<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
-----------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-4694
R. R. DONNELLEY & SONS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-1004130
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
77 WEST WACKER DRIVE, CHICAGO,
ILLINOIS 60601
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER (312) 326-8000
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 the
filing requirements for the past 90 days.
X
Yes------- No -------
NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING
AS OF OCTOBER 31, 1994 153,398,170
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<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
INDEX NUMBER(S)
----- ---------
<S> <C>
Condensed Consolidated Statements of Income (Unaudited) for the
three and nine month periods ended September 30, 1994 and
1993.......................................................... 3
Condensed Consolidated Balance Sheets (Unaudited) at September
30, 1994 and December 31, 1993................................ 4-5
Condensed Consolidated Statements of Cash Flows (Unaudited) for
the nine months ended September 30, 1994 and 1993............. 6
Notes to Condensed Consolidated Financial Statements (Unau-
dited)........................................................ 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations--Comparison of Third Quarter and First
Nine Months 1994 to 1993...................................... 8
Changes in Financial Condition................................. 8-9
</TABLE>
2
<PAGE>
R. R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THIRD QUARTER YEAR TO DATE
----------------------- -----------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
----------------------- -----------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales.................... $ 1,242,973 $ 1,123,848 $ 3,431,188 $ 3,078,153
Cost of sales................ 987,927 891,826 2,764,470 2,475,945
----------- ----------- ----------- -----------
Gross profit................. 255,046 232,022 666,718 602,208
Selling and administrative
expenses.................... 122,848 110,156 356,118 319,441
Restructuring charge......... -- -- -- 90,000
----------- ----------- ----------- -----------
Earnings from operations..... 132,198 121,866 310,600 192,767
Interest expense........... 13,569 11,149 37,768 33,613
Other (income) expense,
net....................... 880 (1,945) 6,356 1,065
----------- ----------- ----------- -----------
Total other expense........ 14,449 9,204 44,124 34,678
----------- ----------- ----------- -----------
Earnings before income taxes
and cumulative effect of
accounting changes.......... 117,749 112,662 266,476 158,089
Provision for income taxes... 37,679 43,211 85,272 57,975
----------- ----------- ----------- -----------
Net income from operations
before cumulative effect of
accounting changes.......... 80,070 69,451 181,204 100,114
Cumulative effect of change
in accounting for
postretirement benefits
other than pensions
(net of $80.1 million in tax
benefits)................... -- -- -- (127,700)
Cumulative effect of change
in accounting for
income taxes................ -- -- -- 58,200
----------- ----------- ----------- -----------
Net income................... $ 80,070 $ 69,451 $ 181,204 $ 30,614
=========== =========== =========== ===========
Income (charge) per share:
Operations before
cumulative effect of
accounting changes........ $ 0.52 $ 0.45 $ 1.18 $ 0.65
Cumulative effect of change
in accounting for
postretirement benefits
other than pensions (net
of tax benefits).......... -- -- -- (0.82)
Cumulative effect of change
in accounting for income
taxes..................... -- -- -- 0.37
----------- ----------- ----------- -----------
Net income................. $ 0.52 $ 0.45 $ 1.18 $ 0.20
=========== =========== =========== ===========
Cash dividends............. $ 0.16 $ 0.14 $ 0.44 $ 0.40
=========== =========== =========== ===========
Average shares outstanding... 153,816,000 154,474,000 154,117,000 154,684,000
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
R. R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(THOUSANDS OF DOLLARS)
ASSETS
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Cash and equivalents................................... $ 21,460 $ 10,716
Receivables, less allowance for doubtful accounts of
$17,414 and
$14,795 at September 30, 1994 and December 31, 1993,
respectively.......................................... 946,279 825,207
Inventories, principally at LIFO cost.................. 302,594 243,714
Prepaid expenses....................................... 27,349 30,277
---------- ----------
Total current assets............................... 1,297,682 1,109,914
---------- ----------
Property, plant and equipment, at cost................. 3,679,823 3,361,255
Accumulated depreciation............................... (1,835,820) (1,686,779)
---------- ----------
Net property, plant and equipment.................. 1,844,003 1,674,476
Goodwill--net.......................................... 540,780 493,672
Other.................................................. 429,478 375,964
---------- ----------
Total assets....................................... $4,111,943 $3,654,026
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(THOUSANDS OF DOLLARS)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Accounts payable....................................... $ 398,053 $ 333,862
Accrued compensation................................... 87,263 78,284
Short-term debt........................................ 37,400 37,428
Current and deferred income taxes...................... 66,213 40,698
Other accrued liabilities.............................. 228,905 195,169
---------- ----------
Total current liabilities............................ 817,834 685,441
---------- ----------
Long-term debt......................................... 876,389 673,422
Deferred income taxes.................................. 258,875 272,959
Other noncurrent liabilities........................... 213,776 178,213
Shareholders' equity:
Common stock, at stated value........................ 330,612 330,612
Retained earnings, including cumulative translation
adjustments of ($5,497) and ($13,140) at September
30, 1994 and December 31, 1993, respectively........ 1,753,600 1,629,673
Reacquired common stock, at cost..................... (139,143) (116,294)
---------- ----------
Total shareholders' equity......................... 1,945,069 1,843,991
---------- ----------
Total liabilities and shareholders' equity......... $4,111,943 $3,654,026
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income from operations before cumulative effect of
accounting changes.................................... $ 181,204 $ 100,114
Depreciation and amortization.......................... 232,599 203,881
Net change in assets and liabilities................... (47,395) (56,879)
Other.................................................. 5,598 6,562
--------- ---------
Net cash provided by operating activities............ 372,006 253,678
--------- ---------
Cash flows used for investing activities:
Capital expenditures................................... (338,584) (233,318)
Other investments including acquisitions, net of cash
acquired.............................................. (104,860) (106,501)
--------- ---------
Net cash used for investing activities............... (443,444) (339,819)
--------- ---------
Cash flows from (used for) financing activities:
Net increase in borrowings............................. 170,008 177,326
Disposition of reacquired common stock................. 18,689 13,030
Acquisition of common stock............................ (38,637) (40,086)
Cash dividends on common stock......................... (67,821) (61,887)
--------- ---------
Net cash from financing activities................... 82,239 88,383
--------- ---------
Effect of exchange rate changes on cash and equivalents.. (57) (1,486)
--------- ---------
Net increase in cash and equivalents..................... 10,744 756
Cash and equivalents at beginning of period.............. 10,716 12,348
--------- ---------
Cash and equivalents at end of period.................... $ 21,460 $ 13,104
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
R. R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. The condensed consolidated financial statements included herein are
unaudited (although the balance sheet at December 31, 1993 is condensed from
the audited balance sheet at that date) and have been prepared by the company
to conform with the requirements applicable to this quarterly report on Form
10-Q. Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been omitted as permitted by such requirements. However, the
company believes that the disclosures made are adequate to make the information
presented not misleading. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
the related notes included in the company's 1993 annual report on Form 10-K.
The condensed consolidated financial statements included herein reflect, in
the opinion of the company, all adjustments (which include only normal,
recurring adjustments) necessary to present fairly the financial information
for such periods.
