SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarter Ended April 30, 1997
Commission File Number 1-4925
HARCOURT GENERAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-1619609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27 Boylston Street, Chestnut Hill, MA 02167
(Address of principal executive offices) (Zip Code)
(617) 232-8200
(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
As of June 10, 1997, the number of outstanding shares of each of the issuer's
classes of common stock was:
Class Shares Outstanding
Common Stock, $1.00 Par Value 50,722,669
Class B Stock, $1.00 Par Value 20,023,687
<PAGE>
HARCOURT GENERAL, INC.
I N D E X
Part I. Financial Information Page Number
Item 1. Condensed Consolidated Balance Sheets as of
April 30, 1997 and October 31, l996 1
Condensed Consolidated Statements of Earnings
for the Three and Six Months Ended
April 30, l997 and l996 2
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended April 30, l997
and l996 3
Notes to Condensed Consolidated Financial
Statements 4-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit 3.1 15-41
Exhibit 10.1 -
Exhibit 11.1 42
Exhibit 27.1 43
<PAGE>
<TABLE>
HARCOURT GENERAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
(In thousands) April 30, October 31,
1997 l996
Assets
Current assets:
<S> <C> <C>
Cash and equivalents $ 459,389 $ 532,862
Short-term investments 340,769 242,054
Undivided interests in NMG Credit
Card Master Trust 180,428 114,392
Accounts receivable, net 192,388 294,718
Inventories 596,435 592,141
Deferred income taxes 77,491 77,491
Other current assets 82,269 79,607
Total current assets 1,929,169 1,933,265
Property and equipment, net 564,257 574,926
Other assets:
Prepublication costs, net 208,130 209,519
Intangible assets, net 446,907 456,494
Other 158,076 152,034
Total other assets 813,113 818,047
Total assets $3,306,539 $3,326,238
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable and current maturities
of long-term liabilities $ 136,970 $ 163,717
Accounts payable 252,150 315,108
Accrued liabilities 326,423 333,205
Taxes payable 25,090 77,548
Other current liabilities 131,323 58,769
Total current liabilities 871,956 948,347
Long-term liabilities:
Notes and debentures 792,342 714,282
Other long-term liabilities 232,593 224,792
Total long-term liabilities 1,024,935 939,074
Deferred income taxes 187,632 187,632
Commitments and contingencies
Minority interest 217,653 217,653
Shareholders' equity:
Preferred stock 1,134 1,152
Common stock 70,745 71,119
Paid-in capital 744,217 743,947
Cumulative translation adjustments (6,363) (4,493)
Retained earnings 194,630 221,807
Total shareholders' equity 1,004,363 1,033,532
Total liabilities and shareholders' equity $3,306,539 $3,326,238
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
1 <PAGE>
<TABLE>
HARCOURT GENERAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
(In thousands except for per share amounts)
Six Months Three Months
Ended April 30, Ended April 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues $1,648,725 $1,542,784 $880,027 $844,343
Costs applicable to revenues 1,019,652 961,367 564,816 543,127
Selling, general and
administrative expenses 562,869 498,514 291,996 263,235
Corporate expenses 18,939 15,840 8,236 8,437
Operating earnings 47,265 67,063 14,979 29,544
Investment income 21,375 15,423 10,781 7,249
Interest expense (41,753) (41,445) (21,103) (20,990)
Earnings before income taxes 26,887 41,041 4,657 15,803
Income taxes (9,141) (13,954) (1,583) (5,373)
Net earnings $ 17,746 $ 27,087 $ 3,074 $ 10,430
Weighted average number of
common and common equivalent
shares outstanding 72,232 73,155 72,081 72,949
Net earnings per common share $ .25 $ .37 $ .04 $ .14
Dividends per share:
Common Stock $ .36 $ .34 $ .18 $ .17
Class B Stock $ .324 $ .306 $ .162 $ .153
Series A Stock $ .411 $ .389 $ .2055 $ .1945
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
2 <PAGE>
<TABLE>
HARCOURT GENERAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
(In thousands)
Six Months
Ended April 30,
1997 1996
Cash flows from operating activities:
<S> <C> <C>
Net earnings $ 17,746 $ 27,087
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 102,611 84,429
Other items 4,991 1,188
Changes in current assets and liabilities:
Accounts receivable 108,867 94,954
Inventories (2,112) (14,742)
Other current assets (2,356) (8,911)
Current liabilities (53,484) (24,932)
Net cash provided by operating activities 176,263 159,073
Cash flows from investing activities:
Capital expenditures (76,969) (131,498)
Purchases of available-for-sale investments (271,915) (126,196)
Maturities of available-for-sale investments 173,200 188,332
Purchases of held-to-maturity investments (342,971) (309,851)
Maturities of held-to-maturity investments 276,935 244,565
Acquisitions (6,148) (17,467)
Other investing activities (7,503) (25,589)
Net cash used for investing activities (255,371) (177,704)
Cash flows from financing activities:
Proceeds from borrowings 183,500 108,550
Repayment of debt (132,000) (764)
Repurchase of Common Stock (20,139) (67,150)
Dividends paid (25,237) (24,042)
Other financing activities (489) 1,899
Net cash provided by
financing activities 5,635 18,493
Cash and equivalents
Decrease during the period (73,473) (138)
Beginning balance 532,862 363,750
Ending balance $459,389 $363,612
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
3 <PAGE>
HARCOURT GENERAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of presentation
The Condensed Consolidated Financial Statements of Harcourt General, Inc.
(the Company) are submitted in response to the requirements of Form 10-Q
and should be read in conjunction with the Consolidated Financial
Statements in the Company's Annual Report on Form 10-K. In the opinion
of management, these statements contain all adjustments, consisting only
of normal recurring accruals, necessary for a fair presentation of the
results for the interim periods presented. The April 30, l997 Condensed
Consolidated Financial Statements include the February 1, l997 Condensed
Consolidated Financial Statements of The Neiman Marcus Group, Inc. (NMG).
NMG is a separate public company which is listed on the New York Stock
Exchange and is subject to the reporting requirements of the Securities
Exchange Act of 1934. The Company owns approximately 53% of the common
stock of NMG. The Company is entitled to 100% of the earnings of NMG to
the extent that the Company has previously absorbed losses of NMG
applicable to the minority interest.
The Company's businesses are seasonal in nature, and historically the
results of operations for these periods have not been indicative of the
results for the full year.
Certain prior period amounts have been reclassified to conform to
current period presentation.
2. Stock purchase program
The Company's Board of Directors has authorized the purchase of up to 3.5
million shares of the Company's Common Stock pursuant to its open market
stock purchase program. During the six months ended April 30, 1997, the
Company purchased approximately .4 million shares at an average price of
$45.56 per share under this buyback program.
3. Undivided interests in NMG Credit Card Master Trust
In March 1995, NMG sold all of its Neiman Marcus credit card receivables
through a subsidiary to a trust in exchange for certificates representing
undivided interests in such receivables. During the quarter ended April
30, 1997, the Company began to segregate its undivided interests in NMG
Credit Card Master Trust from its accounts receivable on the consolidated
balance sheets. The undivided interests in NMG Credit Card Master Trust
include the interests retained by NMG's subsidiary which are represented
by the Class C Certificate ($54.0 million) and the Seller's Certificate
(the excess of the total receivables transferred to the trust over the
portion represented by certificates sold to investors and the Class C
Certificate). The undivided interests in NMG Credit Card Master Trust
represent securities which the Company intends to hold to maturity in
accordance with Statement of Financial Accounting Standard No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." Due
to the short-term revolving nature of the credit card portfolio, the
carrying value of the Company's undivided interests in the NMG Credit
Card Master Trust approximates fair value.
4<PAGE>
HARCOURT GENERAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. Short-term investments
Short-term investments consist of commercial paper, certificates of
deposit, corporate debt securities, U.S. Government and agency
securities. All such investments are classified as available-for-sale.
The carrying values of short-term investments were as follows:
<TABLE>
<CAPTION>
April 30, October 31, October 31,
1997 1996 1995
<S> <C> <C> <C>
Corporate debt securities $144,780 $ 144,673 $ 184,758
Government and agency 80,301 73,936 28,337
Certificates of deposit 47,981 21,102 20,150
Commercial paper 67,707 2,343 9,828
$340,769 $ 242,054 $ 243,073
</TABLE>
The duration of short-term investments is generally one year or less.
Therefore, the Company is not subject to significant interest rate
risk which would cause fair value to materially diverge from carrying
value. Gross realized and unrealized gains and losses in the periods
presented were not material. In May 1997, all of the Company's short-
term investments were sold to partially fund the acquisition of
National Education Corporation, resulting in a loss of $.4 million.
5. Intangible assets
Intangible assets are amortized over their estimated useful lives as
follows: goodwill (10-40 years), trademarks (40 years) and other
(11-15 years). The amortization periods are determined on a case by
case basis and reviewed for impairment as required. Other intangible
assets consist primarily of publication rights and mailing lists.
The gross amount of goodwill by amortization period was as follows:
<TABLE>
<CAPTION>
April 30, October 31, October 31,
Period 1997 1996 1995
<S> <C> <C> <C>
40 years $400,837 $400,540 $385,174
15 years 76,298 75,890 77,590
10 years 5,787 5,787 2,736
$482,922 $482,217 $465,500
</TABLE>
5 <PAGE>
HARCOURT GENERAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. Exercise of stock options
The range of option prices for options exercised in the six months ended
April 30, 1997 was $21.12 - $33.25. The ranges of option prices for
options exercised in fiscal years 1996 and 1995 were $21.12 - $32.25 and
$13.34 - $32.36, respectively.
7. Revenue recognition
The Company recognizes publishing revenues principally upon shipment of
products, net of a provision for returns based on sales. Subscription
revenues are generally collected in advance. These revenues are deferred
and recognized pro-rata as related issues are shipped. Contract revenues
are recognized as services are provided. Revenues from retail sales are
recognized at point-of-sale or upon shipment.
8. Issuance of a subsidiary's stock
Upon issuances of shares of a subsidiary's stock, the Company's policy is
to record the difference between its carrying value per share of the
subsidiary's stock and the offering price per share of the subsidiary's
stock, net of estimated taxes, as an adjustment to paid-in capital.
9. New accounting standards
On January 1, 1997, the Company adopted Statement of Financial Accounting
Standards No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" (SFAS 125). This statement
provides guidance for distinguishing transfers of financial assets (e.g.
securitizations) that are sales from transfers that are secured
borrowings. The effect of adopting SFAS 125 was not material to the
Company's financial position or results of operations.
In February 1997, the Financial Accounting Standards board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128). Under the new standard, which must be adopted for periods
ending after December 15, 1997, the Company will be required to change
the method used to compute earnings per share and to restate prior
periods presented. A dual presentation of basic and diluted earnings per
share will be required. The basic earnings per share calculation, which
will replace primary earnings per share, will exclude the dilutive impact
of stock options, the Series A Stock and other common share equivalents.
The diluted earnings per share calculation, which will replace fully
diluted earnings per share, will include common share equivalents. The
adoption of SFAS 128 will not have a material impact on earnings per
share for the six month and three month periods ended April 30, 1997 and
1996.
6<PAGE>
HARCOURT GENERAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10. Subsequent event
On June 5, 1997, the Company acquired through a tender offer
approximately 95.6% of the issued and outstanding common shares of
National Education Corporation ("NEC") for approximately $723.4 million
or $21.00 per share. On June 10, 1997, pursuant to a merger agreement
with NEC, a subsidiary of the Company was merged with and into NEC, and
the remaining 1.6 million outstanding common shares of NEC not previously
purchased by the Company were converted into the right to receive $21.00
in cash. In aggregate, the Company expects the total cost of this
acquisition to approximate $850.0 million, including the purchase of all
of the outstanding NEC shares and acquisition-related fees and expenses.
The source of funds for such payment is cash and equivalents and short-
term investments on hand and $300 million in borrowings under its
existing revolving credit agreement.
