<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 1-8247
SCHULLER CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-0856796
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
717 17th Street
Denver, Colorado 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 978-2000
--------------
(Registrant's telephone number, including area code)
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 [ ]
At August 1, 1996, there were 161,563,494 shares of the registrant's
common stock outstanding.
<PAGE> 2
*PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
* "Schuller" or the "Company" when used in this report refers to
Schuller Corporation, incorporated in the State of Delaware in 1991,
and includes, where applicable, its consolidated subsidiaries.
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SCHULLER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 175,090 $ 310,809
Marketable securities, at cost which approximates market 48,008 116,958
Receivables, net of allowances 241,359 195,780
Inventories 104,094 77,121
Prepaid expenses 6,853 5,807
Deferred tax assets 26,922 31,233
-----------------------------------
Total Current Assets 602,326 737,708
Property, Plant and Equipment, net of accumulated depreciation
of $590,841 and $580,022, respectively 754,003 717,410
Deferred Tax Assets 203,743 414,711
Other Assets 259,286 228,629
Net Assets Held for Sale 375,601
-----------------------------------
$1,819,358 $2,474,059
====================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 4
SCHULLER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Accounts and notes payable $ 103,247 $ 95,282
Compensation and benefits 103,775 104,550
Income taxes 50,465 28,768
Other accrued liabilities 70,876 103,005
------------------------------------
Total Current Liabilities 328,363 331,605
Long-Term Debt, less current portion (Note 3) 426,913 447,007
Postretirement Benefits Other Than Pensions 208,420 204,445
Deferred Income Taxes and Other Noncurrent
Liabilities 342,143 310,536
------------------------------------
1,305,839 1,293,593
------------------------------------
Contingencies and Commitments (Notes 4 and 9)
STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------
Cumulative Preference Stock, Series B (Note 5) 178,638
Common Stock 1,616 1,228
Treasury Stock, at cost (15,288) (1,999)
Capital in Excess of Par Value (Notes 2, 5 and 6) 538,334 1,013,505
Unearned Stock Compensation (Note 6) (7,835) (3,427)
Accumulated Deficit (30,135) (39,322)
Pension Liability Adjustment (841) (841)
Cumulative Currency Translation Adjustment 27,668 32,684
------------------------------------
513,519 1,180,466
------------------------------------
$1,819,358 $2,474,059
=================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 5
SCHULLER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
(Thousands of dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $381,403 $354,051 $ 707,512 $682,452
Cost of Sales 272,901 251,782 505,451 480,448
Selling, General and
Administrative 42,197 39,417 79,027 75,274
Research, Development
and Engineering 8,530 7,822 15,583 14,294
Other Income (Expense), net (1,476) (2,039) 4,139 (6,597)
-------------------------------------------------------------
Income from Operations 56,299 52,991 111,590 105,839
Interest Income 6,417 3,822 12,891 7,709
Interest Expense 12,364 12,642 24,952 24,822
Profit Sharing Expense (Note 10) 86 8,071 6,648 15,558
-------------------------------------------------------------
Income from Continuing Operations
before Income Taxes 50,266 36,100 92,881 73,168
Income Tax Expense (Benefit)
(Note 8) 22,116 16,521 (63,647) 33,092
-------------------------------------------------------------
Income from Continuing Operations 28,150 19,579 156,528 40,076
Income from Discontinued
Operations, net of tax
and Minority Interest 13,912 22,746
Gain on Disposal of
Discontinued Operations,
net of tax (Note 9) 177,159
-------------------------------------------------------------
Income before Extraordinary
Items 28,150 33,491 333,687 62,822
Extraordinary Loss on Trust
Settlements, net of tax (Note 10) (314,296)
Extraordinary Loss on
Early Extinguishment of
Debt, net of tax (Note 3) (1,989) (1,989)
-------------------------------------------------------------
Net Income 26,161 33,491 17,402 62,822
Preference Stock Dividends (1,984) (6,230) (8,215) (12,461)
Premium on Preference Stock
Redemption (52,126) (52,126)
-------------------------------------------------------------
Net Income (Loss) Applicable
to Common Stock $(27,949) $ 27,261 $ (42,939) $ 50,361
====================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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SCHULLER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS), continued
(Thousands of dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
EARNINGS PER COMMON SHARE
(AFTER PREFERENCE STOCK DIVIDENDS Three Months Six Months
AND PREMIUM ON PREFERENCE STOCK REDEMPTION) Ended June 30, Ended June 30,
--------------------------------------------------------------
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary and Fully Diluted:
Income (Loss) from Continuing
Operations $ (.17) $ .11 $ .68 $ .23
Income from Discountinued
Operations, net of tax and
Minority Interest .11 .18
Gain on Disposal of Discontinued
Operations, net of tax 1.24
- -------------------------------------------------------------------------------------------------------------------
Income (Loss) before Extraordinary
Items (.17) .22 1.92 .41
Extraordinary Loss on Trust
Settlements, net of tax (2.21)
Extraordinary Loss on Early
Extinguishment of Debt,
net of tax (.01) (.01)
- -------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Applicable to
Common Stock $ (.18) $ .22 $ (.30) $ .41
===================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-5
<PAGE> 7
SCHULLER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 17,402 $ 62,822
Non-cash items included in net income:
Depreciation and amortization 33,901 30,314
Deferred taxes (103,343) 95,545
Product guarantee income 3,459 3,855
Provision for furnace rebuilds 3,690 4,196
Postretirement and pension benefits 7,069 11,406
Interest expense 989 873
Profit sharing expense 6,648 15,558
Income from discontinued operations (22,746)
Gain on disposal of discontinued operations (177,159)
Extraordinary loss on trust settlements 314,296
Other, net 19,259 3,297
Profit sharing paid (34,309) (18,259)
(Increase) decrease in current assets:
Receivables (31,992) (9,387)
Inventories (22,596) (28,970)
Prepaid expenses (753) 1,059
Increase (decrease) in current liabilities:
Accounts payable (2,479) (3,428)
Compensation and benefits (10,714) (17,864)
Income taxes 21,894 (1,955)
Other accrued liabilities (28,227) (16,970)
Decrease in postretirement benefits other than pensions (3,341) (4,684)
Decrease in other noncurrent liabilities (12,647) (1,815)
Net cash used in discontinued operations (59,180)
----------------------------
Net cash provided by operating activities 1,047 43,667
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- --------------------------------------------------------------------------------------------------------------------
Purchases of property, plant and equipment (57,650) (46,600)
Acquisitions (57,007)
Proceeds from sales of assets 2,708 2,183
Proceeds from sale of Riverwood 1,081,341
Purchases of held-to-maturity securities (32,435) (101,049)
Purchases of available-for-sale securities (31,487) (16,078)
Proceeds from maturities of held-to-maturity securities 82,946 78,357
Proceeds from sales or maturities of available-for-sale securities 50,034
(Increase) decrease in other assets 7,911 (128)
----------------------------
Net cash provided by (used in) investing activities 1,046,361 (83,315)
----------------------------
</TABLE>
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SCHULLER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS, continued
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES: 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Issuance of debt $ 679
Payments on debt (24,697) $ (1,284)
Dividends on preference stock (10,292) (12,461)
Redemption of preference stock (230,764)
Dividends on common stock (970,425)
Stock warrants exercised 64,794
Purchases of treasury stock (13,289) (449)
Other stock transactions 1,805 19
----------------------------
Net cash used in financing activities (1,182,189) (14,175)
----------------------------
Effect of Exchange Rate Changes on Cash (938) 526
----------------------------
Net Decrease in Cash and Equivalents (135,719) (53,297)
Cash and Equivalents at Beginning of Period 310,809 204,291
----------------------------
Cash and Equivalents at End of Period $ 175,090 $ 150,994
====================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 9
SCHULLER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On March 27, 1996, Schuller Corporation ("Schuller" or the "Company"), disposed
of its 81.3 percent interest in Riverwood International Corporation
("Riverwood"), its paperboard and packaging systems subsidiary (See Note 9).
The assets and liabilities of Riverwood and related parent Company deferred
taxes, goodwill and minority interest were classified as net assets held for
sale at December 31, 1995. Riverwood's results of operations have been shown
as discontinued operations through the first quarter of 1996.
Manville Personal Injury Settlement Trust (the "PI Trust") owns approximately
79 percent of the Company's common stock.
The condensed consolidated financial statements as of June 30, 1996 and
December 31, 1995 and for the three and six month periods ended June 30, 1996
and 1995 reflect all normal, recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the financial condition and
the results of operations for the periods presented. The year-end condensed
consolidated balance sheet was derived from audited financial statements, and
as presented does not include all disclosures required by generally accepted
accounting principles.
The Company has reclassified the presentation of certain prior period
information to conform with the current presentation format.
Additional information regarding the Company's accounting policies, operations,
financial position, reorganization proceedings and relationship with the PI
Trust is contained or incorporated in the Company's Form 10-K for the year
ended December 31, 1995 filed with the Securities and Exchange Commission.
Note 1 - Inventories
The major classes of inventories were as follows:
<TABLE>
<CAPTION>
(Thousands of dollars)
June 30, December 31,
1996 1995
-----------------------------------
<S> <C> <C>
Finished goods $ 65,261 $46,432
Raw materials and supplies 26,854 23,344
Work-in-process 11,979 7,345
-----------------------------------
$104,094 $77,121
===================================
</TABLE>
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<PAGE> 10
Note 2 - Special Cash Dividend
On March 27, 1996, the Company declared a special cash dividend of $6.00 per
share, to all common stockholders. The dividend, which totaled $970.4 million,
was paid April 12, 1996.
Note 3 - Long-Term Debt
On June 30, 1996, the Company redeemed its 9 Percent Sinking Fund Debentures
due through 2003. The prepayment of the debentures at 100 percent of the
principal amount of $27.7 million, plus accrued interest of $1.6 million,
resulted in an extraordinary loss on early extinguishment of debt of $2
million, net of taxes of $1.1 million.
Note 4 - Contingencies and Commitments
Between 1988 and 1992, the Company manufactured phenolic roofing insulation
which may, under certain circumstances, contribute to the corrosion of metal
decks on which it is installed. Subsequently, the Company began a voluntary
program to inspect such metal decks and remediate where appropriate. The
Company has also accrued for costs relating to future inspections, remediation
and anticipated claims. These accruals are based on the Company's historical
experience regarding the incidence of corrosion and the cost of remediation and
include a number of assumptions related to the types of roofs on which phenolic
insulation has been installed as well as the assumption that the Company's past
remediation experience will continue over the remaining lives of roofs
insulated with the Company's phenolic roofing insulation.
During the first quarter of 1995, the Company and its liability insurance
carriers reached a settlement with respect to the extent of coverage to be
provided by such carriers. In addition, during the third quarter of 1995, the
Company and the former owner of the phenolic roofing insulation business
reached an agreement with respect to the costs to be reimbursed by the former
owner. Pursuant to these agreements, the Company has been reimbursed for a
portion of historical costs incurred and is entitled to receive reimbursement
for a substantial portion of future costs to be incurred by the Company for
inspection and remediation.
In 1996, the Company and a third party were named as defendants in two class
action cases filed in U.S. District Court in Boston, Massachusetts. The
plantiffs purport to represent all building owners in the United States with
phenolic insulation installed on their roof decks and seek damages and
injunctive relief, including an order requiring the removal and replacement of
the phenolic insulation and remediation of any deck corrosion. The Company
intends to defend these allegations vigorously.
The Company has reviewed its historical inspection and remediation experience
and the terms and collectibility of amounts payable under the reimbursement
agreements in light of the commitments and contingencies
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<PAGE> 11
described above. Based on the information available to date and subject to the
assumptions described above, if additional costs are incurred in excess of the
accrued amounts, such costs are not expected to have a material adverse effect
on the Company's financial condition, liquidity or results of operations.
Note 5 - Redemption of Cumulative Preference Stock, Series B
On April 30, 1996 the Company redeemed its Cumulative Preference Stock, Series
B, with cash of $230.8 million, plus accrued dividends of $4.1 million. The
excess of the redemption price over the carrying value of the preference stock
of $52.1 million was charged directly to Capital in Excess of Par Value and was
deducted from net income to compute earnings and earnings per share applicable
to common stockholders.
Note 6 - Unearned Stock Compensation
During the second quarter of 1996, the Company established the Schuller
Corporation 1996 Executive Incentive Compensation Plan (the "Compensation
Plan"). Under the Compensation Plan executives and other eligible employees
were granted deferred stock rights and options to purchase shares of the
Company's common stock. Through June 30, 1996, 0.8 million deferred stock
rights have been granted, with vesting through December 31, 2000. Accordingly,
$8.2 million of unearned stock compensation was reflected in stockholders'
equity during the second quarter of 1996 based upon a stock price of $10.625
per share on the grant date. In addition, options to purchase 2.5 million
shares and 1.7 million shares, at exercise prices of $10.625 and $13.281 per
share, respectively, were granted.
Note 7 - Other Income (Expense), net
Other income, net, was $4.1 million for the first six months of 1996 compared
with other expense, net, of $6.6 million for the same period of 1995. Other
income for 1996 included a $7.2 million gain relating to the receipt of surplus
pension assets in connection with the settlement of defined benefit pension
plans in which the Company's Canadian employees previously participated. Other
expense for 1995 included a $2.9 million charge for legal costs in connection
with litigation brought by the Company against the former owner of the phenolic
roofing business.
Note 8 - Income Taxes
For the six months ended June 30, 1996, the net income tax benefit of $63.6
million included a $104.5 million tax benefit on the portion of the special
cash dividend that was paid to the PI Trust.
For income tax purposes, the Company is entitled to a tax benefit on the amount
of common dividends paid to the PI Trust in the years in which those dividends
are transferred to a specific settlement fund within the
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<PAGE> 12
PI Trust or paid to the claimants. The Company expects the PI Trust to
transfer its entire dividend proceeds from the special dividend to the
settlement fund which will result in a current tax deduction for the Company.
This current tax deduction will be utilized to shelter the tax gain on the
disposition of Riverwood (see Note 9), which will result in cash tax payments
to be made in conjunction with the sale at tax rates significantly lower than
normal statutory tax rates.
For financial reporting purposes, the tax benefit on the portion of the
dividend paid to the PI Trust was realized at less than statutory rates. Due
to the size of the dividend in relation to the Company's equity, the Company
recorded a corresponding pro rata reduction in the carrying value of its
deferred tax asset related to common stock held by the PI Trust. The pro rata
reduction in the deferred tax asset partially offset the statutory tax benefit
on the dividend, resulting in an effective tax rate on the portion of the
dividend paid to the PI Trust of approximately 14 percent.
Exclusive of the tax benefit on the special cash dividend, the Company's tax
rates for the first six months of 1996 and 1995 were 44 percent and 45 percent,
respectively. These are higher than the U.S. federal statutory rate primarily
due to higher foreign effective tax rates and U.S. state and local taxes.
The Company's deferred tax assets declined $215.3 million during the first six
months of 1996 primarily due to net operating loss carryforwards and PI
Trust-related deductions that are expected to be utilized to shelter the gain
on the disposition of Riverwood.
Note 9 - Disposition of Riverwood
On March 27, 1996, the Company consummated the disposition of its 81.3 percent
interest in Riverwood and received gross cash proceeds of $1.08 billion and
recorded a gain of $177.2 million, net of taxes of $177.8 million.
