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 February 28, 1997
------------------------
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 no. 1-4651
-------
ECHLIN INC.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Connecticut 06-0330448
- ------------------------------------------- ----------------------
(State of incorporation) (I.R.S. employer
identification no.)
100 Double Beach Road
Branford, Connecticut 06405
- ------------------------------------------- ----------------------
(Address of principal executive offices) (Zip code)
(203) 481-5751
---------------------------------------
(Registrant's telephone number, including area code)
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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
---- ----
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of class Outstanding at March 31, 1997
- -------------------------- -----------------------------
Common stock, $1 par value 62,434,094
<PAGE>
ECHLIN INC.
<TABLE>
INDEX
<CAPTION>
PART I. FINANCIAL INFORMATION Page
- ------------------------------ ----
<S> <S>
Item 1. Financial Statements
Consolidated balance sheets at February 28, 1997
and August 31, 1996. 3
Consolidated statements of income for the three
months ended February 28, 1997 and February 29, 1996;
for the six months ended February 28, 1997 and
February 29, 1996. 4
Consolidated statements of cash flows for the
six months ended February 28, 1997 and
February 29, 1996. 5
Notes to consolidated financial statements at
February 28, 1997. 6-7
Item 2. Management's Financial Analysis 8-9
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
</TABLE>
2
<PAGE>
PART I: FINANCIAL INFORMATION
<TABLE>
ECHLIN INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
<CAPTION>
February 28, August 31,
1997 1996
----------- ----------
(unaudited) (A)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,808 $ 16,106
Accounts receivable, less-allowance for
doubtful accounts of $4,897 and $5,621 426,984 370,837
Inventories, at lower of cost (first-in,
first-out) or market:
Raw materials and component parts 194,598 167,215
Work in process 90,039 87,140
Finished goods 462,375 425,027
---------- ----------
Total inventories 747,012 679,382
Other current assets 60,110 42,687
---------- ----------
Total current assets 1,237,914 1,109,012
---------- ----------
Property, plant and equipment, at cost 1,270,411 1,155,495
Accumulated depreciation (575,747) (534,186)
---------- ----------
Property, plant and equipment, net 694,664 621,309
---------- ----------
Marketable securities 82,940 83,578
---------- ----------
Intangible assets, net 365,694 226,292
---------- ----------
Other assets 85,608 90,563
---------- ----------
Total assets $2,466,820 $2,130,754
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 41,635 $ 21,596
Current portion of long-term debt 9,454 6,286
Accounts payable, trade 244,591 264,532
Accrued taxes on income 22,071 33,985
Accrued liabilities 179,835 197,828
---------- ----------
Total current liabilities 497,586 524,227
---------- ----------
Long-term debt 796,146 468,013
---------- ----------
Deferred income taxes 126,403 129,640
---------- ----------
Shareholders' equity:
Preferred stock, without par value:
Authorized 1,000,000 shares, issued none - -
Common stock, $1 par value:
Authorized 150,000,000 shares,
issued 62,702,268 and 62,242,279 62,702 62,242
Capital in excess of par value 352,903 350,935
Retained earnings 694,283 658,235
Foreign currency translation adjustments (62,618) (61,953)
Net unrealized investment gains 2,410 2,410
Treasury stock, at cost, 270,264 shares (2,995) (2,995)
---------- ----------
Total shareholders' equity 1,046,685 1,008,874
---------- ----------
Total liabilities and shareholders' equity $2,466,820 $2,130,754
========== ==========
See notes to consolidated financial statements.
</TABLE>
(A) The balance sheet at August 31, 1996 has been derived from the audited
financial statements at that date.
