<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
MARCH 31, 1999 1-3574
HASTINGS MANUFACTURING COMPANY
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MICHIGAN 38-0633740
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
325 NORTH HANOVER STREET
HASTINGS, MICHIGAN 49058
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 616-945-2491
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 _______
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<PAGE>
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS APRIL 20, 1999
----- --------------
<S> <C> <C>
Common stock, $2 par value 789,529 shares
</TABLE>
<PAGE>
Hastings Manufacturing Company and Subsidiaries
Contents
===============================================
PART I - FINANCIAL INFORMATION
Page
Item 1 - Financial Statements:
Report on Review by Independent Certified Public
Accountants 3
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 4-5
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1999 and 1998 6
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1999 and 1998 7-8
Notes to Condensed Consolidated Financial
Statements 9-10
Review by Independent Certified Public Accountants 11
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12-18
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 19
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 20
2
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Report on Review by Independent Certified Public Accountants
Board of Directors
Hastings Manufacturing Company
Hastings, Michigan
We have reviewed the accompanying condensed consolidated balance sheets of
Hastings Manufacturing Company and subsidiaries as of March 31, 1999, and
the related condensed consolidated statements of income and cash flows for
the three-month periods ended March 31, 1999 and 1998, included in the
accompanying Securities and Exchange Commission Form 10-Q for the period
ended March 31, 1999. These condensed consolidated financial statements are
the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1998, and the
related consolidated statements of income, stockholders' equity and cash
flows for the year then ended (not presented herein). In our report dated
February 26, 1999, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1998, is fairly stated in all material respects in relation to
the consolidated balance sheet from which it has been derived.
/s/BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
April 20, 1999
3
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Balance Sheets
=============================================
Item 1. Financial Statements
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 85,369 $ 635,773
Accounts receivable, less allowance
for possible losses of $250,000 and
$210,000 5,800,743 5,489,165
Inventories:
Finished products 8,298,508 8,317,084
Work in process 589,412 660,534
Raw materials 1,355,366 1,620,604
Prepaid expenses and other assets 91,594 75,655
Future income tax benefits 2,376,856 2,395,856
----------- -----------
TOTAL CURRENT ASSETS 18,597,848 19,194,671
----------- -----------
PROPERTY AND EQUIPMENT
Land and improvements 640,384 635,692
Buildings 5,313,398 5,275,207
Machinery and equipment 19,647,385 19,503,267
----------- -----------
25,601,167 25,414,166
Less accumulated depreciation 16,780,848 16,411,078
----------- -----------
NET PROPERTY AND EQUIPMENT 8,820,319 9,003,088
----------- -----------
PREPAID PENSION ASSET 2,597,688 2,675,688
INTANGIBLE PENSION ASSET 564,949 564,949
4
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FUTURE INCOME TAX BENEFITS 4,717,093 4,719,637
OTHER ASSETS 21,720 30,467
----------- -----------
$35,319,617 $36,188,500
=========== ===========
</TABLE>
5
<PAGE>
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Balance Sheets
=============================================
<CAPTION>
MARCH 31, DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Notes payable to banks $ 2,800,000 $ 2,300,000
Accounts payable 1,081,738 1,536,612
Accruals:
Compensation 396,165 600,599
Income taxes 13,661 41,294
Taxes other than income 126,676 152,932
Miscellaneous 127,985 300,780
Current portion of postretirement
benefit obligation 1,044,175 1,044,175
Current maturities of
long-term debt 1,320,000 1,320,000
----------- -----------
TOTAL CURRENT LIABILITIES 6,910,400 7,296,392
LONG-TERM DEBT,
less current maturities 4,290,000 4,620,000
PENSION AND DEFERRED COMPENSATION
OBLIGATIONS, less current portion 2,596,812 2,604,111
POSTRETIREMENT BENEFIT OBLIGATION,
less current portion 14,474,449 14,650,755
----------- -----------
TOTAL LIABILITIES 28,271,661 29,171,258
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $2 par value,
authorized and unissued
500,000 shares - -
6
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Common stock, $2 par value,
1,750,000 shares authorized;
789,526 shares issued
and outstanding 1,579,052 1,579,052
Additional paid-in capital 338,272 338,272
Retained earnings 7,255,891 7,273,410
Accumulated other comprehensive
income (Note 3):
Cumulative foreign currency
translation adjustment (932,840) (981,073)
Pension liability adjustment (1,192,419) (1,192,419)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 7,047,956 7,017,242
----------- -----------
$35,319,617 $36,188,500
=========== ===========
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
7
<PAGE>
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Income
=================================================
<CAPTION>
Three months ended March 31, 1999 1998
---------- ----------
<S> <C> <C>
NET SALES $8,959,131 $9,946,018
COST OF SALES 6,597,554 6,771,980
---------- ----------
Gross profit 2,361,577 3,174,038
---------- ----------
OPERATING EXPENSES
Advertising 70,301 97,566
Selling 736,710 760,036
General and administrative 1,360,040 1,504,124
---------- ----------
2,167,051 2,361,726
---------- ----------
Operating income 194,526 812,312
---------- ----------
OTHER EXPENSE (INCOME)
Interest expense 147,087 109,130
Interest income - (8,117)
Other, net (37,204) 1,024
---------- ----------
109,883 102,037
---------- ----------
Income before income tax expense 84,643 710,275
INCOME TAX EXPENSE 39,000 292,000
---------- ----------
NET INCOME $ 45,643 $ 418,275
========== ==========
8
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BASIC AND DILUTED NET INCOME
PER SHARE OF COMMON STOCK (Note 2) $.06 $.54
DIVIDENDS PER SHARE OF COMMON STOCK $.08 $.075
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
9
<PAGE>
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
=================================================
<CAPTION>
Three months ended March 31, 1999 1998
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 45,643 $ 418,275
Adjustments to reconcile net
income to net cash for
operating activities:
Depreciation 354,470 371,456
Gain on sale of property and
equipment (42,300) -
Deferred income taxes 19,000 247,000
Change in postretirement
benefit obligation (176,306) (246,840)
Changes in operating
assets and liabilities:
Accounts receivable (303,376) (1,354,834)
Refundable income taxes - 2,487
Inventories 378,771 (380,735)
Prepaid expenses and other
current assets (15,899) (26,056)
Other assets 86,747 12,329
Accounts payable and accruals (896,642) 204,571
---------- ----------
Net cash for operating activities (549,892) (752,347)
---------- ----------
INVESTING ACTIVITIES
Capital expenditures (152,345) (453,768)
Proceeds from sale of property and
equipment 42,300 -
---------- ----------
Net cash for investing activities (110,045) (453,768)
---------- ----------
</TABLE>
10
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<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
=================================================
<CAPTION>
Three months ended March 31, 1999 1998
---------- ----------
<S> <C> <C>
FINANCING ACTIVITIES
Proceeds from issuance of notes
payable to banks 1,900,000 1,900,000
Principal payments on notes
payable to banks (1,400,000) (800,000)
Principal payments on long-term debt (330,000) (365,625)
Dividends paid (63,162) (58,794)
---------- ----------
Net cash from financing activities 106,838 675,581
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 2,695 1,721
---------- ----------
NET DECREASE IN CASH (550,404) (528,813)
CASH, beginning of period 635,773 558,172
---------- ----------
CASH, end of period $ 85,369 $ 29,359
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 157,639 $ 120,008
Income taxes, net of refunds 26,680 8,885
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
11
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Hastings Manufacturing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
=====================================================
NOTE 1 In the opinion of the management of Hastings Manufacturing
Company and subsidiaries (the "Company"), the accompanying
unaudited condensed consolidated financial statements include all
normal recurring adjustments considered necessary to present
fairly the financial position as of March 31, 1999, and the
results of operations and cash flows for the three months ended
March 31, 1999 and 1998.
The results of operations for the three months ended March 31,
1999, are not necessarily indicative of the expected results for
all of 1999.
The condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All
significant intercompany balances, transactions and stockholdings
have been eliminated.
The accompanying consolidated financial statements are condensed
and do not contain all of the information and footnote
disclosures required by generally accepted accounting principles
in a complete set of financial statements.
NOTE 2 A reconciliation of the numerators and denominators used in the
"basic" and "diluted" earnings per share (EPS) calculations
follows:
<TABLE>
<CAPTION>
Three months ended March 31, 1999 1998
-------- --------
<S> <C> <C> <C>
Numerator:
Net income used for both
basic and diluted EPS
calculation $ 45,643 $418,275
======== ========
Denominator:
Weighted average shares
outstanding for the period -
used for basic EPS calculation 775,046 771,496
Dilutive effect of stock options
and contingently issuable shares - 1,031
-------- --------
12
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Weighted average shares outstanding
for the period - used for
diluted EPS calculation 775,046 772,527
======== ========
</TABLE>
NOTE 3 Comprehensive income and its components consist of the following:
<TABLE>
<CAPTION>
Three months ended March 31, 1999 1998
-------- --------
<S> <C> <C> <C>
Net income $ 45,643 $418,275
Other comprehensive income,
net of tax:
Foreign currency translation
adjustments 48,233 15,761
Minimum pension liability
adjustment - -
-------- --------
Other comprehensive income 48,233 15,761
-------- --------
Comprehensive income $ 93,876 $434,036
======== ========
</TABLE>
Accumulated comprehensive income totaled $2,125,259 and
$2,173,492 at March 31, 1999 and December 31, 1998, respectively.
13
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Hastings Manufacturing Company and Subsidiaries
Review by Independent Certified Public Accountants
=====================================================
The March 31, 1999 and 1998, condensed consolidated financial statements
included in this filing on Form 10-Q have been reviewed by BDO Seidman,
LLP, Independent Certified Public Accountants, in accordance with
established professional standards and procedures for such a review.
14
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
NET SALES
1999 COMPARED TO 1998
Net sales in the first quarter of 1999 decreased $986,887, or 9.9%, from
$9,946,018 in the first quarter of 1998 to $8,959,131. The 1999 decrease
reflects a decline in both the domestic piston ring aftermarket and export
markets, offset by a slight increase in the private brand and original
equipment volumes. The domestic aftermarket decline reflects an industry-
wide replacement parts softness through the early part of 1999. The export
volume has been adversely affected to date by specific political and
economic factors, in addition to the carryover effect of the global
economic concerns from late 1998. One of the Company's 1999 goals is to
increase the percentage of orders filled within a specific time after
receipt of the order. While the Company was able to improve its order fill
performance during the first quarter, the potential improvement was impeded
during this period by a temporary production issue as discussed below in
the "Cost of Sales and Gross Profit" section.
1998 COMPARED TO 1997
Net sales in the first quarter of 1998 increased $1,193,861, or 13.6%, from
the first quarter of 1997. This growth reflects the success of the
Company's increased focus on the domestic piston ring aftermarket, combined
with an acceleration of export volume. As detailed in previous filings,
the Company broadened its direct account export efforts throughout 1997.