The estimated effective tax rate on the sale is higher than statutory tax rates
due to federal income taxes resulting from the election under Section
338(h)(10) of the U.S. Internal Revenue Code to treat the disposition of
Riverwood as an asset sale for tax purposes and other book and tax basis
differences.
The Company has agreed to indemnify the purchaser of Riverwood and certain
affiliated parties against losses resulting from a breach of representations or
warranties with respect to (i) certain Riverwood filings with the Securities
and Exchange Commission, (ii) the absence of undisclosed Riverwood liabilities
and (iii) certain Riverwood environmental matters. The Company will not be
required to indemnify the purchaser for losses until the aggregate amount of
all losses exceeds $20 million. In addition, the Company's obligation to
indemnify is limited
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<PAGE> 13
to 80 percent of the amount of losses in excess of $20 million. The aggregate
liability of the Company is limited to $100 million. The Company's obligation
to indemnify is limited to claims made on or prior to May 31, 1997.
In this regard, the Louisiana Department of Environmental Quality notified
Riverwood, by letter dated December 19, 1995, that Riverwood may be liable for
the remediation of the release or threat of release of hazardous substances at
two sites that Riverwood or its predecessor previously operated in Shreveport,
Louisiana and Caddo Parish, Louisiana. The Company has consented to be
responsible, subject to the provisions of the preceding paragraph, for losses
incurred in connection with these matters to the extent such losses exceed $1
million. The Company is currently evaluating these claims.
In addition, the Company may be responsible for certain Riverwood U.S. federal,
state and local income tax liabilities to the extent, if any, they are
attributable to audit adjustments for tax periods ending prior to the
disposition of Riverwood.
Note 10 - Extraordinary Loss on Trust Settlements
On April 5, 1996, the Company completed the exchange (the "Exchange") of the
PI Trust's profit sharing right to 20 percent of the Company's net earnings (as
adjusted) for approximately 32.5 million shares of the common stock of the
Company, which represented 20 percent of the Company's common stock on a fully
diluted basis after giving effect to the Exchange. The Exchange was approved
by the Company's stockholders in March 1996. As a result, the Company recorded
an extraordinary loss of $314.3 million, net of taxes of $169.2 million, during
the first quarter of 1996. The extraordinary loss was based on the New York
Stock Exchange closing price of the Company's common stock on April 4, 1996 of
$14.50 per share, plus related expenses of the transaction and other trust
related settlements. The Company recognized profit sharing expense to the PI
Trust through April 5, 1996.
Note 11 - Earnings (Loss) Per Common Share
Primary and fully diluted earnings per common share amounts were determined
using the following common equivalent shares:
<TABLE>
<CAPTION>
Second Quarter First Six Months
1996 1995 1996 1995
- --------------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
Primary 159,554,000 124,684,000 142,177,000 123,744,000
Fully Diluted 159,554,000 125,301,000 142,251,000 125,303,000
</TABLE>
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<PAGE> 14
During April 1996, an additional 32.5 million common shares were issued as part
of the Exchange. In addition, warrants were exercised to purchase 6.9 million
shares of common stock through June 6, 1996, the expiration date of the
warrants.
Earnings per share amounts were calculated after the deduction for preference
stock dividends and the premium on preference stock redemption.
Note 12 - Acquisitions
On January 31, 1996, the Company acquired the commercial and industrial roofing
businesses of Nord Bitumi SpA, headquartered in Italy, and Nord Bitumi U.S.,
Inc. On March 25, 1996, the Company acquired Web Dynamics, a U.S. manufacturer
of polymer filtration products. Also during the first quarter of 1996, a joint
venture, in which the Company has a 60 percent interest, to operate and expand
an existing fiber glass mat facility in China became effective, which is
accounted for under the equity method.
The combined purchase price for the acquisitions and the Company's contribution
to the joint venture totaled $60.1 million during the first six months of 1996.
The acquisitions were accounted for under the purchase method, and accordingly,
the purchase prices were allocated on the basis of the estimated fair value of
assets acquired and liabilities assumed. Total purchase price in excess of net
assets acquired of $41 million is being amortized on a straight-line basis over
20 years. The pro forma effect of the acquisitions is not material to the
results of operations for the three or six months ended June 30, 1996 and 1995.
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<PAGE> 15
Note 13 - Business Segment Information
The Company reports separately the results of the Building Products and
Engineered Products segments. The Building Products segment consists of the
Company's building insulation, commercial and industrial roofing systems and
mechanical insulations businesses. The Engineered Products segment consists of
the Company's specialty insulations, filtration and mats and fibers businesses.
<TABLE>
<CAPTION>
Thousands of dollars
Three Months
Ended June 30,
- ----------------------------------------------------------------------------------------------------------
Building Products 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $227,718 $198,335
Costs and Expenses 190,928 163,960
Other Income (Expense), net (329) 212
- ----------------------------------------------------------------------------------------------------------
Income from Operations $ 36,461 $ 34,587
==========================================================================================================
Engineered Products
- ----------------------------------------------------------------------------------------------------------
Net Sales $161,818 $162,374
Costs and Expenses 131,540 130,837
Other Income (Expense), net (167) 74
- ----------------------------------------------------------------------------------------------------------
Income from Operations $ 30,111 $ 31,611
==========================================================================================================
Corporate and Eliminations
- ----------------------------------------------------------------------------------------------------------
Net Sales $ (8,133) $ (6,658)
Costs and Expenses 1,160 4,224
Other Income (Expense), net (980) (2,325)
- ----------------------------------------------------------------------------------------------------------
Income (Loss) from Operations $(10,273) $(13,207)
==========================================================================================================
Consolidated Total Company
- ----------------------------------------------------------------------------------------------------------
Net Sales $381,403 $354,051
Costs and Expenses 323,628 299,021
Other Income (Expense), net (1,476) (2,039)
- ----------------------------------------------------------------------------------------------------------
Income from Operations $ 56,299 $ 52,991
==========================================================================================================
</TABLE>
Net sales included in Corporate and Eliminations relate principally to the
elimination of intersegment sales from the Engineered Products segment to the
Building Products segment (at prices approximating market).
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<PAGE> 16
<TABLE>
<CAPTION>
(Thousands of dollars)
Six Months
Ended June 30,
- --------------------------------------------------------------------------------------------------------
Building Products 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $ 408,218 $ 377,467
Costs and Expenses 346,934 310,542
Other Income (Expense), net (490) (2,490)
- --------------------------------------------------------------------------------------------------------
Income from Operations $ 60,794 $ 64,435
========================================================================================================
Engineered Products
- --------------------------------------------------------------------------------------------------------
Net Sales $ 315,313 $ 318,573
Costs and Expenses 253,208 255,288
Other Income (Expense), net 103 527
- --------------------------------------------------------------------------------------------------------
Income from Operations $ 62,208 $ 63,812
========================================================================================================
Corporate and Eliminations
- --------------------------------------------------------------------------------------------------------
Net Sales $ (16,019) $ (13,588)
Costs and Expenses (81) 4,186
Other Income (Expense), net 4,526 (4,634)
- --------------------------------------------------------------------------------------------------------
Income (Loss) from Operations $ (11,412) $ (22,408)
========================================================================================================
Consolidated Total Company
- --------------------------------------------------------------------------------------------------------
Net Sales $ 707,512 $ 682,452
Costs and Expenses 600,061 570,016
Other Income (Expense), net 4,139 (6,597)
- --------------------------------------------------------------------------------------------------------
Income from Operations $ 111,590 $ 105,839
========================================================================================================
</TABLE>
Net sales included in Corporate and Eliminations relate principally to the
elimination of intersegment sales from the Engineered Products segment to the
Building Products segment (at prices approximating market).
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<PAGE> 17
Report of Independent Accountants
To the Stockholders and Directors
of Schuller Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of
Schuller Corporation as of June 30, 1996 and the related condensed consolidated
statement of income (loss) for the three month and six month periods ended June
30, 1996 and 1995 and the condensed consolidated statement of cash flows for
the six month periods ended June 30, 1996 and 1995. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
for the year then ended (not presented herein); and in our report dated April
5, 1996, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1995, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
/s/ COOPERS & LYBRAND L.L.P.
- ------------------------------------------
COOPERS & LYBRAND L.L.P.
Denver, Colorado
August 8, 1996
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<PAGE> 18
Item 2.
SCHULLER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Schuller Corporation ("Schuller" or the "Company") manufactures and markets
insulation for buildings and equipment, commercial roofing systems,
high-efficiency air filtration media and fibers and nonwoven mats used as
reinforcements in building and industrial applications. The Company operates
45 manufacturing facilities in North America, Europe and China, and is
comprised of two principal business segments: Building Products and Engineered
Products.
The Building Products segment consists of the Company's building insulation
business, which manufactures fiber glass wool insulation for walls and attics
in residential and commercial buildings; the commercial and industrial roofing
systems business, which supplies roofing membranes, insulations, accessories
and related guarantees; and mechanical insulations business, which manufactures
pipe and duct insulation for use in commercial buildings, factories, refineries
and other industrial applications.
The Engineered Products segment consists of the Company's specialty insulations
and filtration business, which manufactures thermal and acoustic insulation for
aircraft, automobiles and heating, ventilating
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<PAGE> 19
and air conditioning ("HVAC") and other equipment; air filtration media for
commercial and industrial buildings; and ultra-fine fibers for clean room air
filters and battery separators. The Engineered Products segment also includes
the Company's mats and fibers business, which manufactures continuous filament
fiber glass-based products used for reinforcing roofing, flooring, wall
covering and plastic products.
On March 27, 1996, the Company disposed of its 81.3 percent interest in
Riverwood International Corporation ("Riverwood"), its former paperboard and
packaging systems subsidiary. The assets and liabilities of Riverwood and
related parent Company deferred taxes, goodwill and minority interest were
classified as net assets held for sale at December 31, 1995. Riverwood's
results of operations have been shown as discontinued operations through the
first quarter of 1996. See Note 9 to the Condensed Consolidated Financial
Statements.
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<PAGE> 20
RESULTS OF OPERATIONS
The following table sets forth, for the three and six month periods ended June
30, 1996 and 1995, certain income and expense items and the percentage that
such items increased (decreased):
<TABLE>
<CAPTION>
Three Months Percentage
Ended June 30, Increase
1996 1995 (Decrease)
-------- -------------- ----------
(Thousands of dollars)
<S> <C> <C> <C>
Net Sales:
Building Products $227,718 $198,335 14.8
Engineered Products 161,818 162,374 (0.3)
Corporate and Eliminations (8,133) (6,658)
-------- --------
381,403 354,051 7.7
Cost of Sales 272,901 251,782 8.4
-------- --------
Gross Profit 108,502 102,269 6.1
Other Operating Expenses 50,727 47,239 7.4
Other Expense, net (1,476) (2,039) (27.6)
-------- --------
Income from Operations:
Building Products 36,461 34,587 5.4
Engineered Products 30,111 31,611 (4.7)
Corporate and Eliminations (10,273) (13,207)
------- --------
$ 56,299 $ 52,991 6.2
======== ========
Six Months Percentage
Ended June 30, Increase
1996 1995 (Decrease)
-------- -------------- ----------
(Thousands of dollars)
Net Sales:
Building Products $408,218 $377,467 8.1
Engineered Products 315,313 318,573 (1.0)
Corporate and Eliminations (16,019) (13,588)
-------- ---------
707,512 682,452 3.7
Cost of Sales 505,451 480,448 5.2
-------- --------
Gross Profit 202,061 202,004
Other Operating Expenses 94,610 89,568 5.6
Other Income (Expense), net 4,139 (6,597)
-------- --------
Income from Operations:
Building Products 60,794 64,435 (5.7)
Engineered Products 62,208 63,812 (2.5)
Corporate and Eliminations (11,412) (22,408)
-------- --------
$111,590 $105,839 5.4
======== ========
</TABLE>
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<PAGE> 21
Second Quarter 1996 Compared With Second Quarter 1995
The Company's net sales for the second quarter of 1996 increased $27.3 million,
or 7.7 percent, to $381.4 million from $354.1 million for the same period of
1995. Gross profit increased $6.2 million, or 6.1 percent, compared with the
second quarter of 1995. Gross profit margins were 28.4 percent and 28.9
percent for the quarters ended June 30, 1996 and 1995, respectively. Income
from operations for the second quarter of 1996 increased $3.3 million, or 6.2
percent, to $56.3 million from $53.0 million.
The Building Products segment's net sales for the second quarter of 1996
increased $29.4 million, or 14.8 percent, compared with the same period of
1995. Income from operations increased $1.9 million, or 5.4 percent. These
increases are due primarily to the inclusion of the operating results of the
Nord Bitumi SpA and Nord Bitumi U.S., Inc., (collectively "Nord") businesses
acquired earlier in 1996 by the commercial and industrial roofing systems
business. The building insulation business benefited from stronger U.S.
housing starts which resulted in higher sales volume during the second quarter
of 1996. However, lower selling prices resulted in moderately lower operating
profits as the industry continued to experience excess capacity. Mechanical
insulations reported improved operating results, reflecting continued strength
in commercial and industrial construction markets coupled with enhanced
productivity.
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<PAGE> 22
The Engineered Products segment's income from operations decreased $1.5
million, or 4.7 percent, and net sales were flat compared with the second
quarter of 1995. Net sales were unchanged and income from operations for U.S.
mats and fibers declined slightly when compared with 1995. The Company's U.S.
production remained capacity constrained, along with other market suppliers,
which led to higher selling prices. Sales volumes were negatively affected
for a significant portion of the second quarter of 1996 by the shutdown and
rebuilding of a furnace for regular maintenance and to increase production
capacity. The operating results of the worldwide mats and fibers business
declined as U.S. dollar-reported results of the Company's German operations
decreased due to the strengthening of the U.S. dollar against the German mark,
along with continuing weakness in European construction markets. The
filtration and specialty insulations businesses experienced slightly higher net
sales and operating income as the continued demand for ultra-fine fibers used
for filtration and improvements in sales of HVAC equipment insulation were
partially offset by weakness in sales of automotive insulation products.
Other operating expenses include selling, general, administrative and research,
development and engineering expenses. These expenses, while remaining constant
at 13.3 percent of net sales, increased $3.5 million, or 7.4 percent, compared
with the second quarter of 1995. The increase is principally due to additional
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<PAGE> 23
expenses as a result of recent acquisitions, acquisition activities and
increased product and process improvement programs.
First Six Months of 1996 Compared With First Six Months of 1995
The Company's net sales for the six months ended June 30, 1996 increased $25
million, or 3.7 percent, to $707.5 million from $682.5 million for the same
period of 1995. Gross profit was flat compared with 1995, with gross profit
margins of 28.6 percent and 29.6 percent for 1996 and 1995, respectively,
reflecting lower building insulation prices realized during 1996. Income from
operations increased $5.8 million, or 5.4 percent, to $111.6 million from
$105.8 million.
The Building Products segment's net sales increased $30.7 million, or 8.1
percent, compared with the same period of 1995. The increase in net sales is
due mainly to the Nord acquisition. Increased building insulation sales volumes
due to stronger 1996 U.S. housing starts were offset by lower selling prices.
Income from operations decreased $3.6 million, or 5.7 percent, primarily as a
result of lower building insulation prices due to excess industry capacity.
Net sales and operating income for mechanical insulations were essentially flat
compared with 1995.
