<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 30, 1996
--------------
Commission file number 1-6687
------
JOHNSTON INDUSTRIES, INC.
-------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 11-1749980
-------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Thirteenth Street, Columbus, Georgia 31901
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(706) 641-3140
---------------
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the Registrant's Common Stock as of March
30, 1996 was 10,327,660 shares.
<PAGE> 2
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
INDEX
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements Of Income
Condensed Consolidated Statements Of Cash Flows
Notes To Condensed Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
2
<PAGE> 3
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
MARCH 30, 1996 DEC. 30, 1995
-------------- -------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $ 3,722 $ 1,471
Accounts and Notes Receivable
(Less Allowance for Doubtful Accounts
of $1,966 and $1,772) 45,298 42,218
Income Taxes Receivable 705 1,310
Inventories 62,369 52,951
Prepaid Expenses and Other 1,900 763
Deferred Income Taxes 1,655 919
Assets Held for Sale 5,472 5,462
Net Assets of Discontinued Operations 9,080 17,793
--------- ---------
Total Current Assets 130,201 122,887
Property, Plant, and Equipment - Net 127,945 109,572
Intangible Asset - Pension 2,464 2,464
Goodwill 13,882
Other Assets 5,412 5,616
--------- ---------
Total Assets $ 279,904 $ 240,539
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Current Maturities of Long-Term Debt $ 182 $ 206
Accounts Payable 30,070 26,901
Accrued Expenses 17,538 12,422
--------- ---------
Total Current Liabilities 47,790 39,529
Long-Term Debt 149,881 110,758
Other Liabilities 13,872 13,791
Deferred Income Taxes 8,365 3,314
Commitments and Contingencies
Minority Interest in Consolidated Subsidiary 17,968
Stockholders' Equity:
Preferred Stock, par value $.01 per share;
Authorized 3,000,000 shares; issued
325,000 shares 3
Common Stock, par value $.10 per share;
Authorized 20,000,000 shares; issued
12,449,391 and 12,426,891 shares 1,245 1,243
Additional Paid-In Capital 23,569 17,293
Retained Earnings 47,191 46,505
--------- ---------
Total 72,008 65,041
Less Treasury Stock; 2,121,731 and 1,861,912
shares, at cost (10,258) (8,108)
Less Minimum Pension Liability Adjustment, Net
of Tax Benefit (1,754) (1,754)
Stockholders' Equity 59,996 55,179
--------- ---------
Total Liabilities and Stockholders' Equity $ 279,904 $ 240,539
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
------------
MARCH 30, MARCH 31,
1996 1995
--------- ---------
<S> <C> <C>
Net Sales $ 84,030 $ 90,536
Costs and Expenses:
Cost of Sales, excluding Depreciation and Amortization 68,757 72,545
Selling, General, and Administrative 6,553 6,692
Restructuring Charges 2,252
Depreciation and Amortization 4,612 4,094
-------- --------
Total Costs and Expenses 82,174 83,331
-------- --------
Income from Operations 1,856 7,205
Other Expenses (Income):
Interest Expense 2,302 2,119
Interest Income (23) (25)
Other - Net 145 134
-------- --------
Total Other Expenses 2,424 2,228
-------- --------
Equity in Earnings(Loss) of Equity Investments (117)
-------- --------
Income (Loss) from Continuing Operations Before Tax
Provision, Minority Interest in Consolidated
Subsidiary, and Extraordinary Item (568) 4,860
Provision (Benefit) for Income Taxes (647) 2,001
(Income) Loss of Minority Interest in Consolidated
Subsidiary from Continuing Operations 1,200 (331)
-------- --------
Income from Continuing Operations 1,279 2,528
DISCONTINUED OPERATIONS:
Income from Discontinued Operations of Jupiter
National (less applicable income taxes of
$4,268 and $245, respectively) net of minority
interest in income of $1,083 and $183, respectively 2,448 105
Loss on Disposal of Jupiter National, including
provision of $300 for operating losses during phase-
out period (less applicable income tax benefit of $2,801) (1,479)
-------- --------
Income from Discontinued Operations 969 105
-------- --------
EXTRAORDINARY ITEM, (LESS APPLICABLE INCOME TAXES OF
$323), - Loss on Early Extinguishment of Debt 527
-------- --------
Net Income 1,721 2,633
Preferred Dividends 2
-------- --------
Earnings Applicable to Common Stock $ 1,719 $ 2,633
======== ========
</TABLE>
4
<PAGE> 5
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)- CONTINUED
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
------------
MARCH 30, MARCH 31,
1996 1995
---- ----
<S> <C> <C>
Earnings (Loss) Per Share:
Continuing Operations $ .12 $ .24
Discontinued Operations .09 .01
Extraordinary Item (.05)
-------- --------
Total $ .16 $ .25
======== ========
Dividends Per Share $ .10 $ .10
======== ========
Weighted Average Number of Common
and Common Equivalent Shares
Outstanding 10,642 10,682
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
-------------
MARCH 30, MARCH 31,
1996 1995
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income from Continuing Operations 1,279 2,528
------- -------
Adjustments to Reconcile Net Income from Continuing
Operations to Net Cash from Operating Activities:
Depreciation and Amortization 4,612 4,094
Provision for Bad Debts (99) 149
Undistributed Loss in Unconsolidated Affiliates 117
(Gain) Loss on Sales of Assets 69 18
(Increase) Decrease - Assets:
Accounts Receivable (5,276) (8,605)
Inventories (911) 2,886
Deferred Income Taxes (414) 216
Other Assets (804) 165
Increase (Decrease) - Liabilities:
Accounts Payable 3,816 (4,479)
Accrued Expenses 2,672 1,805
Income Taxes Payable 2,172 (1,081)
Deferred Income Taxes 506
Other Liabilities (108) 2,034
(Loss) Income in Minority Interest of Consolidared
Subsidiary (1,200) 331
Other - Net 50
------- -------
Total Adjustments 4,529 (1,794)
------- -------
Net Cash Provided by Continuing Operations 5,808 734
------- -------
Discontinued Operations:
Income from Discontinued Operations 2,448 105
Loss on Disposal of Discontinued Operations (1,479)
Cash Provided by Discontinued Operations 17,941 547
Items Not Affecting Cash, Net (10,146) (899)
------- -------
Net Cash Provided by Discontinued Operations 8,764 (247)
------- -------
Net Cash Provided by Operating Activities 14,572 487
------- -------
Cash Flows From Investing Activities:
Additions to Property, Plant, and Equipment (5,669) (10,665)
Inc. (Dec.) in Non-Operating Accounts Payable (1,198) 5,322
Purchase of Minority Interest in Jupiter National (37,693)
Purchase of T. J. Beall, Net of Cash Acquired 296 (2,721)
------- -------
Purchases of Investments
Net Cash Used In Investing Activities (44,264) (8,064)
------- -------
</TABLE>
6
<PAGE> 7
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements for the
three months ended March 30, 1996 and March 31, 1995 are unaudited. The
March 31, 1995 statements included the accounts of Johnston Industries,
Inc. ("Johnston"), its wholly-owned subsidiaries, Southern Phenix
Textiles, Inc. ("Southern Phenix") and Opp and Micolas Mills, Inc.
("Opp and Micolas"), and its majority-owned subsidiary, Jupiter
National, Inc. ("Jupiter") and Jupiter's wholly-owned subsidiaries,
Wellington Sears Company ("Wellington"), and Greater Washington
Investments, Inc. ("GWI"), (collectively, the "Company"). The March
30, 1996 financial statements include the accounts of Johnston and its
direct wholly owned subsidiaries, Southern Phenix, Opp & Micolas,
Johnston Industries Composite Reinforcements, Inc. ("JICR") (formerly
Tech Textiles, USA), T.J. Beall Company ("TJB"), and its indirect
wholly owned subsidiaries, Wellington, and GWI. See Notes 2 and 4 for
further discussion of Jupiter and TJB. In the opinion of management,
the information reflects all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the results
for the periods presented. Operating results for the three months
ended March 30, 1996 are not necessarily indicative of the results
that may be expected for the entire year. The condensed consolidated
financial statements included herein should be read in conjunction
with the financial statements and notes thereto included in the
Company's Transition Report on Form 10-K for the period July 1, 1995
to December 30, 1995. Reference is made to the accounting policies of
the Company described in the notes to consolidated financial
statements included in the Company's Transition Report on Form 10-K
for the period July 1, 1995 to December 30, 1995.
2. JUPITER NATIONAL
Acquisition of Minority Interest
On August 16, 1995, Johnston jointly announced with Jupiter an
agreement and plan of merger under which the public shareholders of
Jupiter would receive cash from Johnston for each outstanding Jupiter
Share. The merger was approved by Jupiter's shareholders on March 12,
1996, and was consummated on March 28, 1996 at a purchase price of
$33.97 per share. In connection with the consummation of this
transaction, Jupiter was merged into a subsidiary of the Company. Total
purchase consideration was approximately $45,950,000 which included
payments of $39,000,000 to stockholders, certain holders of options to
purchase common stock and the assumption of certain Jupiter options by
Johnston. Other acquisition costs included approximately $5,488,000 of
merger related expenses paid by Jupiter less a reduction for Johnston
deferred income taxes of $1,432,000 which arose through equity
accounting for Johnston's investment in Jupiter. Due to Johnston's
previous ownership interest in Jupiter, the acquisition of the
remaining outstanding interest is accounted for as a "step acquisition"
using the purchase method which results in a partial step-up in Jupiter
assets. The Company recorded such partial step-up in basis for the
applicable assets and has recorded goodwill of $11,762,000 which is to
be amortized over 20 years.
<PAGE> 8
In connection with the completion of the merger of Jupiter, the Company
repurchased from GRM Industries, Inc., a stockholder, 259,819 shares of
the Company's Common Stock having an aggregate value of $2,150,000.
Discontinuance of the Venture Capital Segment
In connection with the consummation of the merger of Jupiter
into a subsidiary of the Company, the Company's management made the
decision to discontinue the venture capital investment segment of
Jupiter's operations. All such portfolio investments are to be
marketed and targeted to be sold within one year. The Company's
consolidated financial statements have been modified to separate the
results of the continuing operations from those of the discontinued
venture capital investment segment. The assets and liabilities of the
discontinued segment are reflected as a separately identifiable item
within the condensed consolidated balance sheets as net assets of
discontinued operations and have been classified as current in both
years for consistency. Additionally, results of operations and cash
flows for discontinued operations are reflected separate from
continuing operations within the condensed consolidated statements of
income and cash flows. Prior periods have been restated so that they
are presented on a comparable basis.
Income before taxes from the discontinued operations include net
realized and unrealized gains from investments of approximately
$10,218,000 less interest expenses and operating expenses. The gains
from investments is mainly due to gains realized on the sale of the
Company's investment in EMC Corporation and Viasoft during the three
months ended March 30, 1996.