Note 2. Components of the company's inventories at September 30, 1994 and
December 31, 1993 were as follows:
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
--------------------------
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
<S> <C> <C>
Raw materials........................................ $148,613 $142,739
Work in process...................................... 239,883 154,477
Operating supplies................................... 39,183 32,192
Progress billings.................................... (75,939) (40,299)
LIFO reserve......................................... (49,146) (45,395)
-------- --------
Total inventories................................ $302,594 $243,714
======== ========
Note 3. The following provides supplemental cash flow information:
<CAPTION>
(THOUSANDS OF DOLLARS)
--------------------------
NINE MONTHS ENDED
SEPTEMBER 30
--------------------------
1994 1993
------------- ------------
<S> <C> <C>
Interest paid, net of capitalized interest........... $ 30,797 $ 23,201
Income taxes paid.................................... $ 65,945 $ 46,493
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS--COMPARISON OF THIRD QUARTER 1994 TO THIRD QUARTER 1993
Net sales increased 10.6% above the prior year reflecting higher volume from
new products and services, new customers, recent expansions and acquisitions.
Net sales from international operations were 39% above the prior year and
represented over 11% of total company sales in the quarter. International sales
growth included new operations in Europe, Asia and Latin America, including the
recent acquisition of a 51% interest in Chilean-based Editorial Lord Cochrane,
which was fully consolidated in operating results beginning July 1, 1994.
Gross profit increased 9.9%, reflecting higher volume partially offset by
higher depreciation and amortization, increased start-up expenses and a higher
LIFO provision. Selling and administrative expenses were 11.5% above the prior
year, due to the higher volume, recent expansions and new operations. Other
expense increased $5.2 million reflecting higher interest expense (due to
larger commercial paper balances and higher interest rates), lower investment
income and higher minority interest expense. The effective tax rate of 32% in
1994 was lower than the 1993 rate reflecting benefits associated with life
insurance programs, credits associated with affordable housing investment
programs and the one-time impact on the deferred income tax provision in the
third quarter of 1993, related to the federal tax rate increase. As a result of
the volume increase and the lower effective tax rate, net income increased
15.3%, which exceeded the growth in sales. Earnings per share were $0.52, up
15.6%, reflecting net income growth and fewer average shares outstanding.
RESULTS OF OPERATIONS--COMPARISON OF FIRST NINE MONTHS 1994 TO FIRST NINE
MONTHS 1993
Net sales increased 11.5% above the prior year reflecting higher volume from
new products and services, new customers, recent expansions and acquisitions.
Net sales from international operations were 31% above the prior year and
represented approximately 11% of total company sales in the first nine months
of 1994. International sales growth included new operations in Europe, Asia and
Latin America, including the recent acquisition of a 51% interest in Chilean-
based Editorial Lord Cochrane, which was fully consolidated in operating
results beginning July 1, 1994.
Gross profit increased 10.7%, reflecting higher sales volume partially offset
by higher depreciation and amortization, increased start-up expenses and a
higher LIFO provision. Selling and administrative expenses increased 11.5% due
to the higher volume, recent expansions and new operations. Other expense
increased $9.4 million reflecting higher interest expense (due to larger
commercial paper balances and higher interest rates), lower investment income
and higher minority interest expense. The effective tax rate of 32% in 1994 was
lower than the 1993 rate reflecting benefits associated with life insurance
programs, credits associated with affordable housing investment programs and
the one-time impact on the deferred income tax provision in the third quarter
of 1993, related to the federal tax rate increase. As a result of the volume
increase and the lower effective tax rate, net income increased 12.6% over
1993, excluding the restructuring charge and accounting changes reflected in
the first quarter of 1993. Earnings per share of $1.18 increased 13.5%,
excluding the one-time items, reflecting net income growth and fewer average
shares outstanding.
CHANGES IN FINANCIAL CONDITION
With the growth in cash flow and the credit facilities and shelf registration
discussed below, management believes the company has the financial strength and
flexibility to fund current operations and growth. Net income from operations
plus depreciation and amortization was $413.8 million, up 13.4% from the prior
year, excluding the restructuring charge recorded in the first quarter of 1993.
Capital investment during the first nine months totaled $443.4 million,
including new equipment to meet the growing needs of present and new customers;
expansion of manufacturing plants; and
8
<PAGE>
acquisitions and joint venture investments. Full year capital spending is
estimated to be $525 million. Working capital increased $55.4 million from
December 31, 1993 primarily from increased receivables and inventories
reflecting recent acquisitions and increased volume partially offset by higher
accounts payable balances.
At September 30, 1994, the company continues to have two unused revolving
credit facilities totaling $550 million with a number of banks. These credit
facilities provide support for the issuance of commercial paper and other
credit needs. At September 30, 1994, the company had effective shelf
registration statements permitting it to issue, from time to time, up to $500
million in debt securities. Under the shelf registration statements, the
company issued $200 million of medium term notes during October and early
November, 1994. The notes bear interest rates between 7.01% and 7.96% (with a
weighted average interest rate of 7.55%) with maturity dates ranging from 1997
to 1999. The proceeds from these issues were used to retire commercial paper
debt.
9
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3(ii)(a)By-Laws
3(ii)(b)Amendment to By-Laws adopted October 27, 1994
10 1993 Stock Purchase Plan, as amended
12 Statement of Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
(b) No Current Report on Form 8-K was filed during the third quarter of 1994.
10
<PAGE>
SIGNATURE
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.
R. R. Donnelley & Sons Company
/s/ William L. White
By __________________________________
William L. White
Controller
(Authorized Officer and
Chief Accounting Officer)
November 14, 1994
Date __________________________
11
<PAGE>
EXHIBIT 3(ii)(a)
As Amended through October 27, 1994
BY-LAWS OF
R. R. DONNELLEY & SONS COMPANY
ARTICLE I
---------
SECTION 1.1. PRINCIPAL OFFICE. The principal office in the State of
Delaware shall be in the City of Wilmington, County of New Castle, State of
Delaware, and the name of the resident agent in charge thereof is The
Corporation Trust Company.
SECTION 1.2. OTHER OFFICES. The corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
----------
Meetings of Stockholders
------------------------
SECTION 2.1. ANNUAL MEETING. The annual meeting of the stockholders shall
be held on the fourth Thursday in March of each year for the purpose of electing
Directors of the class for which the term expires on that date and for the
transaction of such other business as may properly be brought before the
meeting. Such meeting shall be held at eight o'clock in the morning or such
other time during normal business hours as may be fixed by the Board of
Directors and stated in the notice of the meeting. If the day fixed for the
annual meeting shall be a legal holiday, the Board of Directors may, subject to
the provisions of Article X hereof, designate another day on which such meeting
shall be held. If the election of Directors shall not be held on the date
designated for any annual meeting, or any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as conveniently may be.
