UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number #1-8484
Heilig-Meyers Company
(Exact name of registrant as specified in its charter)
Virginia 54-0558861
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2235 Staples Mill Road, Richmond, Virginia 23230
(Address of principal executive offices) (Zip Code)
(804) 359-9171
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of October 1, 1996.
48,622,771 shares of Common Stock, $2.00 par value.
HEILIG-MEYERS COMPANY
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings for
Three and Six Months Ended August 31, 1996
and August 31, 1995 (Unaudited) 3
Consolidated Balance Sheets as of
August 31, 1996 (Unaudited),
and February 29, 1996 (audited) 4
Consolidated Statements of Cash Flows for
Six Months Ended August 31, 1996 and
August 31, 1995 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - see Index to Exhibits 15
b. There were no reports on Form 8-K filed
during the quarter ended August 31, 1996.
HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
1996 1995 1996 1995
Revenues:
Sales $286,989 $270,356 $587,680 $536,324
Other income 56,534 54,505 113,757 107,508
Total revenues 343,523 324,861 701,437 643,832
Costs and Expenses:
Costs of sales 191,205 179,853 384,920 349,458
Selling, general and
administrative 111,179 103,018 226,637 201,143
Interest 10,974 10,453 21,565 19,970
Provision for doubtful
accounts 18,080 13,859 37,023 26,373
Total costs and expenses 331,438 307,183 670,145 596,944
Earnings before provision for
income taxes 12,085 17,678 31,292 46,888
Provision for income taxes 4,338 6,362 11,175 17,107
Net earnings $ 7,747 $ 11,316 $ 20,117 $ 29,781
Net earnings per share of common
stock:
Primary and fully diluted $0.16 $0.23 $0.41 $0.60
Cash dividends per share of
common stock $0.07 $0.07 $0.14 $0.14
See notes to consolidated financial statements.
HEILIG-MEYERS COMPANY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except par value data)
August 31, February 29,
1996 1996
(Unaudited) (Audited)
ASSETS
Current assets:
Cash $ 14,080 $ 16,017
Accounts receivable, net 558,195 518,969
Other receivables 16,042 13,638
Inventories 310,067 293,191
Other 54,590 53,501
Total current assets 952,974 895,316
Property and equipment, net 240,226 216,059
Excess costs over net assets acquired, net 187,008 177,585
$1,380,208 $1,288,960
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 75,000 $ 190,000
Long-term debt due within
one year 99,245 17,812
Accounts payable 82,022 87,739
Accrued expenses 85,333 71,916
Total current liabilities 341,600 367,467
Long-term debt 454,761 352,631
Deferred income taxes 50,741 49,879
Stockholders' equity:
Preferred stock, $10 par value --- ---
Common stock, $2 par value 97,245 97,143
Capital in excess of par value 121,478 120,769
Retained earnings 314,383 301,071
Total stockholders' equity 533,106 518,983
$1,380,208 $1,288,960
See notes to consolidated financial statements.
HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Six Months Ended
August 31,
1996 1995
Cash flows from operating activities:
Net earnings $ 20,117 $ 29,781
Adjustments to reconcile net
earnings to net cash used by
operating activities:
Depreciation and amortization 15,603 14,298
Provision for doubtful accounts 37,023 26,373
Other, net (117) ---
Change in operating assets and
liabilities net of the effects
of acquisitions:
Accounts receivable (76,948) (81,373)
Sale of accounts receivable --- 100,000
Other receivables (2,404) (4,079)
Inventories (9,199) (7,814)
Prepaid expenses (2,426) (12,390)
Accounts payable (5,717) (6,047)
Accrued expenses 12,918 5,808
Net cash (used)/provided
by operating activities (11,150) 64,557
Cash flows from investing activities:
Acquisitions, net of cash acquired (8,506) (9,644)
Additions to property and equipment (37,676) (32,666)
Disposals of property and equipment 508 1,220
Miscellaneous investments (7,164) (3,913)
Net cash used by investing
activities (52,838) (45,003)
Cash flows from financing activities:
Net increase (decrease) in notes payable (115,000) 10,200
Proceeds from long-term debt 199,612 0
Payments of long-term debt (16,437) (21,561)
Issuance of common stock 681 116
Dividends paid (6,805) (6,799)
Net cash provided/(used)
by financing activities 62,051 (18,044)
Net (decrease)/increase in cash (1,937) 1,510
Cash at beginning of period 16,017 10,360
Cash at end of period $ 14,080 $ 11,870
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. The accompanying consolidated financial statements of Heilig-Meyers Company
have not been audited by independent accountants, except for the balance
sheet at February 29, 1996. These financial statements have been prepared
in accordance with regulations of the Securities and Exchange Commission
in regard to quarterly (interim) reporting. In the opinion of management,
the financial information presented reflects all adjustments, comprised
only of normal recurring accruals, which are necessary for a fair
presentation of the results for the interim periods. Significant
accounting policies and accounting principles have been consistently
applied in both the interim and annual consolidated financial statements.