NEC is a global provider of print and interactive multimedia based
products and services for the education and training marketplace. NEC's
business is conducted primarily through three operating entities, ICS
Learning Systems, Inc. ("ICS"), Steck-Vaughn Publishing Corporation
("Steck-Vaughn"), and National Education Training Group, Inc. ("NETG").
ICS provides distance learning opportunities in vocational, degree and
professional self-studies to consumers and businesses. Steck-Vaughn
publishes supplemental educational materials used in elementary,
secondary and adult education. NETG develops, markets and distributes
interactive multimedia products to train information technology
professionals and end-users of technology. NEC holds approximately 82%
of the issued and outstanding shares of Steck-Vaughn Common Stock, and
the remaining shares of Steck-Vaughn Common Stock are traded on the
NASDAQ National Market. Accordingly, as a result of the Company's
acquisition of NEC, the Company also acquired control of Steck-Vaughn.
7<PAGE>
HARCOURT GENERAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The following table presents revenues and operating earnings (loss) from
operations by business segment.
<TABLE>
<CAPTION>
Six Months Three Months
Ended April 30, Ended April 30,
(In thousands) 1997 1996 1997 1996
Revenues:
<S> <C> <C> <C> <C>
Publishing $ 386,393 $ 362,632 $ 188,011 $185,604
Specialty retailing 1,206,050 1,115,322 661,947 625,424
Professional services 56,282 64,830 30,069 33,315
Total revenues $1,648,725 $1,542,784 $ 880,027 $844,343
Operating earnings (loss):
Publishing ($ 52,538) ($ 26,283) ($ 33,011)($ 14,949)
Specialty retailing 116,624 101,325 54,312 48,583
Professional services 2,118 7,861 1,914 4,347
Corporate expenses (18,939) (15,840) (8,236) (8,437)
Total operating
earnings $ 47,265 $ 67,063 $ 14,979 $ 29,544
</TABLE>
Six Months Ended April 30, l997 Compared to Six Months Ended April 30, l996
Publishing
Publishing revenues for the six months ended April 30, l997 increased 6.6% to
$386.4 million from $362.6 million in the six months ended April 30, l996.
The Company's international publishing group and its scientific, technical,
medical and professional (STMP) publishing group both contributed to the
increase in revenues while its educational publishing group revenues were
essentially unchanged from the same period last year. The international
publishing group revenues increased primarily due to the acquisition in the
first quarter of both a Spanish language medical and health sciences publisher
and international distribution rights from Mosby-Year Book health sciences
publications. Higher journal revenues at Academic Press were the primary
source of the increased revenues at the STMP publishing group.
The publishing operating loss increased $26.3 million to $52.5 million
compared with the same period last year. The incremental seasonal loss is
attributable to the educational publishing group, where higher levels of
selling and plate amortization costs were incurred by the elementary and
secondary businesses in preparation for significant textbook adoptions
expected later in the year. This loss was slightly offset by higher earnings
at the STMP publishing group in comparison to the prior year, resulting
primarily from higher sales volume of journals at Academic Press.
Specialty Retailing
Specialty retailing results are reported with a lag of one quarter.
Accordingly, the operating results of The Neiman Marcus Group, Inc. (NMG) for
the twenty-six
8<PAGE>
HARCOURT GENERAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Specialty Retailing (continued)
weeks ended February 1, 1997 are consolidated with the operating results of
the Company for the six months ended April 30, 1997.
Revenues in the twenty-six weeks ended February 1, 1997 increased $90.7
million or 8.1% over revenues in the twenty-six weeks ended January 27, l996.
The increase resulted primarily from a 4.4% comparable sales increase and the
opening of new Neiman Marcus stores in King of Prussia, Pennsylvania in
February 1996 and Paramus, New Jersey in August 1996.
Operating earnings increased 15.1% to $116.6 million primarily as a result of
the higher sales volume. The increase also included improved gross margins,
resulting from lower markdowns as a percentage of revenues during the fiscal
1997 holiday season.
Professional Services
Professional services revenues decreased 13.2% to $56.3 million compared to
the same period last year. The decrease is attributed to lower volume and
prices due to competitive conditions in both group and individual outplacement
programs.
Professional services operating earnings decreased $5.7 million to $2.1
million in 1997 compared to the same six month period last year, primarily due
to lower revenues.
Investment Income
Investment income increased 38.6% to $21.4 million compared to the same six
month period in 1996. The increase is primarily due to a higher average
portfolio balance in fiscal 1997, which included $268.8 million in cash
proceeds received in October 1996 from NMG's sale of its common stock to the
public.
Interest Expense
Interest expense increased slightly to $41.8 million from $41.4 million in the
same period last year. Higher average NMG borrowings were offset by a lower
effective interest rate which resulted from the repayment at maturity of NMG's
fixed rate senior notes with borrowings under NMG's revolving credit
agreement.
Income Tax Expense
The Company's effective tax rate is estimated to be 34.0% in fiscal l997,
unchanged from fiscal 1996.
Minority interest
In fiscal 1997, upon achievement by NMG of net earnings of approximately $70.0
million, the Company will have fully recovered previously absorbed losses
attributable to the minority shareholders, and will thereafter no longer
include in its earnings that portion of NMG earnings (currently 47%)
attributable to the minority shareholders.
9<PAGE>
HARCOURT GENERAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Three Months Ended April 30, 1997 Compared to
Three Months Ended April 30, 1996
Publishing
Publishing revenues increased 1.3% to $188.0 million compared to the same
period last year. The increase in the quarter was attributable to higher
international publishing group revenues resulting from the acquisition of a
Spanish language medical and health sciences publisher and international
distribution rights from Mosby-Year Book health science publication, as well
as to favorable foreign currency exchange rates. The STMP publishing group
revenues increased primarily due to higher sales volume of journals at
Academic Press. The incremental revenues of the international and STMP
publishing groups were offset in part by a seasonal decline in revenues at the
educational publishing group, primarily related to the elementary business.
The publishing operating loss increased by $18.1 million to $33.0 million
compared to $14.9 million in the same period last year. Higher plate
amortization costs related to new instructional programs and higher selling
costs, both incurred by the elementary and secondary businesses in preparation
for significant textbook adoptions expected later in the year, were primarily
responsible for the seasonal loss.
Specialty Retailing
Specialty retailing results are reported with a lag of one quarter. The
operating results of NMG for the thirteen weeks ended February 1, 1997 are
consolidated with the operating results of the Company for the three months
ended April 30, 1997.
Revenues in the thirteen weeks ended February 1, l997 increased 5.8% over
revenues in the thirteen weeks ended January 27, l996. A 2.5% comparable
sales increase and the opening of a new Neiman Marcus store in Paramus, New
Jersey in August 1996 contributed to the improvement.
Operating earnings increased 11.8% to $54.3 million compared to $48.6 million
in the prior year period. The increase was primarily due to higher revenues
and to improved gross margins which resulted from lower markdowns as a
percentage of revenues during the fiscal 1997 holiday season as compared to
fiscal 1996.
Professional Services
Professional services revenues decreased $3.2 million to $30.1 million in the
1997 second quarter from $33.3 million in 1996. The decrease was primarily
due to lower volume in the individual outplacement programs resulting from
competitive market conditions.
Professional services operating earnings decreased $2.4 million to $1.9
million compared to the same period in the prior year, primarily due to lower
revenues.
10<PAGE>
HARCOURT GENERAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Investment Income
Investment income increased $3.5 million to $10.8 million in 1997 compared to
the same 1996 quarter. The increase was primarily due to a higher average
portfolio balance which included the cash proceeds from NMG's sale of its
common stock.
Interest Expense
Interest expense increased $0.1 million compared to the same period last year.
Liquidity and Capital Resources
The following discussion analyzes liquidity and capital resources by
operating, investing and financing activities as presented in the Company's
Condensed Consolidated Statement of Cash Flows.
Cash provided by operating activities for the six months ended April 30, l997
was $176.3 million. The publishing and professional services business
segments provided $109.2 million of cash from operations while NMG's
operations provided $67.1 million. The cash provided by the publishing and
professional services business segments was sufficient to fund their working
capital and capital expenditures as well as the Company s dividend
requirements. NMG increased its borrowings in order to fund working capital
for the holiday season, capital expenditures and the repurchase of all of its
redeemable preferred stocks from the Company.
The primary items affecting working capital were decreases in accounts
receivable ($108.9 million) and current liabilities ($53.5 million).
Cash flows used by investing activities were $255.4 million for the six months
ended April 30, 1997. The Company's investing activities included capital
expenditures totaling $77.0 million. Publishing capital expenditures in the
six month period ended April 30, 1997 totaled $53.7 million and were related
principally to expenditures for prepublication costs. Capital expenditures in
the publishing business are expected to approximate $150.0 million in fiscal
1997. Specialty retailing capital expenditures in the 1997 period totaled
$23.3 million and were primarily related to store renovations. Capital
expenditures for NMG in fiscal 1997 are expected to approximate $55.0 million.
In October 1996, NMG sold 8.0 million shares of its common stock to the public
at $35.00 per share. The net proceeds were used, together with an additional
3.9 million shares of NMG common stock and bank borrowings, to repurchase all
of NMG s outstanding preferred stock from the Company. The Company will no
longer receive the annual dividends of approximately $27.1 million from such
preferred stock.
11<PAGE>
HARCOURT GENERAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financing activities reflect additional borrowings by NMG of $183.5 million
under its revolving credit agreement, which included borrowings made to repay
$132.0 million of senior notes at maturity. Financing activities also reflect
the payment of $25.2 million in dividends and the purchase of approximately .4
million shares of the Company's Common Stock for $20.1 million on the open
market at an average price of $45.56 per share.
At April 30, 1997, the Company had $400 million available under its revolving
credit agreement with thirteen banks. The agreement expires in December 1999.
NMG had $130 million available at February 1, 1997 under its revolving credit
facility, which expires in April 2000.
The acquisition of National Education Corporation (NEC) on June 5, 1997 is
expected to cost approximately $850.0 million and will be funded with cash and
equivalents and short-term investments on hand and borrowings under the
revolving credit agreement. The Company continues to believe that its cash on
hand, cash generated from operations and its current and future debt capacity
will be sufficient to fund its planned capital growth and the repayment of
$125 million of its subordinated notes in June 1997, as well as its operating
and dividend requirements.
12<PAGE>
HARCOURT GENERAL, INC.
PART II
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on March 14, 1997. The
following matters were voted upon at the meeting:
1. Election of the following individuals as Class A Directors for a term
of three years:
Gary L. Countryman Brian J. Knez
For 61,324,277 For 61,881,806
Withheld 755,466 Withheld 197,937
Jack M. Greenberg Richard A. Smith
For 61,884,929 For 61,870,739
Withheld 194,814 Withheld 209,004
2. Approval of an increase in the Company's authorized shares of Common
Stock and Class B Stock.
For 56,584,012
Against 5,396,748
Abstain 98,983
3. Approval of the Company's 1997 Incentive Plan.
For 49,899,536
Against 6,258,483
Abstain 1,277,725
Non-voting 4,643,999
4. Ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the 1997 fiscal year.
For 61,963,499
Against 57,987
Abstain 58,257
Non-Voting 0
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Restated Certificate of
Incorporation of Harcourt
General, Inc.
10.1 Harcourt General, Inc. 1997
Incentive Plan, incorporated
herein by reference to
Exhibit A to the Company's
Definitive Schedule 14A
(Definitive Proxy Statement
13<PAGE>
and Definitive Additional
Materials), dated February
4, 1997, and filed with the
Commission.
HARCOURT GENERAL, INC.
PART II
Item 6. Exhibits and Reports on Form 8-K. (continued)
(a) Exhibits (continued)
11.1 Computation of weighted
average number of shares
outstanding used in
determining primary and
fully diluted earnings per
share.
27.1 Financial data schedule
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the
quarter ended April 30, 1997.