Except as otherwise provided by statute or the certificate of incorporation,
the only business which properly shall be conducted at any annual meeting of the
stockholders shall (i) have been specified in the written notice of the meeting
(or any supplement thereto) given as provided in Section 2.4, (ii) be brought
before the meeting by or at the direction of the Board of Directors or the
officer of the corporation presiding at the meeting or (iii) have been specified
in a written notice (a "Stockholder Meeting Notice") given to the corporation,
in accordance with all of the following requirements, by or on behalf of any
stockholder who is entitled
<PAGE>
to vote at such meeting. Each Stockholder Meeting Notice must be delivered
personally to, or be mailed to and received by, the Secretary of the corporation
at the principal executive offices of the corporation in the City of Chicago,
State of Illinois, not less than 60 days nor more than 90 days prior to the
annual meeting; provided, however, that in the event that less than 75 days'
notice or prior public disclosure of the date of the annual meeting is given or
made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. Each Stockholder Meeting Notice
shall set forth: (i) a description of each item of business proposed to be
brought before the meeting and the reasons for conducting such business at the
annual meeting; (ii) the name and record address of the stockholder proposing to
bring such item of business before the meeting and the reasons for conducting
such business at the annual meeting; (iii) the class and number of shares of
stock held of record, owned beneficially and represented by proxy by such
stockholder as of the record date for the meeting (if such date shall then have
been made publicly available) and as of the date of such Stockholder Meeting
Notice and (iv) all other information which would be required to be included in
a proxy statement filed with the Securities and Exchange Commission if, with
respect to any such item of business, such stockholder were a participant in a
solicitation subject to Section 14 of the Securities Exchange Act of 1934. No
business shall be brought before any annual meeting of stockholders of the
corporation otherwise than as provided in this Section; provided, however, that
nothing contained in this Section shall be deemed to preclude discussion by any
stockholder of any business properly brought before the annual meeting. The
officer of the corporation presiding at the annual meeting of stockholders
shall, if the facts so warrant, determine that business was not properly brought
before the meeting in accordance with the provisions of this Section and, if he
should so determine, he should so declare to the meeting and any such business
so determined to be not properly brought before the meeting shall not be
transacted. (Amended 10/27/94)
SECTION 2.2. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the Chief Executive Officer,
President, or the Chairman of the Board, and shall be called by the Secretary
pursuant to a resolution duly adopted by the affirmative vote of a majority of
the whole Board of Directors. Such call shall state the purposes of the proposed
meeting. Business transacted at any special meeting shall be limited to the
general objectives stated in the call. (Amended 12/15/88)
SECTION 2.3. PLACE OF MEETING. All meetings of stockholders for the
election of Directors shall be held in the City of Chicago, County of Cook,
State of Illinois and the Board of Directors is authorized to fix the place
within the City
2
<PAGE>
of Chicago for the holding of such meeting. Meetings of stockholders for any
other purpose may be held at such place, within or without the State of
Delaware, and time as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof. (Amended 1/9/57)
SECTION 2.4. NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the Board of Directors, the
Chief Executive Officer, the Chairman of the Board or the President, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail in a
sealed envelope addressed to the stockholder at his address as it appears on the
records of the corporation, with postage thereon prepaid. (Amended 12/15/88)
SECTION 2.5. CLOSING TRANSFER BOOKS OR FIXING RECORD DATE. The Board of
Directors may close the stock transfer books of the corporation for a period not
exceeding fifty (50) days preceding the date of any meeting of stockholders, or
the date for payment of any dividend, or the date for the allotment of rights or
the date when any change, or conversion or exchange of capital stock shall go
into effect or for a period of not exceeding fifty (50) days in connection with
obtaining the consent of stockholders for any purpose. In lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding fifty (50) days preceding the date of any meeting of the
stockholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change, or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of and to vote at, such
meeting and any adjournment thereof, or to receive payments of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, 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.
SECTION 2.6. VOTING LIST. At least ten days before every election of
Directors, a complete list of the stockholders entitled to vote at such
election, arranged in alphabetical order with the residence of and the number of
voting shares held by each, shall be prepared by the Secretary. Such list shall
be open at the place where said election is to be held for ten days, to the
examination of any
3
<PAGE>
stockholders, and shall be produced and kept at the time and place of election
during the whole time thereof, and subject to the inspection of any stockholder
who may be present.
SECTION 2.7. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of stockholders, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 2.8. PROXIES. At all meetings of stockholders a stockholder may
vote by proxy executed in writing by the stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
SECTION 2.9. VOTING. When a quorum is present at any meeting of
stockholders, the affirmative vote of the holders of a majority of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the subject matter shall decide any question brought before such meeting, unless
the question is one upon which, by express provision of the statutes, the
certificate of incorporation or these by-laws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question. Every stockholder having the right to vote shall be entitled to vote
in person, or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than eleven months prior to voting,
unless such instrument provides for a longer period. Every such stockholder
shall have one vote for each share of stock having voting power registered in
his name on the books of the corporation. Except where the transfer books of
the corporation shall have been closed or a date shall have been fixed as a
record date for the determination of its stockholders entitled to vote, no share
of stock shall be voted on at any election for Directors which has been
transferred on the books of the corporation within twenty days next preceding
such election of Directors. (Amended 1/28/93)
SECTION 2.10. VOTING OF STOCK OF CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the by-laws of such corporation may prescribe or, in the
4
<PAGE>
absence of such provision, as the Board of Directors of such corporation may
determine. Shares standing in the name of a deceased person may be voted by
executor or administrator of such deceased person, either in person or by proxy.
Shares standing in the name of a guardian, conservator or trustee may be voted
by such fiduciary, either in person or by proxy, but no such fiduciary shall be
entitled to vote shares held in such fiduciary capacity without a transfer of
such shares into the name of such fiduciary. Shares standing in the name of a
receiver may be voted by such receiver. A stockholder whose shares are pledged
shall be entitled to vote such shares, unless in the transfer by the pledger or
on the books of the corporation, he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent the stock
and vote thereon.
SECTION 2.11. TREASURY STOCK. The corporation shall not vote shares of its
own stock directly or indirectly; and such shares shall not be counted in
determining the total number of outstanding shares.
SECTION 2.12. ELECTION OF DIRECTORS. When a quorum is present at any
meeting of stockholders, directors shall be elected by a plurality of the votes
of the shares present in person or represented by proxy at such meeting of
stockholders and entitled to vote on the election of directors. (New Section
10/22/92)
ARTICLE III
-----------
Directors
---------
SECTION 3.1. GENERAL POWERS. The property and business of the corporation
shall be managed by its Board of Directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders. (Amended 9/28/90)
Without limiting the generality of the foregoing, it shall be the
responsibility of the Board of Directors to establish broad objectives and the
general course of the business, determine basic policies, appraise the adequacy
of overall results, and generally represent and further the interests of the
Company's stockholders and insure the most effective use of the Company's
assets.
Several examples of the responsibilities of the Board are as follows:
1. Establish broad Company objectives and basic policies and maintain
overall control of the business.
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2. Make necessary revisions of the by-laws (in accordance with Article X).
3. Determine dividend action (in accordance with Article VIII).
4. Authorize necessary action with respect to issuance of new securities
and listing securities for trading on exchanges.
5. Fix time and place and take other necessary action with respect to
stockholders meetings (in accordance with Article II).
6. Approve issuance of stock certificates to replace those lost or
destroyed (in accordance with Section 7.2).
7. Fill Vacancies in the Board of Directors (in accordance with Section
3.8).
8. Elect the officers of the corporation (in accordance with Section 4.2.)
and appraise their performance.
9. Determine the basic organization structure of the business.
10. Authorize any necessary action with respect to loans and pledging of
assets (in accordance with Section 6.2.).
11. Designate officers authorized to buy or sell corporate investment
securities.
12. Designate persons authorized to execute contracts and other
documents requiring signatures of officers or specific individuals (in
accordance with Section 6.1).
13. Select, or designate those authorized to select, depositaries for
corporate funds and investment securities and designate check
signatories and persons authorized to have access to safe deposit boxes
(in accordance with Sections 6.3 and 6.4).