Certain notes and the related information have been condensed or omitted
from the interim financial statements presented in this Quarterly Report
on Form 10-Q. Therefore, these financial statements should be read in
conjunction with the Company's 1996 Annual Report on Form 10-K. The
results for the second quarter of fiscal year 1997 are not necessarily
indicative of future financial results.
B. On June 19, 1996, the Board of Directors declared a cash dividend of $0.07
per share which was paid on August 24, 1996, to stockholders of record on
July 17, 1996.
C. Accounts receivable are shown net of the allowance for doubtful accounts
and unearned finance income. The allowance for doubtful accounts was
$64,944,000 and $54,714,000 and unearned finance income was $60,300,000 and
$60,114,000 at August 31, 1996, and February 29, 1996, respectively.
D. The Company made income tax payments of $1,231,000 and $12,812,000 during
the three months ended August 31, 1996, and August 31, 1995, respectively.
E. The Company made interest payments of $10,974,000 and $9,380,000 during the
three months ended August 31, 1996, and August 31, 1995, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The following discussion should be read in conjunction with the
consolidated financial statements and notes to the consolidated financial
statements included in Item 1 of this document, and with the Company's audited
consolidated financial statements and notes thereto for the fiscal year ended
February 29, 1996.
RESULTS OF OPERATIONS
Total revenues for the second quarter rose 5.7% to $343.5 million from
$324.9 million in the prior year. Net earnings decreased 31.5% to $7.7 million
(or $.16 per share) from $11.3 million (or $0.23 per share) in the prior year
period.
Sales for the second quarter increased 6.2% to $287.0 million from $270.4
million in the prior year period. For the six month period ended August 31,
1996, sales increased 9.6% to $587.7 million from $536.3 million in the prior
year. Comparable store sales were -3.4% and -0.7% compared to 3.1% and 2.8% for
the three and six months ended August 31, 1996 and 1995, respectively. The
overall increase in sales for both periods was attributable to increased volume
due to the addition of 66 stores from August 31, 1995 to August 31, 1996. The
Company's Eastern stores provided 80% of total sales for the second quarter, or
$228.8 million, representing a 2.5% increase over the same period of the prior
year. The Company's Western stores added $35.4 million, or 12% of total sales,
representing a 16.9% increase over the second quarter of the prior year. The
Company's 31 Puerto Rican stores contributed $22.8 million, or 8% of total
sales. Sales increases were below Management's expectations due to a
continued sluggish home furnishings retail environment and lower than
anticipated sales of seasonal goods. Overall sales increases for the three
and six months ended August 31, 1996 were due to increased volume with an
immaterial impact from price changes.
As a percentage of sales, other income decreased during the second
quarter to 19.7% from 20.2% in the prior year second quarter. For the six
months ended August 31, 1996, other income decreased, as a percentage of
sales, to 19.4% from 20.0% in the prior year. The decrease in both periods
is primarily the result of additional interest costs associated with a larger
pool of securitized receivables. Interest costs related to securitized
receivables, which are based on the dollar value of receivables sold to third
parties, are netted against finance income. Proceeds from securitized
receivables are generally used by the Company to lower debt levels.
Costs of sales increased during the second quarter to 66.6% of sales from
66.5% in the prior year period. The Company's disciplined pricing strategy
resulted in improved raw margins during the second quarter compared to the prior
year period. However, these improvements were offset by higher fixed-type
expenses such as occupancy and delivery, as a percentage of sales, due to loss
of sales leverage resulting from negative comparable store sales during the
second quarter. For the six month period ended August 31, 1996, costs of sales
were 65.5% compared to 65.1% in the prior year. This increase is mainly due to
loss of sales leverage on occupancy and delivery costs for the six months ended
August 31, 1996.