14<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HARCOURT GENERAL, INC.
Date: June 16, 1997 s/John R. Cook
John R. Cook
Senior Vice President and
Chief Financial Officer
Date: June 16, 1997 s/Stephen C. Richards
Stephen C. Richards
Vice President and
Controller
Principal Accounting
Officer
15<PAGE>
COMPOSITE COPY
MARCH 14, 1997
RESTATED CERTIFICATE OF INCORPORATION
OF
HARCOURT GENERAL, INC.
(As amended through March 14, 1997)
(Originally incorporated under the name
MID-WEST DRIVE-IN THEATRES, INC. on November 1, 1950)
FIRST: The name of the corporation is HARCOURT GENERAL, INC.
SECOND: Its registered office in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name and address of its registered agent is The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:
To own, operate, and manage hotels or motels; to purchase and acquire land,
buildings, leases, contracts, options, corporate shares, trust certificates
and any and all other property, rights or interests in hotel or motel
enterprises, to buy, sell, lease and deal in hotel or motel furnishings,
equipment and supplies of every kind.
To own, operate and manage places of amusement, including motion pictures,
theatrical productions, vaudeville exhibitions, bowling alleys, sports arenas,
skating rinks, and all other athletic and recreational facilities for public
exhibition or participation, and other enterprises incidental thereto; to
purchase and acquire land, buildings, leases, contracts, options, corporate
shares, trust certificates and any and all other property, rights or interests
in amusement enterprises or activities in connection therewith; to buy, sell,
lease and deal in apparatus, furnishings, equipment and supplies of every kind
used or useful in amusement enterprises, and contracts for every variety of
entertainment, and to construct and erect buildings or other structures of any
and every kind required or incidental to the purposes of this corporation; to
borrow money and contract indebtedness for all proper corporate purposes, to
issue bonds, notes and other evidences of indebtedness therefor, to secure the
same by franchises, rights, property, assets and goodwill of this corporation;
and to assume or guarantee and secure in like manner the leases, contracts or
other obligations and the payment of any dividends on any stock or shares and
the principal or interest on any bonds, notes or other evidences of
indebtedness of any person, firm, association, trust or other corporation, and
to lend money to or advance money in behalf of any person, firm, association,
trust or other corporation, in which this corporation has an interest.
<PAGE>
To lend money, to advance money in behalf of, or invest in the stock,
bonds, notes, debentures or other securities of any person, firm, association,
trust or corporation engaged in the business of acquiring, building, equipping
or operating restaurants, particularly, but without limitation, curb service
restaurants so called, or engage in the business of acquiring real estate or
interests in real estate upon which restaurants are to be constructed.
To engage in the business of buying, preparing and selling foods and
beverages of all kinds and to operate restaurants, liquor lounges, snack bars
or refreshment stands in conjunction with, or as an incident to, any of the
other enterprises in which the corporation may be engaged.
To purchase, lease or otherwise acquire, own, hold, use, develop, improve
and otherwise deal in and with, and sell, convey, mortgage, lease, exchange,
transfer and otherwise dispose of real estate and any interests in real
estate.
To lend money, to advance money on behalf of, or invest in the stocks,
bonds, notes, debentures, securities or obligations of any person, firm,
association, trust or corporation engaged in an enterprise organized for any
of the purposes hereinbefore enumerated in this Article Third.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware, whether or not
similar or related or incidental to or useful or advantageous in or in
connection with any of the purposes or enterprises hereinbefore enumerated in
this Article Third.
FOURTH: The total number of shares of capital stock of all classes which
this corporation shall have authority to issue shall be 320,000,000 shares to
wit: (a) 200,000,000 shares of Common Stock with a par value of $1.00 per
share; and (b) 80,000,000 shares of Class B Stock with a par value of $1.00
per share; and (c) 40,000,000 shares of Preferred Stock with a par value of
$1.00 per share.
The powers, preferences and the relative, participating, optional and other
rights and the qualifications, limitations and restrictions thereof, of each
class of stock, and the express grant of authority to the Board of Directors
to fix by resolution the designations and the powers, preferences and rights
of each share of Preferred Stock and the qualifications, limitations and
restrictions thereof which are not fixed by this Restated Certificate of
Incorporation, are as follows:
A. Common Stock and Class B Stock
I. Dividends, etc. Subject to the rights of the holders of Preferred
Stock, and subject to any other provisions of this Restated Certificate of
Incorporation, as amended from time to time, holders of Common Stock and Class
B Stock shall be entitled to receive such dividends and other distributions in
cash, stock or property of the corporation as may be declared thereon by the
Board of Directors from time to time out of assets or funds of the corporation
legally available therefor, provided that in the case of cash dividends, if at
any time a cash dividend is paid on the Common Stock, a cash dividend will
also be paid on the Class B Stock in an amount per share of Class B Stock
equal to 90% of the amount of the cash dividend paid on each share of the
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Common Stock (rounded down, if necessary, to the nearest one-hundredth of a
cent), and provided, further, that in the case of dividends or other
distributions payable in stock of the corporation other than Preferred Stock,
including distributions pursuant to stock splits or divisions of stock of the
corporation other than Preferred Stock, including distributions pursuant to
stock splits or divisions of stock of the corporation other than Preferred
Stock, which occur after the initial issuance of shares of Class B Stock by
the corporation, only shares of Common Stock shall be distributed with respect
to Common Stock and only shares of Class B Stock in an amount per share equal
to the amount per share paid with respect to the Common Stock shall be
distributed with respect to Class B Stock, and that, in the case of any
combination or reclassification of the Common Stock, the shares of Class B
Stock shall also be combined or reclassified so that the number of shares of
Class B Stock outstanding immediately following such combination or
reclassification shall bear the same relationship to the number of shares
outstanding immediately prior to such combination or reclassification
as the number of shares of Common Stock outstanding immediately following such
combination or reclassification bears to the number of shares of Common Stock
outstanding immediately prior to such combination or reclassification.
II. Voting. (a) At every meeting of the stockholders every holder of
Common Stock shall be entitled to one (1) vote in person or by proxy for each
share of Common Stock standing in his name on the transfer books of the
corporation and every holder of Class B Stock shall be entitled to one (1)
vote in person or by proxy for each share of Class B Stock standing in his
name on the transfer books of the corporation, except that each holder of
Class B Stock shall be entitled to ten (10) votes per share on the election of
any directors at any stockholders' meeting if more than 20% of the shares of
Common Stock outstanding on the record date for such meeting are beneficially
owned by, or if more than 20% of the total voting power attributable to the
shares of the Common Stock outstanding on the record date for such meeting are
voted either directly or by proxy for a person or persons other than those
nominated by the Board of Directors by, a person or group of persons acting in
concert (unless such person or group is also the beneficial owner of a
majority of the shares of Class B Stock on such record date).
(b) The provisions of this Restated Certificate of Incorporation shall
not be modified, revised, altered or amended, repealed or rescinded in whole
or in part, without the affirmative vote of the holders of a majority of the
shares of the Common Stock and of a voting majority of the shares of the Class
B stock each voting separately as a class.
(c) The corporation may not effect or consummate:
(1) any merger or consolidation of the corporation with or into any
other corporation;
(2) any sale, lease, exchange or other disposition of all or
substantially all of the assets of the corporation to or with any
other person; or
(3) any dissolution of the corporation;
unless and until such transaction is authorized by the vote, if any, required
by Article Eighth of this Restated Certificate of Incorporation and by
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Delaware law; and unless and until such transaction is authorized by a
majority of the voting power of the shares of Common Stock and of Class B
Stock entitled to vote, each voting separately as a class, but the foregoing
shall not apply to any merger or other transaction described in the preceding
subparagraphs (1) and (2) if the other party to the merger or other
transaction is a Subsidiary of the corporation.
For purposes of this paragraph (c) a "Subsidiary" is any corporation more
than 50% of the voting securities of which are owned directly or indirectly by
the corporation; and a "person" is any individual, partnership, corporation or
entity.
(d) Following the initial issuance of shares of Class B Stock, the
corporation may not effect the issuance of any additional shares of Class B
Stock (except in connection with stock splits and stock dividends) unless and
until such issuance is authorized by the holders of a majority of the voting
power of the shares of Common Stock and of Class B Stock entitled to vote,
each voting separately as a class.
(e) Every reference in this Restated Certificate of Incorporation to a
majority or other proportion of shares of stock shall refer to such majority
or other proportion of the votes of such shares of stock.
(f) Except as may be otherwise required by law or by this Article Fourth,
the holders of Common Stock and Class B Stock shall vote together as a single
class, subject to any voting rights which may be granted to holders of
Preferred Stock.
III. Transfer.
(a) No person holding shares of Class B Stock of record (hereinafter
called a "Class B Holder") may transfer, and the corporation shall not
register the transfer of, such shares of Class B Stock, whether by sale,
assignment, gift, bequest, appointment or otherwise, except to a Permitted
Transferee. A Permitted Transferee shall mean, with respect to each person
from time to time shown as the record holder of shares of Class B Stock:
(i) In the case of a Class B Holder who is a natural person;
(A) The spouse of such Class B Holder, any lineal descendant of a
grandparent of such Class B Holder, and any spouse of such lineal descendant
(which lineal descendants, their spouses, the Class B Holder, and his or her
spouse are herein collectively referred to as "Class B Holder's Family
Members");
(B) The trustee of a trust (including a voting trust) principally for
the benefit of such Class B Holder and/or one or more of his or her Permitted
Transferees described in each subclause of this clause (i) other than this
subclause (B), provided that such trust may also grant a general or special
power of appointment to one or more of such Class B Holder's Family Members
and may permit trust assets to be used to pay taxes, legacies and other
obligations of the trust or of the estates of one or more of such Class B
Holder's Family Members payable by reason of the death of any such Family
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Members;
(C) Any organization contributions to which are deductible for federal
income, estate or gift tax purposes of any split-interest trust described in
Section 4947 of the Internal Revenue Code, as it may from time to time be
amended (hereinafter called a "Charitable Organization");
(D) A corporation a majority of the beneficial ownership of
outstanding capital stock of which entitled to vote for the election of
directors is owned by, or a partnership a majority of the beneficial ownership
of the partnership interests of which entitled to participate in the management
of the partnership are held by, the Class B Holder or his or her Permitted
Transferees determined under this clause (i), provided that if by reason of any
change in the ownership of such stock or partnership interests, such
corporation or partnership would no longer qualify as a Permitted Transferee,
all shares of Class B Stock then held by such corporation or partnership
shall, upon the election of the corporation given by written notice to such
corporation or partnership, without further act on anyone's part, be converted
into shares of Common Stock effective upon the date of the giving of such
notice, and stock certificates formerly representing such shares of Class B
Stock shall thereupon and thereafter be deemed to represent the like number of
shares of Common Stock; and
(E) The estate of such Class B Holder.
(ii) In the case of a Class B Holder holding the shares of Class
Stock in question as trustee pursuant to a trust (other than a Charitable
Organization or a trust described in clause (iii) below), "Permitted
Transferee" means (A) any person transferring Class B Stock to such trust and
(B) any Permitted Transferee of any such transferor determined pursuant to
clause (i) above.
(iii) In the case of a Class B Holder holding the shares of Class B
Stock in question as trustee pursuant to a trust (other than a Charitable
Organization) which was irrevocable on the record date (hereinafter in this
Section III called the "Record Date") for determining the persons to whom the
Class B Stock is first issued by the corporation, "Permitted Transferee" means
(A) any person to whom or for whose benefit principal may be distributed
either during or at the end of the term of such trust whether by power of
appointment or otherwise and (B) any Permitted Transferee of any such person
determined pursuant to clause (i) above.
(iv) In the case of a Class B Holder which is a Charitable Organization
holding record and beneficial ownership of the shares of Class B Stock in
question, "Permitted Transferee" means any Class B Holder.