14. Approve proposals to convey corporate-owned land or buildings or
designate those authorized to take such action.
15. Designate the person or persons authorized to appoint proxies to vote
stock in subsidiary and other concerns in which the corporation has a
significant interest and the person or persons authorized to determine
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who shall serve as Directors in representing the parent corporation in
such concerns.
16. Designate stock transfer agents, registrars, and paying agents with
respect to corporate securities and other special purpose agents.
17. Procure special professional services required by and for the Board.
18. Provide for issuance of an annual report to stockholders and such
other reports and notices as the Board deems advisable.
19. Employ, upon recommendation of the Audit Committee (in accordance with
Section 3.13), public accountants to audit the corporation's financial
statements.
20. Review and approve new employee benefit plans and major revisions of
employee stock incentive plans.
21. Review and approve the actions of the Executive Committee as reported
in the minutes of their meetings.
22. Approve the annual operating budget.
23. Review and approve the annual capital budget.
24. Direct the manner of handling matters outside the ordinary course of
business of the corporation.
SECTION 3.2. NUMBER, ELECTION AND TERM. Effective immediately, the number
of Directors which shall constitute the whole Board shall be twelve (12) of whom
four (4) shall be Directors of the First Class, four (4) shall be Directors of
the Second Class and four (4) shall be Directors of the Third Class. The term
of office of each class shall be three years, with the term of one class
expiring in each year, and the successors to the class of Directors whose terms
shall expire shall be elected at each annual election or adjournment thereof.
Each Director shall hold office until his successor shall be elected and shall
qualify or until his earlier resignation or removal. Directors need not be
residents of Delaware or stockholders. (Amended 1/27/94)
SECTION 3.3. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
such place as may from time to time be determined by the Board. Special
meetings of the Board of Directors may be called by or at the request of the
Chief
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Executive Officer, the Chairman of the Board, a Vice Chairman, President, or any
two directors. (Amended 12/15/88)
SECTION 3.4. NOTICE. Notice of any special meeting of the Board of
Directors stating the place, date and hour of the special meeting shall be given
in writing to each director, either personally, or by mail, telex, telegram or
cable, addressed to the director's residence or usual place of business, not
less than two days before the date of such meeting, or by such other means,
whether or not in writing, and within such lesser period, as circumstances
require in the reasonable judgment of the person calling the meetings. If
mailed, such notice shall be deemed to be given at the time when it is deposited
in the United States mail with first class postage prepaid. Notice by telegram
or cable shall be deemed given when the notice is delivered to the telegraph or
cable company; notice by telex shall be deemed given when the notice is
transmitted by telex. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver of notice at
such meeting, except where the director attends the meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting, unless otherwise provided by
statute, the Certificate of Incorporation or these By-Laws. (Amended 6/24/76)
SECTION 3.5. QUORUM. A majority of the Board of Directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors, provided, that if less than a majority of the Directors are present
at said meeting, a majority of the Directors present may adjourn the meeting
from time to time without further notice. (Renumbered 6/24/76)
SECTION 3.6. MANNER OF ACTING. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors. (Renumbered 6/24/76)
SECTION 3.7. USE OF COMMUNICATIONS EQUIPMENT. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting. (New Section
6/24/76)
SECTION 3.8. VACANCIES AND ADDITIONAL DIRECTORS. Any director may resign at
any time upon written notice to the corporation. If any vacancy occurs in the
Board of Directors caused by death, resignation, retirement, disqualification or
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removal from office of any Director, or otherwise, or if any new directorship is
created by any increase in the authorized number of Directors, a majority of the
Directors then in office, though less than a quorum may choose a successor or
fill the newly created directorship; and a Director so chosen shall hold office
until the next annual election at which Directors of the class to which he was
chosen are elected and until his successor shall be duly elected and shall
qualify or until his earlier resignation or removal. (Amended 3/26/70)
SECTION 3.9. COMPENSATION. Directors who are not full-time employees of the
Company shall receive a stated salary and may receive options to purchase shares
of the Company's stock as provided under the Company's stock plans, for their
services, and, in addition thereto, shall receive a fixed fee and expenses, if
any, for attendance at each regular or special meeting of the Board of Directors
from time to time. Directors who are full-time employees of the Company shall
not receive any compensation for their services as such; provided that nothing
herein contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation thereof. (Amended
3/28/91)
SECTION 3.10. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors to constitute an Executive Committee. The Chairman of the Executive
Committee shall be the Chief Executive Officer. The Executive Committee shall
have and exercise all of the authority of the Board of Directors in the
management of the corporation, except that such Committee shall not have the
power to take specific actions which have been delegated to other committees of
the Board and shall not be empowered to take action with respect to: declaring
dividends; issuing bonds, debentures, or the borrowing of moneys except within
limits expressly approved by the Board of Directors; amending by-laws; filling
vacancies and newly created directorships in the Board of Directors; removing
Directors of the corporation; mergers or consolidations; the sale, lease or
exchange of all or substantially all of the assets of the corporation;
dissolution; or any other action requiring the approval of stockholders. The
designation of such Committee and the delegation thereto of authority shall not
operate to relieve the Board of Directors or any member thereof of any
responsibility imposed upon it or him by law. (Amended 9/28/90)
SECTION 3.11. FINANCE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors, a majority of whom shall not be employees of the Company, to
constitute a Finance Committee, which Committee is charged with reviewing the
overall financial policies of the Company and making recommendations to the
Board regarding the Company's financial condition and requirements for and
disposition of funds, including: capital structure, raising long-term capital,
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dividend policy, and material changes in the Company's financial position with
respect to cash, investments, debt and accounts receivable. The Committee shall
review the performance and management of the Company's Retirement Benefit Plan
including the investment policy, the performance of the Investment Trustee on a
regular periodic basis, the reasonableness of the actuarial assumptions in
relation to investment performance, the funding status of the Plan and shall
make recommendations with respect to the selection of one or more investment
trustees or other investment agencies, and undertake such other studies and make
such other recommendations to the Board as it may deem desirable with respect to
the Investment Trust of the Retirement Benefit Plan. (Amended and Renamed
9/28/90)
SECTION 3.12. COMPENSATION COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors who are not employees of the Company, to constitute a Compensation
Committee. The Compensation Committee shall determine the annual salary, bonus
and other benefits of selected senior officers and key management employees of
the Company and review, as appropriate, performance standards under compensation
programs for key employees. The Compensation Committee shall also recommend to
the Board candidates for election as corporate officers.
The Compensation Committee shall recommend new employee benefit plans and
changes to stock incentive plans to the Board, approve amendments to the non-
stock employee benefit plans of the Company and oversee the administration of
all of the Company's employee benefit plans. The Compensation Committee may
delegate to one or more officers of the Company the power to approve any
amendment of any non-stock employee benefit plan of the Company or the Donnelley
Tax Credit Stock Ownership Plan which in the reasonable opinion of such officer
will not materially affect the costs to the Company of, or benefits under, such
plans. (Amended 7/22/93)
SECTION 3.13. AUDIT COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors who are not employees of the Company to constitute an Audit Committee,
which Committee shall review on behalf of the stockholders of the Company: the
qualifications and services of the independent public accountants employed by
the Company from time to time to audit the books of the Company, the scope of
their audits, the adequacy of their audit reports, and recommendations made by
them. The Committee may also make such reviews of internal financial audits and
controls as the Committee considers desirable.