3
<PAGE>
<TABLE>
ECHLIN INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
Feb. 28, Feb. 29, Feb. 28, Feb. 29,
1997 1996 1997 1996
------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $842,219 $735,902 $1,693,127 $1,449,669
Cost of goods sold 645,375 549,053 1,280,394 1,069,718
-------- -------- ---------- ----------
Gross profit on sales 196,844 186,849 412,733 379,951
Selling and administrative
expenses 151,858 141,863 301,062 275,729
-------- -------- ---------- ----------
Income from operations 44,986 44,986 111,671 104,222
-------- -------- ---------- ----------
Interest expense (11,806) (11,633) (23,015) (22,351)
Interest income 3,097 2,329 6,294 5,158
-------- -------- ---------- ----------
Interest expense, net (8,709) (9,304) (16,721) (17,193)
-------- -------- ---------- ----------
Income before taxes 36,277 35,682 94,950 87,029
Provision for taxes 12,676 12,128 33,232 29,802
-------- -------- ---------- ----------
Net income $ 23,601 $ 23,554 $ 61,718 $ 57,227
======== ======== ========== ==========
Average shares outstanding 62,409 61,918 62,377 61,884
======== ======== ========== ==========
Earnings per share $0.38 $0.38 $0.99 $0.92
======== ======== ========== ==========
Dividends per share $0.22 $0.205 $0.44 $0.41
======== ======== ========== ==========
See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
ECHLIN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<CAPTION>
Six Months Ended
February 28, February 29,
------------ ------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 61,718 $57,227
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 56,363 46,119
Gain on sale of business (7,360) -
Changes in assets and liabilities, excluding
acquisitions' balance sheets:
Accounts receivable (18,097) (56,393)
Inventories (49,734) (11,460)
Other current assets (12,241) (12,940)
Accounts payable (43,038) (4,891)
Taxes on income (15,350) 3,040
Accrued liabilities (33,235) (17,667)
Other 2,170 (2,619)
-------- --------
Cash (used for) provided by
operating activities (58,804) 416
-------- --------
Cash flows from financing activities:
Long-term and short-term borrowings 692,683 375,666
Long-term and short-term repayments (377,842) (243,795)
Sale of accounts receivable - 55,000
Proceeds from common stock issuances 2,094 1,814
Dividends paid (27,380) (24,756)
-------- --------
Cash provided by financing activities 289,555 163,929
-------- --------
Cash flows from investing activities:
Capital expenditures, net (68,945) (48,477)
Sales of marketable securities 2,142 19,437
Net assets of businesses acquired (177,425) (147,110)
-------- --------
Cash used for investing activities (244,228) (176,150)
-------- --------
Impact of foreign currency changes on cash 1,179 (6,243)
-------- --------
Decrease in cash and cash equivalents (12,298) (18,048)
Cash and cash equivalents at beginning
of period 16,106 27,700
-------- --------
Cash and cash equivalents at end of period $ 3,808 $ 9,652
======== ========
See notes to consolidated financial statements.
</TABLE>
5
<PAGE>
ECHLIN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. General:
- -----------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair statement have been included. Operating
results for the six-month period ended February 28, 1997 are not
necessarily indicative of the results that may be expected for the year
ending August 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
company's Annual Report on Form 10-K for the year ended August 31, 1996.
NOTE 2. Business Combinations:
- ------------------------------
During December 1996, the company acquired the outstanding common stock
of Iroquois Tool Systems, Inc. (Iroquois), a brake rotor manufacturer,
located in North East, Pennsylvania by issuing 335,474 shares of common
stock. This transaction was accounted for as a pooling of interests and
as a result the financial statements for the six months ended February
28, 1997 include Iroquois' results of operations. Since the acquisition
did not have a material impact on the company, prior years' results were
not restated.
During September 1996, the company acquired Long Manufacturing, Ltd.
(Long), headquartered in Oakville, Ontario, Canada, for approximately
$170 million. Long manufactures and distributes motor vehicle heat
exchange products and air-conditioning evaporators to original equipment
manufacturers and aftermarket customers. In October 1996, the company
acquired Nobel Plastiques SA (Nobel), located in France and Spain, for
approximately $16 million. Nobel manufactures fluid, hydraulic and
pneumatic servo control lines. The Long and Nobel acquisitions were
accounted for using the purchase method of accounting.
NOTE 3. Borrowing Arrangements:
- -------------------------------
Commercial paper, domestic notes payable and certain notes payable with
foreign banks at February 28, 1997 were classified as long-term debt
because of the company's intent to refinance this debt on a long-term
basis and the availability of such financing under the terms of the
company's revolving credit agreement. The weighted average interest
rates at February 28, 1997 were 5.39% for commercial paper, 5.44% for
domestic notes payable and 3.54% for foreign notes payable.
6
<PAGE>
ECHLIN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4. Sale of Business:
- -------------------------
During October 1996, the company sold certain assets of Sensor
Engineering, a division of the company that manufactures cards and
readers for access control systems, for $11.4 million. The pre-tax
gain resulting from the sale, in the amount of $7,360,000, was deducted
from selling and administrative expenses in the accompanying
consolidated statements of income. The gain on the sale added $0.07
to earnings per share.
NOTE 5. Earnings per share:
- ---------------------------
The Financial Accounting Standards Board recently implemented Statement
of Financial Accounting Standards No. 128, "Earnings Per Share", which
requires companies to disclose basic and diluted earnings per share.