The success realized in early 1998 reflects, in part, the development and
growth of those relationships.
COST OF SALES AND GROSS PROFIT
1999 COMPARED TO 1998
Cost of sales in the first quarter of 1999 decreased $174,426, or 2.6%,
from the first quarter of 1998. The gross profit margin on net sales
declined from 31.9% in the first quarter of 1998 to 26.4% in the 1999
comparative period. Given the net sales decline detailed above, a larger
cost of sales decline, with a higher relative gross profit margin, would
have been anticipated. The first quarter of 1999 was, however, negatively
15
<PAGE>
impacted by non-recurring costs associated with the conversion and start-up
of various production processes. Both equipment and personnel factors
contributed to this situation with associated costs approximating $400,000.
The Company believes that these factors have been corrected to prevent any
future impact. Had this production incident not occurred, the gross profit
margin for the first quarter would have approached the 31.9% level attained
in the first quarter of 1998.
1998 COMPARED TO 1997
Cost of sales in the first quarter of 1998 increased $842,723, or 14.2%,
from the first quarter of 1997. This increase mirrors the reported net
sales gain. The gross profit margin on net sales declined slightly from
32.3% in the first quarter of 1997 to 31.9% in the 1998 comparative period.
This slight decrease reflects the impact of the sales mix change with a
higher relative portion of export sales activity in the first quarter of
1998. Those sales have traditionally not required the same level of gross
profit margin as domestic sales due to the lower level of ongoing operating
support costs associated with export markets.
OPERATING EXPENSES
1999 COMPARED TO 1998
Total operating expenses in the first quarter of 1999 decreased $194,675,
or 8.2%, from $2,361,726 in the first quarter of 1998, to $2,167,051.
Advertising expenses decreased $27,265, or 27.9%, in the first quarter of
1999 in comparison to the same period in 1998. This decrease is the result
of the inclusion, in 1998, of a biannual customer service tips manual,
combined with a slight decrease in advertising support costs in 1999.
Selling expenses, down $23,326, or 3.1%, reflect a decrease in various
volume-driven selling support costs. General and administrative expenses
decreased $144,084, or 9.6%, from $1,504,124 in the first quarter of 1998
to $1,360,040. This decrease reflects the inclusion in 1998 of
approximately $50,000 of severance costs related to staffing reductions,
combined with a reduction, in 1999, of certain personnel support costs.
1998 COMPARED TO 1997
Total operating expenses in the first quarter of 1998 increased $9,052, or
0.4%, from the first quarter of 1997. Advertising expenses declined
slightly reflecting the inclusion of a biannual product catalog expense in
1997. Selling expenses, down $39,139, or 4.9%, reflect certain sales staff
reductions realized in late 1997. This sales staff reduction resulted in
lower compensation-driven costs and lower support costs including travel
and benefit costs. General and administrative costs increased $57,643, or
4.0%, reflecting higher personnel support costs offset in part by further
16
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reductions in various expenses associated with the general office and
corporate operations.
OTHER EXPENSES
1999 COMPARED TO 1998
Other expenses netted to $109,883 for the first quarter of 1999 compared to
a net expense of $102,037 for the first quarter of 1998. This increase
reflects a higher interest expense on the Company's long-term debt
associated with the restructuring of its debt obligations in late August of
1998, as detailed in previous reports. This higher interest expense
related to long-term obligations was offset by lower interest expense on
short-term borrowings, reflecting decreased working capital requirements as
driven by the net sales decrease. The other, net amount in 1999 primarily
reflects the gain on the sale of obsolete plant equipment.
1998 COMPARED TO 1997
Other expenses netted to $102,037 for the first quarter of 1998 compared to
a net expense of $115,151 for the first quarter of 1997. Interest costs
declined, reflecting the normal amortization of the Company's long-term
debt obligations, offset slightly by an increase in the interest expense
associated with short-term borrowings. The increase in short-term
borrowings reflects the increased working capital requirements that were
driven by the net sales increase. The interest income totals reflect the
income derived from the funds generated by the filter operations sale which
were held in escrow through September of 1998.
TAXES ON INCOME
The 1999 and 1998 effective tax rates of 46.1% and 41.1%, respectively, are
higher than the domestic statutory rate due primarily to the impact of
various state income taxes and the impact of a higher statutory rate
applicable to the earnings of the Canadian subsidiary.
As of March 31, 1999, the Company recorded net deferred income tax assets
of $7,093,949. The major components of those assets are the tax effects of
the net operating loss carryforwards and accrued retirement and
postretirement benefit obligations. The realization of these recorded
benefits is dependent upon the generation of future taxable income.
Management believes it is more likely than not that adequate levels of
future taxable income will be generated to absorb the net operating loss
carryforwards, the deductible amounts related to the retirement and
postretirement benefit obligations and the remaining net deductible
temporary differences.
17
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LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements continue to be for operating
expenses such as labor costs and raw materials, and for funding accounts
receivable, capital expenditures and long-term debt service. Historically,
the Company's primary sources of cash have been from operations and from
bank borrowings. The Company expects to generate sufficient future funds
from operations and bank borrowings to fund its growth and operating needs.
Total short-term lines available to the Company as of March 31, 1999
totaled $5,200,000, of which $2,400,000 was unused.
During the first quarter of 1999, the Company used $549,892 of net cash for
operating activities. The realized net income, depreciation and decrease
in inventories were offset by an increase in accounts receivable, a
decrease in accounts payable and accruals and a decrease in the periodic
postretirement benefit obligation. The decrease in inventories is due
primarily to the production situation noted in the "Cost of Sales and Gross
Profit" section of this discussion. The increase in accounts receivable
reflects the timing of customer sales and the related payment terms
associated with those sales. The decrease in the accounts payable and
accruals is due to several large payments being made in the first quarter
on year-end accruals for compensation, workers compensation and general
accounts payable. The investing activities for the first quarter of 1999
reflect the decreased requirement for new capital equipment, as the Company
makes the transition toward a cellular manufacturing environment. This
trend should continue for the remainder of 1999. The investing activities
also reflect the proceeds from the sale of obsolete plant equipment. The
financing activities for the first quarter of 1999 reflect the additional
working capital requirements that were primarily needed to fund the
operating activity items noted above. The financing activities also
reflect the amortization of the Company's long-term debt obligation that
resulted from the adoption of a new long-term debt agreement with the
Company's primary lender in late August 1998. The details of this
agreement have been disclosed in prior reports.
During the first quarter of 1998, the Company used $752,347 of net cash for
operating activities. The realized net income, depreciation and decrease
in deferred income taxes were offset by increases in accounts receivable
and inventories, and a decrease in the periodic postretirement benefit
obligation. The decrease in the deferred income taxes reflects the
utilization of a portion of the net operating loss carryforward based on
first quarter earnings. The increased accounts receivable and inventory
values reflect the working capital needs resulting from the higher sales
level. The investing activities for the first quarter of 1998 reflect the
Company's continued commitment to enhancing its production capabilities.
The financing activities reflect the continued amortization of the
Company's long-term debt obligations as well as the increased reliance on
short-term borrowings in response to the increased working capital needs.
18
<PAGE>
As noted throughout the above discussion, the Company has experienced
several events during the first quarter of 1999 that have negatively
affected its cash flow. The decline in net sales and the resulting decline
in net income are viewed as temporary in nature. The production situation
described above is considered to be a "one-time" event that should not recur
in the future. As a result, the Company anticipates that operations
(which should be subject to minimal current cash outflows for U.S. income
taxes due to utilization of the net operating loss carryforwards), in
combination with the balancing of available short-term lines of credit
with our operations, will generate cash flows sufficient to fund its
working capital, capital outlays and dividend needs through 1999.
NEW ACCOUNTING STANDARD
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," issued in June 1998, requires companies to recognize all
derivative contracts as either assets or liabilities in the balance sheet
and to measure them at fair value. If certain conditions are met, a
derivative may be specifically designated as a hedge, the objective of
which is to match the timing of gain or loss recognition on the hedging
derivative with the recognition of (i) the changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk of (ii)
the earnings effect of the hedged forecasted transaction. For a derivative
not designated as a hedging instrument, the gain or loss is recognized in
income in the period of change. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999.
Historically, the Company has not entered into derivative contracts for
speculative purposes. The Company does periodically enter into interest
rate swap and collar agreements to reduce the impact of changes in interest
rates on its floating rate borrowings. However, the fair value of such
derivatives are not significant. Accordingly, the Company does not expect
adoption of the new standard on January 1, 2000 to materially affect its
consolidated financial statements.
YEAR 2000 READINESS DISCLOSURE
The year 2000 (Y2K) issue is the result of computer programs having been
written using two digits, rather than four, to define the applicable year.
Any of the Company's computers, computer programs, manufacturing and
administrative equipment or products that have date-sensitive software or
microprocessor may recognize a date using "00" as the year 1900 rather than
the year 2000. If any of the Company's systems that are date-sensitive use
only two digits, system failures or miscalculations may result causing
disruptions of operations, including, among other things, a temporary
inability to process transactions or engage in similar normal business
activities.
19
<PAGE>
During 1995, the Company's internal data processing personnel began an
evaluation of the Company's exposure to the effects of the Y2K issue. As a
member of certain automotive supplier trade associations, awareness of the
Y2K issue was both highlighted and documented beginning in early 1996. At
that point, a multi-disciplined committee was established to coordinate the
Company's efforts in addressing the Y2K impact. This committee continues to
include several members of the internal Executive Committee with
responsibility for full board-level reporting on this issue. Through the
efforts of this committee, the Company coordinates both internal and
external reviews of its Y2K exposure.
Internally, this committee evaluated the general operating systems for the
Company as well as the security systems, telecommunications networks,
manufacturing equipment and internal personal computer (PC) operations.
Through the second half of 1996 and much of 1997, the Company utilized the
services of an outside consultant, as well as its internal resources, to
convert its computer system to be Y2K compliant. As of December 31, 1998,
the Company's core operating system and applications, its PC operating
systems and the majority of its PC applications were believed to be
compliant. The remaining PC applications are expected to be compliant by
mid-1999, pending installation of the next software release or upgrade as
needed. Manufacturing equipment testing has been completed with no
perceived Y2K exposure. At this point, the Company is coordinating live
tests of its operating systems for Y2K compliance. Those test events are
expected to extend through mid-1999. Incremental costs related to the Y2K
project, primarily consisting of expenses related to the consultant,
approximated $120,000 through 1998 with $10,000, $80,000 and $30,000
charged to operating expenses as incurred in 1998, 1997 and 1996,
respectively. Internal costs, which are not incremental in nature, have
not been tracked by the Company. Future costs to be incurred to complete
Y2K compliance and testing procedures, primarily related to Company
personnel are not expected to be material.