The Audit Committee will recommend to the Board the selection of the
independent public accountants.
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The Audit Committee shall review the Company's financial disclosure
documents, management perquisites, significant developments in accounting
principles and significant proposed changes in financial statements. The Audit
Committee shall also review and monitor the Company's codes of conduct to guard
against significant conflicts of interest and dishonest, unethical or illegal
activities. The Audit Committee shall review periodically the performance of the
Company's accounting and financial personnel, and shall review material
litigation and regulatory proceedings and other issues relating to potentially
significant corporate liability. (Amended 9/28/90)
SECTION 3.14. NOMINATING COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors to constitute a Nominating Committee, which Committee shall recommend
to the Board nominees for election to the Board of Directors in connection with
any meeting of stockholders at which directors are to be elected and persons for
appointment to fill any Board vacancy which the Board of Directors is authorized
under the By-Laws to fill. The Committee may also recommend to the Board
policies or guidelines concerning criteria for Board membership, the structure
and composition of Board Committees, the size and composition of the Board and
the selection, tenure and retirement of Directors and matters related thereto.
(Amended 9/28/90)
SECTION 3.15. OTHER COMMITTEES. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate two or more Directors to
constitute committees other than the Executive Committee, Finance Committee,
Compensation Committee, Audit Committee and Nominating Committee, which
committees shall have and exercise such authority as may be provided for in the
resolution creating such committee. (Amended 9/28/90)
SECTION 3.16. HONORARY DIRECTORS. The Board of Directors may select from
time to time, and for such periods of time as it may deem appropriate, one or
more past Chairmen of the Board, Presidents or Chief Executive Officers elected
a Director prior to September 28, 1990, to serve as Honorary Directors.
Honorary Directors shall be entitled to receive notice of and to attend all
meetings of the Board of Directors, to receive copies of all reports or other
communications made to the Board of Directors, to give counsel and advice on any
subject, to receive such fees and expense reimbursements as may be provided from
time to time by the Board of Directors. The Board of Directors, Chief Executive
Officer, Chairman of the Board or President may invite an Honorary Director to
attend meetings of any committee of the Board of Directors or to undertake
temporary assignments, but this shall not preclude any other arrangements,
consulting or otherwise, between the corporation and an Honorary Director. The
presence or absence of an Honorary Director shall not be counted for purposes or
determining the existence of a quorum. Honorary Directors shall not have the
right to vote on
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any matters voted on by the Board of Directors or any of the rights, duties,
privileges, or responsibilities of Directors of the corporation. (Amended
9/28/90)
SECTION 3.17. NOMINATION OF DIRECTORS. Except as otherwise fixed pursuant
to the certificate of incorporation relating to the rights of the holders of any
one or more classes or series of Preferred Stock issued by the corporation,
acting separately by class or series, to elect, under specified circumstances,
directors at a meeting of stockholders, nominations for the election of
directors may be made by the Board of Directors or a committee appointed by the
Board of Directors pursuant to Section 3.14 or by any stockholder entitled to
vote in the election of directors generally. However, any stockholder entitled
to vote in the election of directors generally may nominate one or more persons
for election as directors at a meeting at which directors are to be elected only
if written notice of such stockholder's intent to make such nomination or
nominations has been delivered personally to, or been mailed to and received by,
the Secretary of the corporation at the principal executive offices of the
corporation in the City of Chicago, State of Illinois, not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that, in the event
that less than 75 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. Each such notice shall
set forth: (i) the name and record address of the stockholder who intends to
make the nomination; (ii) the name, age, principal occupation or employment,
business address and residence address of the person or persons to be nominated;
(iii) the class and number of shares of stock held of record, owned beneficially
and represented by proxy by such stockholder and by the person or persons to be
nominated as of the record date for the meeting (if such date shall then have
been made publicly available) and of the date of such notice; (iv) a
representation that the stockholder intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice; (v) a
description of all arrangements or understandings between such stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder; (vi) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the Securities Exchange Act of 1934 and the proxy rules of the
Securities and Exchange Commission; and (vii) the consent of each nominee to
serve as a director of the corporation if so elected. The corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the corporation to determine the eligibility of such proposed
nominee to serve as a director of the corporation. The officer of the
corporation presiding at the annual meeting of stockholders shall, if the facts
so warrant, determine that a nomination was not made in accordance with the
provisions of this Section, and
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if he should so determine, he should so declare to the meeting and the defective
nomination shall be disregarded. No person shall be eligible for election as a
director of the corporation unless nominated in accordance with the procedures
set forth herein. (Added 3/24/88)
ARTICLE IV
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Officers of the Corporation
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SECTION 4.1. OFFICERS AND NUMBER. The officers of the corporation shall be
a Chief Executive Officer, a Chairman of the Board, one or more Vice Chairmen, a
President, one or more Executive Vice Presidents, one or more Sector Presidents,
one or more Business Unit Presidents, one or more Senior Vice Presidents, one or
more Vice Presidents, a Secretary, a Treasurer, a Controller, a General Counsel,
one or more Assistant Secretaries, one or more Assistant General Counsels, one
or more Assistant Treasurers and one or more Assistant Controllers. Any two or
more offices may be held by the same person except the offices of President and
Secretary. The Chief Executive Officer shall be either the Chairman, a Vice
Chairman or the President, as designated by the Board of Directors. The Board
of Directors may elect one or more Vice Chairmen of the Board and one or more
Executive Vice Presidents. The Board of Directors may elect an Honorary Director
to the office of Honorary Chairman of the Board. (Amended 1/27/94)
SECTION 4.2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of the stockholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the Board of Directors. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or shall have
been removed in the manner hereinafter provided. (Adopted 10/21/60)
SECTION 4.3. REMOVAL. Any officer elected by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests of
the corporation would be served thereby. (Amended 12/15/88)
SECTION 4.4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term. (Adopted 10/21/60)
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SECTION 4.5. SALARIES. No officer shall be prevented from receiving a
salary for his services as an officer by reason of the fact that he is also a
Director of the corporation.
SECTION 4.6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
have overall supervision of, and responsibility for, the business, and shall
direct the affairs and policies of the corporation. (Adopted 12/15/88)
SECTION 4.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
at all meetings of the stockholders and Board of Directors. The Chairman of the
Board shall perform such other duties and responsibilities as may be assigned to
him by the Board of Directors. (Amended 9/28/90)
SECTION 4.8. VICE CHAIRMEN OF THE BOARD. The Vice Chairmen of the Board
shall, in the absence of the Chairman of the Board (in the order prescribed by
the Board), preside at all meetings of the stockholders and Board of Directors,
and shall perform such other duties as may be assigned to them by the Board of
Directors. (Amended 12/15/88)
SECTION 4.9. HONORARY CHAIRMAN OF THE BOARD. The Honorary Chairman of the
Board shall consult with the Chief Executive Officer and other officers of the
corporation, as he or they shall determine, with respect to the general policies
and affairs of the corporation, and shall have such authority and perform such
duties as from time to time may be prescribed by the Board of Directors or as
may be granted by the Chief Executive Officer. (Renumbered 9/28/90)
SECTION 4.10. PRESIDENT. Subject to the supervision and direction of the
Chief Executive Officer, the President shall have responsibility for such of the
operations and other functions of the corporation as may be assigned to him.