The Engineered Products segment's income from operations decreased $1.6
million, or 2.5 percent, on a one percent, or $3.3 million, decrease in net
sales compared with the first six months of 1995. While net sales
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<PAGE> 24
and income from operations for U.S. mats and fibers were essentially flat
compared with 1995 as U.S. production remained capacity constrained, U.S.
dollar-reported results of the Company's German operations decreased due to the
strengthening of the U.S. dollar against the German mark, along with continuing
weakness in European construction markets. The filtration and specialty
insulations businesses experienced slightly higher net sales and operating
income as the continued demand for ultra-fine fibers used for filtration and
improvements in sales of HVAC equipment insulation were partially offset by
weakness in sales of automotive insulation products.
Other operating expenses remained constant as a percentage of sales at 13
percent and increased $5 million, or 5.6 percent, for the first half of 1996
compared with the same period of 1995. The increase is principally due to
additional expenses associated with acquisitions, acquisition activities and
increased product and process improvement programs.
Other income, net, was $4.1 million for the first six months of 1996 compared
with other expense, net, of $6.6 million for the same period of 1995. Other
income for 1996 included a $7.2 million gain relating to the receipt of surplus
pension assets in connection with the settlement of defined benefit pension
plans in which the Company's Canadian employees previously participated. Other
expense for 1995 included a $2.9 million charge for legal costs in connection
with litigation
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<PAGE> 25
brought by the Company against the former owner of the phenolic roofing
business.
Compared with the corresponding quarter and six month periods of 1995, the
Company's interest income increased $2.6 million and $5.2 million,
respectively, primarily due to higher average cash and marketable securities
balances.
For the six months ended June 30, 1996, the Company reported a net income tax
benefit of $63.6 million, which included a $104.5 million tax benefit on the
portion of the special cash dividend that was paid to Manville Personal Injury
Settlement Trust (the "PI Trust") in April 1996. See Note 8 to the Condensed
Consolidated Financial Statements. Exclusive of the tax benefit on the special
cash dividend, the Company's tax rates for the first six months of 1996 and
1995 were 44 percent and 45 percent, respectively. These are higher than the
U.S. federal statutory rate primarily due to higher foreign effective tax rates
and U.S. state and local taxes.
On March 27, 1996, the Company consummated the disposition of Riverwood,
received gross cash proceeds of $1.08 billion and recorded a gain of $177.2
million, net of taxes of $177.8 million, on the disposition of the Company's
81.3 percent interest. The estimated effective tax rate on the sale is higher
than the statutory tax rate due to federal income taxes resulting from the
election under Section 338(h)(10) of the U.S.
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<PAGE> 26
Internal Revenue Code to treat the disposition of Riverwood as an asset sale
for tax purposes, and other book and tax basis differences.
On April 5, 1996, the Company completed the Profit Sharing Exchange Agreement
with the PI Trust, which provided for the exchange of the PI Trust's profit
sharing right to 20 percent of the Company's net earnings (as adjusted) for
approximately 32.5 million shares of the common stock of the Company. As a
result, the Company recorded an extraordinary loss of $314.3 million, net of
taxes of $169.2 million, during the first quarter of 1996. The extraordinary
loss was based on the New York Stock Exchange closing price of the Company's
common stock on April 4, 1996 of $14.50 per share, plus related expenses of the
transaction and other trust related settlements. The Company paid its final
profit sharing obligation for the period of January 1, 1996 through April 5,
1996, during the second quarter of 1996.
On June 30, 1996 the Company redeemed its 9 Percent Sinking Fund Debentures
with cash of $27.7 million, plus accrued interest of $1.6 million, resulting in
an extraordinary loss on early extinguishment of debt of $2.0 million, net of
related income taxes of $1.1 million.
On April 30, 1996 the Company redeemed its Cumulative Preference Stock, Series
B ( the "Preference Stock"), with cash of $230.8 million, plus accrued
dividends of $4.1 million. The excess of the redemption price over the
carrying value of the Preference Stock of $52.1 million was
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<PAGE> 27
charged directly to Capital in Excess of Par Value and was deducted from net
income to compute earnings and earnings per share applicable to common
stockholders.
Due to the factors discussed above, net loss applicable to common stock for the
second quarter of 1996 was $27.9 million, compared with net income of $27.3
million for the same period of 1995. Year-to-date net loss applicable to
common stock for 1996 was $42.9 million, compared with net income of $50.4
million for 1995. The primary and fully diluted net loss per common share for
the second quarter of 1996 was $0.18 each, as compared with primary and fully
diluted earnings per common share of $0.22 each for the same period in 1995.
Primary and fully diluted loss per common share for the six month period ended
June 30, 1996 was $0.30 compared with earnings per common share of $0.41 during
the same period of 1995. Earnings (loss) per common share amounts were
calculated after deducting preference stock dividends and the premium on
preference stock redemption.
LIQUIDITY AND CAPITAL RESOURCES
The Company broadly defines liquidity as the ability to generate sufficient
cash flow to satisfy operating requirements, fund capital expenditures and meet
existing obligations and commitments. In addition, liquidity also includes the
ability to obtain appropriate financing and to convert into cash those assets
that are no longer required to meet the Company's strategic objectives.
Therefore,
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<PAGE> 28
liquidity should not be considered separately from capital resources, which
consist of currently or potentially available funds for use in achieving
long-range business objectives and meeting debt service commitments.
Additionally, the Company's relationship with the PI Trust should be considered
in evaluating liquidity.
The Company's agreements with its lenders contain a number of financial and
general covenants. These include, among other things, restrictions on
borrowings, investments, stock issuances and repurchases, dividends and other
distributions by Schuller International (the Company's wholly owned
subsidiary), and restrictions on intercompany transactions, including transfers
of cash. As of June 30, 1996, the maximum amount available for dividends to be
paid by Schuller International under its most restrictive debt covenants was
approximately $192 million. Noncompliance with these or other covenants, or
the occurrence of any other event of default, could result in the termination
of existing credit agreements and the acceleration of debt owed by the Company
and its subsidiaries. At June 30, 1996, the Company was in compliance with
these covenants.
A tax sharing agreement between the Company and Schuller International provides
that Schuller International's U.S. federal and state income taxes be
calculated as if it were an independent entity and that such tax amounts be
remitted to the Company. The Company is able to apply tax benefits to reduce
the consolidated domestic tax obligations,
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<PAGE> 29
allowing Schuller Corporation to retain a large portion of the cash remitted by
Schuller International. In connection with the disposition of Riverwood, the
tax sharing agreement between the Company and Riverwood terminated on March 27,
1996.
At June 30, 1996, the Company had cash and marketable securities totaling
$223.1 million. Total cash and marketable securities located outside the U.S.
and Canada were approximately $24.4 million. At December 31, 1995, the
Company's cash and marketable securities totaled $427.8 million.
During the first quarter of 1996, the Company received proceeds of $1.08
billion for the disposition of Riverwood. During the second quarter of 1996,
the Company paid a special cash dividend of $6 per common share, totaling
$970.4 million; redeemed its Preference Stock at $25 per share plus accrued
dividends, totaling $234.9 million; and redeemed its 9 Percent Sinking
Debentures at 100 percent of the principal amount plus accrued interest,
totaling $29.3 million.
The Company's cash flows from operating activities are primarily influenced by
sales volume and selling prices. During the first six months of 1996, sales
volumes were positively influenced by strong U.S. construction markets,
partially offset by softness in European construction markets and capacity
constraints in U.S. markets served by the Company's mats and
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<PAGE> 30
fibers and ultra-fine fibers businesses. The Company's building insulation
business continued to experience price declines which began in the second half
of 1995 due to new capacity. In addition, changes in the Company's accounts
receivable and inventory balances reflect changes in actual and anticipated
sales levels. Increases in sales volumes, primarily from the acquisitions
completed during 1996, resulted in a larger increase in accounts receivable for
the first six months of 1996 when compared with the same period of 1995.
Meanwhile, production capacity constraints combined with strong demand,
particularly in mats and fibers, resulted in a smaller increase in inventory
balances than was reported for the first six months of 1995.
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<PAGE> 31
Demand for the Company's products has historically been cyclical due to
macroeconomic factors affecting residential and commercial construction
markets. The Company estimates that approximately half of its annual sales are
made to commercial and industrial construction markets, while approximately
one-third are made to residential construction markets and the remainder are
made to original equipment manufacturers.
In addition to the proceeds from the disposition of Riverwood, the Company's
investing activities for the first six months of 1996 include the combined
cash purchase prices for acquisitions and contributions to its joint venture of
$57 million. The Company's investing activities also include capital
expenditures for the six months ended June 30, 1996 totaling $57.6 million, of
which approximately $27.9 million were for capacity expansion projects.
The Company's capacity expansion programs are periodically revised to reflect
changes in demand, industry capacity and the results of productivity and
technology innovations. In order to meet worldwide demand for its mats
and fibers products, the Company announced plans during 1995 to increase its
U.S. production capacity of continuous filament fiber glass by mid 1997. The
increase will be accomplished
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<PAGE> 32
primarily by reconstructing an existing furnace, while also expanding existing
capacity. In addition, the Company entered into a joint venture in China and
began expansion of an existing fiber glass mat facility, with completion
expected in 1997. The Company also plans to complete the current expansion of
its filtration business' ultra-fine fiber production capacity during 1996
through capital spending programs. The Company currently estimates capital
spending in 1996 of approximately $100 million to $110 million, excluding
acquisitions, of which approximately $40 million to $50 million will be used in
the capacity expansion programs described above. As of June 30, 1996,
outstanding purchase commitments relating to these and other projects totaled
$16.7 million.
On June 6, 1996, warrants to purchase approximately seven million shares of the
Company's common stock expired. Substantially all of the warrants were
exercised at $9.40 per share, and as a result, the Company received proceeds of
$64.8 million during 1996. Through the April 30, 1996 Preference Stock
redemption date, the Company paid cash dividends of $10.3 million, or $1.12 per
share, on Preference Stock during 1996. For the the first six months of 1995,
$12.5 million, or $1.35 per share, of dividends were paid. As a result of the
redemption, the Company will no longer pay such dividends. These dividends, at
the annual rate of $2.70 per share, totaled $24.9 million during 1995.
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<PAGE> 33
On August 1, 1996, the Company announced the adoption of a dividend policy to
pay regular quarterly cash dividends on its common stock. The first such
dividend, of three cents per share, was declared for the third quarter of 1996,
payable October 10, 1996. Dividend policies and amounts are subject to change
at the discretion of the Company's Board of Directors based on factors
including, but not limited to, the Company's operating results, capital
requirements, financing agreements and financial condition.
At June 30, 1996, the Company had a $100 million receivables sale facility (the
"Receivables Facility") for its domestic short-term working capital
requirements. Amounts available for borrowing under the Receivables Facility
are based on the daily balance of certain outstanding trade accounts receivable
adjusted for various factors as defined under the terms of the Receivables
Facility. There have been no borrowings under the Receivables Facility through
June 30, 1996. The Company's foreign subsidiaries also had working capital
facilities totaling $65.7 million available for borrowing at June 30, 1996.
The Company believes that its current cash position, funds available under the
Receivables Facility and foreign working capital facilities, and cash generated
from operations will enable it to satisfy its debt service requirements, its
ongoing capital expansion program, its other ongoing operating costs and its
dividend policy. However, the Company
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<PAGE> 34
may need to access capital markets to pay the principal of the $400
million Senior Notes due in 2004, or in connection with possible future
acquisitions.
RELATIONSHIP OF SCHULLER TO THE PI TRUST
The PI Trust owns approximately 79 percent of Schuller's common stock. The PI
Trust is an irrevocable trust formed under the laws of the State of New York,
pursuant to a trust agreement dated as of November 28, 1988, as amended (the
"Trust Agreement"), to implement certain portions of the Company's Second
Amended and Restated Plan of Reorganization, in particular, those relating to
the settlement of asbestos health claims against Schuller Corporation and
certain of its affiliates. As the majority owner of the Company's common
stock, the PI Trust has effective voting control, including the power to
nominate and elect directors as the trustees of the PI Trust determine. Four
trustees of the PI Trust currently serve as members of Schuller's Board of
Directors, including one trustee who serves as the Chairman of the Board.
In furtherance of its purposes under the Trust Agreement of enhancing and
preserving its trust estate and providing compensation to bona fide asbestos
health claimants, the PI Trust has an interest in maximizing the value of, and
at times increasing the liquidity of, its investment in the Company. The PI
Trust may from time to time consider and discuss with management various means
by which the Company might seek to maximize stockholder value and enhance
stockholder liquidity. The
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<PAGE> 35
Company conducts all negotiations with the PI Trust on an arm's-length basis,
with both parties being represented by their own legal and financial advisors.
Significant transactions with the PI Trust are reviewed by the Board of
Directors, after consultation with appropriate external advisors and experts,
to determine that the transactions are fair. In addition, the Audit Committee
of the Board of Directors reviews the accounting treatment for such
transactions.
The Company will receive a tax deduction when the PI Trust sells some or all of
its shares of common stock and distributes the proceeds to its beneficiaries or
transfers the proceeds to a specific settlement fund. If the PI Trust were to
sell the stock at a price greater than the average carrying value, the Company
may receive a tax benefit in excess of the deferred tax asset reflected for
financial reporting purposes. Likewise, if the PI Trust were to sell the stock
at a price lower than the average carrying value, the Company would receive a
tax benefit less than the deferred tax asset reflected for financial reporting
purposes.
Additional information regarding the Company's accounting policies, operations,
financial position, reorganization proceedings, relationship with the PI Trust,
disposition of Riverwood and the Profit Sharing Exchange Agreement is contained
or incorporated in the Company's Form 10-K for the year ended December 31, 1995
and Form 8-K, dated March 27, 1996, filed with the Securities and Exchange
Commission.
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<PAGE> 36
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On June 7, 1996, the Company's Annual Meeting of Stockholders was held
in Denver, Colorado and the following items were voted upon and approved by the
stockholders.
1. The following Directors were elected by the stockholders:
<TABLE>
<CAPTION>
NAME FOR VOTE WITHHELD
---- --- -------------
<S> <C> <C>
Leo Benatar 151,583,660 1,030,645
Robert A. Falise 151,581,634 1,032,671
Todd Goodwin 151,583,159 1,031,146
Michael N. Hammes 151,570,826 1,043,479
John Nils Hanson 151,586,128 1,028,177
Kathryn Rudie Harrigan 151,569,967 1,044,338
Louis Klein, Jr. 151,582,234 1,032,071
Frank J. Macchiarola 151,579,888 1,031,417
Christian E. Markey, Jr. 151,579,341 1,034,964
William E. Mayer 151,586,217 1,028,088
W. Thomas Stephens 151,569,177 1,045,128
</TABLE>
2. Approval of the Schuller Corporation 1996 Executive Incentive
Compensation Plan.
For: 139,071,289 Against: 5,934,434
Abstain: 216,078 Broker Non-Vote: 7,392,504
3. Approval of the appointment of Coopers & Lybrand L.L.P. as Independent
Accountants of the Company for the fiscal year ending December 31,
1995.
For: 151,882,488 Against: 679,643
Abstain: 52,174 Broker Non-Vote: -0-
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<PAGE> 37
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 3.1, Amended and Restated By-Laws, as amended July 31,
1996.
Exhibit 10.1, Agreement between W. Thomas Stephens and the
Company, effective as of April 12, 1996
Exhibit 10.2, Amendment No. 3 to the Employment Agreement
between Richard B. Von Wald and the Company, effective as of
April 12, 1996.