Basic earnings per share as shown on the income statements are
calculated by dividing net income by the average number of common
shares outstanding. Diluted earnings per share is arrived by dividing
net income by the average number of common shares outstanding plus the
number of shares which would be issued assuming the exercise of
outstanding employee stock options. For the quarter and six month
periods ended February 28, 1997, proforma diluted earnings per share
would have been $0.37 and $0.98, respectively.
7
<PAGE>
ECHLIN INC.
MANAGEMENT'S FINANCIAL ANALYSIS
Results of Operations:
- ----------------------
For the three and six months ended February 28, 1997, net sales
increased 14 percent and 17 percent, respectively, over the
corresponding periods of a year ago. The majority of this growth
was due to businesses acquired during the past year including the
Automotive Segment of Handy & Harman, Long Manufacturing, Nobel
Plastiques SA and Iroquois Tool Systems, Inc.
Net sales of comparable operations rose 4 percent for both the
three and six month periods. Domestically, operations increased 3
and 4 percent for the quarter and six months, respectively,
reflecting the impact of price changes and new product
introductions. Unit volume for the quarter was down as the
continued softness in aftermarket demand for "under-the-hood"
products and higher than normal returned goods from our customers,
combined to offset continued growth in our automotive brake and
fluid system businesses. For the six months, unit volume was flat
with last year. Foreign comparable operations improved 6 and 3
percent for the quarter and six month period, respectively,
reflecting price increases and the introduction of new products.
In addition, second quarter unit volume was higher as increased
demand for brake products in Canada and Europe offset continued
weakness in our European heavy duty business. Unit volume was
lower for the six months reflecting the downturn in European heavy
duty production experienced throughout the period. Translation
rate changes during the quarter increased sales primarily due to a
weaker dollar in relation to the British pound. Year-to-date sales
were lowered due to translation rate changes affecting our
operations in Germany, South Africa and Mexico.
The gross profit to sales percentage for the six months declined
from 26.2 a year ago to 24.4, while for the second quarter the
percentage decreased to 23.4 from 25.4. Production was kept below
planned levels in an effort to keep inventory in line with current
demand. In addition, higher than normal costs of returned goods
and changes in Echlin's business mix, negatively impacted margins.
Although selling and administrative expenses increased for the
three and six month periods, they declined as a percentage of
sales. For the second quarter, they declined to 18.0 percent from
19.2 percent a year ago, while for the six month period expenses
declined to 17.8 percent vs. 19.0 percent last year. The dollar
increase and percent of sales reduction for both periods was
primarily due to current year acquisitions of original equipment
businesses, which have expense-to-sales ratios below our historical
average.
When compared to the prior year, net interest expense decreased
$595,000 for the quarter and $472,000 for the six month period, as
higher interest income earned from our Puerto Rican investment
portfolio offset increased interest expense due to higher average
debt levels.
8
<PAGE>
MANAGEMENT'S FINANCIAL ANALYSIS (cont.'d)
- -----------------------------------------
Liquidity and Sources of Capital:
- ---------------------------------
During the first six months of fiscal 1996, operations used
$58,804,000 of cash vs. the prior year when they provided $416,000.
The additional outflow reflected higher inventory purchases to meet
increased demand at certain locations and for new products, along
with the timing of liability and tax payments. Partially
offsetting these working capital outflows are increased cash
inflows from accounts receivable collections.
Net debt increased $346,935,000 from year end primarily due to
business acquisitions, current year capital expenditures and
working capital requirements. Total debt to total capital was 45
percent, up from 41 percent a year ago and 33 percent at August 31,
1996.
Capital expenditures are $20 million above last year. This
increase represented normal spending by companies acquired during
the past year, tooling and machinery for new product introductions,
and the purchase of a facility in the United Kingdom which had
previously been leased.
9
<PAGE>
ECHLIN INC.
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
1. Exhibit (3) (ii) - By-Laws as amended on December 22, 1987,
June 21, 1988, October 30, 1991, June 29, 1994, December 18, 1996,
and April 3, 1997 are being filed as an Exhibit.
2. During the quarter ended February 28, 1997, the company did not
file any Reports on Form 8-K.
10
<PAGE>
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.
Echlin Inc.