(v) In the case of a Class B Holder which is a corporation or
partnership (other than a Charitable Organization) acquiring record and
beneficial ownership of the shares of Class B Stock in question upon its
initial issuance by the corporation, "Permitted Transferee" means (A) any
partner of such partnership, or stockholder of such corporation, on the Record
Date, (B) any person transferring such shares of Class B Stock to such
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corporation or partnership, and (C) any Permitted Transferee of any such
person, partner, or stockholder referred to in subclauses (A) and (B) of this
clause (v), determined under clause (i) above.
(vi) In the case of a Class B Holder which is a corporation or
partnership (other than a Charitable Organization or a corporation or
partnership described in clause (v) above) holding record and beneficial
ownership of the shares of Class B Stock in question, "Permitted Transferee"
means (A) any person transferring such shares of Class B Stock to such
corporation or partnership and (B) any Permitted Transferee of any such
transferor determined under clause (i) above.
(vii) In the case of a Class B Holder which is the estate of a deceased
Class B Holder, or which is the estate of a bankrupt or insolvent Class B
Holder, which holds record and beneficial ownership of the shares of Class B
Stock in question, "Permitted Transferee" means a Permitted Transferee of such
deceased, bankrupt or insolvent Class B Holder as determined pursuant to
clause (i), (ii), (iii), (iv), (v) or (vi) above, as the case may be.
(b) Notwithstanding anything to the contrary set forth herein, any Class
B Holder may pledge such Holder's shares of Class B Stock to a pledgee
pursuant to a bona fide pledge of such shares as collateral security for
indebtedness due to the pledgee, provided that such shares shall not be
transferred to or registered in the name of the pledgee and shall remain
subject to the provisions of this Section III. In the event of foreclosure or
other similar action by the pledgee, such pledged shares of Class B Stock may
only be transferred to a Permitted Transferee of the pledgor or converted into
shares of Common Stock, as the pledgee may elect.
(c) For purposes of this Section III:
(i) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(ii) Each joint owner of shares of Class B Stock shall be considered a
"Class B Holder" of such shares.
(iii) A minor for whom shares of Class B Stock are held pursuant to a
Uniform Gifts to Minors Act or similar law shall be considered a
Class Holder of such shares.
(iv) Unless otherwise specified, the term "person" means both natural
persons and legal entities.
(v) Without derogating from the election conferred upon the
corporation pursuant to subclause (D) of clause (i) above, each
reference to a corporation shall include any successor corporation
resulting from merger or consolidation; and each reference to a
partnership shall include any successor partnership resulting from
the death or withdrawal of a partner.
(d) Any transfer of shares of Class B Stock not permitted hereunder shall
result in the conversion of the transferee's shares of Class B Stock into
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shares of Common Stock, effective the date on which certificates representing
such shares are presented for transfer on the books of the corporation. The
corporation may, in connection with preparing a list of stockholders entitled
to vote at any meeting of stockholders, or as a condition to the transfer or
the registration of shares of Class B Stock on the corporation's books,
require the furnishing of such affidavits or other proof as it deems necessary
to establish that any person is the beneficial owner of shares of Class B
Stock or is a Permitted Transferee.
(e) At any time when the number of outstanding shares of Class B Stock as
reflected on the stock transfer books of the corporation falls below 12 1/2% of
the aggregate number of the issued and outstanding shares of the Common Stock,
Class B Stock and Series A Stock of the corporation, or the Board of Directors
and the holders of a majority of the outstanding shares of Class B Stock
approve the conversion of all of the Class B Stock into Common Stock, then,
immediately upon the occurrence of either such event the outstanding shares of
Class B Stock shall be converted into shares of Common Stock. In the event of
such a conversion, certificates formerly representing outstanding shares of
Class B Stock shall thereupon and thereafter be deemed to represent the like
number of shares of Common Stock.
(f) Shares of Class B Stock shall be registered in the names of the
beneficial owners thereof and not in "street" or "nominee" name. For this
purpose, a "beneficial owner" of any shares of Class B Stock shall mean a
person who, or an entity which, possesses the power, either singly or jointly,
to direct the voting or disposition of such shares. The corporation shall note
on the certificates for shares of Class B Stock the restrictions on transfer
and registration of transfer imposed by this Section III.
IV. Conversion Rights.
(a) Subject to the terms and conditions of this Section IV, each share of
Class B Stock shall be convertible at any time or from time to time, at the
option of the respective holder thereof, at the office of any transfer agent
for Class B Stock, and at such other place or places, if any, as the Board of
Directors may designate, or, if the Board of Directors shall fail so to
designate, at the principal office of the corporation (attention of the
Secretary of the corporation), into one (1) fully paid and nonassessable share
of Common Stock. Upon conversion, the corporation shall make no payment or
adjustment on account of dividends accrued or in arrears on Class B Stock
surrendered for conversion or on account of any dividends on the Common Stock
issuable on such conversion. Before any holder of Class B Stock shall be
entitled to convert the same into Common Stock, he shall surrender the
certificate or certificates for such Class B Stock at the office of said
transfer agent (or other place as provided above), which certificate or
certificates, if the corporation shall so request, shall be duly endorsed to
the corporation or in blank or accompanied by proper instruments of transfer
to the corporation or in blank (such endorsements or instruments of transfer
to be in form satisfactory to the corporation), and shall give written notice
to the corporation at said office that he elects so to convert said Class B
Stock in accordance with the terms of this Section IV, andshall state in
writing therein the name or names in which he wishes the certificate or
certificates for Common Stock to be issued. Every such notice of election to
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convert shall constitute a contract between the holder of such Class
B Stock and the corporation, whereby the holder of such Class B Stock shall be
deemed to subscribe for the amount of Common Stock which he shall be entitled
to receive upon such conversion, and, in satisfaction of such subscription, to
deposit the Class B Stock to be converted and to release the corporation from
all liability thereunder, and thereby the corporation shall be deemed to agree
that the surrender of the certificate or certificates therefor and the
extinguishment of liability thereon shall constitute full payment of such
subscription for Common Stock to be issued upon such conversion. The
corporation will as soon as practicable after such deposit of a certificate or
certificates for Class B Stock, accompanied by the written notice and the
statement above prescribed, issue and deliver at the office of said transfer
agent (or other place as provided above) to the person for whose account such
Class B Stock was so surrendered, or to his nominee or nominees, a certificate
or certificates for the number of full shares of Common Stock to which he
shall be entitled as aforesaid. Subject to the provisions of subsection (c) of
this Section IV, such conversion shall be deemed to have been made as of the
date of such surrender of the Class B Stock to be converted; and the person or
persons entitled to receive the Common Stock issuable upon conversion of such
Class B Stock shall be treated for all purposes as the record holder or
holders of such Common Stock on such date.
(b) The issuance of certificates for shares of Common Stock upon
conversion of shares of Class B Stock shall be made without charge for any
stamp or other similar tax in respect of such issuance. However, if any such
certificate is to be issued in a name other than that of the holder of the
share or shares of Class B Stock converted, the person or persons requesting
the issuance thereof shall pay to the corporation the amount of any tax which
may be payable in respect of any transfer involved in such issuance or shall
establish to the satisfaction of the corporation that such tax has been paid.
(c) The corporation shall not be required to convert Class B Stock, and
no surrender of Class B Stock shall be effective for that purpose, while the
stock transfer books of the corporation are closed for any purpose; but the
surrender of Class B Stock for conversion during any period while such books
are so closed shall become effective for conversion immediately upon the
reopening of such books, as if the conversion had been made on the date such
Class B Stock was surrendered.
(d) The corporation covenants that it will at all times reserve and keep
available, solely for the purpose of issue upon conversion of the outstanding
shares of Class B Stock, such number of shares of Common Stock as shall be
issuable upon the conversion of all such outstanding shares, provided that
nothing contained herein shall be construed to preclude the corporation from
satisfying its obligations in respect of the conversion of the outstanding
shares of Class B Stock by delivery of shares of Common Stock which are held
in the treasury of the corporation. The corporation covenants that if any
shares of Common Stock, required to be reserved for purposes of conversion
hereunder, require registration with or approval of any governmental authority
under any federal or state law before such shares of Common Stock may be
issued upon conversion, the corporation will use its best efforts to cause
such shares to be duly registered or approved, as the case may be. The
corporation will endeavor to list the shares of Common Stock required to be
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delivered upon conversion prior to such delivery upon each national securities
exchange, if any, upon which the outstanding Common Stock is listed at the
time of such delivery. The corporation covenants that all shares of Common
Stock which shall be issued upon conversion of the shares of Class B Stock,
will, upon issue, be fully paid and nonassessable and not entitled to any
preemptive rights.
V. Liquidation Rights. In the event of any dissolution, liquidation or
winding up of the affairs of the corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and other
liabilities of the corporation, the holders of each series of Preferred Stock
shall be entitled to receive, out of the net assets of the corporation, an
amount for each share equal to the amount fixed and determined by the Board of
Directors in any resolution or resolutions providing for the issuance of any
particular series of Preferred Stock, plus an amount equal to all dividends
accrued and unpaid on shares of such series to the date fixed for
distribution, and no more, before any of the assets of the corporation shall
be distributed or paid over to the holders of Common Stock. After payment in
full of said amounts to the holders of Preferred Stock of all series other
than the corporation's Series A Cumulative Convertible stock,
$1.00 par value (hereinafter the "Series A Stock"), and after payment of the
full amount provided for the holders of Series A Stock in accordance with the
first sentence of Section B.3. of this Article Fourth, the remaining assets
and funds of the corporation shall be divided among and paid ratably to the
holders of Common Stock (including those persons who shall become holders of
Common Stock by reason of converting their shares of Class B Stock) in a
manner not inconsistent with the provisions of Section B.3. of this Article
Fourth regarding the rights of the holders of Series A Stock in any such
liquidation, dissolution or winding up. If, upon such dissolution, liquidation
or winding up, the assets of the corporation distributable as aforesaid among
the holders of Preferred Stock of all series shall be insufficient to permit
full payment to them of said preferential amounts, then such assets shall be
distributed among such holders, first in the order of their respective
preferences, and second, as to such holders who are next entitled to such
assets and who rank equally with regard to such assets, ratably in proportion
to the respective total amounts which they shall be entitled to receive as
provided in this Section V. A merger or consolidation of the corporation with
or into any other corporation or a sale or conveyance of all or any part of
the assets of the corporation (which shall not in fact result in the
liquidation of the corporation and the distribution of assets to stockholders)
shall not be deemed to be a voluntary or involuntary liquidation or
dissolution or winding up of the corporation within the meaning of this
Section V.
B. Preferred Stock.
The Board of Directors is hereby authorized from time to time to provide by
resolution for the issuance of shares of Preferred Stock in one or more series
not exceeding the aggregate number of shares of Preferred Stock authorized by
this Restated Certificate of Incorporation, as amended from time to time; and
to determine with respect to each such series the voting powers, if any (which
voting powers if granted may be full or limited), designations, preferences
and relative, participating, optional or other special rights and the
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qualifications, limitations or restrictions appertaining thereto, including
without limiting the generality of the foregoing, the voting rights
appertaining to shares of Preferred Stock of any series (which may be one vote
per share or a fraction of a vote per share, and which may be applicable
generally or only upon the happening and continuance of stated events or
conditions), the rate of dividend to which holders of Preferred Stock of any
series may be entitled (which may be cumulative or noncumulative), the rights
of holders of Preferred Stock of any series in the event of liquidation,
dissolution or winding up of the affairs of the corporation, and the rights
(if any) of holders of Preferred Stock of any series to convert or exchange
such shares of Preferred Stock of such series for shares of any other class of
capital stock (including the determination of the price or prices or the rate
or rates applicable to such rights to convert or exchange and the adjustment
thereof, the time or times during which the right to convert or exchange shall
be applicable and the time or times during which a particular price or rate
shall be applicable).