Exhibit 10.3, Form of Employment Agreement with the Executive
Officers of the Company.
Exhibit 10.4, Schuller Corporation 1996 Stock Award Plan which
was filed as an exhibit to the Company's Form S-8 filed on
June 19, 1996 (Registration No. 333-06313), and incorporated
herein by reference.
Exhibit 10.5, Schuller Corporation Deferred Compensation Plan
which was filed as an exhibit to the Company's Form S-8 filed
on June 19, 1996 (Registration No. 333-06321), and
incorporated herein by reference.
Exhibit 10.6, Schuller Corporation 1996 Executive Incentive
Compensation Plan which was filed as an exhibit to the
Company's Form S-8 filed on June 20, 1996 (Registration No.
333-06375), and incorporated herein by reference.
Exhibit 15, Letter of Coopers and Lybrand L.L.P.
Exhibit 27.1, Financial Statement Schedules.
Exhibit 27.2, Financial Statement Schedules.
(b) Form 8-K.
None.
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<PAGE> 38
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.
SCHULLER CORPORATION
---------------------
(Registrant)
Date: August 8, 1996 By: /s/ R. B. Von Wald
--------------------------------------
R. B. Von Wald
Executive Vice President,
General Counsel and Secretary
Date: August 8, 1996 By: /s/ K. L. Jensen
--------------------------------------
K. L. Jensen
Senior Vice President and
Chief Financial Officer
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<PAGE> 39
EXHIBIT INDEX
Exhibit
Number Exhibit Description Page
- ------- ------------------- ----
3.1 Amended and Restated By-Laws, as amended July 31, 1996.
10.1 Agreement between W. Thomas Stephens and the Company,
effective as of April 12, 1996
10.2 Amendment No. 3 to the Employment Agreement between
Richard B. Von Wald and the Company, effective as of
April 12, 1996.
10.3 Form of Employment Agreement with the Executive Officers
of the Company.
10.4 Schuller Corporation 1996 Stock Award Plan which was
filed as an exhibit to the Company's Form S-8 filed on
June 19, 1996 (Registration No. 333-06313), and incorporated
herein by reference.
10.5 Schuller Corporation Deferred Compensation Plan which
was filed as an exhibit to the Company's Form S-8 filed
on June 19, 1996 (Registration No. 333-06321), and
incorporated herein by reference.
10.6 Schuller Corporation 1996 Executive Incentive Compensation
Plan which was filed as an exhibit to the Company's
Form S-8 filed on June 20, 1996 (Registration No. 333-06375),
and incorporated herein by reference.
15 Letter of Coopers and Lybrand L.L.P.
27.1 Financial Statement Schedules.
27.2 Financial Statement Schedules.
<PAGE> 1
EXHIBIT 3.1
================================================================================
BY-LAWS
OF
MANVILLE CORPORATION
As Amended and Restated on July 31, 1996
================================================================================
<PAGE> 2
BY-LAWS
OF
MANVILLE CORPORATION
(A DELAWARE CORPORATION)
----------------------------
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.01. Annual Meetings. The annual meeting of shareholders
for the election of Directors and for the transaction of such other business as
may come before the meeting shall be held at such place within or without the
State of Delaware and at such date and at such time as determined by resolution
of the Board of Directors.
SECTION 1.02. Special Meetings. Special meetings of the shareholders
may be called for any purpose at any time by the chief executive officer of the
Corporation or by the Board of Directors and shall be called by the chief
executive officer or the Secretary of the Corporation upon the written request
of shareholders owning 15 percent or more of the outstanding shares entitled to
vote. Such written request shall specify the purpose or purposes of, and a
proposed date for, the meeting and shall be sent to the Corporation at its
principal offices, addressed to the attention of the chief executive officer or
Secretary, by first class mail, return receipt requested, postage prepaid, or
by facsimile or hand delivery. Upon receipt of such written request, the chief
executive officer or Secretary shall promptly give notice of, and shall
convene, a special meeting of the shareholders for the purpose or purposes set
forth in such written request to be held on a date within five days of the
proposed date specified in the written request (or the date closest to such
date which complies with applicable law, regulations and the rules of any
exchange on which the Corporation's voting shares are then listed). Special
meetings may be held at such place within or without the State of Delaware and
at such hour as may be designated in the notice of such meeting.
SECTION 1.03. Notice of Shareholders' Meetings. The notice of all
meetings of shareholders shall be in writing and shall state the place, date
and hour of the meeting and the name and capacity of the person issuing the
notice. The notice of an annual meeting shall state that the meeting is called
for the election of Directors and for the transaction of other business which
may properly come before the meeting and, if any other action which could be
taken as a special meeting is to be taken at such annual meeting, shall state
the additional purpose or purposes of the meeting. The notice of special
meeting shall state the purpose or purposes for which the meeting is called and
shall also indicate that it is being issued by or at the direction of the
person or persons calling the meeting.
A copy of the notice of each meeting of shareholders shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, to each shareholder at his record address or at such
other address which he may have furnished by request in writing to the
Secretary of the Corporation. If a meeting is adjourned to another time
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or place, and, if any announcement of the adjourned time or place is made at
the meeting, it shall not be necessary to give notice of the adjourned meeting
unless the adjournment is for more than thirty days or the Directors, after
adjournment, fix a new record date for the adjourned meeting.
Notice of a meeting need not be given to any shareholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of a shareholder at a meeting, in person or by proxy,
shall constitute a waiver, except when the shareholder attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 1.04. Quorum at Shareholders' Meetings: Vote Required. At
any meeting of the shareholders the holders of a majority of the outstanding
shares entitled to vote at such meeting and present in person or by proxy shall
constitute a quorum. If there shall be less than a quorum at any meeting of
the shareholders, a majority of those present may adjourn the meeting.
Directors shall be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote in the
election. Whenever any corporate action, other than the election of Directors,
is to be taken by vote of the shareholders, it shall, except as otherwise
required by the General Corporation Law of the State of Delaware, be authorized
by a majority of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote thereon.
SECTION 1.05. Inspectors at Shareholders' Meetings. The Board of
Directors or the Chairman of the Board, in advance of any shareholders'
meeting, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person presiding
at the shareholders' meeting may, and on the request of any shareholders
entitled to vote thereat shall, appoint one or more inspector. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors or the Chairman of the Board in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and
the voting power of each, the shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the person
presiding at the meeting or any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
SECTION 1.06. Presiding Officer and Secretary of Meetings. At each
meeting of the shareholders, the chief executive officer of the Corporation
shall preside. If the Chairman of the Board is the chief executive officer and
is not present, then the President, or if neither be present,
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a Vice President, shall preside. If none of such officers be present, a
presiding officer shall be elected at the meeting. The Secretary of the
Corporation shall act as secretary of such meetings, if present, and if not, a
secretary for the meeting shall be appointed by the presiding officer thereat.
ARTICLE II
DIRECTORS
SECTION 2.01. Qualifications and Number. A Director need not be a
shareholder, a citizen of the United States or a resident of the State of
Delaware. The number of Directors constituting the whole Board of Directors
shall be not less than two nor more than nineteen, the precise number to be
fixed from time to time by resolution of the Board of Directors. The number of
Directors may be increased or decreased by action of Directors, provided that
any such increase or decrease shall require the vote of a majority of the whole
Board of Directors. No decrease shall shorten the term of any incumbent
Director. Any Director may be removed with or without cause by the holders of
a majority of the shares then entitled to vote at an election of directors.
SECTION 2.02. Term. Directors who are elected at an annual meeting
of shareholders, and Directors who are elected in the interim to fill vacancies
and newly created directorships, shall hold office until the next annual
meeting of shareholders and until their successors have been elected and
qualified. In the interim between annual meetings of shareholders, newly
created directorships and any vacancies in the Board of Directors, including
vacancies resulting from the resignation or removal of Directors, may be filled
by the vote of the remaining Directors then in office, although less than a
quorum exists.
SECTION 2.03. Place and Time of Meetings of the Board. Regular and
special meetings of the Board of Directors shall be held at such places (within
or without the State of Delaware) and at such times as may be fixed by the
Board of Directors or upon call of the chief executive officer of the
Corporation or of the executive committee or, in the case of special meetings,
upon call of at least two Directors.
SECTION 2.04. Quorum and Manner of Acting. One-third of the whole
Board of Directors shall constitute a quorum for the transaction of business,
but if there shall be less than a quorum at any meeting of the Board of
Directors, a majority of those present (or if only one be present, then that
one) may adjourn the meeting from time to time and the meeting may be held as
adjourned without further notice. At all meetings of Directors, a quorum being
present, all matters shall be decided by the vote of a majority of the
Directors present at the time of the vote.
SECTION 2.05. Unanimous Written Consent. Any action required or
permitted to be taken by the Board of Directors or any of its committees may be
taken without a meeting if all members of the Board of Directors or the
committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consent thereto by the members of the
Board of Directors or the committee shall be filed with the minutes of the
proceedings of the Board of Directors or committee.
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SECTION 2.06. Attendance by Electronic Means. Any one or more
members of the Board of Directors or any committee thereof may participate in a
meeting of such Board or committee by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
SECTION 2.07. Remuneration of Directors. In addition to
reimbursement for his reasonable expenses incurred in attending meetings or
otherwise in connection with his attention to the affairs of the Corporation,
each Director as such, and as a member of any committee of the Board of
Directors, shall be entitled to receive such remuneration as may be fixed from
time to time by the Board of Directors.
SECTION 2.08. Notice of Meetings. Regular meetings of the Board of
Directors may be held without notice if the time and place of such meetings are
fixed by the Board. All regular meetings of the Board of Directors, the time
and place of which have not been fixed by the Board of Directors, and all
special meetings of the Board of Directors shall be held upon at least two
hours' notice to the Directors given by letter, telegram or telephone. No
notice need specify the purpose of the meeting. Any requirement of notice
shall be effectively waived by any Director who signs a waiver of notice before
or after the meeting. Attendance of any Director at a meeting shall constitute
a waiver of any requirement of notice, except when such Director attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened.
SECTION 2.09. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the whole Board, may
designate from among its members an executive committee and other committees to
serve at the pleasure of the Board of Directors. Each committee shall consist
of three or more Directors and shall be empowered to perform such functions as
may, by resolution, be delegated to it by the Board, except that no committee
shall have authority with respect to the following matters:
(1) amending the certificate of incorporation;
(2) adopting an agreement of merger or consolidation or
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets or a dissolution of
the Corporation or a revocation of a dissolution;
(3) amending the by-laws of the Corporation; or
(4) declaring a dividend or authorizing the issuance of stock.
The Board of Directors may designate one or more Directors as
alternate members of any such committee, who may replace any absent member or
members at any meetings of such committee. In the absence or disqualification
of a member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of the absent or disqualified member.
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ARTICLE III
OFFICERS
SECTION 3.01. Officers. The Board of Directors, at its first meeting
held after the annual meeting of shareholders in each year, shall appoint a
President, one or more Vice Presidents, a Secretary and a Treasurer. The Board
of Directors may also appoint from time to time such other officers or agents
as they may deem proper. The President shall be appointed from among the
members of the Board of Directors. The Board of Directors may specify which
officer shall be chief executive office of the Corporation. Any two or more
offices may be held by the same person.
Any two or more offices may be held by the same person.
SECTION 3.02. Term of Office. Unless otherwise provided in the
resolution or election or appointment, each officer should hold office until
the meeting of the Board of Directors following the next annual meeting of
shareholders and until his successor has been elected and qualified, provided,
the Board of Directors may remove any officer for cause or without cause.
SECTION 3.03. Powers and Duties. Officers shall have such powers and
duties as generally pertain to their respective offices and such further powers
and duties as from time to time shall be conferred by the Board of Directors.
ARTICLE IV
INDEMNIFICATION
SECTION 4.01. Indemnification. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a Director, officer, employee or agent,
of the Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
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venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper.
To the extent that a Director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in the first two paragraphs of this
Section 4.01 or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Any indemnification under the first two paragraphs of this Section
4.01 (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of
the Director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in the first two
paragraphs of this Section 4.01. Such determination shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of Directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or even if obtainable a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (3) by the
shareholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the Director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Section 4.01.
The indemnification provided by Section 4.01 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of shareholders or disinterested
Directors or otherwise, both as to action in their official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a Director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Section 4.01.
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For purposes of this Section 4.01, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its Directors, officers, and
employees, or agents, so that any person who is or was a Director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this
Section 4.01 with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
For purposes of this Section 4.01, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a Director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such Director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Section 4.01.
ARTICLE V
CAPITAL STOCK
SECTION 5.01. Share Certificates. Each certificate representing
shares of the Corporation shall be in such form as may be approved by the Board
of Directors. Each such certificate shall be signed by the Chairman of the
Board or the President or a Vice President and by the Secretary or Treasurer or
an Assistant Secretary or an Assistant Treasurer. The signatures of said
officers upon a certificate may be facsimile, engraved or printed, to the
extent permitted by law. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effects as if he were such officer at the date of issue.
SECTION 5.02. Lost, Destroyed or Stolen Certificates. No certificate
representing shares shall be issued in place of any certificate alleged to have
been lost, destroyed or stolen, except on production of such evidence of such
loss, destruction or theft and on delivery to the Corporation, if the Board of
Directors shall so require, of a bond of indemnity in such amount, upon such
terms and secured by such surety as the Board of Directors may in its
discretion require.
SECTION 5.03. Transfer of Shares. The shares of stock of the
Corporation shall be transferable or assignable on the books of the Corporation
only by the person to whom they have been issued or his legal representative
and only upon surrender of the certificate or certificates representing such
shares.
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SECTION 5.04. Record Dates. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof or for the purpose of determining shareholders entitled
to receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board may fix, in advance, a date as the
record date for any such determination of shareholders. Such date shall not be
more than sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Signing of Instruments. All checks, drafts, notes,
acceptances, bills of exchange and orders for the payment of money shall be
signed in such manner and by such person or persons as may be authorized from
time to time by resolution of the Board of Directors.
SECTION 6.02. Corporate Seal. The seal of the Corporation shall be
in such form as the Board of Directors shall approve.
ARTICLE VII
AMENDMENTS TO BY-LAWS
SECTION 7.01. Amendments. These by-laws or any of them may be
amended or repealed, and new by-laws adopted, at any annual meeting of the
shareholders, or at any special meeting called for that purpose, by a vote of a
majority of the shares represented and entitled to vote. The Board of
Directors shall have power, by a majority vote of the whole Board, to amend or
repeal these by-laws, or any of them, or to adopt new by-laws if notice of the
proposed change has been delivered or mailed to each Director with the notice
of the meeting or if all the Directors are present or have all assented in
writing to such change, but any such action of the Board of Directors may be
amended or repealed by the shareholders at any annual meeting or any special
meeting called for that purpose. If any by-law regulating an impending
election of Directors is adopted, amended or repealed by the Board, there shall
be set forth in the notice of the next meeting of shareholders for the election
of Directors the by-law so adopted, amended or repealed, together with a
concise statement of changes made.
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EXHIBIT 10.1
AGREEMENT
AGREEMENT dated as of April 12, 1996 between Schuller
Corporation (formerly Manville Corporation), a Delaware corporation (the
"Company"), and W. Thomas Stephens ("Executive").