Date: April 14, 1997 Joseph A. Onorato
-------------- --------------------------
Joseph A. Onorato
Vice President and
Chief Financial Officer
Date: April 14, 1997 Jon P. Leckerling
-------------- --------------------------
Jon P. Leckerling
Vice President, General
Counsel and Corporate
Secretary
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's SEC Form 10-Q for the quarterly period ended February 28, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> FEB-28-1997
<CASH> 3808
<SECURITIES> 0
<RECEIVABLES> 431881
<ALLOWANCES> 4897
<INVENTORY> 747012
<CURRENT-ASSETS> 1237914
<PP&E> 1270411
<DEPRECIATION> 575747
<TOTAL-ASSETS> 2466820
<CURRENT-LIABILITIES> 497586
<BONDS> 0
0
0
<COMMON> 62702
<OTHER-SE> 983983
<TOTAL-LIABILITY-AND-EQUITY> 2466820
<SALES> 1693127
<TOTAL-REVENUES> 1693127
<CGS> 1280394
<TOTAL-COSTS> 301062
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16721
<INCOME-PRETAX> 94950
<INCOME-TAX> 33232
<INCOME-CONTINUING> 61718
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61718
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
<PAGE>
EXHIBIT (iii)(ii)
As Amended through
April 3, 1997
ECHLIN INC.
BY-LAWS
ARTICLE I. SHAREHOLDERS
Section 1. Place for Holding Meetings
All Meetings of Shareholders, whether Annual or Special, shall be held
at the offices of the Company in the Town of Branford, County of New Haven and
State of Connecticut or at such other place within or outside the State of
Connecticut as shall be designated in the notice of such Meeting.
Section 2. Annual Meeting of Shareholders
The Annual Meeting of Shareholders, for the election of directors and
the transaction of other business, shall be held during the month of December in
each year at a date and hour fixed by the Board of Directors. At each Annual
Meeting the shareholders entitled to vote shall, in accordance with their
respective voting rights, elect a Board of Directors, and they may transact such
other business as may properly come before the Meeting.
No business may be transacted at any Annual Meeting other than business that is
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors (or any duly authorized
committee thereof); (b) otherwise properly brought before the Annual Meeting by
or at the direction of the Board of Directors (or any duly authorized committee
thereof); or (c) otherwise properly brought before the Annual Meeting by any
shareholder of the Company (i) who is a shareholder of record on the date of the
giving of the notice provided for in this Section 2 and on the record date for
the determination of shareholders entitled to vote at such Annual Meeting, and
(ii) who complies with the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for business to be properly
brought before an Annual Meeting by a shareholder, such shareholder must have
given timely notice thereof in proper written form to the Secretary of the
Company. To be timely a shareholder's notice to the Secretary must be delivered
to or mailed and received at the principal offices of the Company not less than
one hundred twenty (120) days prior to the anniversary date of the immediately
preceding Annual Meeting; provided, however, that in the event that the Annual
Meeting is called for a date that is not within thirty (30) days before or after
such anniversary date, notice by the shareholder in order to be timely must be
so received not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the Annual Meeting was
mailed or public disclosure of the date of the Annual Meeting was made,
whichever first occurs. In no event shall an adjournment of an Annual Meeting
commence a new time period for the giving of a shareholder's notice as described
above.
To be in proper written form, a shareholder's notice to the Secretary must set
forth as to each matter such 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 such shareholder, (iii) the class
or series and number of shares of capital stock of the Company which are owned
beneficially or of record by such shareholder, (iv) a description of all
arrangements or understandings between such shareholder and any other person or
persons (including their names) in connection with the proposal of such business
by such shareholder or in connection with the acquisition, holding, voting or
disposing of the Company's shares, and a description of any material interest of
such shareholder or other person in such business, and (v) a representation that
such shareholder intends to appear in person or by proxy at the Annual Meeting
to bring such business before the Meeting.
No business shall be conducted at the Annual Meeting except business
brought before the Annual Meeting in accordance with the procedures set forth in
this Section 2; provided, however, that once business has been properly brought
before the Annual Meeting in accordance with such procedures, nothing in this
Section 2 shall be deemed to preclude discussion by any shareholder of any such
business. If the Chairman of an Annual Meeting determines that business was not
properly brought before the Annual Meeting in accordance with the foregoing
procedures, the Chairman shall declare to the Meeting that the business was not
properly brought before the Meeting and that such business shall not be
discussed or transacted.
Section 3. Special Meetings
The Chairman of the Board, the President, or the Board of Directors
may, and upon the written request of the holders of at least thirty-five (35)
per cent of the voting power of all shares entitled to vote at the Meeting the
President shall, call a Special Meeting of Shareholders for such purposes as may
be designated in the notice thereof.
Section 4. Quorum
The holders of a majority of the issued and outstanding stock entitled
to vote who shall be present in person or represented by proxy at any Meeting
duly called will constitute a quorum for the transaction of business.