Selling, general and administrative expense increased as a percentage of
sales to 38.7% from 38.1% in the prior year quarter. For the six month period
ended August 31, 1996, selling, general and administrative expense was 38.6%
compared to 37.5% in the prior year. The increase in both periods was primarily
the result of loss of sales leverage on certain fixed-type expenses such as
salaries and related costs. These increases were partially offset by lower
advertising, as a percentage of sales, in both periods.
Interest expense decreased to 3.8% of sales in the second quarter of
fiscal 1997 from 3.9% of sales in the second quarter of the prior year. The
decrease is mainly due to lower short-term interest rates compared to the
same period in the prior year. Weighted average short-term interest rates
for the second quarter decreased to 5.9% from 6.3% in the prior year.
Weighted average short-term debt decreased to $207.4 million from $208.0
million in the prior year period. Weighted average long-term interest rates
remained the same at 7.9% compared to the prior year period. For the
quarter, weighted average long-term debt increased to $401.9 million from
$386.2 million in the prior year period. For the six month periods ended
August 31, 1996 and August 31, 1995, interest expense equaled 3.7% of sales.
On August 9, 1996, the Company's wholly-owned subsidiary MacSaver Financial
Services (MFS), completed a public debt issuance of $200.0 million, seven
year notes due August 2003 at a fixed rate of 7.875% unconditionally
gauranteed by the Company. Proceeds from the issuance were used to pay down
short-term bank debt, thereby increasing the percentage of long-term fixed
rate funding. This issuance is consistent with the Company's focus on
structuring its debt portfolio to contain a higher percentage of long-term
fixed rate financing, thereby reducing its exposure to changes in short-term
interest rates.
The provision for doubtful accounts increased in the second quarter, as a
percentage of sales, to 6.3% from 5.1% in the prior year. For the six months
ended August 31, 1996, the provision increased to 6.3% from 4.9% in the prior
year. The increase in both periods was the result of a rise in the portfolio
loss rate and related write-offs experienced in the second half of fiscal 1996
and first half of fiscal 1997. The extension of credit is constantly monitored
by management to minimize the portfolio loss rate.
The income tax rate in effect for the second quarter of fiscal 1997 was
35.9% compared to 36.0% for the second quarter of fiscal 1996. For the six
months ended August 31, 1996, the income tax rate was 35.7% compared to 36.5% in
the prior year period. The decrease in the income tax rate in both periods is
the result of larger fixed dollar income tax credits in the current year and a
favorable impact from the Company's Puerto Rican operations in the current year
which have a lower effective tax rate compared to the Company as a whole.
LIQUIDITY AND CAPITAL RESOURCES
The Company decreased its cash position $1.9 million to $14.1 million at
August 31, 1996, from $16.0 million at February 29, 1996, compared to a increase
of $1.5 million in the comparable period a year ago.
Net cash outflow from operating activities was $11.2 million, compared to
a net cash inflow of $64.6 million in the comparable period of the prior year.
The Company traditionally produces a deficit in cash flow from operations
because it extends credit to its customers. An increase in accounts
receivable due to a 9.6% increase in sales for the six months ended
August 31, 1996 led to the net cash outflow for the period. Also
contributing to the net cash outflow was an increase in inventory levels due
primarily to new stores added during the six months ended August 31, 1996.
This increase was offset by a corresponding increase to the Company's accrued
expenses. In contrast, during the second quarter of fiscal 1996, the Company
entered into an asset securitization agreement involving the sale of $100.0
million of accounts receivable. This resulted in a positive cash flow from
operations for the six months ended August 31, 1995. Continued extension of
credit and related increases in customer accounts receivable, combined with
expected increases to inventory due to new store growth will likely produce
negative cash flows from operations in the upcoming fiscal 1997 quarters.
However, the Company periodically sells accounts receivable as a source of
liquidity, providing additional positive cash flows from operating activities.