W I T N E S S E T H :
WHEREAS, Executive currently serves as Chairman of the Board
of Directors (the "Board") of the Company;
WHEREAS, the Company and Executive have heretofore entered
into an Employment Agreement (the "Employment Agreement") dated as of April 10,
1992, as extended July 21, 1993 and July 12, 1994 and as amended November 4,
1994, which among other things sets forth the terms and conditions of
Executive's employment with the Company; and
WHEREAS, Executive having decided to resign as Chairman of the
Board, President and Chief Executive Officer of the Company, the Company and
Executive desire to enter into the following agreement in settlement and
cancellation of all existing and prior agreements between them concerning
Executive's existing and continued employment by the Company;
NOW THEREFORE, in consideration of the foregoing and the
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
<PAGE> 2
1. Resignations. (a) Effective June 7, 1996 Executive
shall resign as Chairman of the Board and as chairman of the board of the
directors of all of the subsidiaries and affiliates of the Company, including
without limitation Schuller International Group Inc. and Schuller International
Inc.
(b) Effective on the earlier of April 12, 1997
and the date designated by the Board by not less than 24 hours prior written
notice (the "Effective Date"), Executive shall be deemed to have resigned as,
and shall be treated for all purposes as having ceased to be, President and
Chief Executive Officer of the Company and an officer of any and all
subsidiaries and affiliates of the Company.
(c) Following the Effective Date, Executive shall
continue as an employee of the Company, subject to the succeeding sentence and
Section 4 below. From the Termination Date until the expiration of the
Continued Benefits Period (as such terms are defined in Section 4) Executive
shall be deemed to be on administrative leave. Upon termination of the
Continued Benefits Period, Executive shall cease to be an employee of the
Company for all purposes.
2. Public Statements. (a) On or prior to April 15,
1996, the Company shall issue a written press release in form acceptable to
Executive announcing Executive's plans to resign as described in Section 1
hereof. Except to the extent disclosed in such release or otherwise made known
to the public (other than as a result of Executive's breach of this covenant),
and subject to paragraph (c) below, neither party shall disclose either
Executive's plans for resignation or the terms of this
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agreement to anyone other than, on a confidential basis, his or its financial
and legal advisors or (i) in Executive's case, his family and (ii) in the
Company's case, the Manville Personal Injury Settlement Trust.
(b) The parties agree that each shall use his or
its best efforts not to make any statements or take any action that may be
derogatory or disparaging to the reputation of the other or to the reputation
of any of the Company's subsidiaries and affiliates.
(c) Notwithstanding the foregoing, nothing in
this agreement shall preclude either party from truthful statements or
disclosures that are required by applicable law or regulation, or from taking
any position or from disclosing the terms of this agreement in prosecuting or
defending any judicial, administrative or arbitration proceeding arising
hereunder.
3. Payments. In satisfaction of all amounts to which
Executive is or may be entitled (including by reason of termination of
employment) under the Employment Agreement, the Supplemental Retirement
Agreement between Executive and the Company dated as of November 4, 1994, as
amended as of October 25, 1995, (the "Retirement Agreement"), the Payment and
Termination Agreement between Executive and the Company dated October 3, 1995,
Executive's Account under the Manville Corporation Benefit Trust Agreement and
Declaration of Trust by and between the Company and Harris Trust and Saving
Bank, and all outstanding awards under the Manville Corporation Stock Incentive
Plan (the "Plan"):
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(a) Upon the execution of this agreement the
Company agrees to pay Executive the sum of $7,831,600.
(b) The Company will pay Executive the sum of
$1,250,000 plus earnings thereon in accordance with Section 3(c) below upon the
occurrence of the following events:
(i) a material breach of this agreement
by the Company, as determined by the Committee described below, or
(ii) subject to a determination by a
committee the members of which are set forth in Schedule A hereto (the
"Committee"), acting by a majority, that Executive has substantially performed
his material obligations under this agreement and has not engaged in a willful
and intentional breach of a material provision of this agreement, the earliest
to occur of (x) January 3, 1997, (y) the employment of a new President and
Chief Executive Officer of the Company and (z) notice from the Board pursuant
to Section 1(b) hereof that Executive shall be treated as having resigned as
President and Chief Executive Officer.
(c) As promptly as possible following the
execution of this agreement, the sum of $1,250,000 (the "Escrow Amount") shall
be escrowed with the Colorado National Bank, N.A., a national banking
association, or a similar institution acceptable to Executive (the "Escrow
Agent") pursuant to an agreement between the Company and such Escrow Agent (the
"Escrow Agreement"). The Escrow Amount shall be invested in accordance with
the terms of the Escrow Agreement. The Escrow Amount shall be paid out to
Executive in accordance with Section 3(b) hereof and the
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Escrow Agreement upon instruction from the Committee. If the Committee shall
determine in accordance with Section 3(b) hereof that the Escrow Amount is to
be returned to the Company, the Company shall, or shall cause the Committee to,
give notice to that effect to Executive.
4. Transition Period. (a) From the date hereof until
the Effective Date, Executive agrees to continue his employment with the
Company and to cooperate with the Board in the search for his successor as
Chief Executive Officer of the Company. Thereafter, Executive will continue
his employment with the Company and will cooperate with such successor and the
Board in the transition process until the date of the earliest to occur of (i)
December 31, 1997, (ii) the expiration of 24 hours advance written notice from
the Board of the termination of such obligation and (iii) the expiration of 24
hours advance written notice by Executive that he is terminating his employment
hereunder or of his acceptance of employment with a new employer (such date,
the "Termination Date").
(b) From the date hereof until the Effective
Date, the Company shall reimburse Executive for expenses reasonably and
necessarily incurred by him hereunder. From the date hereof until the earliest
to occur of (i) December 31, 1997, (ii) the date Executive effects the
termination of his employment hereunder (including by accepting employment with
a new employer) and (iii) the material breach by Executive of this agreement,
the Company shall (x) compensate Executive at the rate of $50,000 per month,
payable in arrears and (y) continue to provide Executive with the use of an
office and part-time secretarial support.
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(c) Executive shall be eligible for an annual
bonus in respect of 1996 consistent with the Company's annual incentive plan.
The timing and amount, if any, of such bonus shall be determined by the Board
of Directors of the Company in its sole and absolute discretion.
(d) From the date hereof until the earliest to
occur of (i) the third anniversary hereof, (ii) the date of Executive's
commencement of employment with a new employer and (iii) the termination by
Executive of his employment hereunder (the "Continued Benefits Period"), the
Company will continue to provide Executive with medical, life, accident, dental
and prescription insurance and other benefits and perquisites at the levels
currently provided to Executive, subject to continued payroll deductions on the
same basis as are currently charged to Executive in connection with such
benefits. At the expiration of the Continued Benefits Period, Executive's
rights, if any, to any such benefits shall be determined in accordance with the
provisions applicable to retirees under the applicable plans and policies.
(e) Except as expressly provided herein,
Executive shall not be entitled to any compensation or benefits in respect of
the Continued Benefits Period, or any portion thereof, or the termination
thereof.
(f) In the event of a material breach by the
Company of this agreement, the Company shall pay to Executive in a lump sum an
amount equal to the product of (i) $50,000 and (ii) the number of full months
in the period (x) beginning on the date of receipt by the Company of a notice,
in accordance with Section 13(g) hereof, from Executive specifying in detail
the alleged breach and (y) ending on
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December 31, 1997. Such amount shall be reduced by compensation, if any, paid
to Executive in accordance with clause (x) of Section 4(b) hereof during such
period. Following payment of such amount the Company will have no further
obligation to compensate Executive under clause (x) of Section 4(b) hereof.
5. Golden Parachute Tax. (a) Anything in this
agreement to the contrary notwithstanding, in the event that any payment by the
Company to or for the benefit of Executive, whether paid or payable pursuant to
the terms of this agreement or otherwise (such payment, excluding any payment
pursuant to this Section 5, a "Payment") is either determined by the Company to
be subject, or is subjected by the Internal Revenue Service (after exhaustion
by the Company of its remedies described in Section 5(c)), to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, (the
"Code") or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive shall be entitled
to receive from the Company, within 15 days following the determination
described in Section 5(b) below, an additional payment ("Excise Tax Adjustment
Payment") in an amount such that after payment by Executive of all applicable
Federal, state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Excise Tax Adjustment Payment,
Executive retains an amount of the Excise Tax Adjustment Payment equal to the
Excise Tax imposed upon the Payments.
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(b) In the event that as the result of a position
taken by the Company or the Internal Revenue Service Executive is required to
make a payment of any Excise Tax, the determination of the amount of the Excise
Tax Adjustment Payment shall be made by a nationally recognized accounting firm
acceptable to Executive and the Company (the "Accounting Firm"), which shall
provide detailed supporting calculations to the Company and Executive. Subject
to the provisions of Section 5(c) below, the amount of the Excise Tax
Adjustment Payment shall be promptly paid by the Company to or for the benefit
of Executive. The determination of the Excise Tax Adjustment Payment by the
Accounting Firm shall be binding upon the Company and Executive.
(c) Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Excise Tax Adjustment Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
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(i) give the Company any information
reasonably requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in
any proceedings relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limiting the foregoing provisions of this Section 5(c), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in
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<PAGE> 10
one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to Executive, on
an interest-free basis and shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment
of taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which an Excise Tax Adjustment Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by Executive of an
amount advanced by the Company pursuant to Section 5(c), Executive becomes
entitled to receive any refund with respect to such claim, Executive shall
(subject to the Company's complying with the requirements of Section 5(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by Executive of an amount advanced by the Company pursuant to
Section 5(c), a determination is made that Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify Executive
in writing of its intent to contest such denial of refund prior to the
expiration of 30 days
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<PAGE> 11
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Excise Tax Adjustment Payment required to be
paid.
6. Non-Competition. In consideration of the agreements
herein of the Company, Executive acknowledges and herein recognizes the highly
competitive nature of the businesses of the Company and accordingly agrees that
from the date hereof until the expiration of the two year period following the
Effective Date Executive shall not, without the Company's written consent,
serve as an employee, owner (except for passive investments of not more than 1%
of the outstanding shares of, or any other equity interest in, any company or
entity listed or traded on a national securities exchange or in an
over-the-counter securities market), officer, agent or director of any firm or
person which directly competes with a line of business (i) then being conducted
by the Company or any of its subsidiaries or affiliates, in any geographic area
in which the Company or any of its subsidiaries or affiliates conducts such
line of business, and (ii) that at any time during Executive's employment by
the Company is or was conducted, or is or was actively being developed, by the
Company or any subsidiary or affiliate of the Company.
7. Confidentiality. Executive shall not at any time
disclose or use for his own benefit or purposes, or for the benefit or purposes
of any other person, firm, partnership, joint venture, association, corporation
or other business organization, entity or enterprise other than the Company and
any of its subsidiaries or affiliates, any trade secrets, information, data, or
other confidential information relating to customers,
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<PAGE> 12
development programs, costs, marketing, trading, investment, sales activities,
promotion, credit and financial data, manufacturing processes, financing
methods, plans, or the business and affairs of the Company generally, or of any
subsidiary or affiliate of the Company, provided that the foregoing shall not
apply to information which is not unique to the Company or which is generally
known to the industry or the public other than as a result of Executive's
breach of this covenant.
8. Return of Records; Intellectual Property. On the
Effective Date, Executive shall return to the Company immediately (a) all
memoranda, books, papers, plans, information, letters and other data, and all
copies thereof or therefrom, in any way relating to the business of the Company
or any of its affiliates, except that he may retain personal notes, notebooks
and diaries, and (b) all Company equipment except that on the Effective Date
Executive may, at his option, purchase from the Company any or all of the
equipment agreed to by the Company at the fair market value thereof as
reasonably determined by the Company. Executive further agrees that he will
not retain or use for his account at any time any trade names, trademark or
other proprietary business designation used or owned in connection with the
business of the Company or its subsidiaries or affiliates.
9. Specific Performance and Other Remedies. Executive
acknowledges and agrees that the Company has no adequate remedy at law for a
breach or threatened breach by Executive of any of the provisions of this
agreement and, in recognition of this fact, Executive agrees that, in the event
of a breach or threatened breach by Executive of any provisions hereof, in
addition to any remedies at
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<PAGE> 13
law, the Company, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which
may then be available. Nothing in this agreement shall be construed as
prohibiting the Company from pursuing any other remedies at law or in equity
that it may have or any other rights that it may have under any other
agreement.
10. Release. (a) In consideration of the agreements by
the Company herein, Executive hereby agrees to and does fully and completely
release, discharge and waive any and all claims, complaints, causes of action,
actions, suits, debts, sums of money, contracts, controversies, agreements,
promises, or demands of whatever kind, in law or in equity, which he ever had,
now has or which he, his heirs, executors or administrators may have against
the Company and its subsidiaries, predecessors, successors and assigns, and
each and all of their officers and directors in their capacities as such, by
reason of any event, matter, cause or thing which has occurred to the date of
execution of this agreement (hereinafter "Claims"). Executive understands and
accepts that this agreement specifically covers, but is not limited to, any and
all Claims which Executive has or may otherwise have against the Company
relating in any way to compensation, or to any other terms, conditions or
circumstances of Executive's employment with the Company and to his termination
of such employment as contemplated hereby, whether for severance or based on
statutory or common law claims for employment discrimination (including any
claims under the Age Discrimination in Employment Act), wrongful discharge,
breach of contract or any other
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<PAGE> 14
theory, whether legal or equitable. Notwithstanding the foregoing, in no event
shall Executive be deemed by this Section to have released any rights or claims
Executive may have for payments or benefits under this agreement, including but
not limited to rights to indemnification as well as rights pursuant to any
benefit program or policy under which rights are created, prescribed or
preserved by this agreement. Executive specifically acknowledges that any and
all awards held by Executive under the Plan whether, vested or unvested, will
be canceled upon execution of this agreement and Executive shall have no
further rights of any kind whatsoever in respect of any such award or under the
Plan.
(b) The Company agrees to and does fully and
completely release, discharge and waive any and all claims, complaints, causes
of action, actions, suits, debts, sums of money, contracts, controversies,
agreements, promises or demands of whatever kind, in law or equity, which the
Company or its predecessors had, the Company now has or it or its successors
may have against Executive by reason of any event, matter, cause or thing which
has occurred prior to the date of execution of this agreement and as to which
the Board of Directors of the Company (acting in their capacity as such) has
actual knowledge prior to the date of execution of this agreement.
11. Indemnification. The Company will indemnify the
Executive (and his legal representatives or other successors) to the fullest
extent permitted (including payment of expenses in advance of final disposition
of a proceeding) by the laws of the jurisdiction of incorporation of the
Company, as in effect at the time of the subject act or
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<PAGE> 15
omission, or by the Restated Certificate of Incorporation and By-Laws of the
Company, as in effect at such time or on the effective date of the Employment
Agreement, or by the terms of any indemnification agreement between the Company
and the Executive, whichever affords or afforded greatest protection to the
Executive, and the Executive shall be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the benefit
of its directors and officers (and to the extent the Company maintains such an
insurance policy or policies, during any period in which Executive is an
officer or director of the Company, the Executive shall be covered by such
policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company officer or director), against
all costs, charges and expenses (including without limitation judgments,
settlements or other monetary awards), whatsoever incurred or sustained by him
or his legal representatives at the time such costs, charges and expenses are
incurred or sustained, in connection with any action, suit or proceeding to
which he (or his legal representatives or other successors) may be made a party
by reason of his being or having been a director, officer or employee of the
Company, or any subsidiary or his serving or having served any other enterprise
as a director, officer or employee at the request of the Company.
