the Board of Directors shall not be exclusive of any other
rights to which any person may be entitled, including any right under policies
of insurance that may be purchased and maintained by the Corporation or others,
with respect to claims, issues or matters in relation to which the Corporation
would not have the power to indemnify such person under the provisions of this
Article. Such rights shall not prevent or restrict the power of the Corporation
to make or provide for any further indemnity, or provisions for determining
entitlement to indemnity, pursuant to one or more indemnification agreements,
bylaws, or other arrangements (including, without limitation, creation of trust
funds or security interests funded by letters of credit or other means) approved
by the Board of Directors (whether or not any of the Directors of the
Corporation shall be a party to or beneficiary of any such agreements, bylaws or
arrangements); provided, however, that any provision of such agreements, bylaws
or other arrangements shall not be effective if and to the extent that it is
determined to be contrary to this Article or applicable laws of the Commonwealth
of Virginia.
Section 11. Further Board Action. Any other provision of this Article
notwithstanding, the Board of Directors shall be empowered to amend this Article
from time to time, to the extent permitted by then applicable law, to limit,
eliminate or extend the rights provided hereunder, provided that no such
amendment shall limit or reduce the rights provided under this article with
respect to any act or omission occurring prior to such amendment.
Section 12. Severability. Each provision of this Article shall be severable,
and an adverse determination as to any such provision shall in no way affect the
validity of any other provision.
ARTICLE VIII
Emergency Bylaws
The emergency bylaws provided in this Article shall be operative during any
emergency, notwithstanding any different provision in the preceding Articles of
these bylaws, in the Articles of Incorporation or in the Virginia Stock
Corporation Act (other than those provisions relating to emergency bylaws). An
emergency exists if a quorum of the Board of Directors cannot readily be
assembled because of some catastrophic event. To the extent not inconsistent
with these emergency bylaws, the bylaws provided in the preceding Articles shall
remain in effect during such emergency. Upon the termination of such emergency,
the emergency bylaws shall cease to be operative unless and until another such
emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
date, time and place of the meeting. To the extent feasible, notice shall be
given in accord with Article IV, Section (5) above, but notice may be given only
to such of the Directors as it may be feasible to reach at the time, by such
means as may be feasible at the time, including publication or radio, and at a
time less then twenty-four (24) hours before the meeting if deemed necessary by
the person giving notice. Notice shall be similarly given, to the extent
feasible, to the other persons referred to in Subsection (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time in accordance with
Article IV, Section (6) of these bylaws. If the Directors present at any
particular meeting shall be fewer than the number required for such quorum,
other persons present as referred to below to the number necessary to make up
such quorum shall be deemed Directors for such particular meeting as determined
by the following provisions and in the following order of priority:
(i) the President, if not already serving as a Director;
(ii) Vice Presidents not already serving as Directors, first in the
order of the seniority of their title as designated by the Board of Directors
before the emergency, and then in the order of their seniority of first
election to such offices; provided, that if two or more shall have the same
seniority of title or shall have been first elected to such offices on the
same day, then in the order of their seniority in age;
(iii) [reserved for future use]
(iv) all other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have
been first elected to such offices on the same day, then in the order of
their seniority in age; and
(v) any other persons who are designated on a list that shall have been
approved by the Board of Directors before the emergency, such persons to be
taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during as well as before any such emergency, may
provide, and from time to time modify, lines of succession in the event that
during such an emergency any or all officers or agents of the Corporation shall
for any reason be rendered incapable of discharging their duties.
(d) The Board of Directors, during as well as before any such emergency,
may, effective in the emergency, change the principal office, or designate
several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these emergency bylaws.
These emergency bylaws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these emergency bylaws may make any further or
different provisions that may be practical and necessary for the circumstances
of the emergency.
ARTICLE IX
Miscellaneous
Section 1. Voting of Shares. Shares of any corporation which this Corporation
shall be entitled to vote may be voted, either in person or by proxy, by this
Corporation's Chairman of the Board or President or by any other officer
expressly authorized by this Corporation's Board of Directors or Executive
Committee, and each such officer is authorized to give this Corporation's
consent in writing to any action of such corporation, and to execute waivers and
take all other necessary action on behalf of the Corporation with respect to
such shares.
Section 2. Seal. The corporate seal of the Corporation shall consist of a
flat-faced circular die, of which there may be any number of counterparts, on
which there shall be engraved two concentric circles between which is inscribed
the name of the corporation, and in the center the year of its organization and
the words "corporate seal".
Section 3. Amendments to Bylaws. Unless proscribed by the Articles of
Incorporation, the Board of Directors of the Corporation shall have the power to
adopt and from time to time amend, alter, change or repeal these bylaws with or
without the approval of the shareholders of the Corporation, but bylaws so made,
amended, altered or changed, may be further amended, altered, changed or
repealed by the shareholders. The shareholders in adopting or amending a
particular bylaw may provide expressly that the Board of Directors may not amend
or repeal that bylaw.
EXHIBIT 11.1
<TABLE>
CHESAPEAKE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
FOR THE FIRST QUARTER ENDED MARCH 31, 1995 AND 1994
(Share amounts in thousands, dollar amounts in millions,
except for per share amounts)
<CAPTION>
1995 1994
<S> <C> <C>
Primary:
Weighted average number of common shares
outstanding 23,759 23,450
Net additions to common shares assuming
exercise of dilutive options, determined by
treasury stock method 256 141
Common shares and equivalents 24,015 23,591
Net Income (loss) $ 20.8 $ 2.0
Per share amount $ .87 $ .09
Fully diluted:
Common shares and equivalents 24,015 23,591
Net additional common shares issuable upon
exercise of dilutive options, determined
by treasury stock method using period end
market price, if higher than average
price 1 23
Common shares, equivalents and other
potentially dilutive securities 24,016 23,614
Net income (loss) for fully diluted
computation $ 20.8 $ 2.0
Per share amount $ .87 $ .09
</TABLE>
NOTE: (a) Dilution is less than 3%
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000019731
<NAME> CHESAPEAKE CORP /VA/
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 32,500,000
<SECURITIES> 0
<RECEIVABLES> 134,400,000
<ALLOWANCES> 4,100,000
<INVENTORY> 103,600,000
<CURRENT-ASSETS> 287,700,000
<PP&E> 1,262,400,000
<DEPRECIATION> 641,400,000
<TOTAL-ASSETS> 1,044,600,000
<CURRENT-LIABILITIES> 138,800,000
<BONDS> 364,000,000
<COMMON> 0
0
23,800,000
<OTHER-SE> 386,100,000
<TOTAL-LIABILITY-AND-EQUITY> 1,044,600,000
<SALES> 291,100,000
<TOTAL-REVENUES> 294,200,000
<CGS> 201,700,000
<TOTAL-COSTS> 252,500,000
<OTHER-EXPENSES> 700,000
<LOSS-PROVISION> 4,100,000
<INTEREST-EXPENSE> 8,000,000
<INCOME-PRETAX> 33,000,000
<INCOME-TAX> 12,200,000
<INCOME-CONTINUING> 20,800,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,800,000
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
</TABLE>