Investing activities produced negative cash flows of $52.8 million during
the first six months of fiscal 1997 as compared to negative cash flows of $45.0
million in the prior year period. For both the six month periods ended August
31, 1996 and August 31, 1995, negative cash flows from investing activities were
primarily due to additions to property and equipment due to the opening of the
Company's new stores. The Company opened 39 and 42 new stores in the six months
ended August 31, 1996 and 1995, respectively. Capital expenditures will
continue to be financed by cash flows from operations, supplemented by funds
from external sources.
Financing activities produced positive cash flows of $62.1 million during
the first six months of fiscal 1997 as compared to an $18.0 million negative
cash flow in the prior year period. During the second quarter of fiscal
1997, the Company received $199.6 million from a public debt issuance of
$200.0 million, seven year notes. A portion of the proceeds was used to
reduce the Company's notes payable. The Company has a $400.0 million
revolving credit facility, of which $340.0 was unused at August 31, 1996.
The Company also has lines of credit with banks, totaling $60.0 million, of
which $45.0 was unused at August 31, 1996. In addition, the Company has a
commitment from a bank to borrow $60.0 million for five years, if necessary.
OTHER INFORMATION
On August 27, 1996, the Company announced it had signed a letter of
intent to buy certain assets relating to 20 stores of McMahan's Furniture
Company, of Santa Monica, California. Closing took place on October 1, 1996.
The acquisition was financed by the Company's existing credit facilities. These
stores are located in California, Washington and Nevada.
On September 17, 1996, the Company announced it had entered into a merger
agreement with Rhodes, Inc. based in Atlanta, Georgia. Rhodes is a publicly
traded specialty furniture retailer with 106 stores in 15 states located
primarily in the southeastern United States. Under the terms of the agreement,
Rhodes shareholders will receive one share of Heilig-Meyers stock for every two
shares of Rhodes stock. Heilig-Meyers will issue approximately 4.5 million
common shares in the transaction. The transaction is currently structured to be
a tax-free exchange of shares and accounted for under purchase accounting
rules. The merger is subject to certain closing conditions, including the
approval of the stockholders of Rhodes, Inc. and is expected to close by the
end of the Company's fiscal year.
The Company also announced it had signed a letter of intent to purchase
certain assets relating to 23 stores of Self Service Furniture Company,
headquartered in Spokane, Washington. These stores are located in Washington,
Oregon, Idaho, California and Montana. The acquisition will be financed by the
Company's existing credit facilities. Closing is anticipated to take place in
October 1996.
OUTLOOK
The retail furniture environment remained sluggish during the second
quarter of fiscal 1997 and there appears to be no fundamental reason to
anticipate a significant turn in the environment in the upcoming third and
fourth quarters. As a result, the Company anticipates sales trends to
remain under pressure for the remainder of fiscal 1997. However, during the
first and second quarters of fiscal 1997, the underlying trends in costs of
sales and selling, general and administrative expense showed improvement (as
a percentage of sales) as compared to the third and fourth quarters of the
prior fiscal year. These improvements were the result of the Company's
disciplined promotional strategy and related focus on merchandising margins
and cost control. The Company anticipates these improving trends will
continue and, based on achieving marginal comparable store sales increases,
result in favorable year over year improvements to costs of sales and
selling, general and administrative expense (as a percentage of sales) in
the third and fourth quarters of this fiscal year.
Certain statements included in the above discussions are not based on
historical facts, but are forward-looking statements. These statements reflect
the Company's reasonable judgements with respect to future events and are
subject to risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, the customer's willingness,
need and financial ability to purchase home furnishings and related items,
the Company's ability to extend credit to its customers, the costs and
effectiveness of promotional activities as well as the Company's access to,
and cost of, capital. Other factors such as changes in tax laws,
recessionary or expansive trends in the Company's markets, inflation rates
and regulations and laws which affect the Company's ability to do business
in its markets may also impact the outcome of forward-looking statements.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of the Company's shareholders was held June 19,
1996.