The President shall perform such other duties and responsibilities as may be
assigned to him by the Chief Executive Officer. In the absence of the Chairman
of the Board and Vice Chairmen of the Board, the President shall preside at
meetings of the stockholders and Board of Directors. (Renumbered and Amended
9/28/90)
SECTION 4.11. VICE PRESIDENTS. Each Vice President shall have such
corporate powers, if any, as may be assigned to him from time to time by the
Board of Directors, Chief Executive Officer, Chairman of the Board or the
President. (Renumbered 9/28/90)
SECTION 4.12. SENIOR VICE PRESIDENTS. Each Senior Vice President shall have
such corporate powers, if any, as may be assigned to him by the Board of
Directors, Chief Executive Officer, Chairman of the Board or the President.
(Renumbered 9/28/90)
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SECTION 4.13. SECTOR PRESIDENTS. The Board of Directors may from time to
time designate as Sector President one or more of the individuals who occupies
the position of senior officer heading a Sector consisting of one or more
business units and to whom one or more of the Business Unit Presidents reports.
(Amended 1/27/94)
SECTION 4.14. BUSINESS UNIT PRESIDENTS. The Board of Directors may from
time to time designate as Business Unit President one or more of the individuals
who occupies the position of senior officer heading a business unit consisting
of one or more divisions and one or more sales units and who reports to one or
more of the Sector Presidents or other senior officers of the corporation.
(Added 1/27/94)
SECTION 4.15. EXECUTIVE VICE PRESIDENTS. The Board of Directors may
designate as an Executive Vice President the officer to whom one or more other
senior officers of this corporation reports. (Amended and Renumbered 1/27/94)
SECTION 4.16. ORDER OF SUCCESSION. Such of the directors of the corporation
as shall be designated by resolution of the Board of Directors, and in the order
of such designation, shall in the absence of the Chairman of the Board perform
the duties of the Chairman of the Board and shall have all of the powers and
shall be subject to any restrictions imposed upon the Chairman.
Such of the officers of the corporation as may be designated by resolution of
the Board of Directors, and in the order of such designation, shall in the
absence of the Chief Executive Officer, perform the duties of the Chief
Executive Officer and when so acting shall have all the powers of and be subject
to any restrictions imposed upon the Chief Executive Officer.
Such of the officers of the corporation as may be designated by resolution of
the Board of Directors, and in the order of such designation, shall in the
absence of the President perform the duties of the President and when so acting
shall have all the powers of and be subject to any restrictions imposed upon the
President. (Renumbered 1/27/94)
SECTION 4.17. SECRETARY. The Secretary shall keep the minutes of all
meetings of the stockholders and Board of Directors of the corporation, shall
have charge of the corporate records and the corporate seal, and shall have the
power to attach the seal to all instruments which shall require sealing after
the same shall have been signed as authorized by the Board of Directors.
(Renumbered 1/27/94)
SECTION 4.18. TREASURER. The Treasurer shall be responsible for the
receipt, custody and disbursement of all funds of the corporation in the form of
both cash and securities. He may delegate the details of his office to someone
in his stead,
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but this shall nowise relieve him of the responsibilities and liability of his
office. The Treasurer shall have the power to attach the seal to all instruments
which shall require sealing after the same shall have been signed as authorized
by the Board of Directors. (Renumbered 1/27/94)
SECTION 4.19. CONTROLLER. The Controller reports to the Chief Executive
Officer directly or through such other management executives as the Chief
Executive Officer may direct. The Controller, however, may directly submit any
matter to the Board of Directors for their consideration. The Controller shall
maintain adequate records of all assets, liabilities, and transactions of the
corporation, and in conjunction with other officers and department heads, shall
initiate and enforce measures and procedures whereby the business of the
corporation shall be conducted with the maximum of safety, efficiency and
economy. He shall attend that part of the meetings of the Board of Directors
which is concerned with the review of the financial and operating reports of the
business, except when, in the discretion of the Board, he shall be asked not to
attend. (Renumbered 1/27/94)
SECTION 4.20. GENERAL COUNSEL. The General Counsel shall be the chief legal
officer of the corporation and have legal responsibility for all aspects of the
business. The General Counsel shall have the power to attach the seal to all
instruments which shall require sealing after the same shall have been signed as
authorized by the Board of Directors. (Renumbered 1/27/94)
SECTION 4.21. ASSISTANT TREASURERS. The Assistant Treasurers shall in the
absence of the Treasurer perform all functions and duties of the Treasurer and
in addition shall perform such functions and duties as the Treasurer may
delegate, but this shall in nowise relieve the Treasurer of the responsibilities
and liability of his office. (Renumbered 1/27/94)
SECTION 4.22. ASSISTANT SECRETARIES. The Assistant Secretaries shall in the
absence of the Secretary perform all functions and duties of the Secretary and
in addition shall assume such functions and duties as the Secretary may
delegate, but this shall in nowise relieve the Secretary of the responsibilities
and liability of his office. (Renumbered 1/27/94)
SECTION 4.23. ASSISTANT GENERAL COUNSELS. The Assistant General Counsels
shall in the absence of the General Counsel perform all functions and duties of
the General Counsel and in addition shall assume such functions and duties as
the General Counsel may delegate, but this shall in nowise relieve the General
Counsel of the responsibilities and liabilities of his office. (Renumbered
1/27/94)
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SECTION 4.24. ASSISTANT CONTROLLERS. The Assistant Controllers shall in the
absence of the Controller perform all functions and duties of the Controller and
in addition shall assume such functions and duties as the Controller may
delegate, but this shall in nowise relieve the Controller of the
responsibilities and liabilities of such office. (Renumbered 1/27/94)
ARTICLE V
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Appointed Officers
------------------
The Chief Executive Officer may appoint officials assigned to a particular
Sector or other business unit as such officers of such Sector or business unit
and having such titles as he shall deem appropriate. Any such officer appointed
by the Chief Executive Officer may be removed by the Chief Executive Officer
whenever in his judgment the best interests of the corporation would be served
thereby. The term of office, compensation, powers and duties and other terms of
employment of appointed officers shall be such as the Chief Executive Officer
may from time to time deem proper, and the authority of such officers shall be
limited to acts pertaining to the business of such Sector or business unit.
(Amended 1/27/94)
ARTICLE VI
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Contracts, Loans, Checks and Deposits
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SECTION 6.1. CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
SECTION 6.2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors (or a resolution of a
committee of Directors pursuant to authority conferred upon that committee).
Such authority may be general or confined to specific instances.
SECTION 6.3. CHECKS, ETC. All checks, demands, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as may be designated by
the Board of Directors or by one or more officers of the corporation named by
the Board of Directors for such purpose.
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SECTION 6.4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies and other depositaries as the Board of Directors may
select.