The loss before income taxes for the disposal of the discontinued
operations include a $4,830,000 provision for anticipated losses on
disposal of the remaining portfolio investments and related debt as
well as a $300,000 provision for future operating costs.
3. RESTRUCTURING CHARGES
In February 1996, the Company announced that it was closing
Wellington's Tarboro Facility ("Tarboro") in an effort to realign and
consolidate certain operations, concentrate capital resources on more
profitable operations and better position itself to achieve its
strategic corporate objectives. All activities related to the closing
are expected to be completed within one year of the announcement. In
December 1995, the Company recorded a write down of $6,532,000 for an
impairment in the value of Tarboro's property, plant and equipment.
During the three months ended March 30, 1996, the Company recorded
restructuring charges totaling $4,118,000 to cover anticipated losses
including $1,619,000 related to write-downs of accounts receivable and
inventory, $834,000 for severance costs and $1,665,000 for other costs
related to the operation. Of these costs, $1,866,000, representing
the minority interest (the portion of Wellington not owned by
Johnston), has been recorded as part of the cost of acquiring
Jupiter, with the remaining $2,252,000 recorded as an expense
on the consolidated statement of income. As a result of the planned
closing of the Tarboro facility, approximately 167 employees will be
terminated. This represents substantially all of the employees at
the Tarboro facility. As of March 30, 1996, no termination benefits
have yet been paid in connection with the closing of this facility.
The Tarboro plant revenues and operating losses (exclusive of any
impairment write-downs or restructuring charges) for the three months
ended March 30, 1996 were $2,882,000 and $465,000, respectively, and
for the three months ended March 31, 1995 were $3,538,000 and
$396,000, respectively.
4. ACQUISITION OF T.J. BEALL COMPANY
On March 25, 1996, the Company acquired all of the outstanding common
stock of TJB, a cotton by-products processor located in West Point,
Georgia. The TJB stock was acquired in exchange for 325,000 shares of
non-voting convertible preferred stock ("Series 1996 Preferred Stock")
of the Company, which has a par value of one cent ($.01) per share and
an estimated value of $3,250,000. The Company incurred costs of
approximately $115,000 connected with the acquisition. Dividends on
the Series 1996 Preferred Stock are payable quarterly at the rate of
<PAGE> 9
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - CONTINUED
(In Thousands of Dollars)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
------------
MARCH 30, MARCH 31,
1996 1995
---- ----
<C> <C>
<S> <C>
Cash Flows From Financing Activities:
Principal Payments of Long-Term Debt (94,116) (5,020)
Proceeds From Issuance of Long-Term Debt 142,236 17,288
Payments Under Line-of-Credit Agreements (18,000) (14,800)
Borrowings Under Line-of-Credit Agreements 4,750 12,150
Purchase of Treasury Stock, at Cost (2,150) (81)
Proceeds from Issuance of Common Stock 73
Extraordinary Item, Loss on Extinguishment of Debt (850)
Dividends Paid (1,056)
------- -------
Net Cash Provided by Financing Activities 31,943 8,481
------- -------
Net Increase in Cash and Cash Equivalents 2,251 904
Cash and Cash Equivalents, Beginning of Period 1,471 3,323
------- -------
Cash and Cash Equivalents, End of Period 3,722 4,227
======= =======
Supplemental Disclosures of Cash Flow Information:
Interest Paid 3,538 1,998
Income Taxes Paid 638 823
</TABLE>
Supplemental Disclosures of Non Cash Investing Information:
On March 25, 1996, Johnston Industries, Inc. acquired T. J. Beall in exchange
for 325,000 shares of preferred stock at a stated value of $10 per share.
In connection with the March 28, 1996 acquisition of the Jupiter National,
Inc. minority interest, Johnston Industries, Inc. issued 410,514 incentive
stock options and 99,816 non-qualified stock options with an aggregate value
of $2,958,439 in exchange for certain Jupiter options having a similar value.
See notes to condensed consolidated financial statements.
7
<PAGE> 10
$.125 per share. Goodwill of $2,210,000 was recorded in connection
with the acquisition and will be amortized over 20 years. Each share
of Series 1996 Preferred Stock may at the shareholder's option, be
converted into the Company's voting common stock, par value $.10 per
share (the "Common Stock"), on a one-for-one basis on a specified
time frame. One-third of the Preferred Stock is convertible into
Common Stock twelve months after closing, an additional one-third is
convertible twenty-four months after closing, and the final one-third
is convertible thirty-six months after closing. The closing date of
record is March 25, 1996. The acquisition has been accounted for
under the purchase method of accounting.
<PAGE> 11
5. INVENTORIES
Inventories consist of the following at March 30, 1996 and December
30, 1995:
<TABLE>
<CAPTION>
MARCH 30, 1996 DECEMBER 30, 1995
-------------- -----------------
<S> <C> <C>
Finished Goods $ 23,330,000 $22,982,000
Work-In Process 16,947,000 15,595,000
Raw Materials and Supplies 22,092,000 14,374,000
------------ -----------
Total $ 62,369,000 $52,951,000
============ ===========
</TABLE>
6. LONG-TERM FINANCING AND SHORT-TERM BORROWINGS
Long-term debt and short-term borrowings consist of the following at
March 30, 1996 and December 30, 1995:
<TABLE>
<CAPTION>
MARCH 30, 1996 DECEMBER 30, 1995
-------------- -----------------
<S> <C> <C>
Johnston Industries, Inc.
Lines of Credit Borrowings $ 0 $ 13,250,000
Term Loans 80,000,000 0
Revolving Credit Loans 64,029,000 45,000,000
Purchase Money Mortgage Debt 1,152,000 1,174,000
------------ ------------
145,181,000 59,424,000
T.J. Beall Company
Short-term borrowing to be refinanced 4,229,000 0
Wellington Sears Company
Revolving Credit Loan 0 27,471,000
Term Loan 0 18,594,000
Equipment Loans 0 4,806,000
Amounts Due Former Affiliates
of Polylok 51,000 13,000
Other Debt 602,000 656,000
------------ ------------
653,000 51,540,000
Total 150,063,000 110,964,000
Less Current Maturities (182,000) (206,000)
------------ ------------
$149,881,000 $110,758,000
============ ============
</TABLE>
Johnston Industries, Inc.
Credit Agreement
On March 28, 1996, the Company signed a new credit agreement with a
syndicate of banks (the "Credit Agreement") to provide aggregate loans
of up to $160,000,000 to repay existing indebtedness, to provide funds
to acquire the remaining outstanding shares of the common stock of
Jupiter and to finance working capital needs. The
agreement provides for
<PAGE> 12
revolving credit loans (the "Revolver") of up to $80,000,000, term
loan A for $40,000,000 and term loan B for $40,000,000. Borrowings
under the Revolver and the term loan A mature on March 28, 2001 and
term loan B matures on March 28, 2003. The term loans are repayable in
quarterly installments starting in 1997.
Interest under the revolver and term loan A bear interest at (i) a
variable rate of the greater of the federal funds rate plus 1/2 of 1%
or the prime rate plus a margin of 1 1/4% or a fixed rate based on the
LIBOR rate plus a margin. Interest under term loan B bears interest at
a variable rate of the greater of (i) the federal funds rate plus 1/2
of 1% or the prime rate plus a margin of 1 3/4% or a (ii) rate based
on the LIBOR rate plus 3%. At March 30, 1996, there were borrowings of
$64,029,000 under the Revolver and $40,000,000 under term loan A, with
an average interest rate of 9.5%, and there were borrowings of
$40,000,000 under term loan B, with an average interest rate of 10%.
Commitment fees are payable at 1/2 of 1% based on the unused portion of
the revolver until 60 days after the date of closing the loan.
Covenants and Restrictions
Under the terms of the credit agreement, substantially all assets are
pledged as collateral for the borrowings under the Credit Agreement.
This agreement requires the Company to maintain certain financial
ratios and specified levels of tangible net worth. The agreement
places a limit on the Company's level of capital expenditures and
type of mergers or acquisitions. Additionally, the agreement permits
the Company to pay dividends on its Common Stock provided it is in
compliance with various covenants and provisions contained therein,
which among other things limits dividends and restricts investments
to the lesser of (x) 20% of total assets of the Company, on a fully
consolidated basis, as of the date of determination thereof, or (y)
$5,000,000 for the period commenting on January 1, 1996 and ending on
December 31, 1996 or (z) $5,000,000 plus 50% of cumulative
consolidated net income for the period commencing January 1, 1997,
minus 100% of cumulative consolidated net loss for the consolidated
entities for such period, as calculated on a cumulative basis as of
the end of each fiscal quarter of the consolidated entities
with reference to the financial statements for such quarter.
At March 30, 1996, the Company was in technical non-compliance with its
minimum tangible net worth covenant under its bank credit agreement.
Such covenant required the Company to maintain a minimum tangible net
worth of $50 million. Such covenant was entered into by the parties
based on certain assumptions with respect to the accounting treatment
of the acquisition of Jupiter National, Inc. In preparing its
quarterly financial information, the Company made adjustments to its
purchase accounting treatment of the Jupiter acquisition due to certain
step acquisition accounting requirements. Such adjustments resulted
in an increase in goodwill and a decrease in tangible net worth to
$45.9 million. Management believes the Company has an agreement in
principle with the agent under its bank credit agreement that
<PAGE> 13
the lenders thereunder will amend such covenant and waive such event of
non-compliance. Such amendment and waiver is subject to formal
agreement of the requisite majority of the credit agreement
participants. While no assurances can be given that the amendment and
waiver will, in fact, be obtained, management has no reason to believe
such amendment and waiver will not be procured and fully expects the
necessary documentation to effect such amendment and waiver to be
entered into in the near future.
Purchase Money Mortgage Agreement
Johnston has a purchase money mortgage agreement with a bank for a
maximum loan of $1,325,000 for an office building. The loan is payable
ratably to December 31, 2008. At March 30, 1996, Johnston had
borrowings of $1,152,000 outstanding under this agreement and currently
pays interest at a rate of 8%.
T.J. Beall Company
At March 30, 1996, TJB had short-term borrowings which were repaid on
April 26, 1996 by Johnston in accordance with the acquisition agreement
between TJB and the Company.
Wellington Sears Company
Revolving Credit and Term Loan
In March 1996, Johnston borrowed funds under its Credit Agreement and
repaid the Wellington revolving credit loans, term loans and equipment
loans which had an aggregate principal balance of $48,300,000 plus
accrued interest of $349,000 and a prepayment penalty of $563,000 and
terminated the Wellington credit agreement. Additionally, the Company
wrote-off total deferred financing costs of $287,000 in connection with
the refinancing of the debt. As a result, the company recorded an
extraordinary loss for the prepayment penalty and the write-off of
deferred financing costs related to this early extinguishment of debt
of $527,000 net of applicable income taxes of $323,000.