(c)(i) The shareholders approved the ratification of the selection of
Deloitte & Touche LLP as accountants and auditors for the Company for
the current fiscal year. The ratification was approved by the
following vote:
FOR - 40,739,145
AGAINST - 82,797
ABSTAIN - 78,467
(c)(ii) The shareholders of the Company elected a board of eleven
directors for one-year terms. The elections were approved by the
following vote:
Directors: For Withheld
William C DeRusha 40,539,065 361,344
Troy A. Peery, Jr. 40,563,211 337,198
Alexander Alexander 40,546,213 354,196
Robert L. Burrus, Jr. 40,514,149 386,260
Benjamin F. Edwards, III 40,545,304 355,105
Alan G. Fleisher 40,471,660 428,749
Nathaniel Krumbein 40,497,865 402,544
Hyman Meyers 40,498,519 401,890
S. Sidney Meyers 40,498,220 402,189
Lawrence N. Smith 40,522,679 377,730
George A. Thornton, III 40,547,313 353,096
(c)(iii) The shareholders of the Company voted on the proposal to amend the
Company's 1990 Stock Option Plan (the "1990 Plan). The amendment was
approved by the following vote:
FOR - 38,884,905
AGAINST - 1,851,182
ABSTAIN - 164,322
BROKER NON-VOTES - 0
(c)(iv) The shareholders of the Company voted on the proposal to amend the
Company's 1994 Stock Option Plan (the "1994 Plan). The amendment was
approved by the following vote:
FOR - 32,889,960
AGAINST - 7,847,214
ABSTAIN - 163,235
BROKER NON-VOTES - 0
(c)(v) The shareholders of the Company also voted on the proposal to approve
the Company's Annual Performance-Based Bonus Plan (the "Bonus Plan").
The proposal was approved by the following vote:
FOR - 39,952,474
AGAINST - 794,142
ABSTAIN - 153,793
BROKER NON-VOTES - 0
Item 5. Other Information.
(i). On July 8, 1996, the Company and its wholly-owned finance subsidiary,
MacSaver Financial Services, Inc. (MFS), filed a joint Registration
Statement on Form S-3 under the 1933 Act relating to up to
$400,000,000 aggregate principle amount of Securities consisting of
(i) shares of the Company's common stock, $2.00 par value, (ii)
Company warrents to purchase Common Stock and (iii) debt securities
consisting of debentures, notes and/or other unsecured evidences of
indebtiveness of MFS, unconditionally guaranteed as to payment of
principal, premium, if any, and interest by the Company. The
Registration Statement was declared effective on July 24, 1996.
On August 9, 1996, MFS completed a public debt issuence of
$200,000,000, seven-year 7 7/8% notes due August 1, 2003
unconditionally gauranteed by the Company. The proceeds of the
offering were used for general corporate purposes.
(ii). On September 6, 1996 the Company announced that the Board of
Directors appointed three additional directors. They were Ms.
Beverley E. Dalton, owner of W.C. English, Inc., a general
construction firm, Mr. Charles A. Davis, Limited Partner of Goldman
Sachs and Co., and Dr. Eugene Trani, President of Virginia
Commonwealth University.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. See INDEX TO EXHIBITS
(b) There were no reports on Form 8-K filed during the quarter
ended August 31, 1996.
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.
Heilig-Meyers Company
(Registrant)
Date: October 14, 1996 /s/Joseph R. Jenkins
Joseph R. Jenkins
Executive Vice President
Principal Financial Officer
Date: October 14, 1996 /s/William J. Dieter
William J. Dieter
Senior Vice President,
Accounting and Principal
Accounting Officer
INDEX TO EXHIBITS
PAGE
Exhibit 3. Company's By-laws, as amended. 16
Exhibit 4(a). Indenture dated as of August 1, 1996, among Heilig-Meyers,
MacSaver and First Union National Bank of Virginia, as
Trustee, filed with the Commission as Exhibit 4(a) to the
Company's Current Report on Form 8-K dated September 11,
1996, is expressly incorporated herein by this reference.
Exhibit 4(b). Officer's Certificate dated August 9, 196, relating to
the public offering by MacSavor Financial Services, Inc.
of $200 million aggregate principal amount of 7 7/8% Notes
due August 1, 2003, guaranteed as to payment of principal
and interest by the Company, filed with the Commission as
Exhibit 4(b) to the Company's Current Report on Form 8-K
dated September 11, 1996, is expressly incorporated herein
by this reference.