Before the corporation shall issue any shares of Preferred Stock of any
series, a certificate setting forth a copy of the resolution or resolutions of
the Board of Directors, fixing the voting powers, designations, preferences,
the relative, participating, optional or other rights, if any, and the
qualifications, limitations and restrictions, if any, appertaining to the
shares of Preferred Stock of such series, and the number of shares of
Preferred Stock of such series authorized by the Board of Directors to be
issued shall be made under seal of the corporation and signed by the president
or vice president and by the secretary or an assistant secretary of the
corporation and acknowledged by such president or vice president as provided
by the laws of the State of Delaware and shall be filed and a copy thereof
recorded in the manner prescribed by the laws of the State of Delaware.
The powers, preferences and the relative, participating, optional and other
rights, and the qualifications, limitations and restrictions thereof of the
series of Preferred Stock of the corporation designated Series A Stock are as
follows:
1. Designation and Number of Shares. The distinctive serial designation of
the series shall be Series A Cumulative Convertible Stock, $1.00 par value.
The number of shares of Series A Stock which the corporation is authorized to
issue is initially established at 10,000,000, which number of shares may be
increased (if, and to the extent that, the Restated Certificate of
Incorporation shall be further amended to increase the authorized number of
shares of Preferred Stock) or decreased (but not below the number of shares of
Series A Stock then outstanding) from time to time by the Board of Directors
of the corporation.
2. Dividends.
(a) Subject to full dividends accrued on the outstanding shares of any
Preferred Stock ranking senior to the Series A Stock in respect of the payment
of dividends for all past dividend periods and for the then current dividend
period having been paid or declared and set apart for payment, holders of the
Series A Stock shall be entitled to receive, but only when and as declared by
the Board of Directors out of funds legally available for the declaration and
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payment of dividends, cumulative dividends as fixed by the provisions of this
paragraph, and no more, payable in cash quarterly on October 29, 1982 and
thereafter on the last day of January, April, July and October in each year,
to holders of record of the Series A Stock on the respective dates fixed in
advance for this purpose by the Board of Directors prior to the payment of
each such dividend. The quarterly dividend to be paid on each share of Series
A Stock shall be the sum of (x) $.03 (adjusted, if necessary, in accordance
with Section 2(f) and (y) the product of (i) the amount of the dividend or
dividends (including special dividends, if any) paid or to be paid in cash on
each share of Common Stock during the quarter ending on the date on which the
Series A Stock dividend is payable, and (ii) the conversion rate (as defined
in Section 4 below).
(b) Such dividends shall accrue and be cumulative as follows: as to
shares issued prior to the record date for the first dividend payment, from
the date of issuance; as to shares issued during the period commencing
immediately after the record date for a dividend and terminating at the close
of business on the payment date for such dividend, from such dividend payment
date; and otherwise, from the quarterly payment date next preceding the date
of issue of such shares.
(c) Accumulations of dividends accrued on any shares of the Series A
Stock shall not bear interest.
(d) No dividend (other than a dividend in Common Stock, in Class B Stock
or in any other class of stock of the corporation ranking junior to the Series
A Stock in respect of the payment of dividends) shall be declared or paid or
set aside for payment, nor shall any other distribution be declared or made
upon the Common Stock, upon the Class B Stock or upon any other stock ranking
junior to the Series A Stock in respect of the payment of dividends, nor shall
any Common Stock, Class B Stock or any other class of stock of the corporation
ranking junior to the Series A Stock in respect of the payment of dividends be
redeemed, purchased or otherwise acquired for any consideration by the
corporation or by any corporation more than fifty percent of the voting
securities of which are owned, directly or indirectly, by the corporation,
while any of the Series A Stock is outstanding, unless, in each case, all
dividends accrued on all outstanding shares of the Series A Stock for all past
dividend periods shall have been paid or declared and set apart for payment.
(e) As used in this certificate, accrued dividends shall mean the sum of
amounts in respect of shares of Series A Stock then outstanding which, as to
each share, shall be an amount computed from the date from which dividends on
such share become cumulative to the date with reference to which the
expression is used, irrespective of whether such amount or any part thereof
shall have been declared as dividends or there shall have existed any funds
legally available for the declaration or payment thereof, less the aggregate
of all dividends paid on such share.
(f) If the corporation shall declare a dividend on its Common Stock in
shares of its Common Stock, the Board of Directors may in its discretion, and
in lieu of any adjustment in the conversion rate (as defined in Section 4
below), declare a dividend on the Series A Stock in shares of its Series A
Stock and provide for the issuance of said shares in accordance with this
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Article Fourth such that the number of shares of Series A Stock distributed on
each share of Series A Stock then outstanding shall equal the number of shares
of Common Stock distributed on each share of Common Stock then outstanding. In
the event a dividend payable in Series A Stock is declared pursuant to this
paragraph (f), the amount of $.03 set forth in clause (x) of Section 2(a), or
such other amount as shall have resulted from any previous adjustments made in
accordance with this paragraph (f), shall be adjusted by multiplying such
amount by a fraction the numerator of which shall be the number of shares of
Series A Stock outstanding on the record date for such dividend and the
denominator of which shall be the sum of the number of shares of Series A
Stock outstanding on the record date for such dividend and the number of
shares of Series A Stock payable thereon pursuant to the declaration of such
dividend. In such event, the amount of $20 set forth in the first and third
sentences of Section 3, or such other amount as shall have resulted from any
previous adjustments made in accordance with this paragraph (f), shall be
adjusted by multiplying such amount by the same fraction used in accordance
with the immediately preceding sentence.
3. Liquidation Rights.
In the event of any liquidation, dissolution or winding up (whether
voluntary or involuntary) of the corporation, holders of the Series A Stock
shall be entitled to be paid in cash from the net assets of the corporation
available for distribution (after the prior claims of the holders of any
Preferred Stock ranking senior to the Series A Stock shall have been
satisfied) the sum of $20 per share (adjusted, if necessary, in accordance
with Section 2(f)) plus dividends accrued on each share to the date fixed for
payment thereof, before any amount shall be paid to holders of the Common
Stock. If the net assets of the corporation available for distribution are
insufficient to allow payment in full to be made to the holders of the Series
A Stock as provided in the immediately foregoing sentence, the holders of the
Series A Stock shall be paid, ratably, in proportion to the full distributive
amounts to which they are respectively entitled. If the net assets of the
corporation available for distribution are sufficient to allow payment in full
to be made to the holders of the Series A Stock as provided in the first
sentence of this Section 3, the holders of the Common Stock shall be entitled
to be paid in cash out of the net assets, if any, remaining for distribution a
sum per share equal to the amount obtained by dividing $20 (adjusted, if
necessary, in accordance with Section 2(f)) by the conversion rate (as defined
in Section 4, below), or, if such remaining net assets are insufficient to
allow payment of such amount per share, then that amount per share derived by
dividing the total amount of such remaining net assets by the number of shares
of Common Stock then outstanding. After giving effect to the distributive
amounts payable to holders of the Series A Stock and of the Common Stock as
aforesaid, all such holders shall be entitled to share ratably in the net
assets, if any, remaining for distribution, each share of Common Stock being
valued as one share, and each share of Series A Stock being valued as the
number of shares equal to the product of one share and the conversion rate (as
defined in Section 4, below), for this purpose. Neither the purchase or
redemption by the corporation of stock of any class, in any manner
permitted by law, nor the consolidation or merger of the corporation with or
into any other corporation or corporations, nor the sale or transfer by the
corporation of all or any part of its properties or assets, shall be deemed to
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be a liquidation, dissolution or winding up of the corporation for the
purposes of this Section 3. No holder of Series A Stock shall be entitled to
receive any amounts with respect thereto upon any liquidation, dissolution or
winding up of the corporation other than the amounts provided for in this
Section 3.
4. Conversion Rights.
(a) Conversion Rate and Procedures.
(i) Subject to the terms and conditions of this Section 4, the shares
of Series A Stock shall be convertible at any time or from time to time, at
the option of the respective holders thereof, at the office of any transfer
agent for Series A Stock, and at such other place or places, if any, as the
Board of Directors may designate, or, if the Board of Directors shall fail so
to designate, at the principal office of the corporation (attention of the
Secretary of the corporation), into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100th of a share) of Common
Stock at the rate of one share of Common Stock for each one share of Series A
Stock surrendered for conversion, subject to the adjustments hereinafter
specified. The term "conversion rate" as used herein shall mean, as of any
time, the number of shares or fraction of shares of Common Stock into which
one full share of Series A Stock shall be entitled to be converted. Upon
conversion, the corporation shall make no payment or adjustment on account of
dividends accrued or in arrears on Series A Stock surrendered for conversion
or on account of any dividends on the Common Stock issuable on such
conversion. Before any holder of Series A Stock shall be
entitled to convert the same into Common Stock, he shall surrender the
certificate or certificates for such Series A Stock at the office of said
transfer agent (or other place as provided above), which certificate or
certificates, if the corporation shall so request, shall be duly endorsed to
the corporation or in blank or accompanied by proper instruments of transfer
to the corporation or in blank (such endorsements or instruments of transfer
to be in form satisfactory to the corporation), and shall give written notice
to the corporation at said office that he elects so to convert said Series A
Stock in accordance with the terms of this Section 4, and shall state in
writing therein the name or names in which he wishes the certificate or
certificates for Common Stock to be issued. Every such notice of election to
convert shall constitute a contract between the holder of such Series A Stock
and the corporation, whereby the holder of such Series A Stock shall be deemed
to subscribe for the amount of Common Stock which he shall be entitled to
receive upon such conversion, and, in satisfaction of such subscription, to
deposit the Series A Stock to be converted and to release the corporation from
all liability thereunder, and thereby the corporation shall be deemed to agree
that the surrender of the certificate or certificates therefor and the
extinguishment of liability thereon, shall constitute full payment of such
subscription for Common Stock to be issued upon such conversion. The
corporation will as soon as practicable after such deposit of a certificate or
certificates for Series A Stock, accompanied by the written notice and the
statement above prescribed, issue and deliver at the office of said transfer
agent (or other place as provided above) to the person for whose account such
Series A Stock was so surrendered, or to his nominee or nominees, a
certificate or certificates for the number of full shares of Common Stock to
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which he shall be entitled as aforesaid, and if the certificate or
certificates surrendered evidence a greater number of shares than the number
of shares to be converted, one or more certificates evidencing the shares of
Series A Stock not to be converted, and together with a cash adjustment of any
fraction of a share as hereinafter stated, if not evenly convertible. Subject
to the provisions of paragraph (ii) of this Section 4(a), such conversion
shall be deemed to have been made as of the date of such surrender of the
Series A Stock to be converted; and the person or persons entitled to receive
the Common Stock issuable upon conversion of such Series A Stock shall be
treated for all purposes as the record holder or holders of such Common Stock
on such date.
(ii) The corporation shall not be required to convert Series A Stock,
and no surrender of Series A Stock shall be effective for that purpose, while
the stock transfer books of the corporation are closed for any purpose; but
the surrender of Series A Stock for conversion during any period while such
books are so closed shall, subject to the provisions of paragraph (iii) of
this subsection 4(a), become effective for conversion immediately upon the
reopening of such books, as if the conversion had been made on the date such
Series A Stock was surrendered, and at the conversion rate in effect at the
date of such surrender.
(iii) The right of each holder of Series A Stock to convert shall be
limited as follows:
(A) For purposes of this paragraph (iii), the term "Conversion Year"
shall mean each twelve-month period commencing March 1 (except that the
initial period commencing October 29, 1982 and ending February 28, 1983 shall
also be deemed to be a "Conversion Year"), the term "Proration Period" shall
mean the first fifteen days of the Conversion Year, and the term "Conversion
Limit" shall be a number equal to ten percent of the total number of shares of
Series A Stock which shall have been issued by the corporation as of the
beginning of the relevant Conversion Year. The total number of shares which
shall have been issued by the corporation as of the beginning of any
Conversion Year, for purposes of calculating the Conversion Limit for such
Conversion Year in accordance with the immediately preceding sentence, shall
mean the aggregate number of shares of Series A Stock issued by the
corporation, without reduction for shares reacquired by the corporation
through conversion, purchase or otherwise (whether or not any such reacquired
shares shall have been cancelled); provided, however, that reacquired shares
which are reissued by the corporation shall not again be counted for the
purpose of determining the total number of shares issued by the corporation
hereunder.