12. Resolution of Disputes. (a) The parties agree to
submit all controversies, claims and matters of difference in any way related
to this agreement or the performance or breach of the whole or any part hereof,
to arbitration in Denver, Colorado, according to the rules and practices of the
American Arbitration Association from time to time in force. If such rules and
practices shall conflict with the Colorado
15
<PAGE> 16
Rules of Civil Procedure or any other provisions of Colorado law then in force,
such Colorado rules and provisions shall govern. Arbitration of any such
controversy, claim or matter of difference shall be a condition precedent to
any legal action thereon. This submission and agreement to arbitration shall
be specifically enforceable.
Awards shall be final and binding on all parties to
the extent and in the manner provided by Colorado law; provided that an
arbitration award shall not be binding on the Company to the extent such award
exceeds the maximum amount (the "Excess Amount") the Company would be required
to pay Executive pursuant to the express terms of this agreement, except that
such Excess Amount shall be binding on the Company as a set-off to the amount
of any award which the Company may secure against Executive. All awards may be
filed by any party with the Clerk of the District Court in the County of
Denver, Colorado and an appropriate judgment entered thereon and execution
issued therefor. At the election of any party, said award may also be filed,
and judgment entered thereon and execution issued therefor, with the clerk of
one or more other courts, state or federal, having jurisdiction over the party
against whom such award is rendered or its property.
(b) In the event of a dispute between Executive
and the Company with respect to any of Executive's rights under this agreement,
the Company shall reimburse Executive for any and all legal fees and related
expenses incurred by him in connection with enforcing such rights, at the time
such fees and related
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<PAGE> 17
expenses are incurred; provided that, if Executive's claim is found by a court
of competent jurisdiction to have been frivolous, Executive shall reimburse the
Company for all amounts paid by it under this Section.
13. Miscellaneous.
(a) Governing Law. This agreement shall be
governed by and construed in accordance with the laws of the State of Colorado
without reference to principles of conflict of laws.
(b) Entire Agreement/Amendments. This agreement
contains the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes in entirety any and all prior
understandings and agreements between the parties with respect thereto, whether
written or oral, including without limitation the Employment Agreement and the
Retirement Agreement. This agreement may not be changed, modified or
discharged except by a written agreement signed by the parties hereto.
(c) No Waiver. The failure of a party to insist
upon strict adherence to any term of this agreement on any occasion shall not
be considered a waiver of such party's rights or deprive such party of the
right thereafter to insist upon strict adherence to that term or any other term
of this agreement. Any such waiver must be in writing and signed by Executive
or an authorized officer of the Company, as the case may be.
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<PAGE> 18
(d) Severability. It is expressly understood and
agreed that although Executive and the Company consider the restrictions
contained in Sections 6 and 7 to be reasonable, if a final judicial
determination is made by a court of competent jurisdiction that the time or
territory restriction in Section 6 or any other restriction contained in
Section 6 and 7 is an unenforceable restriction against Executive, such
provision shall not be rendered void but shall be deemed amended to apply to
such maximum time and territory, if applicable, or otherwise to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any
restriction contained in Sections 6 and 7 is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained
herein. In the event that any one or more of the other provisions of this
agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
agreement shall not be affected thereby.
(e) Assignment. This agreement shall not be
assignable by Executive and shall be assignable by the Company only pursuant to
a merger or consolidation in which the Company is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the
Company, provided that (i) the assignee or transferee is the successor to all
or substantially all of the assets of the Company and (ii) such assignee or
transferee specifically assumes the liabilities, obligations and duties of the
Company, as contained in this agreement, either
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<PAGE> 19
contractually or as a matter of law. The Company further agrees that, in the
event of a sale of assets or liquidation as described in the preceding
sentence, it shall take whatever action it legally can in order to cause such
assignee or transferee to expressly assume the liabilities, obligations and
duties of the Company hereunder. No rights or obligations of Executive under
this agreement may be assigned or transferred by Executive other than his
rights to compensation and benefits, which may be transferred only by will or
operation of law.
(f) Successors; Binding Agreement; Third Party
Beneficiaries. This agreement shall inure to the benefit of and be binding
upon personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees of the parties hereto. If Executive
should die while any amount would still be payable to Executive hereunder if
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this agreement to
Executive's devisee, legatee or other designee or, if there is no such
designee, to Executive's estate. Each of the individuals and entities
described in Sections 6, 7 and 10 above shall be deemed to be a third party
beneficiary of the provisions of such Sections and, in the event of a breach of
such provisions with respect to such member, shall be entitled to enforce such
provisions in accordance with their terms.
(g) Communications. For the purpose of this
agreement, notices and all other communications provided for in this agreement
shall be in writing and shall be deemed to have been duly given when delivered
or two business days
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after being mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the
execution page of this agreement, provided that all notices to the Company
shall be directed to the attention of the Chairman of the Company with a copy
to the General Counsel of the Company, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
(h) Withholding. The Company may withhold from
any and all amounts payable under this agreement such Federal, state and local
taxes as may be required to be withheld pursuant to any applicable law or
regulation.
(i) Survivorship. The respective rights and
obligations of the parties hereunder shall survive to the extent necessary to
the agreed preservation of such rights and obligations.
(j) Acknowledgment. Executive hereby
acknowledges that he has carefully read this agreement, fully understands and
accepts all of its provisions and signs it voluntarily of his own free will.
Executive further acknowledges that he has been provided a full opportunity to
review and reflect on the terms of this agreement and to seek the advice of
legal counsel of his choice. Executive acknowledges that he has been given a
period of 21 days to consider this agreement before signing it. Executive may
revoke this agreement within seven days of his signing it. For such revocation
to be effective, written notice must be received by the Company no later
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than the close of business on the seventh day after Executive signs this
agreement. If Executive revokes this agreement it shall be of no further force
and effect.
(k) Counterparts. This agreement may be signed
in counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
(l) Headings. The headings of the sections
contained in this agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any provision of this
agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the day and year first above written.
/s/ W. Thomas Stephens
---------------------------------------
W. Thomas Stephens
Address:
SCHULLER CORPORATION
By: /s/ Todd Goodwin
-----------------------------------
Chairman of the
Compensation Committee
Attest: /s/ Richard D. Von Wald
-------------------------
General Counsel
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SCHEDULE A
Committee Members:
Robert E. Fowler, Jr.
Will M. Storey
Raymond S. Troubh
<PAGE> 1
EXHIBIT 10.2
Amendment No. 3 to the Employment Agreement dated April 10,
1992, as amended November 4, 1994, by and between Schuller Corporation
(formerly Manville Corporation) (the "Company") and Richard B. Von Wald (the
"Executive").
W I T N E S S E T H :
WHEREAS, Executive currently serves as General Counsel of the
Company;
WHEREAS, in consideration of Executive's continued employment
with the Company the parties wish to amend the Employment Agreement;
WHEREAS, in all other respects the Employment Agreement shall
remain in full force and effect;
NOW THEREFORE, in consideration of the foregoing and the
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
1. Section 9 of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"9. Golden Parachute Tax. (a) Anything in this
agreement to the contrary notwithstanding, in the event Executive's employment
hereunder is terminated other than for Cause or is terminated for Good Reason
within the meaning of Section 8(e) occurring after March 27, 1996 other than
merely by reason of the closing of the transaction contemplated by the
Agreement and Plan of Merger, dated as of October 25, 1995, by and among
Riverwood International Corporation, RIC Holding, Inc., formerly named CDRO
Holding Corporation ("Parent"), and CDRO Acquisition Corporation, a wholly
owned subsidiary of Parent, or in the event of a Change in Control occurring
after March 27, 1996, then:
(i) If it is determined that any payment by the
Company to or for the benefit of Executive, whether paid or payable pursuant to
the terms of this agreement or otherwise, (such payment, excluding any payment
pursuant to this Section 9, a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, (the
"Code") or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then
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<PAGE> 2
Executive shall be entitled to receive from the Company, within 15 days
following the determination described in Section 9(a)(ii) below, an additional
payment ("Excise Tax Adjustment Payment") in an amount such that after payment
by Executive of all applicable Federal, state and local taxes (computed at the
maximum marginal rates and including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon the Excise Tax
Adjustment Payment, Executive retains an amount of the Excise Tax Adjustment
Payment equal to the Excise Tax imposed upon the Payments.
(ii) Subject to the provisions of Section
9(a)(iii), all determinations required to be made under this Section 9(a),
including whether an Excise Tax Adjustment Payment is required and the amount
of such Excise Tax Adjustment Payment, shall be made by a nationally recognized
accounting firm acceptable to Executive and the Company (the "Accounting
Firm"), which shall provide detailed supporting calculations to the Company and
Executive within 15 business days of the date of termination of Executive's
employment. Except as hereinafter provided, any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination hereunder, it is possible that (x) certain Excise
Tax Adjustment Payments will not have been made by the Company which should
have been made (an "Underpayment"). In the event that the Company exhausts its
remedies pursuant to Section 9(a)(iii) and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive.
(iii) Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Excise Tax Adjustment Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(A) give the Company any information
reasonably requested by the Company relating to such
claim,
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(B) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation
with respect to such claim by an attorney reasonably
selected by the Company,
(C) cooperate with the Company in good
faith in order effectively to contest such claim, and
(D) permit the Company to participate
in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 9(a)(iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such
payment to Executive, on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which an Excise Tax Adjustment Payment would
be payable hereunder and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(iv) If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 9(a)(iii), Executive becomes
entitled to receive any refund with respect to such claim, Executive shall
(subject to the Company's complying with the requirements of Section 9(a)(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by Executive of an amount advanced by the Company pursuant to
Section 9(a)(iii), a determination is made that Executive shall not be entitled
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<PAGE> 4
to any refund with respect to such claim and the Company does not notify
Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Excise Tax Adjustment
Payment required to be paid.
(b) In the event of any other termination of Executive's
employment hereunder, notwithstanding any other provision of this Agreement or
any other agreement between Executive and the Company or any affiliate, if a
reduction in the aggregate amount of payments Executive otherwise would be
entitled to receive from the Company or any affiliate, which payments are
deemed contingent on a change described in Section 280G(b)(2)(A)(i) of the
Code, (the "Contingent Payments") would result in a greater "Net After-Tax
Amount", as such term is defined below, then such payments, as Executive shall
designate, shall be reduced to provide the greatest Net After-Tax Amount. For
these purposes, the term "Net After-Tax Amount" shall mean the net amount of
the Contingent Payments after giving effect to all taxes which would be
applicable to such payments, including, but not limited to, any tax under
Section 4999 of the Code. The determination of whether any such payment
reduction shall be effected shall be made by a nationally recognized accounting
firm acceptable to Executive and the Company and such determination shall be
binding upon Executive and the Company.
(c) Notwithstanding anything to the contrary in this
Agreement, if, as of the date of Executive's termination of employment, the
Offset under the Supplemental Retirement Agreement exceeds the benefit to which
Executive is entitled under Section 2 of the Supplemental Retirement Agreement
prior to any Offset, as defined therein, then the aggregate payments (including
perquisites and benefits) due to Executive, if any, under this Agreement shall
be reduced by such excess, except to the extent that such excess shall
otherwise be satisfied by the Company's canceling other compensation or other
amounts or property due to Executive."
2. No Waiver of Existing Rights. Executive's continued
employment by the Company and the execution of this agreement by Executive
shall in no way constitute a waiver by Executive of any right Executive has or
may have under his Employment Agreement as of the date hereof.
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3. Counterparts. This agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
4. Headings. The headings of the sections contained in this
agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the 12th day of April, 1996.
/s/ Richard B. Von Wald
-----------------------------------------
Richard B. Von Wald
Address:
SCHULLER CORPORATION
By: /s/ Todd Goodwin
--------------------------------------
Chairman of the
Compensation Committee
Attest: /s/ W. T. Stephens
-----------------------
Chief Executive Officer
5
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of _____________________ (the "Agreement") by
and between SCHULLER INTERNATIONAL, INC., a Delaware corporation (the
"Company") and a subsidiary of SCHULLER CORPORATION, a Delaware corporation
("Schuller"), and ________________________ (the "Executive").
WHEREAS the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment (the "Agreement"); and
WHEREAS Executive desires to accept such employment and to enter into such
an Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Employment. The Executive's period of employment
hereunder shall commence on _____________________ and, except as otherwise
provided herein, end three years from such date. At the April meeting of
Schuller's Board of Directors (the "Board") or at the next meeting thereafter
at which the extension of employment agreements of executives of the Company is
considered, the Board and the Chief Executive Officer of the Company shall
review this Agreement and Executive's performance hereunder and shall
determine, in their sole discretion, whether or not to extend the period of
Executive's employment pursuant to this Agreement by one year. The period of
Executive's employment hereunder, including
<PAGE> 2
any extension or extensions pursuant to the foregoing sentence, is referred to
hereinafter as the "Employment Term". A failure to renew this Agreement shall
not constitute a termination of Executive's employment.
2. Position. Executive shall serve as ___________________________ of
the Company. Executive shall devote substantially all of his business time and
energies to the business of the Company. Notwithstanding the foregoing,
Executive may (a) continue to serve on the board of directors of any business
corporation on which he is serving as of the date of this Agreement (as shown
on Schedule A), (b) serve on the boards of directors or committees of
non-profit organizations and (c) with the prior approval of the Chief Executive
Officer of the Company or of the Board, serve on the boards of directors of
other business corporations, provided that in the Company's sole reasonable
discretion none of the foregoing activities materially interferes with the
performance of Executive's duties hereunder.
3. Base Salary. Company shall pay Executive a base salary at the
rate of not less than $_______________ per year, as the same may from time to
time be increased at the sole discretion of the Board or, prior to a Change in
Control, decreased in the event of across the board salary reductions within
the corporate staff group or the business division in which Executive is
employed, whichever is applicable ("Base Salary").
4. Incentive Compensation. Executive shall participate in the
Schuller executive incentive compensation plans, as in effect from time to time
during the Employment Term, for which he is eligible. (References herein to
"Schuller executive incentive compensation plans" whether annual or long-term,
shall include such plans
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maintained by Schuller and/or the Company, as the case may be, from time to
time.) The Schuller executive incentive compensation plans in effect on the
date hereof in which Executive participates are listed on Schedule B.
5. Employee Benefits. Executive shall be eligible to participate in
such other of the Company's employee benefit plans and to receive such benefits
for which his level of employment makes him eligible, in accordance with the
Company's policies as in effect from time to time during the Employment Term.
6. Business Expenses. Necessary and reasonable business expenses
incurred by Executive during the Employment Term shall be reimbursed in
accordance with Company policies.
7. Termination Prior to a Change in Control.
(a) Retirement. This Agreement shall terminate automatically
upon Executive's Retirement, as defined hereafter. For purposes of this
Agreement, "Retirement" means termination of Executive's employment initiated
by Executive, other than for Good Reason as defined in Section 7(e) or Section
8(e) hereof, whichever is applicable, whereby Executive is entitled to receive
an immediately payable benefit, including an early retirement benefit, under
the Company's retirement plan generally applicable to its salaried employees or
under any retirement arrangement established with respect to Executive with his
consent, in either case, whether or not Executive commences to receive such
benefit at the time of such termination. Upon termination of Executive's
employment by reason of Retirement prior to a Change in Control, Executive
shall be entitled to benefits determined in accordance with the Company's
retirement, benefit and insurance programs in effect at such time.