Exhibit 11. Computation of Per Share Earnings 22
Exhibit 27. Financial Data Schedule 23
EXHIBIT 3
BY-LAWS
OF
HEILIG-MEYERS COMPANY
ARTICLE 1 - OFFICES
A. The principal office of the Corporation shall be at 2235 Staples Mill
Road, Richmond, Virginia. The Corporation may also have offices at such other
places, within or without the State of Virginia, as the Board of Directors
may, from time to time, appoint, or the business of the Corporation may
require.
B. The registered office of the Corporation shall be its initial registered
office as shown in the Articles of Incorporation or at such other place in
Virginia as the Board of Directors shall, from time to time, appoint, and may,
but need not, be at the principal office of the Corporation.
ARTICLE II - STOCK AND OTHER SECURITIES
A. Certificates of Stock shall be in such form as is required by law and
approved by the Board of Directors. Each stockholder shall be entitled to a
certificate signed by either the Chairman of the Board and Chief Executive
Officer or a Vice President, and by either the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary or any other officer
authorized by resolution of the Board of Directors. Each certificate may (but
need not) be sealed with the seal of the Corporation or a facsimile thereof.
B. The signatures of the officers upon a stock certificate, bond, note or
debenture issued by the Corporation may be facsimiles if such stock
certificate is countersigned by a transfer agent or registered by a registrar,
other than the Corporation itself or an employees of the Corporation, or if
such bond, note or debenture is countersigned or otherwise authenticated by
the signature of a trustee. If any officer who has signed, or whose facsimile
signature has been placed upon, a stock certificate, bond, note or debenture,
shall be ceased to be such officer before such certificate, bond, note or
debenture is issued, or may be issued by the Corporation with the same effect
as if he were such officer at the date of its issue.
C. Only stockholders of record on the stock transfer books of the
Corporation shall be entitled to be treated by the Corporation as the holders
of the stock standing in their respective names, and except to the extent, if
any, required by law, the Corporation shall not be obligated to recognize any
equitable or other claim to, or interest in, any share on the part of any
other person, whether or not it shall have express or other notice thereof.
D. Transfers of stock shall be made on the stock transfer books only upon
surrender of the certificate therefor, endorsed or accompanied by a written
assignment signed by the holder of record or by his duly authorized attorney-
in-fact. The Board of Directors may, from time to time, make reasonable
regulations governing transfers of stock and other securities. No share shall
be transferred, unless otherwise required by law, if such transfer would
violate the terms of any written agreement to which the Corporation, and
either the transferor or transferee, is a party.
E. In case of the loss, mutilation or destruction of a stock certificate,
bond, note or debenture, a duplicate may be issued upon such terms, and
bearing such legend, if any, as the Board of Directors may lawfully prescribe.
ARTICLE III - STOCKHOLDERS MEETING
A. Meetings of the stockholders shall be held at the principal office of
the Corporation, or at such other place, within or without the State of
Virginia, as the Board of Directors may designate from time to time. At least
ten (10) days before each meeting, a complete list of the stockholders
entitled to vote at such meeting, or any adjournment thereof, with the address
and number of shares held by each, shall be prepared, kept on file subject to
inspection by any stockholder during regular business hours, at the principal
office of the Corporation or its registered office or the office of its
transfer agent or registrar.
B. The annual meeting of the stockholders shall be held on the second
Wednesday of July of each year (and if such day is a legal holiday, on the
next business day) or such other date as may be set by the Board of Directors,
for the purpose of electing Directors and transacting such other business as
may properly come before the meeting.
C. Special meetings of the stockholders may be called by the Chairman of
the Board and Chief Executive Officer, the President, the Secretary or the
Board of Directors.
D. Written notice stating the place, day and hour of the meeting, and, in
the case of a special meeting (or required by law or the Articles of
Incorporation or these By-Laws), the purpose or purposes for which the meeting
was called, shall be given to each stockholder entitled to vote at such
meeting. Such notice shall be given either personally or by mail, by or at
the direction of the officer or other person or persons calling the meeting
not more than fifty (50) days nor less than ten (10) days before the date of
the meeting (except that such notice shall be given not less than twenty-five
(25) days before a meeting called to act on a plan of merger of consolidation,
or on proposal to amend the Articles of Incorporation or to reduce stated
capital, or to sell,, lease, exchange, mortgage or pledge for a consideration
other than money, all or substantially all the property or assets of the
Corporation, if not in the usual and regular course of its business and such
notice shall be accompanied by a copy of any proposed amendment or plan of
reduction, merger or consolidation). Notice to a stockholder shall be deemed
given when deposited in the United States mail, with postage prepaid,
addressed to the stockholder at his address as it appears on the stock
transfer books of the Corporation.