Wellington's other debt consists mainly of a note payable to the
Industrial Development Board of Chambers County, Alabama. The note has
been discounted based on an imputed interest rate of 10% and is
repayable in annual installments of $100,000 through December, 2004.
7. EARNINGS PER SHARE
Earnings per share for the three months ended March 30, 1996 and March
30, 1995 was calculated based on the weighted average number of shares
of common and common equivalent shares outstanding during the periods.
For the three months ended March 30, 1996, the preferred dividends
related to the TJB acquisition (see Note 4) were deducted from net
income to compute earnings applicable to common stock. Additionally,
earnings (loss) per share were computed for continuing operations,
discontinued operations, and extraordinary item.
8. INCOME TAXES
The provision for income taxes from continuing operations as computed
under Financial Accounting Standards Board Standard No. 109,
"Accounting for Income Taxes", is comprised of the following for the
three months ended March 30, 1996 and March 31, 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Federal:
Current $ 163,000 $1,236,000
Deferred (830,000) 455,000
--------- ----------
(667,000) 1,691,000
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
<S> <C> <C>
State:
Current 126,000 236,000
Deferred (106,000) 74,000
--------- ----------
20,000 310,000
Provision (benefit) for
income taxes $(647,000) $2,001,000
========= ==========
</TABLE>
The reconciliation of the Company's effective income tax rate to the
Federal statutory rate from continuing operations of 34% for the three
months ended March 30, 1996 and March 31, 1995 follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Federal income taxes at statutory rate benefit $(193,000) $1,652,000
State income taxes, net of Federal tax 27,000 205,000
Equity in Income of Majority-Owned Subsidiary 508,000 102,000
Other - Net 27,000 42,000
--------- ----------
$(647,000) $2,001,000
--------- ----------
Effective rate 113.9% 41.2%
========= ==========
</TABLE>
The significant equity loss from continuing operations has distorted the 1996
effective rate which is usally comparable with the effective rate for the same
period of the prior year.
9. COMMITMENTS AND CONTINGENCIES
Former Steel Fabrication Operations
In 1981, a subsidiary of the Company closed a steel fabricating
facility in Pennsylvania which it had operated before its closing. The
facility was purchased from the Company and again operated as a steel
fabricating facility by the new owner for approximately two years and
thereafter was purchased by the present owner who also operated it as a
steel fabricating facility for about three years. Since that time, the
facility has been closed.
In February 1994, the operators of the facility filed a complaint in
the United States District Court, Eastern District of Pennsylvania,
Bethlehem Iron Works, Inc. and Steel Structures Corp. vs. Lewis
Industries, Inc., Charles P. Lewis and Johnston Industries, Inc. No.
94-CV-0752, against previous owners and operators of the facility
including the Company claiming contamination by a former Johnston
subsidiary which had operated at the facility before its close in 1981.
The complaint seeks to hold predecessors in title and former operators
at the site responsible for costs alleged to have been incurred to
remediate the plant site by the present owners. Such costs are alleged
to be $3.5 million, however, the Company disputes that such costs were
incurred for response and believes that it has presented meritorious
defenses against the imposition of such costs. A non-jury trial began
in the United States District Court for the Eastern District of
Pennsylvania on July 20, 1995 and was concluded on August 25, 1995.
Briefs by all the parties have been filed. The Court is expected to
render a decision during the quarter ending June 29, 1996.
In June 1995, the Company established a reserve of $1,000,000 for costs
which it believed could be incurred to resolve the dispute. Based upon
subsequent events, including the trial and the discovery that certain
co-defendants had no assets or had been through bankruptcy
proceedings, and based upon the fact that the Court has not dismissed
the plaintiff's claims, the Company's management determined to accrue
an additional $1,000,000 in the three months ended December 30, 1995,
<PAGE> 15
thereby increasing the reserve to $2,000,000 as of December 30,
1995. Management continues to dispute the apportionment of any of
these costs against the Company. The loss provision is included in
Other-net in the Statement of Operations. In addition, the Company
has established a reserve in the amount of $200,000 as an estimate of
potential additional legal costs and other costs to be incurred
subsequent to December 30, 1995, in connection with the defense of this
matter. Although management believes that the accruals described above
are reasonable based upon the available facts as of the respective
balance sheet dates, and that the accrual as of December 30, 1995 is
sufficient to cover the estimated costs of such matter, the ultimate
outcome of the litigation cannot presently be determined.
Disputed Purchase Consideration
At March 30, 1996, Wellington has accrued $1,610,000 as additional
purchase consideration in connection with Wellington's original
purchase of assets from WestPoint Stevens, Inc. ("WestPoint"). The
additional purchase price has been allocated to property, plant, and
equipment and was based upon Wellington exceeding a cumulative earnings
threshold, as defined by the purchase agreement, during the three-year
period ended November 28, 1995. Subsequent to March 30, 1996,
Wellington and WestPoint reached a verbal agreement to conclude the
dispute upon payment of $1,850,000. The $240,000 excess over the
amount accrued at March 30, 1996 will increase the purchase price
allocated to property, plant and equipment.
General
The Company is periodically involved in legal proceedings arising out
of the ordinary conduct of its business. Management does not expect
that any of these legal proceedings or the legal proceedings discussed
above, will have a material adverse effect on the Company's
consolidated financial statements or consolidated results of
operations.
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Johnston Industries, Inc. ("Johnston") is a consolidated entity which includes
its direct wholly owned operating subsidiaries, Southern Phenix Textiles, Inc.,
Opp and Micolas Mills, Inc., Johnston Industries Composite Reinforcements, Inc.
("JICR") (formerly Tech Textiles, USA), and T.J. Beall Company ("TJB"), and its
indirect wholly owned subsidiaries, Wellington Sears Company ("Wellington") and
Greater Washington Investments, Inc. ("GWI") (collectively, the "Company").
On August 16, 1995, Johnston jointly announced with Jupiter National, Inc.
("Jupiter") an agreement and plan of merger under which the public shareholders
of Jupiter would receive cash from Johnston for each outstanding Jupiter share.
The merger was approved by Jupiter's shareholders on March 12, 1996, and the
merger of Jupiter into an acquisition subsidiary of the Company was consummated
March 28, 1996.
Management's operating strategy calls for the divestiture of all non-textile
investments, consisting primarily of the investment portfolio acquired in the
merger, in order to allow management to focus its attention on the Company's
core textile operations. Accordingly, all non-textile investments and
operations are now held for disposition and the portfolio investment business is
to be marketed and sold. Such investment portfolio business has been classified
as discontinued operations because such business formerly represented an
operating segment of the Company. All prior period financial information has
been restated in order to reflect Jupiter and GWI as discontinued operations.
On March 25, 1996, the Company completed the acquisition of TJB, a cotton
byproducts processor, whose primary business is the recycling of gin motes
(non-perishable shorter fibers separated from cotton in the ginning process).
The operations of TJB are being integrated with the Utilization operations of
Wellington, which is a major user and recycler of textile byproducts.
While no assurances can be given, management believes the acquisition of the
minority interest in Jupiter, tactical acquisitions (such as TJB acquisition),
the shutdown of Wellington's unprofitable Tarboro facility (discussed below),
and the disposition of all non-textile operations, combined with continued
implementation of the Company's core operating strategy of product innovation,
capital investment, and aggressive marketing, will result in operational
synergies and will enhance the Company's growth and performance potential. The
effect of such operational synergies will, however, be realized over time.
RESULTS OF OPERATIONS
Results for the three months ended March 30, 1996 improved from the transition
period ended December 30, 1995, but declined as compared to the three months
ended March 31, 1995. Such results for the three months ended March 30, 1996
reflected continued weakness in the general economy, which resulted in
comparatively weak sales versus the prior quarterly period and higher fixed
costs as a percent of sales. The improvement compared to the transition period
primarily reflected the stabilization of raw material costs. Results for the
period were also adversely affected by restructuring charges in connection with
the shut down of Wellington's Tarboro facility.
Net sales for the three months ended March 30, 1996 were $84,030,000 compared to
$90,536,000 for the same period in the prior year. The decrease was mainly
attributable to the following sales declines
<PAGE> 17
by fabric market group: Automotive - $1,335,000; Industrial - $4,413,000;
Apparel - $1,054,000; and Specialty Markets - $2,214,000 (primarily yarn
and other non-woven fabrics sales). While no assurances can be given,
management anticipates net sales of automotive fabrics will rebound as sales of
vehicles by the principal domestic automobile manufacturers increase. Sales of
new passenger cars and light trucks are volatile, responding quickly to change
in economic conditions. Accordingly, the extent and timing of any increase in
sales of automotive fabrics currently cannot be predicted with any certainty.
Sales of apparel market products continue to decrease relative to prior periods
and now represents less than 3% of the Company's sales which reflects
management's decreased emphasis in this low margin business. These decreases
were partially offset by an increase in the home furnishings sales of $864,000
during the three months ended March 30, 1996. Management continues to focus on
expanding sales of the high margin products and designs in the decorative
fabrics sector of the home furnishings market. Additionally, net sales of
$2,322,000 for JICR were recorded in the three months ended March 30, 1996
which is reflective of the full consolidation of JICR into the Company's
operations during the transition period ended December 30, 1995. At March 30,
1996, the sales backlog of the Company was approximately $ 63,600,000 compared
to sales backlog of approximately $64,399,000 at December 30, 1995. This minor
decrease in sales backlog of $ 799,000 is representative of continued softness
in the markets served by the Company.
Cost of sales decreased in the three months ended March 30, 1996 to $68,757,000
from $72,545,000 for the comparable 1995 period primarily as a result of
decreased sales discussed above. Gross margin was approximately 18% for the
three months ended March 30, 1996 compared to approximately 20% for the three
months ended March 31, 1995. This decrease was primarily the result of two
factors. First, Company margins were negatively impacted by the decreased sales
volume in certain product types which did not allow the Company increased
productivity through higher utilization of plant and equipment. Second, raw
material costs increased significantly during the three months ended March 30,
1996 compared to the 1995 period, and the Company generally was unable to
pass such increased costs on to its customers. However, management is
encouraged by the increase in gross margin of 4% during the three months ended
March 30, 1996 (18%) versus the transition period ended December 30, 1995
gross margin of 14%. This 4% increase is due to raw material costs (although
still high) receding from their record levels in July 1995.
Selling, general, and administrative expenses of $6,553,000 decreased slightly
by $139,000 for the three months ended March 30, 1996 compared to the same
period in the prior year. While no assurances can be given, management believes
that synergies expected to be achieved upon integration of Johnston and Jupiter
operations will result in further reductions in selling, general, and
administrative expenses. The full impact of the synergies and operational
integration on selling, general, and administrative expenses is not expected to
be completely realized until 1997.