Section 5. Notice of Meetings of Shareholders
Written notice of each Meeting of Shareholders, Annual or Special,
stating the day, hour and place thereof, and the general nature of the business
to be considered, shall be given to each shareholder entitled to vote thereat by
mailing a copy thereof to such shareholder's last known post office address as
last shown on the stock records of the Company, postage prepaid, not less than
ten (10) days nor more than sixty (60) days before the date of the Meeting.
Notice of any meeting may be waived before or after such Meeting.
Section 6. Record Date
The Board of Directors by resolution may fix a date as the record date
for the purpose of determining shareholders entitled to notice of and to vote at
any Meeting of Shareholders or any adjournment thereof, or entitled to receive
any distribution by the Company or for any other purpose, such date to be not
earlier than the date such action is taken by the Board of Directors and not
more than seventy (70) days, and, in case of a Meeting of Shareholders not less
than ten (10) full days, immediately preceding the date on which the particular
event requiring such determination of shareholders is to occur.
Section 7. Voting
At each Meeting of Shareholders, each shareholder then entitled to vote
may vote in person or by proxy, and shall, unless otherwise provided in the
Certificate of Incorporation, have one vote for each share of stock registered
in his or her name on the record date. Unless otherwise provided by law or by
the Certificate of Incorporation, the affirmative vote, at any Meeting of
Shareholders duly held and at which a quorum is present, of a majority of the
voting power of the shares represented at such Meeting which are entitled to
vote on the subject matter shall be the act of the shareholders.
Section 8. Action without Meeting
Any action which may be taken at a Meeting of Shareholders may be taken
without a meeting by consent in writing, setting forth the action so taken or to
be taken, signed by all the persons who would be entitled to vote upon such
action at a Meeting.
Section 9. Adjournment
The holders of a majority of the voting power of the shares entitled to
vote represented at a Meeting may adjourn such Meeting from time to time.
Section 10. Proxies
Every person entitled to vote or execute consents, waivers or releases
in respect of his or her shares may do so either in person or by one or more
agents authorized by a written proxy executed by him or her. A photographic or
similar reproduction of a proxy or a telegram, cablegram, wireless, facsimile or
similar transmission of a proxy sent by such person is a sufficient writing. All
proxies shall be filed with the Secretary of the Company. No proxy shall be
valid after the expiration of eleven months from the date of its execution,
unless it specifies the length of time for which it is to continue in force or
limits its use to a particular Meeting not yet held. No proxy shall be valid
after ten years from its date of execution.
ARTICLE II. DIRECTORS
Section 1. Number, Term and Nominations
The Board of Directors shall consist of not less than three nor more
than twelve members, the number to be as the directors shall from time to time
direct; provided, however, that if the directors shall fail to fix the number of
directors, the number to be elected shall be the same aggregate number as
elected at the preceding Annual Meeting of Shareholders at which directors were
elected and at any intervening Meeting for the election of directors. The
directors shall be elected at the Annual Meeting of Shareholders, and each
director shall be elected to serve for one year or until the next Annual Meeting
and until another shall be chosen or have qualified in his or her stead,
provided, that in the event of failure to hold such Annual Meeting, or to hold
such election thereat, it may be held at any Special Meeting of Shareholders
called for that purpose.
Only persons who are nominated in accordance with the following procedures shall
be eligible for election as directors of the Company, except as may otherwise be
provided in the Certificate of Incorporation of the Company. Nominations of
persons for election to the Board of Directors may be made at any Annual Meeting
of Shareholders (a) by or at the direction of the Board of Directors (or any
duly authorized Committee thereof); or (b) by any shareholder of the Company (i)
who is a shareholder of record on the date of the giving of the notice provided
for in this Section 1 and on the record date for the determination of
shareholders entitled to vote at such Annual Meeting, and (ii) who complies with
the notice procedures set forth in this Section 1.
In addition to any other applicable requirements, for a nomination to be made by
a shareholder, such shareholder must have given timely notice thereof in proper
written form to the Secretary of the Company. To be timely a shareholder's
notice to the Secretary must be delivered to or mailed and received at the
principal executive offices of the Company not less than one hundred twenty
(120) days prior to the anniversary date of the immediately preceding Annual
Meeting of Shareholders; provided, however, that in the event that the Annual
Meeting is called for a date that is not within thirty (30) days before or after
such an anniversary date, notice by the shareholder in order to be timely must
be so received not later than the close of business on the tenth (10th) day
following the date on which such notice of the date of the Annual Meeting was
mailed or public disclosure of the date of the Annual Meeting was made,
whichever first occurs. In no event shall the adjournment of an Annual Meeting
commence a new time period for the giving of a shareholder's notice as described
above.