With the inception of the committee in 1996, the Company began to focus
externally as well. The committee identified suppliers of products and
services deemed to be critical to the Company's operations as well as
customers deemed to have the greatest Y2K exposure (e.g., EDI
communications). The Company has coordinated via surveys with these key
contacts. While the Company cannot guarantee Y2K compliance by its key
suppliers and customers, and in many cases will be relying on statements
from outside vendors without independent verification, preliminary results
indicate that these key suppliers and customers are aware of the issues and
are working to assure their compliance before the year 2000. At this time,
the Company is not aware of any key suppliers or customers who will not be
Y2K compliant by the year 2000. The Company's next steps will be to update
the solicitation of key customers, obtain more detailed information from
certain key suppliers and customers and follow-up with those companies who
20
<PAGE>
did not respond to the original surveys. Pending the results of the
internal testing, the Company intends to prepare a contingency plan that
will specify what exposures it still perceives and what it plans to do if
it or important external companies are not Y2K compliant in a timely
manner. The Company expects to prepare and evaluate its contingency plan
during the third quarter of 1999.
Assessments that the Company is or will be Y2K "compliant" or "ready" are
necessarily statements of belief as to the outcome of future events, based
in part on information provided by third parties that the Company has not
independently verified.
FORWARD-LOOKING STATEMENTS
With the exception of historical matters, the matters discussed in this
commentary include certain predictions and projections that may be
considered forward-looking statements under securities laws. These
statements are subject to a number of important risks and uncertainties
that could cause actual results to differ materially including, but not
limited to, economic, competitive, governmental and technological factors
affecting the Company's operations, markets, products, services and prices.
The Company undertakes no obligation to update, amend or clarify forward-
looking statements, whether as a result of new information, future events
or otherwise.
21
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Item 3. Quantitative and Qualitative Disclosures About
Market Risk
The Company is exposed to potential market risks on interest rates relating
to an interest swap agreement transacted with its primary lender in
connection with its long-term debt agreement. Management believes that the
fluctuation in interest rates in the near future will not have a material
impact on the consolidated financial statements taken as a whole. The
Company does not use derivative financial instruments for trading purposes.
22
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBIT. The following document is filed as an exhibit
to this report on Form 10-Q:
EXHIBIT
NUMBER DOCUMENT
3(a) Amended Articles of Incorporation of Hastings
Manufacturing Company, filed as an exhibit to the Form
10-Q Quarterly Report for the period ended September
30, 1998, are here incorporated by reference.
3(b) Bylaws of Hastings Manufacturing Company, as amended
to date.
4(a) NBD Bank Amended and Restated Letter Agreement for
$6,600,000 Term Loan and $3,000,000 Credit
Authorization to Make Revolving Credit Loans and Issue
Letters of Credit dated August 28, 1998, filed as an
exhibit to the Form 10-Q Quarterly Report for the
period ended September 30, 1998, is here incorporated
by reference.
4(b) Restated Master Agreement dated August 10, 1998,
regarding an interest rate swap transaction between
Hastings Manufacturing Company and NBD Bank, filed as
an exhibit to the Form 10-Q Quarterly Report for the
period ended September 30, 1998, is here incorporated
by reference.
4(c) Commercial Line of Credit Agreement and Note, dated as
of January 23, 1998, between Hastings Manufacturing
Company and Hastings City Bank, filed as an exhibit to
the Form 10-Q Quarterly Report for the period ended
June 30, 1998, is here incorporated by reference.
4(d) Preferred Stock Purchase Rights Plan, filed as an
exhibit to Form 8-K filed with the Securities and
Exchange Commission on February 15, 1996, is here
incorporated by reference.
4(e) Confirmation, dated as of March 12, 1996, regarding an
interest rate collar transaction between Hastings
Manufacturing Company and NBD Bank, filed as an exhibit
23
<PAGE>
to the Form 10-K Annual Report for the year ended
December 31, 1996, is here incorporated by reference.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K. No reports on Form 8-K have been
filed during the quarter for which this report is
filed.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HASTINGS MANUFACTURING COMPANY
Date: May 17, 1999 /S/MONTY C. BENNETT
Monty C. Bennett
Its Vice-President, Employee
Relations, Secretary and Director
Date: May 17, 1999 /S/THOMAS J. BELLGRAPH
Thomas J. Bellgraph
Its Vice-President, Finance
25
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EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
3(a) Amended Articles of Incorporation of Hastings
Manufacturing Company, filed as an exhibit to the Form
10-Q Quarterly Report for the period ended September
30, 1998, are here incorporated by reference.
3(b) Bylaws of Hastings Manufacturing Company, as amended
to date.
4(a) NBD Bank Amended and Restated Letter Agreement for
$6,600,000 Term Loan and $3,000,000 Credit
Authorization to Make Revolving Credit Loans and Issue
Letters of Credit dated August 28, 1998, filed as an
exhibit to the Form 10-Q Quarterly Report for the
period ended September 30, 1998, is here incorporated
by reference.
4(b) Restated Master Agreement dated August 10, 1998,
regarding an interest rate swap transaction between
Hastings Manufacturing Company and NBD Bank, filed as
an exhibit to the Form 10-Q Quarterly Report for the
period ended September 30, 1998, is here incorporated
by reference.
4(c) Commercial Line of Credit Agreement and Note, dated as
of January 23, 1998, between Hastings Manufacturing
Company and Hastings City Bank, filed as an exhibit to
the Form 10-Q Quarterly Report for the period ended
June 30, 1998, is here incorporated by reference.
4(d) Preferred Stock Purchase Rights Plan, filed as an
exhibit to Form 8-K filed with the Securities and
Exchange Commission on February 15, 1996, is here
incorporated by reference.
4(e) Confirmation, dated as of March 12, 1996, regarding an
interest rate collar transaction between Hastings
Manufacturing Company and NBD Bank, filed as an exhibit
to the Form 10-K Annual Report for the year ended
December 31, 1996, is here incorporated by reference.
27 Financial Data Schedule
26
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EXHIBIT 3(b)
HASTINGS MANUFACTURING COMPANY
(A Michigan Corporation)
BYLAWS
<PAGE>
HASTINGS MANUFACTURING COMPANY
(A Michigan Corporation)
BYLAWS
TABLE OF CONTENTS
PAGE
ARTICLE I - OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . 1
Section 1. Times and Places of Meetings . . . . . . . . . . 1
Section 2. Annual Meetings. . . . . . . . . . . . . . . . . 1
Section 3. Special Meetings . . . . . . . . . . . . . . . . 1
Section 4. Notice of Meetings . . . . . . . . . . . . . . . 1
Section 5. Shareholder List . . . . . . . . . . . . . . . . 2
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Vote Required. . . . . . . . . . . . . . . . . . 2
Section 8. Voting Rights. . . . . . . . . . . . . . . . . . 2
Section 9. Proxies . . . . . . . . . . . . . . . . . . . . 3
Section 10. Waiver of Notice . . . . . . . . . . . . . . . . 3
Section 11. Shareholder Proposals . . . . . . . . . . . . . 4
Section 12. Nominations of Director Candidates . . . . . . . 5
Section 13. Adjournments . . . . . . . . . . . . . . . . . . 6
Section 14. Conduct of Meetings. . . . . . . . . . . . . . . 6
Section 15. Inspectors of Election . . . . . . . . . . . . . 7
Section 16. Business Transacted. . . . . . . . . . . . . . . 7
ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. Number and Term of Directors . . . . . . . . . . 8
(a) Number of Directors. . . . . . . . . . . . . . . 8
(b) Classification . . . . . . . . . . . . . . . . . 8
(c) Vacancies and Newly Created Directorships. . . . 8
(d) Amendment. . . . . . . . . . . . . . . . . . . . 8
Section 2. Qualifications of Directors. . . . . . . . . . . 9
Section 3. Powers . . . . . . . . . . . . . . . . . . . . . 9
Section 4. Resignation. . . . . . . . . . . . . . . . . . . 9
Section 5. Removal. . . . . . . . . . . . . . . . . . . . . 9
Section 6. Compensation of Directors . . . . . . . . . . . 9
Section 7. Places of Meetings . . . . . . . . . . . . . . . 10
Section 8. First Meeting of Newly Elected Board . . . . . . 10
Section 9. Regular Meetings . . . . . . . . . . . . . . . . 10
Section 10. Special Meetings . . . . . . . . . . . . . . . . 10
Section 11. Notice of Meetings . . . . . . . . . . . . . . . 10
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PAGE
Section 12. Waiver of Notice . . . . . . . . . . . . . . . . 10
Section 13 Purpose of Meetings . . . . . . . . . . . . . . 11
Section 14. Quorum . . . . . . . . . . . . . . . . . . . . . 11
Section 15. Action Without a Meeting . . . . . . . . . . . . 11
Section 16. Meeting by Telephone or Similar Equipment. . . . 11
ARTICLE IV - COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . 11
Section 1. General. . . . . . . . . . . . . . . . . . . . . 11
Section 2. Executive Committee. . . . . . . . . . . . . . . 12
Section 3. Audit Committee. . . . . . . . . . . . . . . . . 12
Section 4. Compensation Committee . . . . . . . . . . . . . 12
Section 5. Nominating Committee . . . . . . . . . . . . . . 12
Section 6. Other Committees . . . . . . . . . . . . . . . . 13
Section 7. Committee Meetings . . . . . . . . . . . . . . . 13
ARTICLE V - OFFICERS . . . . 13
Section 1. Appointment. . . . . . . . . . . . . . . . . . . 13
Section 2. Term, Removal or Resignation . . . . . . . . . . 13
Section 3.(a) Central Staff. . . . . . . . . . . . . . . . . . 13
(b) Divisional Officers. . . . . . . . . . . . . . . 14
Section 4. Qualifications of Officers . . . . . . . . . . . 14
Section 5. Chairman of the Board. . . . . . . . . . . . . . 14
Section 6. President or Presidents. . . . . . . . . . . . . 14
Section 7. Chief Executive Officer or Officers. . . . . . . 14
Section 8. Chief Operating Officer. . . . . . . . . . . . . 15
Section 9. Vice Presidents. . . . . . . . . . . . . . . . . 15
Section 10. Secretary. . . . . . . . . . . . . . . . . . . . 15
Section 11. Treasurer. . . . . . . . . . . . . . . . . . . . 15
Section 12. Assistant Secretary and Assistant
Treasurer. . . . . . . . . . . . . . . . . . . . 16
Section 13. Other Officers . . . . . . . . . . . . . . . . . 16
ARTICLE VI - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 16
Section 1. Indemnification in Action by Third Party . . . . 16
Section 2. Indemnification in Action by or in Right
of the Corporation . . . . . . . . . . . . . . . 17
Section 3. Expenses . . . . . . . . . . . . . . . . . . . . 17
Section 4. Authorization of Indemnification . . . . . . . . 17
Section 5. Advances . . . . . . . . . . . . . . . . . . . . 19
Section 6. Other Indemnification Agreements . . . . . . . . 20
Section 7. Insurance . . . . . . . . . . . . . . . . . . . 20
Section 8. Constituent Corporation . . . . . . . . . . . . 20
Section 9. Partial Indemnification. . . . . . . . . . . . . 20
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PAGE
Section 10. Savings Clause . . . . . . . . . . . . . . . . . 20
Section 11. Definitions. . . . . . . . . . . . . . . . . . . 21
Section 12. Construction . . . . . . . . . . . . . . . . . . 21
ARTICLE VII - SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . 21
Section 1. Subsidiaries . . . . . . . . . . . . . . . . . . 21
Section 2. Subsidiary Officers Not Executive Officers . . . 22
ARTICLE VIII - CERTIFICATES OF STOCK . . . . . . . . . . . . . . . . 22
Section 1. Form . . . . . . . . . . . . . . . . . . . . . . 22
Section 2. Facsimile Signature. . . . . . . . . . . . . . . 22
Section 3. Lost Certificates. . . . . . . . . . . . . . . . 22
Section 4. Transfers of Stock . . . . . . . . . . . . . . . 22
Section 5. Fixing of Record Date by Board . . . . . . . . . 23
Section 6. Provision for Record Date in the Absence
of Board Action. . . . . . . . . . . . . . . . . 23
Section 7. Adjournments . . . . . . . . . . . . . . . . . . 23
Section 8. Registered Shareholders. . . . . . . . . . . . . 23
ARTICLE IX - GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . 23
Section 1. Dividends. . . . . . . . . . . . . . . . . . . . 23
Section 2. Reserves . . . . . . . . . . . . . . . . . . . . 24
Section 3. Checks . . . . . . . . . . . . . . . . . . . . . 24
Section 4. Fiscal Year. . . . . . . . . . . . . . . . . . . 24
Section 5. Seal . . . . . . . . . . . . . . . . . . . . . . 24
Section 6. Signing of Instruments . . . . . . . . . . . . . 24
Section 7. Corporate Books and Records. . . . . . . . . . . 24
Section 8. Written Waiver of Notice . . . . . . . . . . . . 24
ARTICLE X - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . 25
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<PAGE>
B Y L A W S
OF
HASTINGS MANUFACTURING COMPANY
ARTICLE I
OFFICES
The Corporation may have offices at such places, both within and
without the State of Michigan as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. TIMES AND PLACES OF MEETINGS. All meetings of the
shareholders shall be held, except as otherwise provided by statute or
these Bylaws, at such time and place as may be fixed from time to time by
the Board of Directors.