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<PAGE> 4
(b) Death or Disability.
(i) Disability. Executive's employment hereunder may
be terminated by the Company if Executive becomes physically or mentally
incapacitated and is therefore unable for a period of six (6) consecutive
months to perform his duties (such incapacity is hereinafter referred to as
"Disability"). Any question as to the existence of the Disability of Executive
as to which Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to Executive
and the Company. Upon any such termination for Disability prior to a Change in
Control, Executive shall be entitled to receive his Base Salary through the
date on which Executive is first eligible to receive payment of disability
benefits in lieu of salary under the Company's employee benefit plans as then
in effect.
(ii) Death. Upon termination for death prior to a
Change in Control, Executive shall be entitled to his Base Salary at the rate
in effect at the time of Executive's death through the end of the month in
which his death occurs.
(iii) Death or Disability Benefits. All other benefits
to which Executive may be entitled following Executive's termination for death
or Disability prior to a Change in Control shall be determined in accordance
with the plans, policies and practices of the Company.
(c) For Cause by the Company; Voluntary Termination by
Executive. Executive's employment hereunder may be terminated by the Company
for "Cause". For purposes of this Agreement, prior to a Change in Control,
"Cause" shall mean (i) Executive's willful and continued failure substantially
to perform his duties hereunder (other than as a result of total or partial
incapacity due to physical or mental illness or as
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<PAGE> 5
a result of termination by Executive for Good Reason as defined in Section 7(e)
below), (ii) Executive's dishonesty in the performance of his or her duties
hereunder or (iii) Executive's conviction of a felony under the laws of the
United States or any state thereof. If Executive is terminated for Cause, or
if Executive voluntarily terminates employment hereunder other than for Good
Reason, in either case, prior to a Change in Control, he shall be entitled to
receive his Base Salary through the date of termination. All other benefits,
if any, payable to Executive following such termination of Executive's
employment shall be determined in accordance with the plans, policies and
practices of the Company.
(d) Without Cause by the Company or with Good Reason by
Executive. If prior to a Change in Control Executive's employment hereunder is
terminated by the Company without Cause (other than by reason of death or
Disability) or by Executive with "Good Reason" (as defined in Section 7(e)
below), Executive shall be entitled to receive the following benefits:
(i) The Company shall pay Executive at the time of
such termination in a lump sum a cash amount equal to two times his Base Salary
in effect at the time of such termination or, in the event of termination by
Executive on account of an event described in Section 7(e)(iv) below, the Base
Salary as in effect prior to the reduction or reductions referred to therein
plus the bonus Executive would have earned in respect of the year of
termination under the Schuller annual incentive compensation plan, if any, in
effect at the date of termination or, in the event of a termination by
Executive by reason of an event described in Section 7(e)(vi), the plan in
effect prior to the elimination referred to therein, determined as if Executive
had been employed by
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<PAGE> 6
the Company for the full year and without regard to any right reserved by the
Company to decrease or eliminate such bonus, and assuming actual performance
had equaled 100% of the performance objective established for such year
pursuant to the terms of such plan.
(ii) For a 24-month period after such termination, the
Company shall cause Executive to be provided with life, accident, medical,
dental and prescription insurance benefits substantially similar to, and on the
same terms as, those benefits elected and received by Executive under the
Company's "Flex Benefit" program immediately prior to such termination;
provided that, Executive shall be charged an amount equal to any monthly
payroll deduction charged for similar benefits to executives in positions
similar to that which Executive held before his termination; and provided
further that, if Executive receives medical benefits under the Schuller Retiree
Comprehensive Health Care Plan and post-retirement life insurance benefits
(collectively, "Retiree Medical and Life Insurance Benefits"), at any time
during the 24-month period referred to above, once such benefits begin
Executive shall be entitled only to Retiree Medical and Life Insurance
Benefits.
(iii) For a period of 24 months after such termination,
the Company shall provide or cause Executive to be provided with the
perquisites listed on Schedule C, attached hereto, as may be amended by the
Company from time to time without Executive's consent prior to such termination
(provided that nothing herein shall be deemed to permit such an amendment
without Executive's consent following a Change in Control), on the same terms
and conditions on which such perquisites were provided prior to Executive's
termination.
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<PAGE> 7
(iv) In addition to all other amounts payable to
Executive under this Section 7(d), Executive shall be entitled to receive all
benefits payable to Executive under any other plan, policy or agreement
relating to retirement or other benefits in accordance with the terms of such
plans, policies or agreements; provided, however that, amounts paid pursuant to
this Section 7(d) shall be in lieu of any payments under any Schuller separation
policy.
(v) The Company shall provide Executive with
outplacement services from the firm of Executive's choice at a cost to the
Company not to exceed the lesser of (A) 20% of Executive's Base Salary in
effect at the time of Executive's termination of employment with the Company or
(B) $25,000.
(e) Good Reason. For purposes of this Agreement, prior to a
Change in Control, "Good Reason" shall mean:
(i) a material reduction in Executive's
responsibilities, authorities or duties, all as contemplated by Section 2
hereof; provided, however, that such reduction by reason of a termination for
Cause or Disability shall not constitute Good Reason;
(ii) Executive's job is eliminated other than by
reason of promotion or termination for Cause or Disability.
(iii) the Company fails to pay Executive any amount
otherwise vested and due hereunder or under any plan or policy of the Company;
(iv) a reduction in Executive's Base Salary except in
the event of an across the board salary reduction within the corporate staff
group or the business division in which Executive is employed, whichever is
applicable;
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<PAGE> 8
(v) a reduction in Executive's aggregate level of
benefits under the Company's pension, life insurance, medical, health and
accident, disability, deferred compensation or savings or similar plans, except
in the event of an across the board reduction in such benefits within the
corporate staff group or the business division in which Executive is employed,
whichever is applicable;
(vi) the elimination of an annual incentive
compensation plan; or
(vii) Executive's office is relocated outside of a
50-mile radius of Denver, Colorado without his written consent.
If Executive provides to the Company a Notice of Termination, as
defined in Section 13(f), in connection with an event described in clauses (i)
through (vii) of this Section 7(e), the Company shall have ten (10) business
days from the date of receipt of such notice to effect a cure of the event
described therein, and upon cure thereof by the Company to Executive's
reasonable satisfaction, such event shall no longer constitute Good Reason for
purposes of this Agreement.
(f) Mitigation. In the event of termination of Executive's
employment hereunder by the Company without Cause or by Executive with Good
Reason prior to a Change in Control, benefits otherwise receivable by Executive
pursuant to subsection 7(d)(ii) shall be reduced to the extent comparable
benefits are received by Executive during the 24-month period following such
termination. Executive shall report to the Company any such benefits actually
received by Executive.
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<PAGE> 9
8. Termination Following a Change in Control.
(a) Retirement. This Agreement shall terminate automatically
upon Executive's Retirement. Upon a termination of Executive's employment by
reason of Retirement following a Change in Control, Executive shall be entitled
to benefits determined in accordance with the Company's retirement, benefit and
insurance programs in effect immediately prior to the Change in Control or, if
more generous, such programs in effect at the time of such Retirement.
(b) Death or Disability.
(i) Disability. Executive's employment hereunder may
be terminated by reason of Executive's Disability, subject to the procedure for
determining such Disability outlined in Section 7(b)(i). Upon any termination
for Disability following a Change in Control, Executive shall be entitled to
receive his Base Salary for a two-year period ending on the second anniversary
of Executive's date of termination. Such Base Salary shall be paid in equal
monthly installments and shall be reduced by any amounts received as disability
benefits in lieu of salary under the Company's employee benefit plans.
(ii) Death. Upon termination for death following a
Change in Control, Executive shall be entitled to (x) his Base Salary at the
rate in effect at the time of Executive's death through the end of the month in
which his death occurs and (y) if and to the extent the death benefits provided
Executive by the Company are less than would have been paid immediately prior
to a Change in Control, a lump sum payment of cash in an amount equal to the
value of such shortfall. Any such lump sum payment shall be made within ten
(10) business days following Executive's death.
9
<PAGE> 10
(iii) Death or Disability Benefits. All other benefits
to which Executive may be entitled upon Executive's termination for death or
Disability following a Change in Control shall be determined in accordance with
the plans, policies and practices of the Company in effect immediately prior to
the Change in Control or, if more generous, such plans, policies and practices
as in effect at any time following the Change in Control; provided that,
nothing in this Section 8(b)(iii) shall be interpreted so as to result in the
duplication of the benefits provided under Section 8(b)(i) or (ii).
(c) For Cause by the Company; Voluntary Termination by
Executive. For purposes of this Agreement, following a Change in Control,
"Cause" shall mean (i) Executive's willful and continued failure substantially
to perform his duties hereunder (other than as a result of total or partial
incapacity due to physical or mental illness or as a result of termination by
Executive for Good Reason as defined in Section 8(e) below) after a written
demand for substantial performance is delivered to Executive personally and
Executive shall have failed during the 60-day period following such written
demand to have corrected such failure, (ii) Executive's dishonesty in the
performance of his duties hereunder or (iii) Executive's conviction of a felony
under the laws of the United States or any state thereof. For purposes of this
Section 8(c) no act or failure to act on Executive's part shall be deemed
willful unless done or omitted to be done by Executive not in good faith and
without reasonable belief that Executive's action or omission was in the best
interest of the Company.
If Executive is terminated for Cause, or if Executive voluntarily
terminates his employment with the Company other than for Good Reason, in
either case, following a Change in Control, he shall be entitled to receive his
Base Salary through
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<PAGE> 11
the date of termination. All other benefits, if any, payable to Executive
following such termination of Executive's employment shall be determined in
accordance with the plans, policies and practices of the Company.
(d) Without Cause by the Company or with Good Reason by
Executive. If Executive's employment is terminated by the Company following a
Change in Control without Cause (other than by reason of death or Disability)
or by Executive with "Good Reason" (which following a Change in Control shall
have the meaning set forth in Section 8(e) below), Executive shall be entitled
to receive the following benefits:
(i) The Company shall pay Executive at the time of
such termination in a lump sum a cash amount equal to two times the sum of (A)
his Base Salary in effect at the time of such termination or, in the event of
termination by Executive by reason of an event described in Section 8(e)(iv)
below, the Base Salary as in effect prior to the reduction or reductions
referred to therein plus (B) the bonus Executive would have earned in respect
of the year of termination under the Schuller annual incentive compensation
plan, if any, in effect at the date of termination or in the event of a
termination by Executive by reason of an event described in Section 8(e)(v),
the plan in effect immediately prior to the reduction or reductions referred to
therein, determined as if Executive had been employed by the Company for the
full year and without regard to any right reserved by the Company to decrease
or eliminate such bonus, and assuming actual performance had equaled 100% of
the performance objective established for such year pursuant to the terms of
such plan.
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(ii) The Company shall pay Executive in a lump sum a
cash amount equal to a fraction of the annual bonus which (absent such
termination and without regard to any right reserved by the Company to decrease
or eliminate such bonus) Executive would have earned with respect to the year
of termination under the Schuller annual executive incentive compensation plan,
if any, in effect at the date of termination or, in the event of a termination
by Executive by reason of an event described in Section 8(e)(v), the plan in
effect prior to the reduction or reductions referred to therein, assuming
actual performance had equaled 100% of the performance objective established
for such year pursuant to the terms of such plan, the numerator of which
fraction is the number of days in such year during which the Executive was
employed by the Company and the denominator of which is 365. Such payment
shall be made at the time of Executive's termination.
(iii) [Reserved.]
(iv) Executive shall receive credit under the
Supplemental Plan for Participants in the Schuller Salaried Retirement Plan for
two additional years of service for purposes of both vesting and accrual of
benefits.
(v) For a 36-month period following Executive's
termination, the Company shall pay Executive in monthly installments the sum of
the monthly costs to Executive of purchasing life, accident, medical, dental
and prescription insurance benefits substantially similar to such benefits
elected and received by Executive under the Company's "Flex Benefit" program
immediately prior to Executive's termination or, if more generous, immediately
prior to the Change in Control ("Continued Benefits") less the monthly payroll
deduction, if any, charged to Executive immediately prior to
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<PAGE> 13
Executive's termination, or, if applicable, immediately prior to the Change in
Control, for any of such Continued Benefits; notwithstanding the foregoing, if
Executive begins to receive Retiree Medical and Life Insurance Benefits at any
time during the 36-month period referred to above, once such benefits begin, the
monthly payment due Executive under the preceding clause shall equal the monthly
costs to Executive of purchasing Continued Benefits not provided by the Company
to Executive as Retiree Medical and Life Insurance Benefits.
(vi) For a 24-month period after such termination, the
Company shall provide or cause Executive to be provided with the perquisites
listed on Schedule C, attached hereto (which the Company may amend from time to
time prior to a Change in Control, without Executive's consent), on the same
terms and conditions on which such perquisites were provided at the time of
Executive's termination or, if more generous, immediately prior to such
termination.
(vii) In addition to all other amounts payable all
other amounts payable to Executive under this Section 8(d), Executive shall be
entitled to receive all benefits payable to Executive under any other plan,
policy or agreement relating to retirement or other benefits, in accordance
with the terms of such plans, policies or agreements; provided, however that,
amounts paid pursuant to this Section 8(d) shall be in lieu of any payments
under any Schuller separation policy.
(viii) The Company shall provide Executive with
outplacement services from the firm of Executive's choice at a cost to the
Company not to exceed 20% of Executive's Base Salary in effect at the time of
such termination or, in the event
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<PAGE> 14
of termination by Executive by reason of an event described in Section 8(e)(iv)
below, the Base Salary as in effect prior to the reduction or reductions
referred to therein.
(e) Good Reason Following a Change in Control. For purposes
of this Agreement, following a Change in Control, "Good Reason" shall mean:
(i) a material adverse change in the nature or scope
of Executive's responsibilities, authorities, duties and/or position (including
by reason of a substantial reduction in the size of the Company or other
substantial change in the character or scope of the Company's operations);
(ii) Executive no longer serves in the position
described in Section 2, other than by reason of a promotion or a termination
for Cause or Disability;
(iii) the Company fails to pay Executive any amounts
otherwise vested and due hereunder or under any plan or policy of the Company;
(iv) a reduction in Executive's Base Salary in effect
immediately prior to the Change in Control or as the same may be increased from
time to time;
(v) a reduction in Executive's incentive compensation
opportunity, as defined below, under the Schuller executive incentive
compensation plans as in effect immediately prior to the Change in Control or
as the same may be increased from time to time (absent, in the case of any such
reduction relative to Executive's annual bonus, a corresponding increase in his
Base Salary);
(vi) the failure of the Company, to continue to
provide Executive with benefits and perquisites which are substantially similar
in the aggregate to those enjoyed by Executive under the Company's pension,
life insurance, medical, health and accident, disability, deferred compensation
or savings or similar plans and fringe benefit
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programs (including vacation) in which Executive was participating immediately
prior to the Change in Control; or the failure by the Company to continue to
provide Executive with directors' or officers' insurance, as applicable, at the
level maintained immediately prior to the Change in Control;
(vii) the Executive's office is relocated outside
of a 50-mile radius of Denver, Colorado without his written consent;
(viii) the failure of the Company to obtain an agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 13(e) hereof; or
(ix) any purported termination of Executive's
employment by the Company which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 13(f) and, if applicable,
following the written demand described in Section 8(c) and the relevant cure
period.