To be in proper written form, a shareholder's notice to the Secretary must set
forth (a) as to each person whom the shareholder proposes to nominate for
election as a director (i) the name, age, business address and residence address
of the person, (ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the Company which
are owned beneficially or of record by the person, and (iv) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the shareholder giving the
notice (i) the name and address of such shareholder, (ii) the class or series
and number of shares of capital stock of the Company which are owned
beneficially or of record by such shareholder, (iii) a description of all
arrangements or understandings between such shareholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such shareholder, (iv) a
representation that such shareholder intends to appear in person or by proxy at
the Meeting to nominate the persons named in its notice, and (v) any other
information relating to such shareholder that would be required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a director if
elected.
No person shall be eligible for election as a director of the Company unless
nominated in accordance with the procedures set forth in this Section 1. If the
Chairman of the Meeting determines that a nomination was not made in accordance
with the foregoing procedures, the Chairman shall declare to the Meeting that
the nomination was defective and such defective nomination shall be disregarded.
Notwithstanding anything in this Section 1 to the contrary, in the
event that the number of directors to be elected to the Board of Directors of
the Company is increased and there is no public disclosure by the Company naming
all of the nominees for director or specifying the size of the increased Board
of Directors at least one hundred (100) days prior to the first anniversary of
the preceding year's Annual Meeting of Shareholders, a shareholder's notice
required by this Section 1 shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the Secretary at the principal executive offices of the Company
not later than the close of business on the tenth (10th) day following the day
on which such public disclosure is first made by the Company.
Section 2. Vacancies
Upon the death, resignation or removal of any director, the vacancy may
be filled by a majority of the remaining directors, even though less than a
quorum, and each director so elected shall hold office until a successor is
elected at the next Annual Meeting of Shareholders, or at a Special Meeting of
Shareholders called for that purpose. The shareholders may at any time elect
directors to fill any vacancy not filled by the directors, and may elect the
additional directors at a Meeting at which an amendment of the By-laws is
approved authorizing an increase in the number of directors. If the resignation
of a director is to take effect at a date later than the receipt thereof by the
Company, appropriate action to elect a successor to take office when the
resignation becomes effective may be taken at any time after such receipt in the
same manner as though such resignation were effective on receipt.
Section 3. Quorum
A quorum of the Board of Directors shall consist of a majority of the
number of directors in office immediately before the Meeting of the directors
begins.
Section 4. Meetings - Notice
Meetings of the Board of Directors may be held within or without the
State of Connecticut and shall be called by the Secretary at any time when
requested by the Chairman of the Board, the President or by a majority of the
Board of Directors. A newly elected Board of Directors may hold its first
Meeting for the purpose of organization and the transaction of any other
business immediately after the Annual Meeting of Shareholders, without notice.
At least two days' written or oral notice of any other Meeting of the Board of
Directors shall be given to each director. Neither the business to be transacted
at, nor the purpose of, any Meeting of the Board of Directors need be specified
in the notice or in any waiver of notice of any Meeting, unless required by the
Connecticut Business Corporation Act.
Section 5. Powers of Directors
The Board of Directors shall have the care and management of the
business, property and affairs of the Company, and subject to restrictions
imposed by the Connecticut Business Corporation Act, by the Certificate of
Incorporation or by the By-laws, may exercise all the powers of the Company and,
so far as is lawful, may delegate any and all such powers as it sees fit.
Section 6. Chairman of the Board, Vice Chairman of the Board and Board
Committees
The Board of Directors shall, by resolution adopted by the affirmative
vote of directors holding a majority of the directorships, designate a director
to the office of Chairman of the Board. The Chairman of the Board shall preside
at all Meetings of Shareholders and of the Board of Directors. The Chairman of
the Board shall serve as Chairman of the Executive Committee and, if not already
a committee member, shall be an ex-officio member of all other standing
committees of the Board of Directors. Except where by law the signature of the
President is required, the Chairman of the Board shall possess the same power as
the President to sign all contracts and other instruments of the Company which
may be authorized by these By-laws or by the Board of Directors; and the
Chairman shall have the power to do any and all other things for and in behalf
of the Company as may be specifically authorized by the Board of Directors from
time to time, and which do not contravene the provisions of these By-laws or the
laws of the State of Connecticut.
The Board of Directors may, by resolution adopted by the affirmative
vote of directors holding a majority of the directorships, designate a director
to the office of Vice Chairman of the Board. In the absence of the Chairman of
the Board, the Vice Chairman shall preside at all Meetings of the Board of
Directors and perform such other duties as shall be assigned by the Chairman or
the Board of Directors.