In February 1996, the Company announced that it was closing Wellington's Tarboro
plant in an effort to realign and consolidate certain operations, concentrate
capital resources on more profitable operations, and better position itself to
achieve its strategic corporate objectives. As a result of closing this
facility, the Company recorded a $6,532,000 non-recurring charge during the
transition period ended December 30, 1995 and a further $2,252,000 non-recurring
restructuring charge to operations during the three months ended March 30, 1996.
(See Note 3 of the condensed consolidated financial statements for further
discussion.)
Depreciation and amortization expense for the three months ended March 30, 1996
increased $518,000 compared to the three months ended March 31, 1995. This
increase reflects additional depreciation based
-2-
<PAGE> 18
on the Company's capital investment program as part of its continuing efforts to
upgrade machinery and equipment to state-of-the-art levels, and to move into new
more profitable markets.
Interest expense for the three months ended March 30, 1996 was $2,302,000
reflecting an increase of $183,000 compared to the three months ended March 31,
1995 interest expense of $2,119,000. Such increase was reflective of higher
average borrowings on the Company's line-of-credit and revolving credit
arrangements during the three months ended March 30, 1996.
The benefit for income taxes of $647,000 for the three months ended March 30,
1996 is mainly due to a tax benefit related to the the indirect majority owned
subsidiary, Wellington.
Conversely, for the three months ended March 31, 1995, the Company recorded an
income tax provision of $2,001,000 at an effective rate of 41%.
The income/loss on the minority interest in consolidated subsidiary from
continuing operations reflects the minority shareholders' proportionate share
in the earnings (losses) for the applicable periods of Wellington through March
28, 1996, the merger date. Only the proportionate interest in Wellington is
applicable because Wellington represents the continuing textile operations of
Jupiter.
As discussed above, the portfolio investment business of Jupiter and
GWI is to be marketed and sold. Since this business was treated as an
operating segment, such operation has been classified as a discontinued
operation. Accordingly, the three months ended March 31, 1995 have been
restated reflecting income from such discontinued operations of $105,000 net of
taxes of $245,000 and minority interest in income of $183,000. For the three
months ended March 30, 1996, income from the discontinued operations was
$2,448,000 net of applicable taxes of $4,268,000 and minority interest in
income of $1,083,000. Income during the quarter from discontinued operations
is mainly reflective of increases in portfolio value and gains on the sale of
the Company's investment in EMC Corporation and Viasoft during the three months
ended March 30, 1996. In connection with the classification of the investment
portfolio business as discontinued operations, the Company recorded a loss on
disposal of Jupiter of $1,479,000 net of the applicable income tax benefit of
$2,801,000. This loss is mainly reflective of the write-down of the remaining
portfolio investments from the values previously established by Jupiter's Board
of Directors. Such write-down was recorded to reduce the investments to their
estimated fair value which is expected to be realized upon the sale of such
investments within one year versus the value of these investments held on a
long-term basis.
On March 28, 1996, the Company signed a new credit agreement with a syndicate
of banks (the "Credit Agreement") to provide aggregate loans of up to
$160,000,000 to repay existing indebtedness, to provide funds to acquire the
remaining outstanding shares of the common stock of Jupiter and to finance
working capital needs. The agreement provides for revolving credit loans (the
"Revolver") of up to $80,000,000, term loan A for $40,000,000 and term loan B
for $40,000,000. Borrowings under the Revolver and the term loan A mature on
March 28, 2001 and term loan B matures on March 28, 2003. The term loans are
repayable in quarterly installments starting in 1997.
-3-
<PAGE> 19
Substantially all assets are pledged as collateral for the borrowings under
these facilities. This agreement requires the Company to maintain certain
financial ratios and specified levels of tangible net worth. The agreement
places a limit on the Company's level of capital expenditures and type of
mergers or acquisitions. Additionally, the agreement permits the Company to pay
dividends on its Common Stock provided it is in compliance with various
covenants and provisions contained therein, which among other things limits
dividends and restricts investments to the lesser of (x) 20% of total assets of
the Company, on a fully consolidated basis, as of the date of determination
thereof, or (y) $5,000,000 for the period commenting on January 1, 1996 and
ending on December 31, 1996 or (z) $5,000,000 plus 50% of cumulative
consolidated net income for the period commencing January 1, 1997, minus 100% of
cumulative consolidated net loss for the consolidated entities for such period,
as calculated on a cumulative basis as of the end of each fiscal quarter of the
consolidated entities with reference to the financial statements for such
quarter.
In March 1996, the Company borrowed $144,028,000 under these facilities and
liquidated the Johnston line-of-credit and revolving credit loans and also the
Wellington revolving credit loans, term loans, and equipment loans. In
connection with this refinancing, the Company wrote off deferred financing costs
of $287,000 and paid a prepayment penalty of $563,000 on the early
extinguishment of the Wellington loans. As a result, the Company recorded an
extraordinary loss for the early extinguishment of debt of $527,000 net of
applicable income taxes of $323,000.
MATERIAL CHANGES IN FINANCIAL CONDITION
As a result of the merger of Jupiter into a subsidiary of Johnston, the Company
has revalued certain Jupiter assets, mainly inventories and property, plant, and
equipment. Due to Johnston's previous ownership interest in Jupiter, the
acquisition of the remaining outstanding interest is accounted for as a "step
acquisition" resulting in a partial step-up in Jupiter assets. The Company
recorded such partial step-up in basis on such assets and has recorded goodwill
of $11,762,000 which is to be amortized over 20 years.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 30, 1996 was $82,411,000 representing a ratio of
current assets to current liabilities of 2.7 to 1.
At March 30, 1996, the Company was in technical non-compliance with its
minimum tangible net worth covenant under its bank credit agreement. Such
covenant required the Company to maintain a minimum tangible net worth of $50
million. Such covenant was entered into by the parties based on certain
assumptions with respect to the accounting treatment of the acquisition of
Jupiter National, Inc. In preparing its quarterly financial information, the
Company made adjustments to its purchase accounting treatment of the Jupiter
acquisition due to certain step acquisition accounting requirements. Such
adjustments resulted in an increase in goodwill and a decrease in tangible net
worth to $45.9 million. Management believes the Company has an agreement in
principle with the agent under its bank credit agreement that the lenders
thereunder will amend such covenant and waive such event of non-compliance.
Such amendment and waiver is subject to formal agreement of the requisite
majority of the credit agreement participants. While no assurances can be
given that the amendment and waiver will, in fact, be obtained, management has
no reason to believe such amendment and waiver will not be procured and fully
expects the necessary documentation to effect such amendment and waiver to be
entered into in the near future.
-4-
<PAGE> 20
Management believes that funds generated from operations and borrowings under
the Credit Agreement (as described above) will be sufficient to meet the needs
of the Company's current operations for at least the next 12 months.
OTHER MATTERS
The Company is involved in litigation. (See Item I - Legal Proceedings and Note
9 to condensed consolidated financial statements).
At March 30, 1996, Wellington has accrued $1,610,000 as additional
purchase consideration in connection with Wellington's original purchase of
assets from WestPoint Stevens, Inc. ("WestPoint"). The additional purchase
price has been allocated to property, plant, and equipment and was based upon
Wellington exceeding a cumulative earnings threshold, as defined by the
purchase agreement, during the three-year period ended November 28, 1995.
Subsequent to March 30, 1996, Wellington and WestPoint reached a verbal
agreement to conclude the dispute upon payment of $1,850,000. The $240,000
excess over the amount accrued at March 30, 1996 will increase the purchase
price allocated to property, plant and equipment.
The Company is periodically involved in legal proceedings arising out of the
ordinary conduct of business. Management does not expect that they will have a
material adverse effect on the Company's consolidated financial position or
results of operations.
RISKS AND UNCERTAINTIES
Except for historical information contained herein, the matters set forth in
this report are forward looking statements which are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those in, or which could be expected based on, such forward looking statements.
The Company's expectations regarding future sales and profits assume, among
other things, reasonable continued growth in the general economy which affects
demand for the Company's products, and reasonable stability in raw materials
pricing, changes in which affect customer purchasing decisions as well as the
Company's prices and margins. The costs and benefits of the Company's
discontinuance of Jupiter and GWI portfolio investments and the Tarboro
disposition may vary from the Company's expectations due to various factors such
as: higher or lower than anticipated proceeds from the sale of assets; the
extent of management's ability to control duplication of costs, inefficiencies
and overhead during the period of phasing out operations; and the difficulties
inherent in forecasting the operating results of an operating mode different
from that which exists at the time the forecast is made. For a further
discussion of risks and uncertainties associated with the Company's business,
readers are referred to the cautionary statement set forth in Item 1 of the
Company's annual report on Form 10-K for the transition period ended December
30, 1995, which cautionary statement is incorporated by reference herein.
-5-
<PAGE> 21
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No reportable legal proceedings arose in the quarter ended March 30, 1996.
There have been no material developments in the Legal Proceedings reported in
the Company's form 10K for the transition period ended December 30, 1995.
ITEM 4. ITEMS SUBMITTED FOR A VOTE TO SHAREHOLDERS
On January 18, 1996, the Annual Meeting of Stockholders was held at the
Harvard Club, 27 West 44th Street, New York, NY. There were present in person
or by proxy 9,380,441 shares of Common Stock entitled to vote. The following
matters were voted upon:
1. To elect the following nominees for director:
<TABLE>
<CAPTION>
Nominee No. of Shares in Favor Withheld
------- ---------------------- --------
<S> <C> <C>
David L. Chandler 9,329,480 53,206
Gerald B. Andrews 9,337,665 42,776
J. Reid Bingham 9,335,365 45,076
William J. Hart 9,335,365 45,076
Gaines R. Jeffcoat 9,337,865 42,576
C. John Kjorlien 9,337,515 42,926
John A. Friedman 9,337,865 42,576
</TABLE>
There were no abstentions or broker non-votes applicable to the
election of Directors. All the nominees were elected as
Directors.
2. To consider a stockholder proposal requesting that the Board of
Directors prepare and provide to every stockholder a report
concerning potential conflicts of interest.
<TABLE>
<CAPTION>
No. of Shares
--------------
<S> <C>
For 553,439
Against 7,063,343
Abstain 37,266
Broker Non-Votes 1,726,393
</TABLE>
The stockholder proposal failed.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1(a) Certificate of Incorporation
3.1(b) Certificate of Amendment of Certificate of Incorporation
3.1(c) Certificate of Designations by Board of Directors
3.2(a) By-Laws of Johnston Industries, Inc.
<PAGE> 22
3.2(b) Amendment to By-Laws of Johnston Industries, Inc.