(B) Shares of Series A Stock surrendered for conversion during any
Proration Period shall not be converted during such Proration Period, but,
subject to the following limitation, shall be converted promptly after the
expiration of such Proration Period. If, during such Proration Period, the
number of shares of Series A Stock surrendered for conversion shall exceed the
Conversion Limit, conversions shall be made on a pro rata basis, each holder
having surrendered shares being deemed to have surrendered that percentage of
such shares which is equal to the ratio of the Conversion Limit to the total
number of shares of Series A Stock actually surrendered for conversion during
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such Proration Period.
(C) During the period of a Conversion Year following the Proration
Period of such Conversion Year, shares of Series A Stock surrendered for
conversion shall not be converted if, prior to the date of such surrender (but
during such Conversion Year), a number of shares of Series A Stock equal to or
greater than the Conversion Limit has been surrendered for conversion.
(D) If, on any day during the period of a Conversion Year following
the Proration Period of such Conversion Year, the number of shares of Series A
Stock surrendered, when taken together with the number of such shares
previously surrendered for conversion during such Conversion Year, exceeds the
Conversion Limit (the Conversion Limit as to such Conversion Year not having
been exceeded prior to such day), then each holder having surrendered such
shares for conversion on such day shall be deemed to have surrendered that
percentage of such shares so surrendered which is equal to the ratio of (x)
the difference between the Conversion Limit and the number of such shares
surrendered for conversion during such Conversion Year but prior to such day,
to (y) the number of such shares surrendered for conversion on such day.
(E) If the implementation of the proration provisions of this
paragraph (iii) should result in any fractional shares of Series A Stock, such
fractional shares shall be ignored for the purpose of conversion pursuant to
this Section 4, and, although fewer shares than the number equal to the
Conversion Limit may as a result of ignoring such fractional shares have been
converted during any Conversion Year, no further conversions of Series A Stock
shall be effected until the following Conversion Year.
(F) All shares of Series A Stock surrendered for conversion and not
converted by reason of the limitations imposed by this paragraph (iii) shall
be returned to the holder together with the Common Stock, if any, issued upon
conversion of the Series A Stock surrendered with such unconverted shares.
(G) Notwithstanding the foregoing provisions of this paragraph (iii),
no limitations on the number of shares of Series A Stock which may be
converted shall apply if the Board of Directors shall approve a transaction in
which the corporation is to be consolidated or merged with or into any other
corporation or corporations, and one of the other corporations is to be the
surviving entity (or, if the corporation is to be the surviving entity, at
least a majority of the shares of Common Stock of the corporation to be
outstanding immediately following such transaction shall as a result thereof
be owned by one person or by a group of persons acting in concert), or all or
substantially all of the properties and assets of the corporation are to be
sold or transferred, or if the Board of Directors shall recommend a tender
offer for at least a majority of the Common Stock as being in the best
interests of the holders of the Common Stock, or if the Board of Directors
shall direct that notice be given to all holders of shares of Common Stock and
Preferred Stock of the corporation that the Conversion Limit applicable to the
Series A Stock is suspended until a specified date or eliminated altogether.
(b) Adjustments.
(i) In case the corporation shall (A) declare a dividend on its Common
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Stock in shares of its capital stock except in any case where a dividend on
its Series A Stock also shall have been declared pursuant to Section 2(f), (B)
subdivide outstanding shares of its Common Stock, (C) combine outstanding
shares of its Common Stock into a smaller number of shares, or (D) issue by
reclassification of its shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
corporation is the continuing corporation) any shares of capital stock, then
the conversion rate in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or reclassification
shall be proportionately adjusted so that the holder of any Series A Stock
surrendered for conversion after such time shall be entitled to receive the
number and kind of shares which he would have owned or have been entitled to
receive had such Series A Stock been converted immediately prior to such time.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(ii) In case the corporation shall fix a record date for the issuance
of rights, warrants or options to all holders of its Common Stock and/or Class
B Stock entitling them to subscribe for or purchase shares of Common Stock
and/or Class B Stock at a price per share less than the current market price
per share of Common Stock (as defined in paragraph (v) below) on such record
date, the conversion rate after such record date shall be determined by
multiplying the conversion rate in effect immediately prior to such record
date by a fraction, of which the numerator shall be the number of shares of
Common Stock and Class B Stock outstanding on such record date plus the number
of additional shares of Common Stock and/or Class B Stock to be offered for
subscription or purchase, and of which the denominator shall be the number of
shares of Common Stock and Class B Stock outstanding on such record date plus
the number of shares of Common Stock and/or Class B Stock which the aggregate
offering price of the total number of shares so to be offered would purchase
at such current market price. Such adjustment shall be made successively
whenever such a record date is fixed. In the event that such rights, warrants
or options are not so issued, the conversion rate shall again be adjusted to
be the conversion rate which would then be in effect if such record date had
not been fixed. To the extent that such rights, warrants or options expire
unexercised, the conversion rate shall be readjusted to the conversion rate
which would then be in effect had the adjustments made as of the record date
for the issuance of such rights, warrants or options been made upon the basis
of the issuance of rights, warrants or options to subscribe for or purchase
only the number of shares of Common Stock and/or Class B Stock as to which
such rights, warrants or options were actually exercised. In the case of an
issuance by the corporation to all holders of its Common Stock and/or Class B
Stock of rights, warrants or options entitling them to subscribe for or
purchase securities convertible into, exchangeable for or carrying a right to
purchase shares of Common Stock and/or Class B Stock (collectively,
"Convertible Securities"), for purposes of this paragraph (ii), such issuance
shall be deemed to be an issuance of rights, warrants or options to such
holders entitling them to subscribe for or purchase Common Stock and/or Class
B Stock at an aggregate offering price equal to the aggregate offering price
of the Convertible Securities plus the minimum aggregate amount (if any)
payable upon conversion of such shares or securities into Common Stock and/or
Class B Stock.
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(iii) In case the corporation shall fix a record date for the making of
a distribution to all holders of its Common Stock and/or Class B Stock
(including any such distribution made in connection with a consolidation or
merger in which the corporation is the continuing corporation) of evidences of
its indebtedness or assets (excluding dividends paid in, or distributions of,
cash to the extent permitted by law) or subscription rights, warrants or
options (excluding those referred to in paragraph (ii) above), the conversion
rate after such record date shall be determined by multiplying the conversion
rate in effect immediately prior to such record date by a fraction, of which
the numerator shall be the current market price per share of Common Stock (as
defined in paragraph (v) below) on such record date, and of which the
denominator shall be such current market price per share of Common Stock, less
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive in the absence of fraud) of the portion of
the assets or evidences of indebtedness so to be distributed, or of such
subscription rights, warrants or options applicable, to one share of Common
Stock. Such adjustment shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the
conversion rate shall again be adjusted to be the conversion rate which would
then be in effect if such record date had not been fixed.
(iv) In case of any reclassification or change of outstanding Common
Stock and/or Class B Stock, or in case of any consolidation or merger of the
corporation with or into another corporation, or in case of any sale or
conveyance to another corporation or entity (other than by mortgage or pledge)
of all or substantially all of the properties and assets of the corporation,
the corporation (or its successor in such consolidation or merger, or the
purchaser of such properties and assets) shall make appropriate provision so
that the holder of each share of Series A Stock then outstanding shall have
the right thereafter to convert such share into the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance, by a
holder of the number of shares of Common Stock into which such Series A Stock
might have been converted immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance, and shall have no other conversion
rights under these provisions; provided, that effective provision shall be
made, in the Articles or Certificate of Incorporation of the resulting or
surviving corporation or otherwise, so that the provisions set forth herein
for the protection of the conversion rights of Series A Stock shall thereafter
be applicable, as nearly as reasonably may be, to any such other shares of
stock and other securities and property deliverable upon conversion of the
Series A Stock remaining outstanding or other convertible preferred stock or
other securities received by the holders of Series A Stock in place thereof;
and provided, further, that any such resulting or surviving corporation shall
expressly assume the obligation to deliver, upon the exercise of the
conversion privilege, such shares, securities or property as the holders of
the Series A Stock remaining outstanding, or other convertible preferred stock
received by the holders in place thereof, shall be entitled to receive
pursuant to the provisions hereof, and to make provisions for the protection
of the conversion right as above provided. In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all reference in this paragraph (iv) shall be deemed to apply,
so far as appropriate and as nearly as may be, to such other securities or
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property. The subdivision or combination of the number of shares of Common
Stock at any time outstanding into a greater or lesser number of shares of
Common Stock (whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock of the corporation for the purposes of
this paragraph (iv).
(v) For the purpose of any computation under paragraphs (ii) and (iii)
of this subsection 4(b), the current market price per share of Common Stock on
any record date shall be deemed to be the average of the daily closing prices
for the thirty consecutive business days commencing forty-five business days
before such date. The closing price for each day shall be the last sale price
(regular way) or, in case no such sale takes place on such day, the average of
the closing bid and asked prices (regular way), in either case on the
composite tape, or, if the Common Stock is not quoted on the composite tape,
on the principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which the Common Stock is listed or
admitted to trading, or if it is not listed or admitted to trading on any such
securities exchange, the average of the closing bid and asked prices as
furnished by any member of the National Association of Securities Dealers,
Inc. selected from time to time by the corporation for that purpose.
(vi) No adjustment in the conversion rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this
paragraph (vi), would require an increase or decrease of at least one percent
in such rate; provided, however, that any adjustments which by reason of this
paragraph (vi) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
4 shall be made to the nearest cent or to the nearest 1/100th of a share, as
the case may be.
(vii) Upon occurrence of any of the events described in paragraphs (i)
through (iv) above, the corporation shall promptly (A) file with the transfer
agent or agents for the Series A Stock a statement signed by the President or
one of the Vice Presidents of the corporation and by its Treasurer or
Assistant Treasurer, disclosing the nature of such event, the conversion rate
in effect immediately thereafter and the kind and amount of stock or other
securities or property into which Series A Stock shall be convertible after
such event, and (B) cause a notice containing a summary of the information set
forth in said statement to be mailed to the holders of record of Series A
Stock. Where appropriate, such notice may be given in advance and included as
a part of a notice required to be mailed under the provisions of subsection
4(c) hereof.
(viii) In any case in which this subsection 4(b) shall require that an
adjustment shall become effective immediately after a record date for an
event, the corporation may defer until the occurrence of such event (A)
issuing to the holder of Series A Stock converted after such record date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such
event over and above the shares issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder an amount in cash in
lieu of a fractional share pursuant to subsection 4(f) hereof; provided,
however, the corporation shall deliver to such holder a due bill or other
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appropriate instrument evidencing such holder's right to receive such
additional shares of Common Stock (or other securities or property, as the
case may be), and such cash, upon the occurrence of the event requiring such
adjustment.
(ix) Except as otherwise expressly provided in this subsection 4(b), no
adjustment in the conversion rate shall be made by reason of the issuance or
sale, in exchange for cash, property or services, of shares of Common Stock
and/or Class B Stock, or any securities convertible into or exchangeable for
shares of Common Stock and/or Class B Stock, or securities carrying the right
to purchase any of the foregoing.
(x) Any determination as to fair market value or as to whether an
adjustment in the conversion rate in effect hereunder is required pursuant to
paragraphs (i) through (iv) of this subsection 4(b), or as to the amount of
any such adjustment, if required, shall be binding upon the holders of Series
A Stock and the corporation if made in good faith by the Board of Directors.