If Executive provides a Notice of Termination, as defined in
Section 13(f), in connection with an event described in clauses (i) through
(vii) of this Section 8(e), to the Company, the Company shall have ten (10)
business days from the date of receipt of such notice to effect a cure of the
event described therein, and upon cure thereof by the Company to Executive's
reasonable satisfaction, such event shall no longer constitute Good Reason for
purposes of this Agreement.
(f) Reduction in Incentive Compensation Opportunity. For
purposes of this Agreement, a "reduction in Executive's incentive compensation
opportunity" under the Schuller executive incentive compensation plans shall
include:
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<PAGE> 16
(i) the failure to maintain both an annual and a
long-term incentive plan;
(ii) any reduction or elimination by the Company of
Executive's annual or long-term incentive compensation pursuant to any reserved
right under any such plan to decrease or eliminate such bonus or award;
(iii) any reduction in Executive's participation level
under any such plan; and
(iv) any adverse change in the payout schedule or its
equivalent or in the manner of assessing actual performance under any such plan
and/or any extraordinary change in the applicable performance criteria
thereunder.
(g) Change in Control. For purposes of this Agreement, the
phrase "Change in Control" shall mean the following and shall be deemed to have
occurred if any of the following events shall have occurred:
(i) any Person (as defined below) (other than
Schuller), any trustee or other fiduciary holding securities under any employee
benefit plan of Schuller, or any company owned, directly or indirectly, by the
stockholders of Schuller in substantially the same proportions as their
ownership of the common stock of Schuller) becomes the Beneficial Owner (as
defined below) (except that a Person shall be deemed to be the Beneficial Owner
of all shares that any such Person has the right to acquire pursuant to any
agreement or arrangement or upon exercise of conversion rights, warrants or
options or otherwise, without regard to the sixty day period referred to in
Rule 13d-3 under the Exchange Act (as defined below)), directly or indirectly,
of securities of Schuller or any Significant Subsidiary
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(as defined below), representing 30 percent or more of the combined voting
power of Schuller's or such subsidiary's then outstanding securities; provided,
however, that such event shall not constitute a Change in Control unless or
until the percentage of such securities owned beneficially, directly or
indirectly, by such Person is equal to or more than all such securities owned
beneficially, directly or indirectly, by Manville Personal Injury Settlement
Trust (the "Trust");
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with Schuller to effect a transaction described in clause (i),
(iii), or (iv) of this paragraph) whose election by the Board or nomination for
election by Schuller's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who either were directors at the
beginning of the two-year period or whose election or nomination for election
was previously so approved but excluding for this purpose any such new director
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of an
individual, corporation, partnership, group, associate or other entity or
Person other than the Board, cease for any reason to constitute at least a
majority of the Board; provided, however, that such event shall not constitute
a Change in Control unless or until the percentage of voting securities of
Schuller owned beneficially, directly or indirectly, by the Trust is less than
50 percent of all such outstanding securities;
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(iii) the consummation of a merger or consolidation of
Schuller or any subsidiary owning directly or indirectly all or substantially
all of the consolidated assets of Schuller (a "Significant Subsidiary") with
any other corporation, other than a merger or consolidation which would result
in the voting securities of Schuller or a Significant Subsidiary outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
resulting entity) more than 50 percent of the combined voting power of the
surviving or resulting entity outstanding immediately after such merger or
consolidation;
(iv) the stockholders of Schuller or any affiliate
approve a plan or agreement for the sale or disposition of all or substantially
all of the consolidated assets of Schuller (other than such a sale or
disposition immediately after which such assets will be owned directly or
indirectly by the stockholders of Schuller in substantially the same
proportions as their ownership of the common stock of Schuller immediately
prior to such sale or disposition) in which case the Board shall determine the
effective date of the Change in Control resulting therefrom; or
(v) any other event occurs which the Board
determines, in its discretion, would materially alter the structure of Schuller
or its ownership.
(vi) Defined terms.
(A) "Beneficial Owner" shall have the meaning
ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to
such Rule.
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(B) "Exchange Act" means the Securities
Exchange Act of 1934, as amended from time to time, including rules thereunder
and successor provisions and rules thereto.
(C) "Person" shall have the meaning ascribed
to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, and shall include a "group" as defined in Section 13(d)
thereof.
9. [Reserved.]
10. Indemnification. The Company will indemnify Executive (and his
legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the jurisdiction of incorporation of the Company, as in effect
at the time of the subject act or omission, or by the Restated Certificate of
Incorporation and By-Laws of the Company, as in effect at such time or on the
effective date of this Agreement, or by the terms of any indemnification
agreement between the Company and Executive, whichever affords or afforded
greatest protection to Executive, and Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by his or his legal representatives at the time such costs, charges
and expenses are incurred or sustained, in connection with any action, suit or
proceeding to which he (or his legal representatives or other successors) may
be
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made a party by reason of her being or having been a director, officer or
employee of the Company, Schuller or any subsidiary of either of them, or he
serving or having served any other enterprise as a director, officer or
employee at the request of the Company or Schuller.
11. Legal Fees. In the event of a dispute between Executive and the
Company with respect to any of Executive's rights under this Agreement, the
Company shall reimburse Executive for any and all legal fees and related
expenses incurred by him in connection with enforcing such rights, at the time
such fees and related expenses are incurred; provided that, if Executive's
claim is found by a court of competent jurisdiction to have been frivolous,
Executive shall reimburse the Company for all amounts paid by it under this
Section.
12. Confidentiality; Specific Performance. Executive will not at any
time (whether during or after him employment with the Company) disclose or use
for his own benefit or purposes, or the benefit or purposes of any other
person, firm, partnership, joint venture, association, corporation or other
business organization, entity or enterprise other than the Company and any of
its subsidiaries or affiliates, any Trade Secrets of the Company without first
obtaining the written consent of the Company.
Executive will not at any time during his employment with the
Company or for a period of two years after termination of his employment,
disclose or use for his own benefit or purposes or the benefit or purposes, of
any other person, firm, partnership, joint venture, association, corporation or
other business organization, entity or enterprise other than the Company and
any of its subsidiaries or affiliates, any Confidential Information of the
Company which is disclosed to or learned by Employee
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during employment with the Company. Employee acknowledges that Confidential
Information and materials developed by Employee, or Confidential Information
and materials received by the Company in confidence from third parties, are
also included within the meaning of this Section.
As used herein "Trade Secret" means the whole or any portion or
phrase of any technical information, design, process, procedure, formula or
improvement known or used by the Company that is valuable and secret (in the
sense that it is not generally known to competitors of the Company). To the
extent consistent with the foregoing, Trade Secrets include (without
limitation) the specialized information and technology that provide the Company
with an advantage over competitors or potential competitors in its industry.
As used herein "Confidential Information" means any data or
information known by the Company related to the business of the Company, other
than Trade Secrets, that is of competitive significance to the Company and not
generally known by the public. To the extent consistent with the foregoing,
"Confidential Information" includes (without limitation): cost data (such as
labor or material costs pertaining to the products or services) of the Company;
data relating to efficiency of the Company's operations; the identity and
location of vendors and the terms of sale (including prices) negotiated with
such vendors; data relating to sales -- by customer, by location, by product
category, by sales price, or by end-use application; customer lists; financial
information hat has not been released to the public; future business plans,
marketing strategies, or advertising campaigns; and personnel files.
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Executive agrees that upon termination of his employment with the
Company for any reason, he will return to the Company immediately all
memoranda, books, papers, plans, information, letters and other data, and all
copies thereof or therefrom, in any way relating to the business of the Company
and its affiliates, except that he may retain personal notes, notebooks and
diaries. Executive further agrees that he will not retain or use for his
account at any time any trade names, trademark or other proprietary business
designation used or owned in connection with the business of the Company or its
affiliates.
Executive acknowledges and agrees that the Company's remedies at
law for a breach or threatened breach of any of the provisions of this Section
would be inadequate and, in recognition of this fact, Executive agrees that, in
the event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which
may then be available.
13. Miscellaneous.
(a) Governing Law; Liability of the Executive. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Colorado. Executive shall not be subject to liability for breach of this
Agreement by reason of his termination of his employment hereunder.
(b) Entire Agreement/Amendments/Effectiveness. This Agreement
shall supersede any and all existing employment, change-in-control or severance
agreements between Executive and the Company or any of its affiliates and
contains
22
<PAGE> 23
the entire understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement and any amendment hereto shall not be effective unless and until
signed by the Chief Executive Officer of the Company and attested to by the
General Counsel of the Company.
(c) No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.
(d) Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
(e) Successors; Binding Agreement. (i) In the event of a
Change in Control, the Company will require the successor to the Company as
Executive's employer (whether such succession is direct or indirect, by
purchase, merger, consolidation or otherwise, to any portion of the business
and/or assets of Schuller or the Company) to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company", shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
23
<PAGE> 24
or otherwise. Prior to a Change in Control, the term "Company", shall also
mean any affiliate of the Company to which Executive may be transferred and the
Company shall cause such successor employer to be considered the "Company"
bound by the terms of this Agreement and this Agreement shall be amended so to
provide. Following a Change in Control the term "Company" shall not mean any
affiliate of the Company to which Executive may be transferred unless Executive
shall have previously approved of such transfer in writing, in which case the
Company shall cause such successor employer to be considered the "Company"
bound by the terms of this Agreement and this Agreement shall be amended so to
provide.
(ii) This Agreement shall inure to the benefit of and
be enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee or, if there is no
such designee, to Executive's estate. This Agreement shall not be assignable
by Executive.
(f) Notice; Notice of Termination. (i) For the purpose of
this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and, except as otherwise provided in paragraph
(iii) below, shall be deemed to have been duly given when delivered or mailed
by United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the signature page of this
Agreement; provided that all notices to the
24
<PAGE> 25
Company shall be directed to the attention of the General Counsel of Schuller,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
(ii) Any purported termination of Executive's
employment by the Company or by Executive shall not be effective unless
communicated by written Notice of Termination to the other party hereto in
accordance with paragraph (i) above. For purposes of this Agreement, a "Notice
of Termination" in the case of a termination for Cause following a Change in
Control shall mean a notice given within ten (10) business days of the
Company's having actual knowledge of the events giving rise to such termination
and in all cases shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of Executive's employment under the provision so indicated.
(iii) The date of termination of Executive's employment
shall be the date of receipt of the Notice of Termination, except in the case
of (A) Executive's death, in which case the date of termination of employment
shall be the date of death or (B) Executive's termination for Cause following a
Change in Control, in which case the date of termination shall be ten (10)
business days after actual receipt by Executive of the Notice of Termination;
provided that, if within thirty (30) days after any Notice of Termination
following a Change in Control is received, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the date of termination of Executive's employment shall be the
date on which the
25
<PAGE> 26
dispute is finally determined, either by mutual written agreement of the
parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or the
time for appeal therefrom has expired and no appeal has been perfected); and
provided further that the date of termination of Executive's employment shall
be extended by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
Base Salary and incentive compensation) or, if higher, the compensation in
effect immediately prior to the Change in Control, and continue Executive as a
participant in all compensation, benefit (including fringe benefits and
perquisites) and insurance plans in which Executive was participating when the
notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this paragraph (iii). Amounts paid under this
paragraph are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
(g) Arbitration. The parties hereby agree to submit all
controversies, claims and matters of difference in any way related to this
Agreement or the performance or breach of the whole or any part hereof, to
arbitration in Denver, Colorado, according to the rules and practices of the
American Arbitration Association from time to time in force. If such rules and
practices shall conflict with the Colorado Rules of Civil Procedure or any
other provisions of Colorado law then in force, such
26
<PAGE> 27
Colorado rules and provisions shall govern. Arbitration of any such
controversy, claim or matter of difference shall be a condition precedent to
any legal action thereon. This submission and agreement to arbitration shall
be specifically enforceable.
Awards shall be final and binding on all parties to the extent and
in the manner provided by Colorado law; provided that an arbitration award
shall not be binding on the Company to the extent such award exceeds the
maximum amount the Company would be required to pay Executive pursuant to the
express terms of this Agreement. All awards may be filed by any party with the
Clerk of the District Court in the County of Denver, Colorado and an
appropriate judgment entered thereon and execution issued therefor. At the
election of any party, said award may also be filed, and judgment entered
thereon and execution issued therefor, with the clerk of one or more other
courts, state or federal, having jurisdiction over the party against whom such
award is rendered or its property.
(h) Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
27
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
-------------------------------------------
[Executive name]
SCHULLER INTERNATIONAL, INC.
By:
----------------------------------------
W. Thomas Stephens
Chief Executive Officer and President
ATTEST:
------------------------------------
Richard B. Von Wald
Executive Vice President,
General Counsel and Secretary
28
<PAGE> 29
[Executive Name]
Schedule A
Outside Directorships Held
None.
29
<PAGE> 1
EXHIBIT 15
[COOPERS & LYBRAND LETTERHEAD]
August 8, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Schuller Corporation Registrations:
on Form S-8 (File No. 33-29389)
and Form S-3 (File No. 33-43912)
and Form S-8 (File No. 333-06375)
and Form S-8 (File No. 333-06313)
and Form S-8 (File No. 333-06321)
Gentlemen:
We are aware that our report dated August 8, 1996 on our review of interim
financial information of Schuller Corporation for the three and six month
periods ended June 30, 1996, and included in the Company's quarterly report on
Form 10-Q for the quarter then ended is incorporated by reference in the above
referenced registration statements. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statements prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
Very truly yours,
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
Coopers & Lybrand L.L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1996 FORM 10Q OF SCHULLER CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 175,090
<SECURITIES> 48,008
<RECEIVABLES> 243,789
<ALLOWANCES> 7,037
<INVENTORY> 104,094
<CURRENT-ASSETS> 602,326
<PP&E> 1,344,844
<DEPRECIATION> 590,841
<TOTAL-ASSETS> 1,819,358
<CURRENT-LIABILITIES> 328,363
<BONDS> 426,913
<COMMON> 1,616
0
0
<OTHER-SE> 511,903
<TOTAL-LIABILITY-AND-EQUITY> 1,819,358
<SALES> 707,512
<TOTAL-REVENUES> 707,512
<CGS> 505,451
<TOTAL-COSTS> 505,451
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,052
<INTEREST-EXPENSE> 24,952
<INCOME-PRETAX> 92,881
<INCOME-TAX> (63,647)
<INCOME-CONTINUING> 156,528
<DISCONTINUED> 177,159
<EXTRAORDINARY> (316,285)
<CHANGES> 0
<NET-INCOME> 17,402
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1995 FORM 10Q OF SCHULLER CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 150,994
<SECURITIES> 62,145
<RECEIVABLES> 217,647
<ALLOWANCES> 7,414
<INVENTORY> 87,208
<CURRENT-ASSETS> 545,559
<PP&E> 1,288,425
<DEPRECIATION> 589,127
<TOTAL-ASSETS> 2,363,343
<CURRENT-LIABILITIES> 269,522
<BONDS> 441,711
<COMMON> 1,229
0
178,638
<OTHER-SE> 963,013
<TOTAL-LIABILITY-AND-EQUITY> 2,363,343
<SALES> 682,452
<TOTAL-REVENUES> 682,452
<CGS> 480,448
<TOTAL-COSTS> 480,448
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 940
<INTEREST-EXPENSE> 24,822
<INCOME-PRETAX> 73,168
<INCOME-TAX> 33,092
<INCOME-CONTINUING> 40,076
<DISCONTINUED> 22,746
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,822
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