11 Statements of Computation of Per Share Earnings
(b) Reports on Form 8-K
(i) On March 28, 1996, the Company filed a form 8-K report
describing the consummation of the merger between Jupiter
National, Inc. and JI Acquisition Corp., a wholly owned
subsidiary of the Company, whereby the Company became the sole
shareholder of Jupiter National, Inc.
<PAGE> 23
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
undersigned has duly caused this report to be filed on its behalf by the
undersigned hereto duly authorized.
JOHNSTON INDUSTRIES, INC.
Dated: May 20, 1996 By: /s/ John W. Johnson
---------------------------------
John W. Johnson
Vice President
Chief Financial Officer
By: /s/ John W. Johnson
---------------------------------
John W. Johnson
(Principal Accounting Officer)
<PAGE> 1
EXHIBIT 3.1(a)
CERTIFICATE OF INCORPORATION
OF
JOHNSTON INDUSTRIES, INC.
The undersigned, being of legal age, in order to form a corporation under and
pursuant to the laws of the State of Delaware, does hereby set forth as follows:
FIRST: The name of the Corporation is Johnston Industries, Inc.
SECOND: The address of the registered office of the Corporation in the State
of Delaware is No. 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock of which the Corporation shall
have authority to issue is 3,000 shares of the par value $.10 per share, which
shall be designated as Common Stock. (See sheet attached - amended, 12/22/93).
FIFTH: The name and address of the incorporator are as follows:
Name Address
---- -------
Arthur M. Michaelson 633 Third Avenue
New York, New York 10017
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The exact number of directors shall be fixed from time to time by,
or in the manner provided in, the By-Laws of the Corporation and
may be increased or decreased as therein provided. Directors of the
Corporation need not be elected by ballot unless required by the
By-Laws.
(2) The Board of Directors is expressly authorized to adopt, alter and
repeal the By-Laws of the Corporation in whole or in part at
any regular or special meeting of the Board of Directors, by
vote of a majority of the entire Board of Directors. The By-Laws
may also be adopted, altered or repealed in whole or in part at any
annual meeting or special meeting of stockholders called for that
purpose by the affirmative vote of a majority of the shares of the
Corporation outstanding and entitled to vote thereon.
SEVENTH: The Corporation shall indemnify (a) its directors and officers to
the fullest extent permitted by the laws of the State of Delaware now or
hereafter in force, including the advance of expenses under the procedures
provided by such laws, and (b) its employees and agents who are not directors or
-1-
<PAGE> 2
officers to such extent as shall be authorized by the By-Laws or the Board of
Directors. The foregoing shall not limit the authority of the Corporation to
indemnify the directors, officers and other employees and agents of this
Corporation and shall not be deemed to be exclusive of any rights to which those
indemnified may be entitled as a matter of law or under any resolution, By-Law
provision, or agreement.
EIGHTH: No Director shall be personally liable to the Corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director shall be liable under
Section 174 of Title 8 of the Delaware Code or shall be liable by reason that,
in addition to any and all other requirements for such liability, he (i) shall
have breached his duty of loyalty to the Corporation or its stockholders, (ii)
shall not have acted in good faith or, in failing to act, shall not have acted
in good faith, (iii) shall have acted in a manner involving intentional
misconduct or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of law or
(iv) shall have derived an improper personal benefit.
NINTH: No contract or transaction between the Corporation and one or more
of its directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose if: (i) the
material facts as to his or their relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or the committee in good faith
authorizes such contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum; or (ii) such material facts are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors, a committee or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction. Any director of the Corporation
may vote upon any contract or other transaction between the Corporation and any
subsidiary or affiliated corporation without regard to the fact that he is also
a director of such subsidiary or affiliated corporation. This Article shall not
be construed to invalidate any such contract or transaction which would
otherwise be valid under the common and statutory law applicable thereto.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provision of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the Stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said Court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of
Incorporation and affirms, under penaltiesof perjury, that the signature is
his act and deed and that the facts stated herein are true, this 28th day of
October 1987.
/s/ Arthur M. Michaelson
------------------------
Arthur M. Michaelson,
Incorporator
-3-
<PAGE> 4
"FOURTH: The total number of shares of Capital Stock which the Corporation
shall have authority to issue is Twenty-Three Million (23,000,000) shares
divided into two classes of which Three Million (3,000,000) shares of the par
value of $0.01 per share shall be designated Preferred Stock and Twenty Million
(20,000,000) shares of the par value of $.10 per share shall be designated
Common Stock.
"Subject to any exclusive voting rights which may vest in holders of
Preferred Stock under the provisions of any series of the Preferred Stock
established by the Board of Directors pursuant to authority herein provided, and
except as otherwise provided by law, the holders of shares of Common Stock shall
be entitled to one vote for each share upon all matters upon which stockholders
have the right to vote. Subject to any limitations prescribed in this Article
FOURTH and any further limitations prescribed in accordance therewith, the
holders of shares of Common Stock shall be entitled to receive when and as
declared by the Board of Directors, out of the assets of the Corporation which
are by law available therefor, dividends payable either in cash, in property or
securities of the Corporation.
"The Preferred Stock may be issued from time to time in one or more series as
fixed by resolution or resolutions of the Board of Directors. The resolution or
resolutions of the Board of Directors may, to the full extent now or hereafter
permitted by law and subject to the provisions of this Certificate of
Incorporation, fix the voting powers, designations, preferences and relative,
participating, optional or other special rights, and any qualifications,
limitations or restrictions, of the shares of such series."
Note: Effective October 1, 1991 and prior to the above December 22, 1993
amendment, the authorized capital was Thirteen Million (13,000,000) shares
divided into two classes of which Three Million (3,000,000) shares of the par
value of $0.01 per share was designated Preferred Stock and Ten Million
(10,000,000) shares of the par value of $0.10 per share was designated Common
Stock. Prior to October 1, 1991 only Common Stock was authorized.
-4-
<PAGE> 1
EXHIBIT 3.1(b)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
JOHNSTON INDUSTRIES, INC.
The undersigned corporation, in order to amend its Certificate of
Incorporation, hereby certifies as follows:
FIRST: The name of the corporation is Johnston Industries, Inc.
SECOND: The corporation hereby amends its Certificate of Incorporation as
follows:
Article FOURTH of the Certificate of Incorporation, relating to the capital
stock of the corporation, is hereby amended to read as follows:
"FOURTH: The total number of shares of Capital Stock which the
Corporation shall have authority to issue is Twenty-Three Million
(23,000,000) shares divided into two classes of which Three Million
(3,000,000) shares of the par value of $0.01 per share shall be
designated Preferred Stock and Twenty Million (20,000,000) shares of
the par value of $.10 per share shall be designated Common Stock.
"Subject to any exclusive voting rights which may vest in holders of
Preferred Stock under the provisions of any series of the Preferred
Stock established by the Board of Directors pursuant to authority
herein provided, and except as otherwise provided by law, the holders
of shares of Common Stock shall be entitled to one vote for each share
upon all matters upon which stockholders have upon all matters upon
which stockholders have the right to vote. Subject to any limitations
prescribed in the Article FOURTH and any further limitations prescribed
in accordance therewith, the holders of shares of Common Stock shall be
entitled to receive when and as declared by the Board of Directors, out
of the assets of the Corporation which are by law available therefor,
dividends payable either in cash, in property or securities of the
Corporation.
"The Preferred Stock may be issued from time to time in one or more
series as fixed by resolution or resolutions of the Board of Directors.
The resolution or resolutions of the Board of Directors may, to the
full extent now or hereafter permitted by law and subject to the
provisions of this Certificate of Incorporation, fix the voting powers,
designations, preferences and relative, participating, optional or
other special rights, and any qualifications, limitations or
restrictions, of the shares of such series."
THIRD: The amendment effected herein was authorized by the affirmative vote
of the holders of a majority of the outstanding shares entitled to vote thereon
at a meeting of stockholders pursuant to Sections 222 and 242 of the General
Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, we hereunto sign our names and affirm that the statements
made herein are true under the penalties of perjury, this 20th day of December,
1993.
/s/ Gerald B. Andrews
-----------------------------
GERALD B. ANDREWS, President
ATTEST:
/s/ John W. Johnson
--------------------------
JOHN W. JOHNSON, Secretary
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EXHIBIT 3.1(c)
CERTIFICATE OF DESIGNATIONS
BY BOARD OF DIRECTORS OF
JOHNSTON INDUSTRIES, INC.
In accordance with section 151(g) of the Delaware Corporation Law Annotated, and
Article Fourth of the Certificate of Incorporation, as amended, of Johnston
Industries, Inc., a Delaware corporation (the "Corporation"), the undersigned
hereby certify that the following resolutions were duly adopted by the Board of
Directors of the Corporation by Action of the Board of Directors Without a
Meeting as of January 22, 1996:
BE IT RESOLVED by the Board of Directors of Johnston Industries, Inc., a
Delaware corporation (the "Corporation"), that, subject to the filing of this
resolution with the appropriate officials in accordance with Delaware law, and
in accordance with the authority granted by Article Fourth of the Certificate of
Incorporation of the Corporation, as amended, a series of non-voting one cent
($.01) par value preferred stock, consisting of 325,000 shares, is hereby
established and authorized to be issued, with such preferred stock to have the
following designations, powers, preferences and rights, to-wit:
1) The distinctive name and serial designation of this series of preferred
stock is "Johnston Industries, Inc. preferred stock, series 1996"
(which is hereinafter referred to as the "Series 1996 Preferred
Stock");
2) The holders of Series 1996 Preferred Stock shall have no voting power
whatsoever, and no holder of Series 1996 Preferred Stock shall vote on
or otherwise participate in any proceedings in which actions shall be
taken by the Corporation or the shareholders thereof;
3) The annual dividend rate, and the dividend payment dates are as
follows:
a) The holders of shares of the Series 1996 Preferred Stock shall be
entitled to receive, subject to the provisions of paragraph 3(b)
hereof, a cumulative cash dividend at the rate of Fifty Cents ($.50)
per share per annum on shares of Series 1996 Preferred Stock computed
from January 1 through December 31 of each year, commencing in 1996,
payable quarterly at the rate of Twelve and One Half Cents ($.125) per
share, to stockholders of record on a date not more than twenty (20)
days prior to the date on which such cash dividends are payable. If
any dividends payable on the Series 1996 Preferred Stock with respect
to any quarter of the Corporation are not paid for any reason, the
right of the holders of the Series 1996 Preferred Stock to receive
payment of such dividend shall not lapse or terminate, but said unpaid
dividend or dividends shall accumulate and shall be paid without
interest to the holders of the Series 1996 Preferred Stock, when and as
authorized by the Board of Directors of the Corporation, before any sum
or sums shall be set aside for or applied to the purchase, redemption
or other acquisition for value of shares of any other class and before
any dividend shall be paid or declared, or any other distribution shall
be ordered or made, upon shares of any other class. If the issuance of
any of the Series 1996 Preferred Stock shall take place on a day other
than the first day of a calendar quarter (January 1, April 1, July 1 or
October 1), the Corporation shall pay with respect to said calendar
quarter a prorated amount of the quarterly dividend on such issued
Series 1996 Preferred Stock for the period of time from the date of
issuance of such Series 1996 Preferred Stock until the end of the
calendar quarter;
b) Dividends on shares of the Series 1996 Preferred Stock shall be
payable only out of earnings or assets of the Corporation legally
available for the payment of dividends and only as and when declared by
the Board of Directors of Johnston Industries, Inc., and no dividends
shall be paid on the Series 1996 Preferred Stock at such time as such
payment would violate Delaware law.