(xi) In the event that at any time, as a result of an adjustment made
pursuant to paragraph (i) or paragraph (iv) of this subsection 4(b), the
holder of any shares of Series A Stock thereafter surrendered for conversion
shall become entitled to receive any shares of capital stock of the
corporation other than shares of Common Stock, thereafter the number of such
other shares so receivable upon conversion of any shares of Series A Stock
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in paragraphs (i) through (x) above, and the provisions of
subsections (a) and (c) through (h) of this Section 4 with respect to the
Common Stock shall apply on like terms to any such other shares.
(c) Advance Notice of Certain Events.
In case at any time:
(i) the corporation shall authorize the issuance to all holders of its
Common Stock of rights, warrants or options to subscribe for or purchase
shares of its Common Stock or of any other subscription rights, warrants or
options; or
(ii) the corporation shall authorize the distribution to all holders of
its Common Stock of evidences of its indebtedness or assets (other than
dividends paid in, or distributions of, cash to the extent permitted by law);
or
(iii) there is any consolidation or merger to which the corporation is a
party and for which approval of any shareholders of the corporation is
required, or a conveyance or transfer of all or substantially all of the
properties and assets of the corporation, or a tender offer for at least a
majority of the Common Stock which has been recommended by the Board of
Directors as being in the best interests of the holders of the Common Stock;
or
(iv) there is a total voluntary or involuntary dissolution, liquidation
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or winding up of the corporation; or
(v) the corporation proposes to take any action (other than actions of
the character described in paragraph (i) of subsection 4(b) above) which would
require an adjustment of the conversion rate pursuant to subsection 4(b)
above;
then the corporation shall cause to be filed with the transfer agent or agents
for the Series A Stock, and shall cause to be mailed to the holders of record
of
the outstanding Series A Stock, at least twenty days (or ten days in any case
specified in clause (i) or (ii) above or in the case of a recommended tender
offer as specified in clause (iii) above) prior to the applicable record date
(or
effective date if there shall be no record date) hereinafter specified, a
notice stating (A) the date as of which the holders of Common Stock of record
to be entitled to receive any such rights, warrants, options or distribution
are to be determined, or (B) the date on which any such consolidation, merger,
conveyance, transfer, tender offer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities or other property, if any, deliverable upon
such distribution, right, warrant, option, consolidation, merger, conveyance,
transfer, tender offer, dissolution, liquidation or winding up. The failure to
give the notice required by this subsection 4(c) or any defect therein shall
not affect the legality or validity of any distribution, right, warrant,
option, consolidation, merger, conveyance, transfer, tender offer,
dissolution, liquidation, or winding up, or the vote upon any such action.
(d) Status of Stock Converted.
All shares of Series A Stock which shall have been surrendered for
conversion as herein provided shall no longer be deemed to be outstanding and
all rights with respect to such shares, including the right, if any, to
receive notices and to vote, shall forthwith cease and terminate except only
the right of the holders thereof to receive Common Stock in exchange therefor.
(e) Shares Reserved for Conversion.
The corporation shall at all times reserve and keep available, out of its
authorized and unissued stock, solely for the purpose of effecting the
conversion of Series A Stock, such number of shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all shares of
Series A Stock from time to time outstanding.
(f) Fractions Upon Conversion.
No fractional shares of Common Stock are to be issued upon conversion, but
in lieu thereof the corporation will pay therefor a cash adjustment (computed
to the nearest cent) in an amount equal to such fraction of the market price
per share of Common Stock computed on the basis of the last reported sale
price (regular way) on the business day which next precedes the date of
conversion, or, in case no such sale takes place on such day, the average of
- 20 -
the closing bid and asked prices (regular way) of Common Stock, in either case
on the composite tape, or, if the Common Stock is not quoted on the composite
tape, on the principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which the Common Stock is listed or
admitted to trading, or if the Common Stock is not listed or admitted to
trading on any such securities exchange, the average of the closing bid and
asked prices on said last trading day as furnished by any member of the
National Association of Securities Dealers, Inc. selected from time to time by
the corporation for that purpose.
(g) Taxes Upon Conversion.
The corporation will pay any and all issue and other taxes that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of Series A Stock pursuant to this Section 4. The corporation shall
not, however, be required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of Common Stock in a name
other than that in which the Series A Stock so converted was registered, and
no such issue or delivery shall be made unless and until the person requesting
such issue has paid to the corporation the amount of any such tax, or has
established, to the satisfaction of the corporation, that such tax has been
paid.
(h) Affidavit of Mailing.
An affidavit of the transfer agent or transfer agents for the Series A
Stock or of the Secretary of the corporation to the effect that any notice
provided for in this Section 4 has been mailed shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
5. Voting Rights.
(a) Except as set forth in this Section 5 and as required by applicable
law, the holders of Series A Stock shall not be entitled to vote.
(b) If and whenever accrued dividends on Series A Stock shall not have
been paid or declared and a sum sufficient for the payment thereof set aside,
in an amount equivalent to six quarterly dividends on all shares of Series A
Stock at the time outstanding, then and in such event the holders of Series A
Stock and each other series of Preferred Stock now or hereafter issued which
shall be accorded such class voting right by the Board of Directors and which
shall have the right to elect two directors as the result of a prior or
subsequent default in payment of dividends on such series (each such other
series being hereinafter called "Other Series of Preferred Stock"), voting
separately as a class without regard to series, shall be entitled to elect two
directors, and the holders of all shares otherwise entitled to vote for
directors, voting separately as a class, shall be entitled to elect the
remaining members of the Board of Directors. Such special voting rights of the
holders of Series A Stock may be exercised until all dividends in default on
the Series A Stock shall have been paid in full or declared and funds
sufficient therefor set aside, and when so paid or provided for such special
voting rights of the holders of Series A Stock shall cease, but subject always
to the same provisions for the vesting of such special voting rights in the
- 21 -
case of any such future dividend default or defaults. At any time after such
special voting rights shall have so vested in the holders of Series A Stock,
the Secretary of the corporation may, and upon the written request of the
holders of record of ten percent or more in number of shares of Series A Stock
and each Other Series of Preferred Stock then outstanding addressed to him at
the principal executive office of the corporation shall, call a special
meeting of the holders of Preferred Stock so entitled to vote, for the
election of the directors to be elected by them as herein provided,
to be held within fifty days after such call and at such place and upon such
notice provided by law and in the bylaws for the holding of meetings of
shareholders; provided, however, that the Secretary shall not be required to
call such special meeting in the case of any such request received less than
ninety days before the date fixed for any annual meeting of shareholders, and
if in such case such special meeting is not called, the holders of Preferred
Stock so entitled to vote shall be entitled to exercise the special voting
rights provided in this paragraph at such annual meeting. If any such special
meeting required to be called as above provided shall not be called by the
Secretary within thirty days after receipt of any such request, then the
holders of record of ten percent or more in number of shares of Series A Stock
and each Other Series of Preferred Stock then outstanding may designate in
writing one of their number to call such meeting, and the person so designated
may, at the expense of the corporation, call such meeting to be held at the
place and upon the notice above provided, and for that purpose shall have
access to the stock books of the corporation. No such special meeting and no
adjournment thereof shall be held on a date later than thirty days before the
annual meeting of the shareholders or a special meeting held in place thereof
next succeeding the time when the holders of Series A Stock become entitled to
elect directors as above provided. If, at any meeting so called or at any
annual meeting held while the holders of shares of Series A Stock have the
special voting rights provided for in this paragraph, the holders of not less
than forty percent of the then outstanding shares of Series A Stock
and each Other Series of Preferred Stock are present in person or by proxy,
which percentage shall be sufficient to constitute a quorum for the election
of additional directors as herein provided, the then authorized number of
directors of the corporation shall be increased by two, as of the time of such
special meeting or the time of the first such annual meeting held while such
holders have said special voting rights and such quorum is present, and the
holders of the Series A Stock and each Other Series of Preferred Stock, voting
as a class, shall be entitled to elect the additional directors so provided
for. If the directors of the corporation are then divided into classes under
provisions of the Restated Certificate of Incorporation, as amended, or the
bylaws, the two additional directors shall be members of those respective
classes of directors in which a vacancy is created as a result of such
increase in the authorized number of directors. Upon the election at such
meeting by the holders of the shares of Series A Stock and each Other Series
of Preferred Stock, voting as a class for the two directors they are entitled
so to elect, the persons so elected, together with such persons as may be or
may have been elected as directors by the holders of all shares otherwise
entitled to vote for directors, shall constitute the duly elected directors of
the corporation. The additional directors so elected by holders of Series A
Stock and each Other Series of Preferred Stock, voting as a class, shall serve
until the next annual meeting or until their respective successors shall be
elected and qualified, or if any such director is a member of a class of
- 22 -
directors under provisions dividing the directors into classes as
aforesaid, each such director shall serve until the annual meeting at which
the term of office of his class shall expire or until his successor shall be
elected and shall qualify, and at each subsequent meeting of shareholders at
which the directorship of any director elected by the vote of holders of
Series A Stock and each Other Series of Preferred Stock under the special
voting rights set forth in this paragraph is up for election said special
voting rights shall apply in the re-election of such director or in the
election of his successor, provided, however, that whenever the holders of
Series A Stock and each Other Series of Preferred Stock shall be divested of
the special rights to elect two directors as above provided, the terms of
office of all persons elected as directors by the holders of Series A Stock
and each Other Series of Preferred Stock, voting as a class, or elected to
fill any vacancies resulting from the death, resignation, or removal of
directors so elected by the holders of Series A Stock and each
Other Series of Preferred Stock, shall forthwith terminate and the authorized
number of directors shall be reduced accordingly. If, at any time after a
special meeting of shareholders or an annual meeting of shareholders at which
the holders of Series A Stock and each Other Series of Preferred Stock have
elected additional directors as provided above, and while the holders of
Series A Stock and each Other Series of Preferred Stock shall be entitled to
elect two directors, the number of directors who have been elected by the
holders of Series A Stock and each Other Series of Preferred Stock (or who by
reason of one or more resignations, deaths or removals have succeeded any
directors so elected) shall by reason of resignation, death or removal be less
than two but at least one, the vacancy in the directors elected by the holders
of the Series A Stock and each Other Series of Preferred Stock may be filled
by the remaining director elected by such holders, and failing such election
within thirty days after such vacancy arises, or if there shall not be
incumbent at least one director elected by such holders, the Secretary of the
corporation may, and upon the written request of the holders of record of ten
percent or more in number of shares of Series A Stock and each Other Series of
Preferred Stock then outstanding addressed to him at the principal office of
the corporation shall, call a special meeting of the holders of Preferred
Stock so entitled to vote, for an election to fill such vacancy or vacancies,
to be held within fifty days after such call and at the place and upon the
notice provided by law and in the bylaws for the holding of meetings of
shareholders; provided, however, that the Secretary shall not be required to
call such special meeting in the case of any such request received less than
ninety days before the date fixed for any annual meeting of shareholders, and
if in such case such special meeting is not called, the holders of Preferred
Stock so entitled to vote shall be entitled to fill such vacancy or vacancies
at such annual meeting. If any such special meeting required to be called as
above provided shall not be called by the Secretary within thirty days after
receipt of any such request, then the holders of record of ten percent or
more in number of shares of Series A Stock and each Other Series of Preferred
Stock then outstanding may designate in writing one of their number to call
such meeting, and the person so designated may, at the expense of the
corporation, call such meeting to be held at the place and upon the notice
above provided, and for that purpose shall have access to the stock books of
the corporation; no such special meeting and no adjournment thereof shall be
held on a date later than thirty days before the annual meeting of the
shareholders or a special meeting held in place thereof next succeeding the
- 23 -
time when the holders of Series A Stock and each Other Series of Preferred
Stock become entitled to elect directors as above provided.
(c) So long as any shares of Series A Stock shall be outstanding, the
corporation shall not, without the affirmative vote or written consent of the
holders of a majority of the number of shares of Series A Stock at the time
outstanding, amend the Restated Certificate of Incorporation to increase the
authorized number of shares of Preferred Stock.