The Board of Directors may, by resolution adopted by the affirmative
vote of directors holding a majority of the directorships, designate two or more
directors to constitute an Executive Committee. The Executive Committee shall
have and may exercise all powers which the Board of Directors possesses except
(a) the power to alter or amend the Certificate of Incorporation or By-laws; (b)
the power to declare any dividend or other distribution with respect to the
stock of the Company; (c) the power to fill vacancies on the Board of Directors
or on a committee of the Board of Directors; (d) the power to approve a plan of
merger not requiring shareholder approval; (e) the power to authorize or approve
reacquisition of shares, except according to a formula or method approved by the
Board of Directors; or (f) the power to authorize or approve the issuance or
sale or contract for sale of shares or determine the designation and relative
rights, preferences and limitations of a class or series of shares, except that
the Board of Directors may authorize the Executive Committee or other committee
or a senior executive officer of the company, to do so within limits
specifically prescribed by the Board of Directors.
The Board of Directors may, by resolution adopted by the affirmative
vote of directors holding a majority of the directorships, designate two or more
directors to constitute any other committee or committees as it shall at any
time or from time to time deem appropriate, for the purposes specified in any
resolution authorizing such other committee. Notices of meetings of all
committees shall be given to each committee member as provided for Meetings of
the Board of Directors. A majority of members of a committee shall constitute a
quorum. All committees shall keep regular minutes of their proceedings and
report the same to the Board of Directors on a regular basis.
Section 7. Compensation of Directors
Directors shall receive such reasonable compensation for their services
as directors as the Board of Directors shall at any time or from time to time
fix, including compensation for service upon any committee or committees of the
Board.
Section 8. Consent - Waiver of Notice
If all the directors, or all members of a committee of the Board of
Directors, as the case may be, severally or collectively consent in writing to
any action taken or to be taken by the Company, and the number of such directors
or members constitutes a quorum for such action, such action shall be as valid
corporate action as though it had been authorized at a Meeting of the Board of
Directors or such committee, as the case may be. Notice of any Meeting of the
Board of Directors or any committee thereof may be waived either before or after
such Meeting. All such waivers and consents shall be filed with the minutes of
any such Meeting by the Secretary.
Section 9. Mandatory Retirement of Directors
No person shall be elected to the Board of Directors who has reached
his or her 70th birthday.
Section 10. Indemnification and Advancement of Expenses of Directors
The Company shall provide for the indemnification and advancement of
expenses of directors to the extent properly permitted by law.
ARTICLE III. OFFICERS
Section 1. Officers
The officers of the Company shall be a President, a Vice President, a
Secretary, a Treasurer and a Controller. The Company may also have, at the
discretion of the Board of Directors, one or more additional Vice Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers, and such
other officers as may be appointed. Officers other than the President need not
be directors. The office of Chairman of the Board and President may be held by
the same person but neither the Chairman of the Board nor the President may
occupy any other office. Other than the Chairman of the Board and President, one
person may hold two or more offices. All officers shall serve at the pleasure of
the Board of Directors.
Section 2. President
The President, subject to the control of the Board of Directors, shall
be the Chief Executive Officer of the Company. The President shall direct the
policies and management of the Company and shall have general supervision and
control of the business of the Company. In the absence of the Chairman of the
Board, the President shall preside at all Meetings of Shareholders. The
President shall sign all certificates, contracts and other instruments of the
Company which may be authorized by these By-laws or by the Board of Directors.
The President shall also have all powers and duties of management usually vested
in the office of president of a company, and shall have such other powers and
duties as may be prescribed by the Board of Directors.
Section 3. Vice Presidents
In the absence or disability of the Chairman of the Board and
President, the Vice President designated by the Board of Directors shall perform
all the duties of the President, and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Chairman of the
Board, the Board of Directors or the President.
Section 4. Secretary
The Secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
Meetings of the Board of Directors and Shareholders, with the time and place of
holding, the notice thereof given, the names of those present at Meetings of the
Board of Directors, the number of shares present or represented at Meetings of
Shareholders and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office,
or at the office of the Company's transfer agent, a share register or a
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
Meetings of Shareholders and of the Board of Directors required by the By-laws
or by law to be given, and the Secretary shall keep the seal of the Company in
safe custody and have responsibility for authenticating all records of the
Company. The Secretary shall also have such other powers and perform such other
duties as may be prescribed by the Chairman of the Board, the Board of Directors
or the President.
Section 5. Treasurer
The Treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the Company, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital, shall be classified according to source and shown
in a separate account.