(Entire Article Renumbered 6/28/84)
ARTICLE VII
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Certificates of Stock and Their Transfer
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SECTION 7.1. CERTIFICATES OF STOCK. Certificates of stock of the
corporation shall be in such form as may be determined by the Board of
Directors, shall be numbered and shall be entered in the books of the
corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chief Executive Officer, Chairman of the
Board or President or a Vice President and by the Secretary or Assistant
Secretary or the Treasurer or an Assistant Treasurer. If any stock certificate
is signed manually (a) by a transfer agent other than the corporation or its
employee or (b) by a registrar other than the corporation or its employee, any
other signature on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may nevertheless be issued by the corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
All certificates properly surrendered to the corporation for transfer shall be
cancelled and no new certificates shall be issued to evidence transferred shares
until the former certificate for at least a like number of shares shall have
been surrendered and cancelled and the corporation reimbursed for any applicable
taxes on the transfer, except that in the case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms, and with such
indemnification (if any) to the corporation, as the Board of Directors may
prescribe specifically or in general terms or by delegation to a transfer agent
for the corporation. Certificates shall not be issued representing fractional
shares of stock. (Amended 12/15/88)
SECTION 7.2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed
18
<PAGE>
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
SECTION 7.3. TRANSFERS. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the corporation by the registered holder thereof or by his attorney thereunto
authorized by power of attorney and filed with the Secretary or transfer agent
of the corporation.
SECTION 7.4. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
(Entire Article Renumbered 6/28/84)
ARTICLE VIII
------------
Dividends
---------
SECTION 8.1. DECLARATION. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
SECTION 8.2. RESERVE. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
such other purposes as the Directors shall think conducive to the interest of
the corporation, and the
19
<PAGE>
Directors may modify or abolish any such reserve in the manner in which it was
created.
(Entire Article Renumbered 6/28/84)
ARTICLE IX
----------
Miscellaneous
-------------
SECTION 9.1. FISCAL YEAR. Unless otherwise fixed by the resolution of the
Board of Directors, the fiscal year of the corporation shall be the calendar
year.
SECTION 9.2. SEAL. The corporate seal shall have inscribed thereon the name
of the corporation and the words "Corporate Seal, Delaware." The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
SECTION 9.3. BOOKS. The books of the corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at the
offices of the corporation at Chicago, Illinois, or at such other place or
places as may be designated from time to time by the Board of Directors.
(Entire Article Renumbered 6/28/84)
ARTICLE X
---------
Amendment
---------
These by-laws may be altered or repealed at any regular meeting of the Board
of Directors or at any special meeting of the Board of Directors if notice of
such alteration or repeal be contained in the notice of such special meeting,
provided that no amendment of these by-laws shall conflict with the provisions
of the Certificate of Incorporation, whether relating to the number of Directors
which shall constitute the whole Board or the number of Directors of any class
or otherwise. (Renumbered 6/28/84)
20
<PAGE>
EXHIBIT 3(ii)(b)
R. R. DONNELLEY & SONS COMPANY
AMENDMENT TO BY-LAWS
The following section of the By-Laws was amended by the Board of Directors on
October 27, 1994 to read as follows:
RESOLVED, that Section 2.1 of the Company's By-Laws be and hereby is
amended to delete the second sentence thereof in its entirety and to
substitute the following therefor:
"Such meeting shall be held at eight o'clock in the morning or such
other time during normal business hours as may be fixed by the Board
of Directors and stated in the notice of the meeting."
<PAGE>
Exhibit 10
R. R. DONNELLEY & SONS COMPANY
1993 STOCK PURCHASE PLAN FOR SELECTED MANAGERS AND KEY STAFF EMPLOYEES
(AS AMENDED ON SEPTEMBER 22, 1994)
1. Purpose.
The purpose of the Stock Purchase Plan (the "Plan") of R. R. Donnelley &
Sons Company (the "Company") is to align the interests of the Company's
stockholders and selected managers and key staff employees of the Company and
its majority-owned subsidiaries eligible to participate in the Plan by granting
incentives to such managers and key staff employees to increase their
proprietary interest in the Company's growth and success.
2. Administration.
The Plan will be administered by a Committee (the "Committee") of three or
more directors designated by the Board of Directors of the Company (the "Board).
No member of the Committee, during the one year prior to service on the
Committee or during service on the Committee, shall have been or be granted or
awarded shares of common stock, par value $1.25 per share, of the Company
("Common Stock"), options to purchase shares of Common Stock or other equity
securities of the Company pursuant to the Plan or any other plan of the Company
or any affiliate of the Company, except for any grant or award which would not
result in such member ceasing to be a "disinterested person" within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Committee may adopt such rules and regulations and make
such determinations and interpretations and provide for all terms and conditions
of the Plan and participation thereunder as it shall deem desirable and not
inconsistent with the limitations herein provided. All such rules, regulations,
determinations and interpretations relating to the Plan adopted by the Committee
shall be conclusive and binding upon all parties.
3. Eligibility.
(a) The Committee shall determine the classes (or portions thereof) of
managers and key staff employees of the Company and any of its subsidiaries that
are eligible to participate in the Plan (each such class determined to be so
eligible being referred to herein as an "Eligible Class"); provided that the
Committee may direct that the determination of such classes (or portions
thereof) be made by the Chief Executive Officer, either alone or together with
one or more designated officers of the Company, except that the determination of
the eligibility of any class in which there is an "officer" within the meaning
of Rule 16a-1 under the Exchange Act shall be made by the Committee. The
determination of Eligible Classes shall remain in effect unless and until
changed in accordance with the following. No elimination of an Eligible Class
or portion thereof may be made with respect to any calendar year after February
1 of such year. Additions of Eligible Classes or portions thereof may be made
at any time by the Committee, or by the Chief Executive Officer, either alone or
together with one or more designated officers of the Company, if the Committee
has delegated the authority to determine such Eligible Classes to the Chief
Executive Officer.
<PAGE>
(b) An employee of the Company or a subsidiary of the Company who either
(i) is employed in an Eligible Class on a Purchase Date (as hereinafter
defined), or (ii) was employed in an Eligible Class on the December 31 next
preceding a Purchase Date and who retired at age 55 or over on or after such
December 31 and on or prior to such Purchase Date, shall be eligible to purchase
shares of Common Stock in accordance with the Plan on such Purchase Date (each
such employee being referred to herein as an "Eligible Employee"); provided that
any Eligible Employee who disposes of Common Stock purchased under the Plan in
contravention of Section 7 hereof shall not be an Eligible Employee (and
therefore not entitled to purchase shares of Common Stock under the Plan) on
either of the two Purchase Dates next following the date on which the Company
becomes aware of the most recent such disposition and with respect to which the
condition set forth in Section 4(c) is satisfied.
4. Eligible Employee's and Company's Contributions for Purchase of Shares of
Common Stock.
(a) Subject to subsection (c) below, each Eligible Employee may, with
respect to each Purchase Date, contribute up to 5% of the Compensation (as
hereinafter defined) of such Eligible Employee for the calendar year next
preceding such Purchase Date; provided that the amount, if any, contributed by
an Eligible Employee (the "Eligible Employee's Contribution Amount") shall in no
event be less than $100. The Eligible Employee's Contribution Amount shall,
subject to the conditions contained herein, be applied, together with a Company
contribution equal to 50% of the Eligible Employee's Contribution Amount, to the
purchase of Common Stock as provided in Section 5. The Company will contribute
an additional amount equal to 20% of the Eligible Employee's Contribution
Amount, which amount will be paid in cash to the Eligible Employee in the last
pay period in the month of April next following the Purchase Date.