SECTION 2. ANNUAL MEETINGS. Annual meetings of the shareholders
shall be held at the principal office of the Corporation in the City of
Hastings, State of Michigan, at a date designated by the Board of Directors
from time to time, between February 1 and June 1 of each year. Annual
meetings shall be held to elect, by a plurality vote, successors to those
members of the Board of Directors whose terms expire at the meeting and to
transact only such other business as may be properly brought before the
meeting in accordance with these Bylaws.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders
may be called by an executive officer whenever directed by the Board of
Directors, or by the Chief Executive Officer. Such request shall state the
purpose of the proposed meeting. Special meetings of shareholders may be
held within or without the State of Michigan as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 4. NOTICE OF MEETINGS. Written notice of the date, time,
place, and purposes of a shareholder meeting shall be given not less than
10 nor more than 60 days before the date of the meeting, either personally
or by mail, to each shareholder of record entitled to vote at the meeting.
Except as provided by law or to the extent that a shareholder proposal
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submitted pursuant to Article II, Section 11(b) is not made available for
inclusion at the time of mailing, notice of the purposes of the meeting
shall include notice of any shareholder proposals that are proper subjects
for shareholder action and are intended to be presented by shareholders who
have notified the Corporation in writing of their intention to present the
proposals at the meeting in accordance with these bylaws.
SECTION 5. SHAREHOLDER LIST. The officer or agent who has charge of
the stock ledger of the Corporation shall prepare and make before every
meeting of shareholders, a complete list of the shareholders entitled to
vote at the meeting, arranged by class or series in alphabetical order,
showing the address of and the number of shares registered in the name of
each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during the whole time
thereof, and may be inspected by any shareholder who is present. Such list
shall be prima facie evidence as to the shareholders who are entitled to
examine the list. Failure to comply with the requirements of this section
shall not affect the validity of an action taken at the meeting before a
shareholder makes a demand to comply with the requirements.
SECTION 6. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by statute or by
the Articles of Incorporation. Once a quorum is present, the shareholders
present in person or by proxy at such meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. Whether or not a quorum is present, the meeting
may be adjourned by a vote of the shares present.
Except when the holders of a class or series of shares are
entitled to vote separately on an item of business, shares of all classes
and series entitled to vote shall be combined as a single class and series
for the purpose of determining a quorum. When the holders of a class or
series of shares are entitled to vote separately on an item of business,
shares of that class or series entitled to cast a majority of the votes of
that class or series at a meeting constitute a quorum of that class or
series at that meeting, unless a greater or lesser quorum is provided by
statute or the Articles of Incorporation.
SECTION 7. VOTE REQUIRED. An action, other than the election of
directors, to be taken by shareholder vote shall be authorized by a
majority of the votes cast by shareholders entitled to vote on the action,
unless a greater vote is required by statute, the Articles of
Incorporation, or these bylaws. Unless the Articles of Incorporation
provide otherwise, directors shall be elected by a plurality of votes cast.
Shareholders may not cumulate their votes.
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SECTION 8. VOTING RIGHTS. Except as otherwise provided by the
Articles of Incorporation or the resolution or resolutions of the Board of
Directors creating any class of stock, each shareholder shall at every
meeting of shareholders be entitled to one (1) vote in person or by proxy
for each share of the capital stock having voting power held by such
shareholder. In all elections for directors the vote shall be taken by
ballot.
SECTION 9. PROXIES. A shareholder entitled to vote at a shareholder
meeting or to express consent or dissent without a meeting may authorize
one or more other persons to act for the shareholder by proxy only by the
following methods:
(a) The execution of a writing authorizing another person
or persons to act for the shareholder as proxy. Execution may be
accomplished by the shareholder or by an authorized officer,
director, employee, or agent of the shareholder by either signing
the writing or causing his or her signature to be affixed to the
writing by any reasonable means including, but not limited to,
facsimile signature;
(b) Transmitting or authorizing the transmission of a
telegram, cablegram, or other means of electronic transmission to
the person who will hold the proxy or to a proxy solicitation
firm, proxy support service organization, or similar agent fully
authorized by the person who will hold the proxy to receive that
transmission. Any telegram, cablegram, or other means of
electronic transmission must either set forth or be submitted
with information from which it can be determined that the
telegram, cablegram, or other electronic transmission was
authorized by the shareholder. If a telegram, cablegram, or
other electronic transmission is determined to be valid, the
inspectors, or, if there are no inspectors, the persons making
the determination shall specify the information upon which they
relied.
A copy, facsimile telecommunication, or other reliable
reproduction of the writing or transmission created pursuant to subsections
(a) or (b) may be substituted or used in lieu of the original writing or
transmission for any purpose for which the original writing or transmission
could be used, if the copy, facsimile telecommunication, or other
reproduction is a complete reproduction of the entire original writing or
transmission.
A proxy is not valid after the expiration of three years from its
date unless otherwise provided in the proxy. A proxy must be filed with
the Corporation at or before the meeting.
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SECTION 10. WAIVER OF NOTICE. A shareholder or a shareholder's
attorney-in-fact may waive the shareholder's right to notice before or
after a meeting by a signed waiver of notice. A shareholder's attendance
at a meeting will result in a waiver of objection to:
(a) lack of notice or defective notice of the meeting,
unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; and
(b) consideration of a particular matter at the meeting
that is not within the purposes described in the meeting notice,
unless the shareholder objects to considering the matter when it
is presented.
SECTION 11. SHAREHOLDER PROPOSALS. Except as otherwise provided by
statute, the Articles of Incorporation, or these Bylaws:
(a) No matter may be presented for shareholder action at an
annual or special meeting of shareholders unless such matter is: (i)
specified in the notice of the meeting (or any supplement to the
notice) given by or at the direction of the Board of Directors; (ii)
otherwise presented at the meeting by or at the direction of the Board
of Directors; (iii) properly presented for action at the meeting by a
shareholder in accordance with the notice provisions set forth in this
Section and any other applicable requirements; or (iv) a procedural
matter presented, or accepted for presentation, by the Chairman of the
meeting in his or her sole discretion.
(b) For a matter to be properly presented by a shareholder, the
shareholder must have given timely notice of the matter in writing to
the Secretary of the Corporation. To be timely, the notice must be
delivered to or mailed to and received at the principal executive
offices of the Corporation not less than 120 calendar days prior to
the date corresponding to the date of the Corporation's proxy
statement or notice of meeting released to shareholders in connection
with the last preceding annual meeting of shareholders in the case of
an annual meeting (unless the Corporation did not hold an annual
meeting within the last year, or if the date of the upcoming annual
meeting changed by more than 30 days from the date of the last
preceding meeting, then the notice must be delivered or mailed and
received not more than seven days after the earlier of the date of the
notice of the meeting or public disclosure of the date of the
meeting), and not more than seven days after the earlier of the date
of the notice of the meeting or public disclosure of the date of the
meeting in the case of a special meeting. The notice by the
shareholder must set forth: (i) a brief description of the matter the
shareholder desires to present for shareholder action; (ii) the name
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and record address of the shareholder proposing the matter for
shareholder action; (iii) the class and number of shares of capital
stock of the Corporation that are beneficially owned by the
shareholder; and (iv) any material interest of the shareholder in the
matter proposed for shareholder action.
(c) The shareholder proposal, together with any accompanying
supporting statement, shall not in the aggregate exceed 500 words.
Except to the extent that a shareholder proposal submitted pursuant to
this Section is not made available at the time of mailing, the notice
of the purposes of the meeting shall include the name and address of
and the number of shares of the voting security held by the proponent
of each shareholder proposal.
(d) A shareholder may submit matters and proposals for
shareholder action at any annual or special shareholder meeting if the
matters and proposals are of general concern to, and are proper
subjects for action by, the shareholders. A submitted proposal or
matter may not be presented for shareholder action if it: (i) relates
to the enforcement of a personal claim or the redress of a personal
grievance against the Corporation, its management, or any other
person; (ii) consists of a recommendation, request, or mandate that
action be taken with respect to a matter, including a general
economic, political, racial, religious, social, or similar cause, that
is not significantly related to the Corporation's business or is not
within the Corporation's power to effectuate; (iii) has, at the
shareholder's request, previously been submitted in either of the last
two annual shareholder meetings and the shareholder has failed to
present the proposal, in person or by proxy, for action at the
meeting; (iv) is substantially similar to a matter or proposal
presented within the preceding five calendar years: (A) if it was
submitted once during the past five annual meetings and it received
less than 3% of the total votes cast, or (B) if it was submitted twice
during the past five annual meetings and it received less than 6% of
the total votes cast at the time of its second submission, or (C) if
it was submitted three times during such period and it received less
than 10% of the votes cast at the time of its third submission (if any
of (A), (B) or (C) apply, the proposal may not be presented for three
years after the latest previous submission); or (v) consists of a
recommendation or request that the management take action with respect
to a matter relating to the conduct of the Corporation's ordinary
business operations.