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4) The Series 1996 Preferred Stock shall be subject to conversion by the
holder and to call by Corporation as follows:
a) The Series 1996 Preferred Stock shall be convertible into shares of
Ten Cent ($.10) par value voting common stock of the Corporation
(the "Common Stock") as hereinafter provided and, when so
converted, shall be canceled and retired and shall not be reissued
as such. From and after the date of issue of the Series 1996
Preferred Stock (the "Issue Date"), for a period of thirty-seven
(37) months (the "First Conversion Period"), any holder of the
Series 1996 Preferred Stock shall have the right, but not the
obligation, to convert all or any part of the Series 1996 Preferred
Stock into shares of Common Stock. During the First Conversion
Period, each share of the Series 1996 Preferred Stock may be
converted into one (1) share of Common Stock, with any holder of
the Series 1996 Preferred Stock having a right to convert up to
one-third (1/3) of the Series 1996 Preferred Stock twelve (12)
months after the Issue Date, one-third (1/3) of the Series 1996
Preferred Stock twenty-four (24) months after the Issue Date, and
the final one-third (1/3) of the Series 1996 Preferred Stock
thirty-six (36) months after the Issue Date. In no event shall any
of the Series 1996 Preferred Stock be converted into Common Stock
prior to the date which is 12 months after the Issue Date. Once a
conversion date arrives with regard to any of the Series 1996
Preferred Stock, any holder of the Series 1996 Preferred Stock will
have the continuing right to convert that portion of the Series
1996 Preferred Stock (or any part thereof, on one or more
occasions) at any time thereafter during the First Conversion
Period; provided, however, if within the date which is thirty-seven
(37) months after the Issue Date, any holder of the Series 1996
Preferred Stock shall not have converted all of the Series 1996
Preferred Stock, then Corporation shall have an option to call all
of the unconverted Series 1996 Preferred Stock in accordance with
the provisions set forth hereafter. Any holder of the Series 1996
Preferred Stock shall be permitted to convert less than the total
number of shares of Series 1996 Preferred Stock to which the holder
is entitled to convert at any time, as long as such shares are
converted in lots of at least fifty thousand (50,000) shares.
b) From and after the date which is thirty-seven (37) months after the
Issue Date, for a period of ninety (90) days (the "Call Period"),
Corporation will have the right, but not the obligation to call and
redeem all (or any part) of the unconverted Series 1996 Preferred
Stock then held by any shareholder, for a cash redemption price of
Ten Dollars ($10.00) per share, plus the amount of any accrued but
unpaid dividends thereon.
c) From and after the expiration of the Call Period, for a period of
thirty (30) days (the "Second Conversion Period"), any holder of
Series 1996 Preferred Stock will have the right, but not the
obligation, to convert all or any part of the Series 1996 Preferred
Stock then held by such shareholder into shares of Common Stock.
During the Second Conversion Period, each share of the Series 1996
Preferred Stock may be converted into one (1) share of Common
Stock. From and after the date of the expiration of the Second
Conversion Period, any holder of the Series 1996 Preferred Stock
shall no longer have any right to convert any part of the Series
1996 Preferred Stock into shares of Common Stock.
d) In order to convert the Series 1996 Preferred Stock into Common
Stock, the holder thereof shall on any business day surrender at
the Corporation's principal place of business, the certificate or
certificates representing such shares, duly endorsed to the
Corporation or in blank, and give written notice to the Corporation
at said office of the number of said shares which such holder
elects to convert. The Series 1996 Preferred Stock shall be deemed
to have been converted immediately prior to the close of business
on the day of such surrender for conversion, and the person or
persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder
or holders of such Common Stock at such time. As promptly as
practicable on or after the date of any conversion, and if the
Corporation shall issue stock certificates for its Common Stock,
the
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<PAGE> 3
Corporation shall issue and deliver a certificate or certificates
representing the number of shares of Common Stock issued upon such
conversion to the person or persons entitled thereto. In the case
of conversion of only a part of the shares of any holder of Series
1996 Preferred Stock, the Corporation shall also issue and deliver
to such holder a new certificate representing the number of shares
of such Series 1996 Preferred Stock not converted by such holder.
e) Notice of the intention of the Corporation to call and redeem all
(or any part) of the unconverted Series 1996 Preferred Stock then
held by any shareholder shall be mailed at least five (5) but not
more than ten (10) days before the redemption to each holder of
record of such shares (as of five (5) days prior to the date of
such notice) at his address as shown by the Corporation's records.
At any time after such notice has been mailed, the Corporation may
deposit the aggregate cash redemption price, plus the amount of any
accrued but unpaid dividends on such shares through and including
the date fixed for redemption, with any bank or trust company named
in such notice, payable in the amounts aforesaid to the respective
orders of the record holders of the shares to be redeemed, on
endorsement (if required) and surrender of the certificates
therefor, and thereupon said holders shall cease to be shareholders
with respect to said shares, and from and after the making of such
deposit, said holders shall have no interest in or claim against
the Corporation with respect to said shares, except only the rights
of the holders thereof to receive such monies from said bank or
trust company, without interest, and dividends thereon shall cease
to be payable. Any funds so deposited by the Corporation which
shall be unclaimed after the end of the period established by any
statute controlling the disposition of unclaimed property shall be
released or repaid to the Corporation upon its request, after which
the holders of the shares so called for redemption shall look only
to the Corporation for payment thereof without interest.
f) In case the Corporation shall (i) pay a dividend in shares of its
common stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a lesser number of shares, or (iv)
issue by reclassification of its shares of Common Stock any shares
of its common stock, the conversion rate in effect immediately
prior thereto shall be adjusted so that the holder of a share of
Series 1996 Preferred Stock surrendered for conversion after the
record date fixing shareholders to be affected by such event shall
be entitled to receive, upon conversion, the number of shares of
Common Stock which such holder would have owned or been entitled to
receive after the happening of such event had such share of Series
1996 Preferred Stock been converted immediately prior to the record
date in the case of such dividend or the effective date in the case
of any such subdivision, combination or reclassification.
5) The amount of preferential or other payments to which shares of the
Series 1996 Preferred Stock are entitled on voluntary or involuntary
liquidation, dissolution or winding up, is as follows: the shares of
the Series 1996 Preferred Stock shall not be inferior to any shares of
any other series of the capital stock of the Corporation, and shall be
preferred over any other series of the capital stock of the Corporation
as to assets, and, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders
of Series 1996 Preferred Stock shall be entitled to receive, out of the
assets of the Corporation available for distribution to its
shareholders (whether from capital or surplus), for each share of the
Series 1996 Preferred Stock an amount equal to $10.00 together with all
dividends thereon accrued and in arrears, before any distribution of
the assets shall be made to the holders of the Common Stock or to the
holders of any stock junior to the Series 1996 Preferred Stock. Upon
such payment, the holders of the Series 1996 Preferred Stock shall not
be entitled to any other or further distribution. A consolidation or
merger of the Corporation with or into any other corporation shall not
be deemed to constitute a liquidation, dissolution or winding up of the
corporation within the meaning of this Section (5).
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6) Nothing herein contained shall prevent the Board of Directors of the
Corporation from creating at any time any other series of preferred
stock of the Corporation ranking on a parity with or junior to the
shares of the Series 1996 Preferred Stock in accordance with the
provisions of Article Fourth of the Certificate of Incorporation of the
Corporation, as amended, as aforesaid.
Accordingly, the Certificate of Incorporation of the Corporation is hereby
amended to incorporate the provisions of the aforesaid resolutions.
IN WITNESS WHEREOF, the undersigned have hereunto subscribed their signatures
and have affixed the seal of the Corporation to this Certificate of Designations
by the Board of Directors of Johnston Industries, Inc. as of the 22nd day of
January, 1996.
JOHNSTON INDUSTRIES, INC.
By: /s/ Gerald B. Andrews
-------------------------
President
Attest: /s/ F. F. Walton
---------------------
Secretary
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EXHIBIT 3.2(a)
BY-LAWS
OF
JOHNSTON INDUSTRIES, INC.
Section 1.1. Registered Office. The registered office of the Corporation
shall be at 100 West Tenth Street, City of Wilmington, County of New Castle,
State of Delaware, or at such other office as the Board of Directors may from
time to time designate.
Section 1.2. Principal Office. The principal office of the Corporation
shall be at 30 Rockefeller Plaza, New York, New York 10020, or at such other
office as the Board of Directors may from time to time designate.
Section 1.3. The Other Offices. The Corporation may also establish and
maintain such other offices, within and without the State of Delaware, as the
Board of Directors may from time to time designate or as the business of the
Corporation may require.
STOCKHOLDERS
Section 2.1. Place of Meetings of Stockholders. The meetings of the
stockholders shall be held at such place or places, either within or without the
State of Delaware, as may be fixed from time to time by the Board of Directors.
Section 2.2. Annual Meeting of Stockholders. The Annual Meeting of the
Stockholders for the election of directors and for the transaction of such other
business as may properly be brought before the meeting shall be held on the
second Friday in November of each year, if not a legal holiday, and if that day
be a legal holiday, then on the next succeeding business day, at 11:00 o'clock
a.m., or at such other time and date as shall be fixed from time to time by the
Board of Directors, and stated in the notice of the meeting.
Section 2.3. Special Meeting of Stockholders. Special meeting of the
stockholders for any purpose or purposes, unless otherwise prescribed by law,
may be called by the Board of Directors or by the President or upon the written
request (stating the purpose or purposes of the meeting) of the holders of at
least 33 1/3% of the outstanding shares entitled to vote.
Section 2.4. Fixing the Record Date. The Board of Directors may fix, in
advance, a date as the record date for the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive any dividend or distribution or the allotment
of any rights, or for the purpose of any other action.
Section 2.5. Notice of Meetings of Stockholders; Waiver of Notice. Written
notice of all meetings of stockholders shall be given to each stockholder
entitled to vote at the meeting, except that it shall not be necessary to give
notice to any stockholder who waives notice or to whom notice is not required as
provided in Sections 9.2 and 9.4 of these By-Laws. Each notice shall be
given personally or by mail not less than ten nor more than sixty days before
the date of such meeting and shall state the place, date and hour of the meeting
and, in the case of special meetings, the purpose or purposes for which the
meeting is called.