Any stockholder who attends a meeting shall be deemed to have had timely
and proper notice of the meeting, unless the attends for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
E. Notice of any meeting may be waived, and any action may be taken by the
stockholders without a meeting if a consent in writing, setting forth the
action to be taken, shall be signed by all the stockholders entitled to vote
thereon, in accordance with SS 13.1-27 and 13.1-28 of the Virginia Stock
Corporation Act.
F. The stock transfer books may be closed by order of the Board of
Directors for not more than fifty (50) days for the purpose of determining
stockholders entitled to notice of, or to vote at, any meeting of the
stockholders or any adjournment thereof (or entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
purpose). In lieu of closing such books, the Board of Directors may fix in
advance, as the record date for any such determination, a date not more than
fifty (50) days before the date on which such meeting is to be held (or such
payment is to be made, or other action requiring such determination is to be
taken). If the books are not thus closed or the record date is not thus
fixed, then the date on which the notice of the meeting was mailed (or on
which such dividend is declared or such other action approved by the Board of
Directors) shall be the record date.
G. The Chairman of the Board and Chief Executive Officer or the President
shall preside as Chairman over the meetings of stockholders. If neither the
Chairman of the Board and Chief Executive Officer nor the President is
present, the meeting shall elect a chairman. The Secretary, or, in his
absence, an Assistant Secretary, shall act as Secretary of such meeting. If
no such officer is present, the chairman shall appoint the Secretary of the
meeting.
H. Two inspectors of election may be appointed by the Board of Directors
before each meeting of the stockholders; and if no such appointment has been
made, or if any inspector thus appointed shall not be present, the Chairman
may, and if requested by stockholders holding in the aggregate at least one-
fifth (1/5) of the stock entitled to vote at the meeting shall, appoint such
an inspector or inspectors to determine the qualifications of voters, the
validity of proxies and the number of shares represented at the meeting, to
supervise voting, and to ascertain the results thereof.
I. A stockholder may vote either in person or by proxy executed in writing
by the stockholder or by his duly authorized attorney-in-fact. No proxy shall
be valid after eleven (11) months from its date unless otherwise provided in
the proxy. A proxy may be revoked at any time before the shares to which it
relates are voted by written notice, which may be in the form of a substitute
proxy to the secretary of the meeting. A proxy apparently executed in the
name of a partnership or other Corporation, or by one of several fiduciaries,
shall be presumed to be valid until challenged, and the burden of proving
invalidity shall rest upon the challenger.
J. The procedure at each meeting of the stockholders shall be determined
by the Chairman of the meeting, and (subject to paragraph H of this Article
III) the vote on all questions before any meeting shall be taken in such
manner as the Chairman prescribes. However, upon the demand of stockholders
holding in the aggregate at least one-fifth (1/5) of the stock entitled to
vote on any questions, such vote shall be by ballot.
K. A quorum at any meeting of stockholders shall be a majority of the
shares entitled to vote, represented in person or by proxy. The affirmative
vote of a majority of such quorum shall be the act of the stockholders, unless
a greater vote is required by the Virginia Stock Corporation Act or the
Articles of Incorporation (except that in elections of directors, those
receiving the greatest number of votes shall be elected even though less than
such a majority). Less than a quorum may, by the vote of a majority of the
shares present and entitled to vote, adjourn the meeting to a fixed time and
place, without further notice; and if a quorum shall then be present in person
or by proxy, any business may be transacted which might have been transacted
if a quorum had been present at the meeting as originally called.
L. All committees of stockholders created at any meeting of the
stockholders shall be appointed by the Chairman of the meeting unless
otherwise directed by the meeting.
ARTICLE IV - BOARD OF DIRECTORS
A. The Board of Directors shall consist of fourteen (14) persons, none
of whom need be residents of Virginia or stockholders of the Corporation.