(e) Notwithstanding the above, if the Corporation is subject to
the solicitation rules and regulations of the Securities Exchange Act
of 1934, as amended, and the shareholder desires to require the
Corporation to include the shareholder's proposal in the Corporation's
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proxy materials, matters and proposals submitted for inclusion in the
Corporation's proxy materials shall be governed by those rules and
regulations.
SECTION 12. NOMINATIONS OF DIRECTOR CANDIDATES. Except as otherwise
provided by statue or the Articles of Incorporation:
(a) Nominations of candidates for election to the Board of
Directors of the Corporation at any annual meeting of
shareholders or at any special meeting of shareholders called for
election of directors (an "Election Meeting") may be made by the
Board of Directors or by a shareholder of record of shares of a
class entitled to vote at such Election Meeting.
(b) Nominations made by the Board of Directors shall be
made at a meeting of the Board of Directors, or by written
consent of directors in lieu of a meeting, not less than 20 days
prior to the date of an Election Meeting.
(c) A shareholder of record of shares of a class entitled
to vote at an Election Meeting may make a nomination at an
Election Meeting if, and only if, such shareholder shall have
first delivered, not less than 120 days prior to the date of the
Election Meeting in the case of an annual meeting, and not more
than seven days following the date of notice of the Election
Meeting in the case of a special meeting, a notice to the
Secretary of the Corporation setting forth with respect to each
proposed nominee: (i) the name, age, business address, and
residence address of such nominee; (ii) the principal occupation
or employment of such nominee; (iii) the number of shares of
capital stock of the Corporation that are beneficially owned by
such nominee; (iv) a statements that such nominee is willing to
be nominated; and (v) such other information concerning such
nominee as would be required under the rules of the Securities
and Exchange Commission in a proxy statement soliciting proxies
for the election of such nominee.
(d) If the Chairperson of the Election Meeting determines
that a nomination was not made in accordance with the foregoing
procedures, such nomination shall be void and all votes cast in
favor of election of a person so nominated shall be disregarded.
SECTION 13. ADJOURNMENTS. If a meeting is adjourned, it is not
necessary to give notice of the adjourned meeting if (a) the date, time,
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken, and (b) at the adjourned meeting only such
business is transacted as might have been transacted at the original
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<PAGE>
meeting. If after the adjournment the Board of Directors fixes a new
record date for the adjourned meeting, a notice of the adjourned meeting
shall be given in accordance with Section 4 of this Article.
SECTION 14. CONDUCT OF MEETINGS. Shareholder meetings shall be
conducted as follows:
(a) The chairperson of the meeting shall determine the
order of business and shall have the authority to establish rules
for the conduct of the meeting.
(b) The chairperson of the meeting shall announce at the
meeting when the polls close for each matter voted upon. If no
announcement is made, the polls shall close upon the final
adjournment of the meeting. After the polls close, no ballots,
proxies, or votes nor any revocations or changes to ballots,
proxies, or votes may be accepted.
(c) When the chairperson has declared the polls to be
closed on all matters then before a meeting, the chairperson may
declare the meeting to be adjourned pending determination of the
results by the inspectors of election. In such event, the
meeting shall be considered adjourned for all purposes, and the
business of the meeting shall be finally concluded upon delivery
of the final report of the inspectors of election to the
chairperson at or after the meeting.
(d) When the chairperson determines that no further matters
may properly come before a meeting, he or she may declare the
meeting to be adjourned, without motion, second, or vote of the
shareholders.
(e) When the chairperson has declared a meeting to be
adjourned, unless the chairperson has declared the meeting to be
adjourned until a later date, no further business may properly be
considered at the meeting even though shareholders or holders of
proxies representing a quorum may remain at the site of the
meeting.
(f) The chairperson of the meeting shall have absolute
authority over matters of procedure and there shall be no appeal
from the ruling of the chairperson. If, in his or her absolute
discretion, the chairperson deems it advisable to dispense with
the rules of parliamentary procedure as to any one meeting of
shareholders or part thereof, the chairperson shall so state and
shall clearly state the rules under which the meeting or
appropriate part thereof shall be conducted.
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(g) If disorder should arise that, in the absolute
discretion of the chairperson, prevents the continuation of the
legitimate business of the meeting, the chairperson may quit the
chair and announce the adjournment of the meeting; and upon his
or her so doing, the meeting is immediately adjourned without the
necessity of any vote or further action of the shareholders.
(h) The chairperson may require anyone not a bona fide
shareholder of record on the record date, or a validly appointed
proxy of such a shareholder, to leave the meeting.
(i) The chairperson may introduce nominations, resolutions,
or motions submitted by the Board of Directors for consideration
by the shareholders without a motion or second. Except as the
chairperson shall direct, a resolution or motion not submitted by
the Board of Directors shall be considered for vote only if
proposed by a shareholder of record on the record date or a
validly appointed proxy of such a shareholder and seconded by
such a shareholder or proxy other than the individual who
proposed the resolution or motion.
SECTION 15. INSPECTORS OF ELECTION. The Board of Directors or, if
they shall not have so acted, the Chief Executive Officer, may appoint, at
or prior to any meeting of shareholders, one or more persons (who may be
employees of the Corporation) to serve as inspectors of election. The
inspectors so appointed shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall
receive votes or ballots, hear and determine challenges and questions
arising in connection with the right to vote, count and tabulate votes or
ballots, determine the result, and do such acts as are proper to conduct
the election or vote with fairness to all shareholders.
SECTION 16. BUSINESS TRANSACTED. The business effectively transacted
at a shareholder meeting shall be confined to the following: (a) any
matter specified in the notice or reasonably related to a matter specified
in the notice; and (b) any matter (i) the consideration of which is not
objected to by any shareholder attending the meeting, and (ii) notice of
which is waived by each shareholder not attending the meeting.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF DIRECTORS. Members of the Board of
Directors of the Corporation shall be selected, replaced and removed as
follows:
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(a) NUMBER OF DIRECTORS. The number of the directors of
the Corporation shall be fixed from time to time by resolution
adopted by the affirmative vote of at least eighty percent (80%)
of the entire Board of Directors but shall not be less than nine
(9) nor more than twelve (12).
(b) CLASSIFICATION. The Board of Directors, other than
those who may be elected by the holders of any class or series of
stock having a preference over the common stock as to dividend or
upon liquidation, shall be divided into three classes as nearly
equal in number as possible, with the term of office of one class
expiring each year. At each annual meeting of the shareholders,
the successors of the class of directors whose term expires at
that meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year
following the year of their election.
(c) VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Subject to
the rights of the holders of any series of preferred stock then
outstanding, any vacancy occurring in the Board of Directors
caused by resignation, removal, death, disqualification or other
incapacity, and any newly created directorships resulting from an
increase in the number of directors, shall be filled by a
majority vote of directors then in office, whether or not a
quorum. Each director chosen to fill a vacancy or a newly
created directorship shall hold office until the next election of
directors by the shareholders. When the number of directors is
changed, any newly created or eliminated directorships shall be
so apportioned among the classes as to make all classes as nearly
equal in number as possible. No decrease in the number of
directors constituting the Board of Directors shall shorten the
term of any incumbent director.
(d) AMENDMENT. Notwithstanding Article X or any other
provision of these Bylaws, the provisions of this Section 1 of
Article III of the Bylaws of this Corporation shall not be
amended, altered, modified or repealed except upon the
affirmative vote of a majority of the outstanding shares of stock
of the Corporation entitled to vote in elections of directors;
provided, however, that the foregoing provisions regarding
shareholder approval of any amendment to or alteration,
modification or repeal of this Section 1 of Article III of the
Bylaws shall not apply to any amendment, alteration, modification
or repeal which has been approved by the affirmative vote of
eighty percent (80%) of the entire Board of Directors, which
shall include the affirmative vote of at least one (1) director
of each class of the Board of Directors.
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SECTION 2. QUALIFICATIONS OF DIRECTORS. All directors of this
Corporation shall be and remain at all times shareholders thereof. A
director shall cease to be qualified as such upon sale or transfer of all
of his holdings in the Corporation.
SECTION 3. POWERS. The business of the Corporation shall be managed
by its Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or
by the Articles of Incorporation or by these Bylaws directed or required to
be exercised or done by the shareholders.
SECTION 4. RESIGNATION. Any director may resign at any time and such
resignation shall take effect upon receipt of written notice thereof by the
Corporation, or at such subsequent time as set forth in the notice of
resignation.
SECTION 5. REMOVAL. Any director may be removed from office at any
time, but only for cause, and only if removal is approved as set forth
below.
Except as may be provided otherwise by law, cause for removal
shall be construed to exist only if: (i) the director whose removal is
proposed has been convicted of a felony by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal;
(ii) such director has been adjudicated by a court of competent
jurisdiction to be liable for negligence, or misconduct, in the performance
of his duty to the Corporation in a matter of substantial importance to the
Corporation and such adjudication is no longer subject to a direct appeal;
(iii) such director has become mentally incompetent, whether or not so
adjudicated, which mental incompetency directly affects his ability as a
director of the Corporation; or (iv) the director's actions or failure to
act are deemed by the Board of Directors to be in derogation of the
director's duties.
Removal for cause, as cause is defined in (i) and (ii) above,
must be approved by at least a majority of the total number of directors or
by at least a majority vote of the shares of the Corporation then entitled
to be voted at an election for that director, and the action for removal
must be brought within one year of such conviction or adjudication.
Removal for cause, as cause is defined in (iii) and (iv) above, must be
approved by at least two-thirds (2/3) of the total number of directors.
For purposes of this paragraph, the total number of directors will not
include the director who is the subject of the removal determination, nor
will such director be entitled to vote thereon.
SECTION 6. COMPENSATION OF DIRECTORS. Each director who is not a
salaried officer of the Corporation may receive as compensation for his
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services in that capacity such sums and such benefits as shall from time to
time be determined by the Board of Directors, plus traveling expenses and
other expenses necessary for attendance at regular or special meetings of
the Board of Directors and committees of the board. Members of special or
standing committees may be allowed like compensation for attending
committee meetings. Nothing herein shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 7. PLACES OF MEETINGS. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Michigan.
SECTION 8. FIRST MEETING OF NEWLY ELECTED BOARD. The first meeting
of each newly elected Board of Directors shall be held following the annual
meeting of shareholders, and no notice of such meeting shall be necessary
to the newly elected directors in order to legally constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held
immediately following the annual meeting of shareholders, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as
shall be specified in a written waiver signed by all of the directors.