Section 2.6. Adjourned Meetings. The stockholders present in person or by
proxy at any meeting of stockholders and entitled to vote thereat may adjourn
the meeting despite the absence of a quorum. When a determination of
stockholders entitled to notice of or to vote at any meeting of stockholders has
been
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made, such determination shall apply to any adjournment thereof unless the Board
elects to fix a new record date for the adjourned meeting. Except as required
by law, when the meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken. At the adjourned meeting at which a quorum is present any
business may be transacted, which might have been transacted on the original
date of the meeting.
Section 2.7. List of Stockholders at Meeting. A list of stockholders as of
the record date, prepared in accordance with Section 5.4 of these By-Laws, shall
be produced and kept at every meeting of stockholders.
Section 2.8. Quorum. A majority of the shares entitled to vote, present in
person or represented by proxy, at any meeting of stockholders shall constitute
a quorum, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws. When a quorum is once present to constitute
a meeting, it is not broken by the subsequent withdrawal of any stockholders.
Section 2.9. Vote of Stockholders. Except as otherwise required by law, by
the Certificate of Incorporation or by these By-Laws, all matters coming before
any meeting of stockholders other than the election of directors shall be
decided by the affirmative vote of the majority of the shares present in person
or by proxy and entitled to vote thereat. Directors shall be elected by a
plurality of the votes of the shares present in person or by proxy and entitled
to vote on the election of directors. Unless otherwise provided by the
Certificate of Incorporation, each stockholder of record shall be entitled to
one vote in person or by proxy for each share of the capital stock held by such
stockholder and registered in his name on the books of the Corporation at the
record date fixed for determining stockholders entitled to vote at such meeting.
Section 2.10. Proxies. Each stockholder entitled to vote at any meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Every proxy shall be in writing subscribed by the stockholder or his
duly authorized attorney-in-fact and shall be filed with the Secretary of the
Corporation. Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it or of his legal representatives or
assigns, except in those cases where an irrevocable proxy permitted by statute
is given. No proxy shall be voted or acted upon after expiration of three years
from the date thereof unless the proxy provides for a longer period.
Section 2.11. Inspectors at Stockholders' Meeting. The Board of Directors,
in advance of any meeting of stockholders, may appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the presiding officer may appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath to execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. No candidate for
the office of director shall be appointed as an inspector.
Section 2.12. Action by Stockholders Without a Meeting. In addition to, and
not in limitation of, the provisions of the General Corporation Law of the State
of Delaware, any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereat were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
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DIRECTORS
Section 3.1. Powers of the Board of Directors. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors (sometimes hereinafter referred to as the "Board").
Section 3.2. Number, Election, Tenure and Qualifications of Directors. The
Board of Directors shall consist of not less than three nor more than fifteen
directors. The exact number of directors shall be fixed from time to time by
resolution of the Board or by the stockholders, provided, however, that no
decrease may shorten the term of any incumbent director. Each director shall
hold office until his successor has been elected and qualified, unless he shall
sooner resign, die or be removed as hereinafter provided.
Section 3.3. Newly Created Directorships and Vacancies. Except as otherwise
provided in the Certificate of Incorporation, newly created directorships
resulting from an increase in the authorized number of directors and vacancies
occurring in the Board through death, resignation, removal, disqualification or
for any other reason may be filled by the vote of a majority of the directors
then in office, although less than a quorum.
Section 3.4. Resignations. Any director may resign at any time upon written
notice to the Board or the Secretary.
Section 3.5. Removal. Except as otherwise provided in the Certificate of
Incorporation, the holders of a majority of the shares then entitled to vote at
an election of directors may, at a special meeting for which notice specifying
the intention to pass such resolution has been given, remove any or all of the
directors with or without cause. Any director may be removed for cause by a
majority vote of the whole Board.
Section 3.6. Place and Time of Meetings of the Board. A regular meeting of
each newly elected Board shall be held immediately following the Annual Meeting
of Stockholders and at the place of such meeting, or as soon as practicable
thereafter at such place as shall have been previously fixed for that purpose by
resolution of the Board. Other regular meetings of the Board may be held at
such times and places as the Board may from time to time determine or as may be
specified in the notice of the meeting. Special meetings of the Board shall be
held whenever called by order of the Board, by the President or by any of the
directors, and at such place or places as may be fixed by the Board or specified
in the notice of the meeting.
Section 3.7. Notice of Meetings of the Board of Directors. Notice of
regularly scheduled meetings of the Board of Directors need not be given. Unless
notice is waived or not required as provided in Sections 9.3 and 9.4 of these
By-Laws, notice of the time and place of every special meeting of the Board of
Directors shall be given to each director by oral, telegraphic, telecopy or
written notice at least one day before the meeting. Except as otherwise
provided by law or by these By-Laws, any notice of meeting need not specify the
purpose of the meeting. Notice of an adjourned meeting need not be given other
than by announcement at the meeting at which the adjournment is taken.
Section 3.8. Quorum. A majority of the directors then comprising the Board
shall constitute a quorum for the transaction of business. If at any meeting of
the Board there shall be less than a quorum present, a majority of the directors
present may, without further notice, adjourn the meeting from time to time until
a quorum is obtained.
Section 3.9. Action of the Board of Directors. Except as otherwise provided
in the Certificate of Incorporation or these By-Laws, the act or vote of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board.
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Section 3.10. Action by the Board and Committees Without a Meeting. Any
action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting, if a written
consent to such action is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or such committee.
Section 3.11. Telephone Meetings. Any or all members of the Board or any
committee of the Board may participate in a meeting of the Board or of the
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other.
Participation by such means shall constitute presence in person at the meeting.
Section 3.12. Compensation and Reimbursement of Directors. The Board may
fix the compensation of directors for services in any capacity, and may allow
directors a fixed sum and expenses of attendance, if any, for attendance at each
directors' meeting. Members of committees may be allowed similar compensation
and reimbursement for their services as such. No such payment shall preclude
any director or committee member from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.13. Executive Committee. The Board of Directors may, from time to
time, by resolution passed by a majority of the whole Board, designate an
Executive Committee consisting of three or more directors of the Corporation.
The Executive Committee shall have and exercise all of the powers of the Board
of Directors in the management of the business and affairs of the Corporation
except as otherwise provided in the resolution or by law, and may authorize the
seal of the Corporation to be affixed to all papers which may require it. Such
Committee shall serve at the pleasure of the Board, which shall have power at
any time to change the members thereof, to fill vacancies therein and to
discharge such committee, with or without cause.
Section 3.14. Other Committees. The Board may, from time to time, by
resolution passed by a majority of the whole Board, designate other committees,
to serve at the Board's pleasure, with such powers and duties as the Board
determines.
Section 3.15. Committee Members. The Board of Directors may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee, and, in addition,
in the absence or disqualification of any member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
Section 3.16. Reliance. A member of the Board of Directors, and a member of
any committee thereof, shall be fully protected in relying on good faith upon
the records of the Corporation or upon such information, opinion, reports, or
statements presented to the Corporation by any of its officers and employees or
committees of the Board, or by any other person as to matters the Board or
committee member reasonably believes are within such other person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of the Corporation.
OFFICERS
Section 4.1. Authorized Officers. The officers of the Corporation shall be
a Chairman of the Board, a Vice-Chairman of the Board, a President, one or more
Senior Vice-Presidents and Vice-Presidents (including an Executive Vice-
President, if the Board so determines), a Treasurer and a Secretary. One person
may hold more than one office, and if the same person holds both the office of
Secretary and the office of Treasurer, he may be known as the Secretary-
Treasurer. The Board may from time to time appoint such subordinate or
assistant officers (including Assistant Secretaries and Assistant Treasurers),
agents or employees, with such terms of office, powers and duties, as it may
deem desirable, and may from
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time to time authorize any officer or committee to appoint and remove such
subordinate or assistant officers and prescribe their terms of office, powers
and duties.
Section 4.2. Election or Appointment and Term of Office. The officers of
the Corporation, other than subordinate or assistant officers, shall be elected
or appointed annually by the Board at its first meeting held after each Annual
Meeting of Stockholders. Each officer shall hold office until his successor has
been elected or appointed and qualified or until the office is declared vacant
by the Board of Directors, unless he shall sooner die, resign or be removed as
hereinafter provided.
Section 4.3. Removal. Any officer of the Corporation elected or appointed
by the Board or appointed by an officer or a committee may be removed, with or
without cause, by the Board, or by the officer or committee upon whom the power
to appoint the officer may have been conferred.
Section 4.4. Resignation. Any officer may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time specified therein, and unless
otherwise specified therein the acceptance of such resignation shall not be
necessary to make it effective.
Section 4.5. Vacancies. A vacancy in any office because of death,
resignation, removal or otherwise may be filled by the Board, or by any officer
or committee upon whom the power to appoint persons to such office may have been
conferred.
Section 4.6. Security. The Board may require any officer, employee or agent
to give security for the faithful performance of his duties. Such security may
be in the form of a bond in such amount and form and with such surety or
sureties as the Board may determine.
Section 4.7. Compensation. The Board shall have power to fix the
compensation of all officers of the Corporation. It may authorize any officer or
committee upon whom the power to appoint subordinate or assistant officers may
have been conferred to fix the compensation of such subordinate or assistant
officers.
Section 4.8. Chairman of the Board. The Chairman of the Board shall, when
present, preside at all meetings of the stockholders and of the Board, and shall
have such other powers and duties as the Board assigns to him from time to time.
Section 4.9. Vice-Chairman. In the absence of the Chairman of the Board
and the President, the Vice-Chairman shall preside at all meetings of the
stockholders and of the Board, and he shall have such other powers and duties as
the Board assigns to him from time to time.
Section 4.10. President. The President shall be the chief executive officer
of the Corporation and shall have such other powers and duties as the Board
assigns to him from time to time. He shall, in the absence of the Chairman of
the Board, preside at all meetings of the stockholders and of the Board. He may
sign, with the Secretary or any other proper officer of the Corporation
thereunto authorized by the Board, certificates representing shares of the
Corporation, and deeds, mortgages, bonds, contracts, or other instruments which
the Board has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board or by these By-Laws
to some other officer or agent of the Corporation, or shall be required by law
to be otherwise signed or executed.
Section 4.11. Vice-Presidents. Except as otherwise provided by these
By-Laws, in the absence of the President or in the event of his death or
inability to act, the Executive Vice-President and in his absence or disability
the Senior Vice-President and in his absence or disability the Vice-President
(or in the event there be more than one Senior Vice- President or
Vice-President, in the respective orders designated at the time of their
election, or in the absence of any designation, first the Senior Vice-Presidents
and then the Vice-Presidents in the respective orders of their seniority) shall
perform the duties of the President, and when so acting, shall have all the
authority of and be subject to all the restrictions upon the President. Any
Vice-
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<PAGE> 6
President may sign, with the Secretary or any other proper officer of the
Corporation thereunto authorized by the Board, certificates representing shares
of the Corporation and shall perform such other duties as from time to time may
be assigned to him by the President or by the Board.