(b) The election of an Eligible Employee to contribute with respect to a
Purchase Date and the designation by such Eligible Employee of such Eligible
Employee's Contribution Amount for such Purchase Date must be made no later than
the March 15 next preceding such Purchase Date; provided that in the case of an
Eligible Employee who is subject to Section 16 of the Exchange Act, such
election and designation with respect to a Purchase Date shall be made no later
than the September 15 next preceding such Purchase Date and shall be irrevocable
after such September 15. An Eligible Employee shall pay such Eligible
Employee's Contribution Amount in full on or before the March 15 next preceding
a Purchase Date.
(c) No Eligible Employee may make a contribution under the Plan following
any calendar year of the Company, unless the consolidated net earnings of the
Company for such year, before provision for Federal, state and other income
taxes, shall equal or exceed 8% of the consolidated net sales of the Company, as
determined in accordance with generally accepted accounting principles as in
effect for such year (the "Performance Threshold"); provided, however, that the
Committee may, in its sole discretion exercised at any time, exclude from the
calculation of the Performance Threshold for any year the effect of any
extraordinary, non-recurring or unusual charge or credit, any change in
accounting policy or any other factors (including, without limitation,
acquisitions or dispositions) deemed by the Committee to warrant such exclusion
or change the Performance Threshold as it deems appropriate.
<PAGE>
(d) The "Compensation" of an Eligible Employee for a calendar year shall
mean the sum of (i) the base pay (before reduction on account of any election by
the Eligible Employee pursuant to a "qualified cash or deferred arrangement," as
defined in Section 401(k) of the Internal Revenue Code of 1986 (the "Code")), or
pursuant to a "cafeteria plan," as defined in Section 125 of the Code), and
overtime paid to such Eligible Employee by the Company and its subsidiaries
during such calendar year and (ii) the annual incentive compensation amount paid
to such Eligible Employee by the Company and its subsidiaries during such
calendar year, prorated, if necessary, for the portion of such calendar year
during which such employee was in an Eligible Class. Notwithstanding the
foregoing, Compensation shall not include expatriate benefits paid under the
Company's expatriate policy (as amended from time to time), including, without
limitation, any foreign service or hardship premium.
5. Purchase of Shares of Common Stock.
The Eligible Employee's Contribution Amount and the Company contribution
equal to 50% of such Eligible Employee's Contribution Amount shall be applied on
the first trading day following March 15 in any year when purchases may be made
(a "Purchase Date") to the purchase from the Company of whole shares of Common
Stock for the Eligible Employee's account at the average of the high and low
transaction prices reported in the New York Stock Exchange Composite
Transactions report for such Purchase Date. Any amount in excess of the amount
so applied to the purchase of whole shares of Common Stock shall be paid to the
Eligible Employee.
6. Certificates Representing Shares of Common Stock.
Shares purchased under the Plan for the account of an Eligible Employee
will be represented by a certificate registered in the name of such Eligible
Employee or, if such Eligible Employee shall so specify, in the name of such
Eligible Employee and such Eligible Employee's spouse as joint tenants, and the
certificate shall be delivered to the Eligible Employee as soon as practicable
following the Purchase Date.
7. Disposition of Shares of Common Stock.
An Eligible Employee who purchases shares of Common Stock under the Plan
may sell, assign, transfer or otherwise dispose of such shares at any time;
provided that the sale, assignment, transfer or other disposition of any shares
of Common Stock which are purchased under the Plan within three years of the
date of purchase of such shares under the Plan (other than a transfer into the
name of the Eligible Employee and such employee's spouse as joint tenants or a
transfer from joint tenancy into the name of the Eligible Employee individually)
shall automatically terminate the right of such Eligible Employee to participate
in the Plan on the two Purchase Dates next following the date on which the
Company becomes aware of the most recent such disposition and with respect to
which the condition set forth in Section 4(c) is satisfied. An Eligible
Employee who transfers shares to a trust or brokerage account may
<PAGE>
restore such Eligible Employee's right to participate in the Plan by re-
registering such shares in such Eligible Employee's name (or registering such
shares in joint tenancy with such Eligible Employee's spouse) within three
months of notice from the Company and delivering a copy of the certificate
representing such re-registered shares to the Compensation and Employee Benefits
department of the Company.
8. Number of Shares of Common Stock.
The maximum number of shares of Common Stock available for purchase under
the Plan shall be 7,000,000 shares of Common Stock; provided that such maximum
number shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a split-up or
consolidation of shares or like capital adjustment or the payment of any stock
dividend or other increase or decrease in the number of such issued shares
effected without receipt of consideration by the Company. Shares of Common
Stock purchased under the Plan shall, at the election of the Company, be
authorized and unissued shares of Common Stock or shares of Common Stock held as
treasury shares or a combination thereof.
9. Effective Date.
The Plan shall be submitted to the stockholders of the Company for approval
at the 1993 annual meeting of stockholders and, if approved, shall become
effective as of January 1, 1993.
10. Termination and Amendment.
The Plan shall terminate with respect to Compensation paid to employees
after December 31, 2002 unless terminated earlier by the Board. The Board may
suspend the Plan at any time. Any termination or suspension shall not affect
the rights of an Eligible Employee with respect to shares of Common Stock
theretofore purchased under the Plan. The Board may amend the Plan at any time,
but no amendment may be made without the approval of stockholders if such
amendment would increase the Company's total contribution to a percent greater
than 70% of an Eligible Employee's Contribution Amount, increase the maximum
percentage to more than 5% of an Eligible Employee's Compensation, reduce the
purchase price of shares of Common Stock under the Plan, or increase the
aggregate number of shares of Common Stock which may be purchased under the
Plan.
<PAGE>
EXHIBIT 12
R. R. DONNELLEY & SONS COMPANY
----------------
STATEMENT OF COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1994
-----------------
<S> <C>
Earnings
Earnings before income taxes................................ $266,476
Interest expense............................................ 37,768
Interest component of operating leases (1).................. 15,200
Amortization of capitalized interest........................ 4,624
--------
Earnings available for fixed charges........................ $324,068
========
Fixed Charges
Interest expense............................................ $ 37,768
Capitalized interest........................................ 7,900
--------
Interest incurred........................................... 45,668
Interest component of operating leases (1).................. 15,200
--------
Total fixed charges......................................... $ 60,868
========
Ratio of Earnings to Fixed Charges (2)...................... 5.32
========
</TABLE>
- --------
(1) Management estimates one-third of current year operating lease payments to
be the interest factor of such rentals.
(2) The ratio of earnings to fixed charges for twelve months ended September
30, 1994 was 5.83.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 21,460
<SECURITIES> 0
<RECEIVABLES> 963,693
<ALLOWANCES> 17,414
<INVENTORY> 302,594
<CURRENT-ASSETS> 1,297,682
<PP&E> 3,679,823
<DEPRECIATION> 1,835,820
<TOTAL-ASSETS> 4,111,943
<CURRENT-LIABILITIES> 817,834
<BONDS> 876,389
<COMMON> 330,612
0
0
<OTHER-SE> 1,614,457
<TOTAL-LIABILITY-AND-EQUITY> 4,111,943
<SALES> 3,431,188
<TOTAL-REVENUES> 3,431,188
<CGS> 2,764,470
<TOTAL-COSTS> 3,120,588
<OTHER-EXPENSES> 6,356
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,768
<INCOME-PRETAX> 266,476
<INCOME-TAX> 85,272
<INCOME-CONTINUING> 181,204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181,204
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 0
</TABLE>