SECTION 9. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at the date, time, and place that the Board
determines. A notice to directors is not required for a regular meeting,
except that, when the Board of Directors establishes or thereafter changes
the schedule of regular meetings, or changes the date, time, or place of a
previously scheduled regular meeting, notice of the action shall be given
to each director who was absent from the meeting at which the action was
taken.
SECTION 10. SPECIAL MEETINGS. The Chairperson, the President, or
directors constituting at least one-third of the directors then in office
may call a special meeting of the Board of Directors by giving notice to
each director.
SECTION 11. NOTICE OF MEETINGS. Except as otherwise provided by
these bylaws, notice of the date, time, and place of each meeting of the
Board of Directors shall be given to each director by either of the
following methods:
(a) by mailing a written notice of the meeting to the
address that the director designates or, in the absence of
designation, to the last known address of the director, at least
five days before the date of the meeting; or
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(b) by delivering a written notice of the meeting to the
director at least one full business day before the meeting,
personally or by telecopier or telex, to the director's last
known office or home.
SECTION 12. WAIVER OF NOTICE. A director's attendance at or
participation in a meeting waives any required notice to the director of
the meeting, unless, at the beginning of the meeting or promptly upon the
director's arrival, the director objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or
assent to any action taken at the meeting. A director may waive notice in
writing before or after a meeting.
SECTION 13. PURPOSE OF MEETINGS. Neither the business to be
transacted nor the purpose of a regular or special meeting need be
specified in the notice or waiver of notice of the meeting. If the purpose
is stated in the notice, the business transacted at the meeting is not
limited to the purpose stated.
SECTION 14. QUORUM. At all meetings of the board a majority of the
directors then in office, or of a committee of the Board of Directors,
shall constitute a quorum for the transaction of business, and the acts of
a majority of the directors present at any meeting at which there is a
quorum shall be acts of the Board of Directors except as may be otherwise
specifically provided by statute or by the Articles of Incorporation or, in
the case of a committee, the board resolution establishing such committee.
If a quorum shall not be present at any meeting of the Board of Directors,
the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall
be present.
SECTION 15. ACTION WITHOUT A MEETING. Unless otherwise restricted by
the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if, before or after the
action, all members of the board or of such committee, as the case may be,
consent thereto in writing and such written consent is filed with the
minutes or proceedings of the board or committee. The consent has the same
effect as a vote of the Board of Directors for all purposes.
SECTION 16. MEETING BY TELEPHONE OR SIMILAR EQUIPMENT. The Board of
Directors or any committee designated by the Board of Directors may
participate in a meeting of such board or committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at
such meeting.
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ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 1. GENERAL. The board may designate one or more directors
as alternate members of a committee, who may replace an absent or
disqualified member at a meeting of the committee. Unless prohibited by
the board resolution creating the committee, in the absence or
disqualification of a committee member, the committee members present at a
meeting and not disqualified from voting, whether or not they constitute a
quorum, unanimously may appoint another director to act at the meeting in
the place of the absent or disqualified member. A committee, to the extent
provided in the board resolution creating the committee or these Bylaws,
may exercise all of the board's power and authority in the management of
the business and affairs of the Corporation, except that a committee may
not: (i) amend the Articles of Incorporation, except that a committee may
prescribe the relative rights and preferences of a series of a class of
shares for which the Board of Directors has such authority under the
Articles of Incorporation; (ii) adopt an agreement of merger or
consolidation; (iii) recommend to shareholders the sale, lease, or exchange
of all or substantially all of the Corporation's property and assets;
(iv) recommend to the shareholders a dissolution of the Corporation or a
revocation of a dissolution; (v) amend the bylaws of the Corporation; or
(vi) fill vacancies in the Board of Directors. Unless a resolution of the
Board of Directors expressly so provides, a committee may not declare a
distribution or dividend or authorize the issuance of stock. A committee
exists, and each member serves, at the pleasure of the board. A committee
may establish a time and place for regular meetings, for which no notice is
required, except that, if the committee changes the date, time, or place of
a regular meeting, notice of the change shall be given to each member who
was absent from the meeting at which the change was made. Otherwise, a
notice of a committee meeting shall be given in the same manner as a notice
of a board meeting.
SECTION 2. EXECUTIVE COMMITTEE. The Board of Directors may appoint
an Executive Committee whose membership shall consist of such members of
the Board of Directors as it may deem advisable from time to time to serve
during the pleasure of the board. The Board of Directors may also appoint
directors to serve as alternates for members of the committee in the
absence or disability of regular members. The Board of Directors may fill
any vacancies as they occur. The Executive Committee shall have and may
exercise the powers of the Board of Directors in the management of the
business affairs and property of the Corporation during the intervals
between meetings of the Board of Directors, subject to law and to such
limitations and control as the Board of Directors may impose from time to
time.
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SECTION 3. AUDIT COMMITTEE. The Audit Committee, if there be one,
shall cause a suitable examination of the financial records and operations
of the Corporation and its subsidiaries to be made by the Corporation. The
Audit Committee shall also recommend to the Board of Directors the
employment of independent certified public accountants to examine the
financial statements of the Corporation and its subsidiaries; and report to
the Board of Directors at least once each calendar year.
SECTION 4. COMPENSATION COMMITTEE. The Compensation Committee, if
there be one, shall review the personnel policies, plans and programs of
the Corporation, including individual salaries of executive officers, and
submit recommendations to the Board of Directors. The Compensation
Committee shall also recommend to the Board of Directors the retainer and
attendance fee for nonemployee directors.
SECTION 5. NOMINATING COMMITTEE. The Nominating Committee, if there
be one, shall develop and recommend to the Board of Directors criteria for
the selection of candidates for director, to seek out and receive
suggestions concerning possible candidates, to review and evaluate the
qualifications of possible candidates and to recommend to the Board of
Directors candidates for vacancies occurring from time to time and for the
slate of directors to be proposed on behalf of the Board of Directors at
the annual meeting of shareholders. The Nominating Committee will consider
nominees recommended by the shareholders, as properly submitted to the
Secretary of the Corporation.
SECTION 6. OTHER COMMITTEES. The Board of Directors may designate
such other committees as it may deem appropriate, and such committees shall
exercise the authority delegated to them.
SECTION 7. COMMITTEE MEETINGS. Each committee provided for above
shall meet as often as its business may require and may fix a day and time
each week or at other intervals for regular meetings, notice of which shall
not be required. Whenever the day fixed for a meeting shall fall on a
holiday, the meeting shall be held on the business day following or on such
other day as the committee may determine. Special meetings of the
committees may be called by the chairman of the committee or any two (2)
members other than the chairman, and notice thereof may be given to the
members by telephone, telegram or letter. A majority of its members shall
constitute a quorum for the transaction of the business of any of the
committees. A record of the proceedings of each committee shall be kept
and presented to the Board of Directors.
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ARTICLE V
OFFICERS
SECTION 1. APPOINTMENT. The Board of Directors, at its first meeting
following the annual shareholder meeting, shall appoint a President and
Secretary and may elect from their number a Chairperson and one or more
Vice Chairpersons. The board also may appoint one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers, and other officers and agents
that it deems necessary. The Board of Directors need not appoint or elect
an officer to an office that is already filled and whose specified term has
not expired. The same person may hold two or more offices, but an officer
may not execute, acknowledge, or verify an instrument in more than one
capacity if the instrument is required by law, the Restated Articles of
Incorporation, or these bylaws to be executed, acknowledged, or verified by
two or more officers.
SECTION 2. TERM, REMOVAL, AND VACANCIES. An officer shall hold
office for the term the board specifies upon election or appointment and
until a successor is elected or appointed and qualified, or until the
officer's death, resignation, or removal. The Board of Directors may
remove an officer with or without cause. An officer may resign by written
notice to the Corporation. The resignation is effective upon its receipt
by the Corporation or at a later date specified in the notice.
SECTION 3.
(a) CENTRAL STAFF. The executive officers of the
Corporation shall be a President, one or more Vice Presidents, a
Secretary and a Treasurer who shall be appointed by the Board of
Directors at its first meeting after each regular annual meeting
of shareholders. The Board of Directors may also appoint such
other officers as they may deem necessary. The dismissal of an
officer, the appointment of an officer to fill the place of one
who has been dismissed or has ceased for any reason to be an
officer, the appointment of any additional officers, and the
change of an officer to a different office may be made by the
Board of Directors at any later meeting. Each officer shall hold
office for one year and until their respective successor shall
have been elected and qualified. Any two (2) of the above
offices, except those of the President and Vice President may be
held by the same person.
(b) DIVISIONAL OFFICERS. The Board of Directors or the
Chief Executive Officer may, as they shall deem necessary,
designate certain individuals as divisional officers. Any titles
so given to divisional officers may be withdrawn at any time with
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or without cause by the Board of Directors or the Chief Executive
Officer.
SECTION 4. QUALIFICATIONS OF OFFICERS. All officers shall be and
remain at all times shareholders of the Corporation. An officer shall
cease to be qualified as such upon sale or transfer of all of his holdings
in the Corporation.
SECTION 5. CHAIRMAN OF THE BOARD. There may be elected a Chairman of
the Board, who shall be chosen from among the directors, but who need not
be an officer or an executive employee of the Corporation. The Chairman of
the Board shall preside at all meetings of the shareholders and at all
meetings of the Board of Directors, and shall have such other duties and
powers as may be imposed or given by the Board of Directors.
SECTION 6. PRESIDENT OR PRESIDENTS. The Board of Directors shall
elect one or not more than two Presidents of the Corporation. Each
President shall have the power to see that all orders and resolutions of
the Board of Directors are carried into effect, and shall perform all other
duties necessary or appropriate to his office, subject, however, to his
right and the right of the directors to delegate any specific powers to any
other officer or officers of the Corporation. If two Presidents shall be
elected, the Board of Directors at any time may delegate specific powers of
the office of President to each President to be exercised individually as
the Board of Directors may deem appropriate or the Board of Directors may
delegate all powers of the office of President to both Presidents to be
exercised jointly. If ever two Presidents shall be elected and shall
disagree as to any matter concerning the Corporation or subject to the
exercise of joint powers, then such matter shall be finally determined by
the Board of Directors. In the absence of the Chairman of the Board or if
no Chairman is elected, the President or Presidents shall preside at all
meetings of the shareholders and at all meetings of the Board of Directors,
unless otherwise directed by the Board of Directors. The President or
Presidents shall be ex officio voting members of all standing committees
designated by the Board of Directors except the Audit Committee, unless
otherwise directed by the Board of Directors.