Section 4.12. Secretary. The Secretary shall record the minutes of the
meetings of the stockholders, of the Board and of the Executive Committee in
books provided for the purpose. He shall see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by law. He shall
be custodian of the corporate records and of the seal of the Corporation. He
shall see that the corporate seal is affixed to all documents, the execution of
which on behalf of the Corporation under its seal is duly authorized, and when
so affixed may attest the same. In general, he shall perform all duties
incident to the office of Secretary, and such other duties as from time to time
may be assigned to him by the President or by the Board. In the absence of the
Secretary from any meeting, the minutes shall be recorded by the person
appointed for that purpose by the presiding officer.
Section 4.13. Treasurer. The Treasurer shall have charge and custody of the
books and records of account of the Corporation. In general, he shall perform
all the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board.
Section 4.14. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretary and Assistant Treasurer or, if there be more than one, the Assistant
Secretaries and Assistant Treasurers in the order determined by the Board,
shall, in the absence or disability of the Secretary or the Treasurer, perform
the duties and exercise the powers of the Secretary and the Treasurer,
respectively, and shall perform such other duties and have such other powers as
from time to time may be assigned to them or any of them by the President or by
the Board.
SHARES AND STOCKHOLDERS
Section 5.1. Certificates. Each stockholders shall be entitled to a
certificate or certificates in a form to be approved by the Board, certifying
the number of shares owned by him, signed by the Chairman or Vice Chairman of
the Board or the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary and sealed with
the seal of the Corporation or a facsimile thereof. Any or all the signatures
on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 5.2. Transfer of Shares. Transfer of record of shares of stock of
the Corporation shall be made only on the books of the Corporation upon the
surrender of the certificate representing the shares to be transferred properly
endorsed and bearing the requisite amount of stock transfer stamps, if any, duly
canceled. The Board of Directors may prescribe such additional rules and
regulations as it may deem appropriate relating to the issue, transfer and
registration of securities of the Corporation.
Section 5.3. Lost, Mutilated or Destroyed Certificates. In case any
certificate of stock is lost, stolen, mutilated or destroyed, the Board may
authorize the issue of a new certificate in place thereof upon such terms and
conditions as it may deem advisable. The Board may require satisfactory surety
before issuing a new certificate to replace a certificate claimed to have been
lost, stolen or destroyed.
Section 5.4. Record of Stockholders. The Secretary of the Corporation, or
the registrar or transfer agent appointed by the Board of Directors shall
prepare, at least ten days prior to every meeting of stockholders, a complete
list containing the names and addresses of all stockholders entitled to vote
thereat, and the number of shares registered in the name of each such
stockholder. Such list shall be open to inspection by any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to such meeting, at a place designated in the notice of
such meeting or at
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<PAGE> 7
the place where the meeting is to be held. The Corporation shall be entitled to
recognize the persons in whose names shares stand on the record of stockholders
as the owners thereof for all purposes.
INDEMNIFICATION
Section 6.1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit, or proceeding, including an action or suit by
or in the right of the Corporation, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding"), by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or an
officer of the Corporation or, while a director or officer is or was serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee benefit plans, whether
the basis of the Proceeding is alleged action in an official capacity as a
director or an officer or in any other capacity while serving as a director or
an officer, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but no amendment or repeal of any provision
of law shall adversely affect any right to indemnification provided hereunder
arising prior to such amendment or repeal) against all expenses, liability, and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties, and amounts paid or to be paid in settlement) actually and reasonably
incurred or suffered by such person in connection therewith; provided, however,
that in any action to enforce any indemnification right conferred by these
By-Laws, the Corporation shall indemnify any such person seeking indemnification
in connection with a Proceeding (or part thereof) initiated by such person only
if the Proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in these By-Laws is a
contract right.
Section 6.2. Authority to Advance Expenses. Expenses incurred (including
attorneys' fees) by any person indemnified under these By-Laws in defending a
Proceeding shall be paid by the Corporation in advance of the final disposition
of such Proceeding, provided, however, that if required by the Delaware General
Corporation Law, as amended, such expenses shall be advanced only upon delivery
to the Corporation of an undertaking by or on behalf of such person to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in these By-Laws or otherwise.
Section 6.3. Provisions Nonexclusive. The indemnification rights conferred
on any person by these By-Laws shall not be exclusive of any other rights that
such person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, agreement, vote of stockholders or act of the
Board of Directors or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office.
Section 6.4. Authority to Insure. The Corporation may purchase and maintain
insurance to protect itself and any person indemnified under these By-Laws or
under any statute, provision of the Certificate of Incorporation, agreement,
vote of stockholders or act of the Board of Directors or otherwise, against any
liability, expense, or loss asserted against or incurred by such person, whether
or not the Corporation would have the power to indemnify him against such
liability, expense, or loss under applicable law or the provisions of these
By-Laws.
Section 6.5. Survival of Rights. The indemnification rights provided by
these By-Laws shall continue as to a person who has ceased to be a director or
an officer, and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Section 6.6. Effect of Amendment. Any amendment or repeal of the
indemnification provisions of these By-Laws shall not adversely affect any right
or protection of any director or officer existing at the time of such amendment
or repeal.
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<PAGE> 8
Section 6.7. Authority to Enter into Indemnification Agreements. The
Corporation may enter into indemnification agreements with the directors and
officers of the Corporation and with employees and agents of the Corporation in
any form authorized by resolution of the Board of Directors.
FISCAL YEAR
Section 7. The fiscal year of the Corporation shall end on June 30th of each
year.
SEAL
Section 8. The Board shall provide a suitable seal having inscribed thereon
the name of the Corporation, the year of incorporation and such other
appropriate legend as may from time to time be determined by the Board. If
deemed advisable by the Board, a duplicate seal or seals and facsimile seals may
be provided and used for the necessary purposes of the Corporation.
NOTICES
Section 9.1. Manner of Written Notice. Whenever by law, the Certificate of
Incorporation or these By-Laws written notice is required or permitted to be
given to any stockholder, director, officer or member of a committee, such
notice may be given by depositing same in a United States post office, letter
box or chute, postage prepaid and addressed to such person at his or her address
as the same appears on the records of the Corporation, and the time when the
same shall be so deposited shall be deemed to be the time of the giving of such
notice.
Section 9.2. Waiver of Notice to Stockholders. Notice of a meeting need not
be given to any stockholder who submits a signed waiver of notice in person or
by proxy, whether before or after the meeting. The attendance of any
stockholder at a meeting, in person or by proxy, except for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
on the ground that the meeting is not lawfully called or convened, shall
constitute a waiver of notice by him. A waiver of notice need not specify
either the business to be transacted at, or the purpose of, any regular or
special meeting of the stockholders.
Section 9.3. Waiver of Notice to Directors. Notice of a meeting need not be
given to any director who submits a signed waiver of notice whether before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to him. A waiver of notice need not
specify either the business to be transacted at, or the purpose of, any regular
or special meeting of the Board.
Section 9.4. When Notice or Lapse of Time Unnecessary. Whenever by law, the
Certificate of Incorporation or these By-Laws, the Corporation or the Board is
authorized to take any action after notice to any person or persons, such action
may be taken without notice to each person for whom notice is not, or no longer,
required by law or if at any time before or after such action is completed the
person, or in the case of a stockholder, his attorney-in-fact, submits a signed
waiver of notice.
AMENDMENT AND REPEAL
Section 10.1. Mode of Amendment or Repeal. These By-Laws may be amended,
repealed or new By-Laws adopted, by vote of a majority of the whole Board, or by
the stockholders entitled to vote thereon at any annual meeting or special
meeting of stockholders called for that purpose.
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<PAGE> 1
EXHIBIT 3.2(b)
AMENDMENT TO
BY-LAWS
OF
JOHNSTON INDUSTRIES, INC.
BE IT RESOLVED that the Bylaws of the Corporation be, and they hereby are,
amended to change the principal office of the Corporation from New York, New
York to Columbus, Georgia, to change the fiscal year of the Corporation for all
business purposes to a variable period ending on the Saturday nearest to
December 31st of each year, and to provide that the annual shareholders
meeting shall be held at such time as the directors shall determine from time
to time, by deleting Sections 1.2, 2.2 and 7 of the Bylaws and inserting the
following in lieu thereof:
Section 1.2. Principal Office. The principal office of the Corporation
shall be at 105 Thirteenth Street, Columbus, Georgia 31901 or at such other
office as the Board of Directors may from time to time designate.
Section 2.2. Annual Meeting of Stockholders. The Annual Meeting of the
Stockholders for the election of directors and for the transaction of such other
business as may properly be brought before the meeting shall be held on the last
Thursday in April of each year, if not a legal holiday, and if that day be a
legal holiday, then on the next succeeding business day, at 11:00 a.m., or at
such other time and date as shall be fixed from time to time by the Board of
Directors, and stated in the notice of the meeting.
Section 7. The fiscal year of the Corporation shall be a variable period
ending on the Saturday nearest to December 31st of each year.
<PAGE> 1
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11 - STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
===============================================================================
The weighted average number of common and common share equivalents on a primary
and full-diluted basis are as follows:
Primary
<TABLE>
<CAPTION>
For the Three Months For the Three Months
ended March 30, ended March 31,
--------------- ---------------
1996 1995
---- ----
<S> <C> <C>
Weighted average common shares outstanding 10,571,249 10,565,457
Shares issued from assumed exercise of
incentive stock options 9,515 -0-
Shares issued from assumed exercise of
nonqualified stock options(1) 60,952 116,880
----------- -----------
Weighted average number of shares
outstanding, as adjusted 10,641,716 10,682,337
=========== ===========
Income form Continuing Operations $ 1,279,000 $ 2,528,000
----------- -----------
Income from Discontinued Operations 969,000 105,000
----------- -----------
Extraordinary Loss (527,000) --
----------- -----------
Net Income 1,721,000 2,633,000
Preferred Dividends (2,000) --
----------- -----------
Earnings Applicable to Common Stock $ 1,719,000 $ 2,633,000
=========== ===========
Earnings (Loss) per share
Continuing Operations $ .12 $ .24
Discontinued Operations .09 .01
Extraordinary Item (.05)
----------- -----------
Total $ .16 $ .25
=========== ===========
</TABLE>
(1) Shares issued from assumed exercise of options included the number of
incremental shares which result from applying the "treasury stock method"
for options.
Note: Fully diluted earnings per share are not presented because the
difference from primary earnings per share is insignificant for all
periods presented.