The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the Company with such depositaries as may be, from time to
time designated by the Chairman of the Board or the President. The Treasurer
shall render to the Chairman of the Board, to the President and to the Board of
Directors whenever the Chairman, the President or the Board of Directors
requests it, an account of all transactions as Treasurer and of the financial
condition of the Company, and shall have such other powers and perform such
other duties as may be prescribed by the Chairman of the Board, the Board of
Directors or the President.
Section 6. Controller
The Controller shall be the principal accounting officer of the
Company. The Controller shall have general supervision over the books and
accounts of the Company relating to receipts and disbursements and shall arrange
the form of all vouchers, accounts, reports and returns required by the Company
and by the various divisions. The Controller shall be responsible for and in
charge of accounting and accounting methods, office procedures and routines,
budgets and preparation of statistics to assist in executive control of the
business of the Company. The Controller shall perform such other duties, and
shall render such reports as shall, from time to time, be required of the
Controller by the Chairman of the Board, the Board of Directors, or the
President.
Section 7. Indemnification and Advancement of Expenses of Officers
The Company shall provide for the indemnification and advancement of
expenses of officers to the extent properly permitted by law.
ARTICLE IV. CAPITAL STOCK
Section 1. Form and Execution of Certificates
Share certificates shall be in such form as shall be adopted by the
Board of Directors. The share certificates may be under seal, or facsimile seal
of the Company and shall be signed by the President or a Vice President and by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer except that such signatures may be facsimile if the certificate is
signed by a transfer agent, transfer clerk acting on behalf of the Company or
registrar. If any officer who has signed or whose facsimile signature has been
used on any such certificate ceases to serve the Company as an officer in the
capacity as to which his or her signature was so used before such certificate
has been delivered by the Company, the certificate may, nevertheless, be adopted
by the Company and be issued and delivered as though such officer had not ceased
to hold such office.
Section 2. Transfer
Transfer of shares shall be made only upon the books of the Company by
the registered holder in person or by attorney, duly authorized, and upon
surrender of the certificate or certificates for such shares properly assigned
for transfer.
Section 3. Lost or Destroyed Certificates
The holder of any certificate representing shares of stock of the
Company may notify the Company of any loss, theft or destruction thereof, and
the Secretary or any Assistant Secretary may thereupon, in his or her
discretion, instruct that a new certificate be issued for the same number of
shares to be issued to such holder upon satisfactory proof of such loss, theft
or destruction, and the deposit of indemnity by way of bond or otherwise, in
such form and amount and with such surety or sureties as the Secretary or such
Assistant Secretary may require, to indemnify the Company against loss or
liability by reason of the issuance of such new certificate.
ARTICLE V. SEAL
The Company shall have a corporate seal, in such form as shall be
approved by the Board of Directors.
ARTICLE VI. EXECUTION AND DELIVERY OF
CONTRACTS AND OTHER INSTRUMENTS
All officers shall have authority to enter into any contract or to
execute any instrument in the name and on behalf of the Company, provided that
such contract or instrument is of a nature usual and common in the ordinary
conduct of the business affairs of the Company. Such authority is general, but
shall not be understood in any way to contravene the supervisory powers and
authority of the Chairman of the Board, the President or the Treasurer as set
forth in Article III of these By-laws. The authority of any officer or officers,
agent or agents to enter into any contract or to execute any instrument in the
name of and on behalf of the Company for purposes other than the ordinary
conduct of the business is subject to the approval of the Board of Directors,
and unless so authorized, no officer, agent or employee shall have any power or
authority to bind the Company by any contract or other instrument or to pledge
its credit or to render it liable for any purpose or to any amount except as
provided herein.
ARTICLE VII. FISCAL YEAR
The fiscal year of the Company shall begin on September 1 of each year and
end on August 31 of the next year.
ARTICLE VIII. AMENDMENTS
Section 1. Power of Shareholders
By-laws may be adopted, amended or repealed at a Meeting of
Shareholders by the vote of shareholders entitled to exercise a majority of the
voting power represented at such Meeting.
Section 2. Power of Directors
The authority to adopt, repeal and amend the By-laws is hereby
delegated to the Board of Directors, subject to the power of the shareholders to
adopt, amend or repeal such By-laws or to revoke this delegation of authority;
provided, also, that the directors may increase the number of directorships,
without numerical limit, and may fill any vacancy so created with a director who
shall hold office until a successor is elected at the next Annual Meeting of
Shareholders, or may decrease the number of directorships, by the concurring
vote of the directors holding a majority of the directorships, which number of
directorships shall be the number prior to the vote on the increase.