SECTION 7. CHIEF EXECUTIVE OFFICER OR OFFICERS. The Board of
Directors may appoint one or not more than two Chief Executive Officers of
the Corporation. The Chief Executive Officer or Officers shall be the
Chairman of the Board, the President or Presidents of the Corporation, or
any combination thereof as appointed by the Board of Directors. The Chief
Executive Officer or Officers, in addition to duties as Chairman of the
Board or President as the case may be, shall have final authority, subject
to the control of the Board of Directors, over the general policy and
business of the Corporation and shall have the general control and
management of the business and affairs of the Corporation. The Chief
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Executive Officer or Officers shall have the power, subject to the control
of the Board of Directors, to appoint, suspend, or discharge and prescribe
the duties and to fix the compensation of such agents and employees of the
Corporation, other than the officers appointed by the Board of Directors,
as the Chief Executive Officer or Officers may deem necessary. If two
Chief Executive Officers shall be appointed, the Board of Directors at any
time may delegate specific powers of the position of Chief Executive
Officer to each Chief Executive Officer to be exercised individually as the
Board of Directors may deem appropriate or the Board of Directors may
delegate all powers of the position of Chief Executive Officer to both
Chief Executive Officers to be exercised jointly. If ever two Chief
Executive Officers shall be appointed and shall disagree as to any matter
concerning the Corporation or subject to the exercise of joint powers, then
such matter shall be finally determined by the Board of Directors.
SECTION 8. CHIEF OPERATING OFFICER. There may be elected a Chief
Operating Officer who shall, if elected, have general charge, control and
supervision over the administration and operations of the Corporation and
shall have such other duties and powers as may be imposed or given by the
Board of Directors. If no Chief Operating Officer is elected, the duties
and powers of the Chief Operating Officer shall be performed by the Chief
Executive Officer.
SECTION 9. VICE PRESIDENTS. The Vice President or Vice Presidents
shall perform such duties and have such powers as the Chief Executive
Officer or the Board of Directors may from time to time prescribe. The
Vice President shall perform all duties of the President in case of the
absence or disqualification of the President. There may be not more than
six (6) Vice Presidents who shall act in the order of their appointment.
The Board of Directors may at its discretion designate one or more of the
Vice Presidents as Executive Vice Presidents or Senior Vice Presidents.
Any Vice President so designated shall have such duties and
responsibilities as the board shall prescribe.
SECTION 10. SECRETARY. The Secretary shall attend all meetings of
the shareholders, and of the Board of Directors and of the Executive
Committee, and shall preserve in the books of the Corporation true minutes
of the proceedings of all such meetings. He shall safely keep in his
custody the seal of the Corporation and shall have authority to affix the
same to all instruments where its use is required or appropriate. He shall
give all notices required or appropriate pursuant to statute, bylaws, or
resolution. He shall perform such other duties as may be delegated to him
by the Board of Directors or by the Executive Committee.
SECTION 11. TREASURER. The Treasurer shall have custody of all
corporate funds and securities and shall keep in books belonging to the
Corporation full and accurate accounts of all receipts and disbursements;
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he shall deposit all moneys, securities and other valuable effects in the
name of the Corporation in depositories as may be designated for that
purpose by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and directors at the regular meetings of the board, and whenever
requested by them, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors he shall deliver to the Chief Executive Officer of the
Corporation, and shall keep in force a bond in form, amount and with a
surety or sureties satisfactory to the Board of Directors, conditioned for
faithful performance of the duties of his office, and for restoration to
the Corporation in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and property of whatever
kind in his possession or under his control belonging to the Corporation.
SECTION 12. ASSISTANT SECRETARY AND ASSISTANT TREASURER. There may
be elected an Assistant Secretary and Assistant Treasurer who shall, in the
absence, disability or nonfeasance of the Secretary or Treasurer, perform
the duties and exercise the powers of such persons respectively.
SECTION 13. OTHER OFFICERS. All other officers, as may from time to
time be appointed by the Board of Directors pursuant to Paragraph (a) of
Section 1 of this Article V, shall perform such duties and exercise such
authority as the Board of Directors shall prescribe. All divisional
officers, as may from time to time be appointed by the Board of Directors
or the Chief Executive Officer pursuant to Paragraph (b) of Section 1 of
this Article V, shall perform such duties and exercise such authority as
the Board of Directors or the Chief Executive Officer shall prescribe.
ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION IN ACTION BY THIRD PARTY. The Corporation
shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal (other than an action by or in the right of the
Corporation) by reason of the fact that the person is or was a director or
officer of the Corporation, or, is or was serving at the request of the
Corporation as a director, officer, employee, agent, or trustee of another
foreign or domestic Corporation, partnership, joint venture, trust, or
other enterprise, whether for profit or not for profit, against expenses
(including attorneys' fees), judgments, penalties, fines, and amounts paid
in settlement actually and reasonably incurred by the person in connection
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with such action, suit, or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not opposed to the
best interests of the Corporation or its shareholders, and with respect to
a criminal action or proceeding, the person had no reasonable cause to
believe his or her conduct was unlawful. The termination of any action,
suit, or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner that
the person reasonably believed to be in or not opposed to the best
interests of the Corporation or its shareholders, and with respect to a
criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
SECTION 2. INDEMNIFICATION IN ACTION BY OR IN RIGHT OF THE
CORPORATION. The Corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director or officer of the Corporation, or, is or was serving at the
request of the Corporation as a director, officer, employee, agent, or
trustee of another foreign or domestic Corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not for profit,
against expenses including attorneys' fees and amounts paid in settlement
actually and reasonably incurred by the person in connection with the
action or suit, if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
the Corporation or its shareholders. Indemnification shall not be made for
a claim, issue, or matter in which the person shall have been found liable
to the Corporation except to the extent authorized by statute.
SECTION 3. EXPENSES.
(i) To the extent that a person has been successful on the
merits or otherwise in defense of an action, suit, or proceeding
referred to in Section 1 or 2 of this Article, or in defense of a
claim, issue, or matter in the action, suit, or proceeding, the
Corporation shall indemnify that person against actual and
reasonable expenses, including attorneys' fees incurred by him or
her in connection with the action, suit, or proceeding and an
action, suit, or proceeding brought to enforce the mandatory
indemnification provided in this Section.
(ii) The Corporation shall indemnify a director for the
expenses and liabilities described in this Section 3(ii) without
a determination that the director has met the standard of conduct
set forth in sections 1 and 2, but no indemnification may be made
unless ordered by a court if (A) the director received a
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financial benefit to which he or she was not entitled, (B)
intentionally inflicted harm on the Corporation or its
shareholders, (C) violated Section 551 of the Michigan Business
Corporation Act, or (D) intentionally committed a criminal act.
In connection with an action or suit by or in the right of the
Corporation as described in Section 2, indemnification under this
Section 3(ii) may be for expenses, including attorney's fees,
actually and reasonably incurred. In connection with an action,
suit, or proceeding other than an action, suit, or proceeding by
or in the right of the Corporation, as described in Section 1,
indemnification under this Section 3(ii) may be for expenses,
including attorneys' fees, actually and reasonably incurred, and
for judgments, penalties, fines, and amounts paid in settlement
actually and reasonably incurred.
SECTION 4. AUTHORIZATION OF INDEMNIFICATION.
(i) An indemnification under Section 1 or 2 of this
Article, unless ordered by a court, shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee, or agent is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in
Section 1 or 2 of this Article and upon an evaluation of the
reasonableness of expenses and amounts paid in settlement. This
determination and evaluation shall be made in any of the
following ways:
(A) By a majority vote of a quorum of the Board of
Directors consisting of directors who are not parties or
threatened to be made parties to the action, suit, or
proceeding.
(B) If a quorum cannot be obtained under Subsection
(A) above, by majority vote of a committee duly designated
by the Board and consisting solely of two or more directors
not at the time parties or threatened to be made parties to
the action, suit, or proceeding.
(C) By independent legal counsel in a written opinion,
which counsel shall be selected in one of the following
ways:
(1) By the Board or its committee in the manner
prescribed in Subsection (A) or (B) above.
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<PAGE>
(2) If a quorum of the Board cannot be obtained
under Subsection (A) above and a committee cannot be
designated under Subsection (B) above, by the Board.
(D) By all independent directors who are not parties
or threatened to be made parties to the action, suit, or
proceeding.
(E) By the shareholders, but shares held by directors,
officers, employees, or agents who are parties or threatened
to be made parties to the action, suit, or proceeding may
not be voted.
(ii) In the designation of a committee under Subsection
(i)(B) or in the selection of independent legal counsel under
Subsection (i)(C)(2), all directors may participate.
(iii) If a person is entitled to indemnification under
Section 1 or 2 for a portion of expenses, including reasonable
attorneys' fees, judgments, penalties, fines, and amounts paid in
settlement, but not for the total amount, the Corporation may
indemnify the person for the portion of the expenses, judgments,
penalties, fines, or amounts paid in settlement for which the
person is entitled to be indemnified.
(iv) An authorization of payment of indemnification shall be
made in any of the following ways:
(A) by the board in one of the following ways:
(1) If there are two or more directors who are
not parties or threatened to be made parties to the
action, suit, or proceeding, by a majority vote of all
directors who are not parties or threatened to be made
parties, a majority of whom shall constitute a quorum
for this purpose.
(2) By a majority of the members of a committee
of two or more directors who are not parties or
threatened to be made parties to the action, suit, or
proceeding.
(3) If the Corporation has one or more
independent directors who are not parties or threatened
to be made parties to the action, suit, or proceeding,
by a majority vote of all independent directors who are
not parties or are threatened to be made parties, a
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<PAGE>
majority of whom shall constitute a quorum for this
purpose.
(4) If there are no independent directors and
less than two directors who are not parties or
threatened to be made parties to the action, suit, or
proceeding, by the vote necessary for action by the
board in accordance with Section 523 of the Michigan
Business Corporation Act, in which authorization all
directors may participate.
(B) By the shareholders, but shares held by directors,
officers, employees, or agents who are parties or threatened
to be made parties to the action, suit, or proceeding may
not be voted on the authorization.
SECTION 5. ADVANCES. The Corporation may pay or reimburse the
reasonable expenses incurred by a director, officer, employee, or agent who
is a party or threatened to be made a party to an action, suit, or
proceeding before final disposition of the proceeding if both of the
following apply:
(i) The person furnishes the Corporation a written
affirmation of the person's good faith belief that he or she has
met the applicable standard of conduct set forth in Sections 1
and 2 of this Article.
(ii) The person furnishes the Corporation a written
undertaking, executed personally or on the person's behalf, to
repay the advance if it is ultimately determined that the person
did not meet the standard of conduct.
The undertaking required by Subsection (ii) above must be an unlimited
general obligation of the person but need not be secured and may be
accepted without reference to the financial ability of the person to make
repayment. Determinations and evaluations under this Section shall be made
in the manner specified in Section 4(i) of this Article. Authorizations of
payment shall be made in the manner provided in Section 4(iv).