(d) So long as any shares of Series A Stock shall be outstanding, the
corporation shall not, without the affirmative vote or written consent of the
holders of two-thirds of the number of shares of Series A Stock at the time
outstanding, amend the Restated Certificate of Incorporation to:
(i) change the designations, preferences, limitations or other
relevant rights of the Series A Stock;
(ii) effect an exchange, reclassification or cancellation of all or
part of the Series A Stock;
(iii) effect an exchange or create a right of exchange of another class
or series into Series A Stock;
(iv) change the Series A Stock into the same or a different number of
shares of the same or another class or series; or
(v) cancel or otherwise affect dividends on the shares of Series A
Stock which have accrued but have not been declared.
C. Authorized Shares of Capital Stock.
Except as may be provided in the terms and conditions fixed by the Board of
Directors for any series of Preferred Stock, the number of authorized shares
of any class or classes of stock of the corporation may be increased or
decreased by the affirmative vote of the holders of a majority of the
outstanding shares of stock of the corporation entitled to vote.
D. Preemptive or Preferential Rights of Stockholders.
No stockholder of this corporation shall have any preemptive or
preferential right to purchase or subscribe to any shares of any class of this
corporation now or hereafter to be authorized, or any notes, debentures, bonds
or other securities convertible into or carrying options or warrants to
purchase shares of any class, now or hereafter to be authorized, whether or
not the issue of any such shares, or such notes, debentures, bonds or other
securities, would adversely affect the dividend or voting rights of such
stockholder, other than such rights, if any, as the Board of Directors in its
discretion from time to time may grant, and at such price as the Board of
Directors in its discretion may fix; and the Board of Directors may issue
shares of any class of this corporation, or any notes, debentures, bonds or
other securities convertible into or carrying options or warrants to purchase
shares of any class, without offering any such shares or securities, either in
whole or in part, to the existing stockholders of any class.
- 24 -
FIFTH: The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
EIGHTH: The following provisions are inserted for the regulation and
conduct of the affairs of the corporation, and it is expressly provided that
they are intended to be in furtherance and not in limitation or exclusion of
the powers elsewhere conferred herein or in the by-laws or conferred by law:
(a) The Board of Directors may at any time set apart out of any of the
funds of the corporation available for dividends a reserve or reserves for any
proper purpose and may at any time reduce or abolish any such reserve.
(b) Except as may be otherwise expressly required by law or by other
provisions of this Restated Certificate of Incorporation or the by-laws, the
Board of Directors shall have and may exercise, transact, manage, promote and
carry on all of the powers, authorities, businesses, objects and purposes of
the corporation, provided, however, that the directors may not effect or
consummate:
(1) any merger or consolidation of the corporation or any Subsidiary
with or into any other corporation;
(2) any sale, lease, exchange or other disposition of all or
substantially all of the assets of the corporation to or with any other
person; or
(3) any issuance or transfer by the corporation or any Subsidiary of
any voting securities of the corporation or any Subsidiary to any other person
except for voting securities issued pursuant to stock option, purchase, bonus
or other plans for natural persons who are directors, employees, consultants
and/or agents of the corporation and its Subsidiaries;
unless and until such transaction is authorized by the affirmative vote of
the holders of at least 66 2/3% of the outstanding stock of the corporation
entitled to vote generally in the election of directors considered for the
purposes of this Article Eighth as one class, but the foregoing requirement
shall not apply, and the provisions of Delaware law relating to the percentage
of stockholder approval, if any, shall apply to
(i) any merger or other transaction described in the preceding
subparagraphs (1), (2) and (3) if the other party to the merger or other
transaction is a Subsidiary of the corporation, or
(ii) any merger or other transaction described in the preceding
subparagraphs (1), (2) and (3) if at any time prior to its consummation the
transaction has been approved by a resolution adopted by not less than two-
thirds of all of the directors then in office.
- 25 -
For purposes of this Article Eighth a "Subsidiary" is any corporation
more than 50% of the voting securities of which are owned directly or
indirectly by the corporation; and a "person" is any individual, partnership,
corporation or entity.
(c) The election of directors need not be by ballot unless the by-laws
so require and no director need be a stockholder.
(d) By-laws not inconsistent with the Certificate of Incorporation may
be made, and by-laws may be altered, amended or repealed in the manner therein
specified provided (1) that no inconsistency with the Certificate of
Incorporation results from such alteration or repeal, (2) that the Board of
Directors shall not alter, amend or repeal Sections 3.1 to 3.4 inclusive and
Section 13 of the by-laws as amended at the 1978 Annual Meeting of
Stockholders without the approval of the holders of at least 66 2/3% of the
outstanding stock of the corporation entitled to vote generally in the
election of directors, considered for the purposes of this paragraph (d) as
one class, and (3) that no change of the time or place of the meeting for the
election of directors shall be made within 60 days next before the day on
which such meeting is to be held, and that in case of any change of such time
or place, notice thereof shall be given to each stockholder in person or by
letter mailed to his last known post-office address at least 20 days before
the meeting is held.
(e) The Board of Directors may from time to time determine whether and
to what extent and at what times and places and under what conditions and
regulations the accounts and books and papers of the corporation, or any of
them, shall be open to the inspection of the stockholders, and no stockholder
shall have any right to inspect any account, book or document of the
corporation, except as and to the extent expressly provided by law with
reference to the right of stockholders to examine the original or duplicate
stock ledger, or otherwise expressly provided by law, or except as expressly
authorized by resolution of the Board of Directors.
(f) A director of this corporation shall not, in the absence of fraud,
be disqualified by his office from dealing or contracting with the
corporation, either as vendor, vendee or otherwise, nor in the absence of
fraud, shall any contract or other transaction of the corporation be void or
voidable or otherwise affected by reason of the fact that any director, or any
firm or association in which any director is a member, or any corporation of
which any director is an officer, director or stockholder, or any trust of
which any director is a trustee or beneficiary, is in any way pecuniarily
interested in such contract or transaction, provided that at the meeting of
the Board of Directors or of any committee thereof having authority in the
premises, authorizing or confirming said contract or transaction, the interest
of such director, firm, association, corporation, or trust and in the case of
a firm, association, corporation, or trust, the relation of such director
thereto, is disclosed or made known to the meeting; nor shall any director be
liable to account to the corporation for any profit realized by him from or
through any such contract or transaction of this corporation, by reason of the
fact that he or any firm or association of which he is a member, or any
corporation of which he is an officer, director or
stockholder, or any trust of which he is a trustee or beneficiary, was
- 26 -
pecuniarily interested in such transaction or contract. Directors so
interested may be counted when present at meetings of the Board of Directors
or of any such committee for the purpose of determining the existence of a
quorum. No such interested director shall vote to authorize or confirm any
such contract or transaction, and if he does so vote his vote shall be
disregarded; but in respect of any contract or transaction with any wholly-
owned subsidiary of the corporation, or with any corporation in which such
director is interested only by virtue of being a director or officer or both,
and not as a stockholder, such director may vote and act as freely as though
his interests in such corporation did not exist. Any contract, transaction or
act of the corporation or of the Board of Directors or of any committee
thereof, or of any officer, which shall be ratified by a majority in interest
of stockholders having voting power, at any annual meeting or at a special
meeting called for the purpose, shall be as valid and as binding as though
ratified by every stockholder of the corporation. In any situation in which a
director should disclose his pecuniary interest in a contract or transaction
as provided for in this section, it shall not be necessary for him to disclose
the extent or the details of such pecuniary interest.
(g) The Board of Directors may issue all or any part of the authorized
stock of the corporation at such times and on such lawful conditions as it may
from time to time determine; and no stockholders shall have any preemptive
right to subscribe for any issue of the corporation's stock or of any other
securities.
(h) To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a director of
the corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of the foregoing sentence by the stockholders of the corporation
shall not adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or modification.
NINTH: Meetings may be held without the State of Delaware if the by-laws
so provide. The books of the corporation may be kept (subject to any
provisions contained in the statute) outside of the State of Delaware at such
place or places as may be from time to time designated by the Board of
Directors or in the by-laws of the corporation. No action required or
permitted to be taken by the stockholders of the corporation may be taken
except at the annual meeting of the stockholders or at a special meeting of
the stockholders duly called for as provided by the by-laws of the
corporation. The stockholders entitled to vote generally in the election of
directors, considered for the purposes of this Article Ninth as one class,
shall have the authority to remove any director of the corporation with or
without cause as provided in the by-laws of the corporation.
TENTH: The corporation reserves the right to modify, revise, alter,
amend, change, repeal, or rescind any provision contained in this Restated
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon the stockholders herein are granted
subject to this reservation, provided, however, that the provisions of
Paragraphs (b), (c) and (d) of Article Eighth, and the provisions of Articles
Ninth and Tenth of this Restated Certificate of Incorporation shall not be
- 27 -
modified, revised, altered or amended, repealed or rescinded, in whole or in
part, except by the affirmative vote of the holders of not less than 66 2/3%
of the outstanding stock entitled to vote generally in the election of
directors considered for the purposes of this Article Tenth as one class.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, having been
duly adopted by the Board of Directors and the stockholders of the corporation
in accordance with the provisions of Section 242 and 245 of the Delaware
General Corporation Law, has been executed on this 18th day of December, 1984.
HARCOURT GENERAL, INC.
By /s/ RICHARD A. SMITH
RICHARD A. SMITH
President
Attest: /s/ SAMUEL FRANKENHEIM
SAMUEL FRANKENHEIM
Assistant Secretary
Incorporates amendments and other charter documents dated:
March 14, 1986
March 13, 1987
March 15, 1993
March 14, 1997
- 28 -
<TABLE>
EXHIBIT 11.1
HARCOURT GENERAL, INC.
<CAPTION>
Computation of the weighted average number of shares outstanding used in determining primary and fully
diluted earnings per share:
(In thousands) Six Months Three Months
Ended April 30, Ended April 30,
1997 1996 1997 1996
PRIMARY
1. Weighted average number of common
<S> <C> <C> <C> <C>
shares outstanding 70,874 71,636 70,740 71,445
2. Assumed conversion of Series A
Cumulative Convertible Stock 1,255 1,312 1,252 1,307
3. Assumed exercise of certain stock
options based on average market
value 103 207 89 197
4. Weighted average number of shares
used in primary per share
computations 72,232 73,155 72,081 72,949
FULLY DILUTED (A)
1. Weighted average number of common
shares outstanding 70,874 71,636 70,740 71,445
2. Assumed conversion of Series A
Cumulative Convertible Stock 1,255 1,312 1,252 1,307
3. Assumed exercise of all dilutive
options based on higher of
average or closing market value 103 208 89 200
4. Weighted average number of shares
used in fully diluted per share
computations 72,232 73,156 72,081 72,952
(A) This calculation is submitted in accordance with Securities Exchange Act of 1934 Release No.
9083 although not required by Footnote 2 to Paragraph 14 of APB Opinion No. 15 because it
results in dilution of less than 3%.
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains a summary of financial information extracted from the
Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 459,389
<SECURITIES> 521,197
<RECEIVABLES> 213,293
<ALLOWANCES> 20,905
<INVENTORY> 596,435
<CURRENT-ASSETS> 1,929,169
<PP&E> 954,066
<DEPRECIATION> 389,809
<TOTAL-ASSETS> 3,306,539
<CURRENT-LIABILITIES> 871,956
<BONDS> 792,342
0
1,134
<COMMON> 70,745
<OTHER-SE> 932,484
<TOTAL-LIABILITY-AND-EQUITY> 3,306,539
<SALES> 1,648,725
<TOTAL-REVENUES> 1,648,725
<CGS> 1,019,652
<TOTAL-COSTS> 1,601,460
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 44,902
<INTEREST-EXPENSE> 41,753
<INCOME-PRETAX> 26,887
<INCOME-TAX> 9,141
<INCOME-CONTINUING> 17,746
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,746
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