SECTION 6. OTHER INDEMNIFICATION AGREEMENTS. The indemnification or
advancement of expenses provided by this Article is not exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any Bylaw, agreement, vote of shareholders
or directors, or otherwise. The indemnification provided in Sections 1 to
6 of this Article continues as to a person who ceases to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of the person.
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<PAGE>
SECTION 7. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee, or
agent of another Corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against the person and incurred
by the person in any such capacity or arising out of the person's status as
such whether or not the Corporation would have power to indemnify the
person against the liability under Sections 1 to 6 of this Article.
Insurance on behalf of a director may be purchased from an insurer owned by
the Corporation, but insurance purchased from that insurer may insure a
director against monetary liability to the Corporation or its shareholders
only to the extent to which the Corporation could indemnify the director
under Section 3(ii).
SECTION 8. CONSTITUENT CORPORATION. For the purposes of this
Article, references to the Corporation include all constituent Corporations
absorbed in a consolidation or merger and the resulting or surviving
Corporation, so that a person who is or was a director or officer of such
constituent Corporation, or is or was serving at the request of such
constituent Corporation as a director, officer, partner, trustee, employee,
or agent of another Corporation, partnership, joint venture, trust, or
other enterprise shall stand in the same position under the provisions of
this Article with respect to the resulting or surviving Corporation as he
or she would if he or she had served the resulting or surviving Corporation
in the same capacity.
SECTION 9. PARTIAL INDEMNIFICATION. If a person is entitled to
indemnification under Section 1 or 2 of this Article for a portion of
expenses, including attorneys' fees, judgments, penalties, fines, and
amounts paid in settlement, but not for the total amount thereof, the
Corporation may indemnify the person for the portion of the expenses,
judgments, penalties, fines, or amounts paid in settlement for which the
person is entitled to be indemnified.
SECTION 10. SAVINGS CLAUSE. If this Article or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction,
the Corporation shall nevertheless indemnify each director, executive
officer, or other person whose indemnification is authorized by the Board
of Directors as to expenses, including attorneys' fees, judgments, fines,
and amounts paid in settlement with respect to any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative,
including a grand jury proceeding and an action by the Corporation, to the
full extent permitted by any applicable portion of this Article that shall
not have been invalidated or by any other applicable law.
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<PAGE>
SECTION 11. DEFINITIONS. For the purposes of this Article, "other
enterprises" shall include employee benefit plans; "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and "serving at the request of the Corporation" shall include any
service as a director, officer, partner, trustee, employee, or agent of the
Corporation, which imposes duties on, or involves services by the director,
officer, employee, or agent with respect to any employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be considered to have
acted in a manner "not opposed to the best interest of the Corporation or
its shareholders" as referred to in Sections 1 and 2 of this Article.
SECTION 12. CONSTRUCTION. It is the intent of this Article to grant
to the directors and executive officers of the Corporation (and such other
persons as the Board of Directors may designate) the broadest
indemnification permitted under the laws of the state of Michigan, as the
same may be amended from time to time, and this Article shall be liberally
construed to give effect to such intent. The Corporation further intends,
acknowledges, and agrees that all of the Corporation's directors and
executive officers have undertaken and will undertake the performance of
their duties and obligations in reliance upon the indemnification provided
for in this Article, and accordingly, such rights of indemnification may
not be retroactively reduced or abolished as to any such director or
executive officer with the written consent of such person.
ARTICLE VII
SUBSIDIARIES
SECTION 1. SUBSIDIARIES. The Board of Directors, the Chief Executive
Officer, or any executive officer designated by the Board of Directors may
vote the shares of stock owned by the Corporation in any subsidiary,
whether wholly or partly owned by the Corporation, in such manner as they
may deem in the best interests of the Corporation, including, without
limitation, for the election of directors of any subsidiary Corporation, or
for any amendments to the charter or bylaws of any such subsidiary
Corporation, or for the liquidation, merger, or sale of assets of any such
subsidiary Corporation. The Board of Directors, the Chief Executive
Officer or any executive officer designated by the Board of Directors may
cause to be elected to the Board of Directors of any such subsidiary
Corporation such persons as they shall designate, any of whom may, but need
not be, directors, executive officers, or other employees or agents of the
Corporation. The Board of Directors, the Chief Executive Officer, or any
executive officer designated by the Board of Directors may instruct the
directors of any such subsidiary Corporation as to the manner in which they
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<PAGE>
are to vote upon any issue properly coming before them as the directors of
such subsidiary Corporation, and such directors shall have no liability to
the Corporation as the result of any action taken in accordance with such
instructions.
SECTION 2. SUBSIDIARY OFFICERS NOT EXECUTIVE OFFICERS. The officers
of any subsidiary Corporation, shall not, by virtue of holding such title
and position, be deemed to be executive officers of the Corporation, nor
shall any such officer of a subsidiary Corporation, unless he shall also be
a director or executive officer of the Corporation, be entitled to have
access to any files, records or other information relating or pertaining to
the Corporation, its business and finances, or to attend or receive the
minutes of any meetings of the Board of Directors or any committee of the
Corporation, except as and to the extent expressly authorized and permitted
by the Board of Directors or the Chief Executive Officer.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the Corporation shall be
entitled to have a certificate in the name of the Corporation, signed by
the Chairman of the Board or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him
in the Corporation.
SECTION 2. FACSIMILE SIGNATURE. Where a certificate is signed (1) by
a transfer agent or an assistant transfer agent, or (2) by a transfer clerk
acting on behalf of the Corporation and a registrar, the signature of any
such Chairman, President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary 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 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or his legal representative, to give the Corporation a
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<PAGE>
bond in such sum as it may direct as indemnity against any claim that may
be made against the Corporation with respect to the certificate alleged to
have been lost or destroyed.
SECTION 4. TRANSFERS OF STOCK. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a
new certificate to the person entitled thereto, cancel the old certificate
and record the transaction upon its books.
SECTION 5. FIXING OF RECORD DATE BY BOARD. For the purpose of
determining the shareholders entitled to notice of or to vote at any
meeting of shareholders, or any adjournment thereof, or to express consent
to or dissent from any corporate action in writing without a meeting, or
for the purpose of determining shareholders entitled to receive payments of
any dividend or the distribution or allotment of any rights or evidences of
interests arising out of any change, conversion or exchange of capital
stock, or for the purpose of any other action, the Board of Directors may
fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than sixty (60) days nor less
than ten (10) days before the date of any such meeting, nor more than sixty
(60) days prior to any other action. Only shareholders of record on a
record date so fixed shall be entitled to notice of, and to vote at, such
meeting or to receive payment of any dividend or the distribution or
allotment of any rights or evidences of interests arising out of any
change, conversion or exchange of capital stock.
SECTION 6. PROVISION FOR RECORD DATE IN THE ABSENCE OF BOARD ACTION.
If a record date is not fixed by the Board of Directors: (a) the record
date for determination of shareholders entitled to notice of or to vote at
a meeting of shareholders shall be the close of business on the day next
preceding the day on which notice is given, or, if no notice is given, the
day next preceding the day on which the meeting is held; and (b) the record
date for determining shareholders entitled to express consent to corporate
action in writing, without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the first written consent
is expressed; and (c) the record date for determining shareholders for any
other purpose shall be the close of business on the day on which the
resolution of the board relating thereto is adopted.
SECTION 7. ADJOURNMENTS. When a determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders has
been made as provided in this Article, the determination applies to any
adjournment of the meeting, unless the board fixes a new record date for
the adjourned meeting.
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<PAGE>
SECTION 8. REGISTERED SHAREHOLDERS. The Corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE IX
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting pursuant to law. Dividends may be paid in cash, in property, or in
shares of capital stock, subject to the provisions of the Articles of
Incorporation.
SECTION 2. RESERVES. Before payment of any dividends, there may be
set aside out of any funds of the Corporation available for dividends such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of
the Corporation, or for such other purpose as the directors shall think
conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
SECTION 3. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall end
on the 31st day of December in each year, unless otherwise fixed by
resolution of the Board of Directors.
SECTION 5. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, and the words "Corporate Seal, Michigan". The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 6. SIGNING OF INSTRUMENTS. When the Board of Directors or
these bylaws authorize the signing of a contract, conveyance, or other
instrument without specification of the signing officer, the Chairperson,
the President, any Vice President, the Secretary, or the Treasurer may sign
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<PAGE>
in the name and on behalf of the Corporation and may affix the corporate
seal (if any) to the instrument. The Board of Directors may authorize
other officers and agents to sign instruments in the name and on behalf of
the Corporation.
SECTION 7. CORPORATE BOOKS AND RECORDS. The Corporation shall keep
books and records of account and minutes of the proceedings of its
shareholders, Board of Directors, and executive committee, if any. The
books, records, and minutes may be kept outside the State of Michigan. The
Corporation shall keep at its registered office, or at the office of its
transfer agent within or without the State of Michigan, records containing
the names and addresses of all shareholders, the number, class and series
of shares held by each, and the dates when they respectively became holders
of record. Any of the books, records, or minutes may be in written form or
in any other form capable of being converted into written form within a
reasonable time. The Corporation shall convert into written form without
charge any record not in written form, unless otherwise requested by a
person entitled to inspect the record.
SECTION 8. WRITTEN WAIVER OF NOTICE. Whenever any notice is required
to be given under the provisions of the statutes or of the Articles of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto.
ARTICLE X
AMENDMENTS
These Bylaws may be altered or repealed at any regular or special
meeting of the shareholders or of the Board of Directors. Except as otherwise
required by law or the Articles of Incorporation, the vote of a majority of
the shares present or represented by proxy and entitled to vote at a
meeting of shareholders or the vote of not less than a majority of the
members of the Board of Directors then in office shall be required to amend
or repeal the Bylaws or to adopt new Bylaws. (Amended May 4, 1999.)
-28-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE HASTINGS MANUFACTURING COMPANY AND SUBSIDIARIES FORM
10-Q THE THREE MONTHS ENDED MARCH 31, 1999, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 85,369
<SECURITIES> 0
<RECEIVABLES> 5,800,743
<ALLOWANCES> 250,000
<INVENTORY> 10,243,286
<CURRENT-ASSETS> 18,597,848
<PP&E> 25,601,167
<DEPRECIATION> (16,780,848)
<TOTAL-ASSETS> 35,319,617
<CURRENT-LIABILITIES> 6,910,400
<BONDS> 5,610,000
<COMMON> 1,579,052
0
0
<OTHER-SE> 5,468,904
<TOTAL-LIABILITY-AND-EQUITY> 35,319,617
<SALES> 8,959,131
<TOTAL-REVENUES> 8,959,131
<CGS> 6,597,554
<TOTAL-COSTS> 6,597,554
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 72,000
<INTEREST-EXPENSE> 147,087
<INCOME-PRETAX> 84,643
<INCOME-TAX> 39,000
<INCOME-CONTINUING> 45,643
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,643
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