Nominations for the election of directors may be made by the Directors or a
nominating committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of directors. A stockholder
entitled to vote in the election of directors may nominate one or more
persons for election as a director at an annual or special meeting of
stockholders only if written notice of such stockholders intent to make
such nomination has been given, either by personal delivery to the
Secretary of the Corporation not later than the close of business on the
tenth day following the date on which notice of such meeting is first
mailed to stockholders or by Untied States mail, postage prepaid, to the
Secretary of the Corporation postmarked not later than the tenth day
following the date on which notice of such meeting is first mailed to
stockholders. Each notice required by this section shall set forth: (1)
the name and address of the stockholder who intends to make the nomination;
(2) the name, address, and principal occupation of each proposed nominee;
(3) a representation that the stockholder is entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; and (4) the consent
of each proposed nominee to serve as a director of the Corporation if so
elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing
procedure.
B. Regular meetings of the Board of Directors may be held without notice
at such time and place as the Board of Directors may designate from time to
time (and, in the absence of such designation, at the principal office of
the Corporation). A regular meeting shall be held as soon as practicable
after each annual meeting of the stockholders for the purpose of electing
officers and transacting such other business as may properly come before
the meeting.
C. Special meetings of the Board of Directors may be called at any time
by the Chairman of the Board and Chief Executive Officer or by any
director.
D. Notice of the time and place of each special meeting shall be given
to each director either by mail, telegraph, or written communication
delivered to the address of such director as it appears in the records of
the Corporation, at least twenty-four (24) hours before such meeting.
Neither the business to be transacted at, nor the purpose of, any meeting
of the Board of Directors need be specified in the notice or any waiver of
notice of such meeting.
A director who attends a meeting shall be deemed to have had
timely and proper notice thereof, unless he attends for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
E. Notice of any meeting may be waived, and any action may be taken by
the Board of Directors (or by any committee thereof) without a meeting if a
consent in writing, setting forth the action taken, shall be signed by all
the directors (or members of the committee, as the case may be), in
accordance with SS13.1-41 and 13.1-41.1 of the Virginia Stock Corporation
Act.
F. Each director shall be elected to hold office until the next
succeeding annual meeting, and shall hold office until his successor shall
have been elected and qualifies, or until such earlier time as he shall
resign, die or be removed. No decrease in the number of directors by
amendment to these By-Laws shall change the term of any incumbent director.
G. Any director may be removed, with or without cause, by a vote of the
holders of a majority of the number of shares entitled to vote at an
election of directors.
H. Any vacancy in the Board of Directors (including any vacancy
resulting from an increase of not more than thirty percent (30%) of the
number of directors last elected by the shareholders) may be filled by the
affirmative vote of a majority of the remaining directors, even though less
than a quorum, unless filled by the stockholders.
I. A quorum at a meeting of the Board of Directors shall be a majority
of the number of directors fixed by these By-Laws. The act of the majority
of the directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors.
J. An Executive Committee consisting of at least two (2) or more
directors may be designated by a resolution adopted by a majority of the
number of directors fixed by these By-Laws. To the extent provided in such
resolution, such Executive Committee shall have and may exercise all of the
authority of the Board of Directors except to approve an amendment to the
Articles of Incorporation or a plan of merger or consolidation.
Other committees with limited authority may be designated by
resolution adopted by a majority of the directors present at a meeting at
which a quorum is present.
Regular meetings of any committee may be held without notice at
such time and place as shall be fixed by a majority of the committee.
Special meetings of any committee may be called at the request of the
Chairman of the Board and Chief Executive Officer or any member of the
committee. Notice of such special meetings shall be given by the Chairman
of the Board and Chief Executive Officer or any member of any such
committee, and shall be deemed duly given, or may be waived, or action may
be taken without a meeting, as provided in paragraphs D and E of this
Article IV. A majority of any such committee shall constitute a quorum,
and the act of a majority of those present at any meeting at which a quorum
is present shall be the act of the committee, unless otherwise provided by
the Board of Directors.
ARTICLE V - OFFICERS, AGENTS AND EMPLOYEES
A. The officers of the Corporation shall be a Chairman of the Board and
Chief Executive Officer, a President, a Secretary, and a Treasurer, each of
whom shall be elected by the Board of Directors at the regular meeting of
the Board of Directors to be held as soon as practicable after each annual
meeting of the stockholders, and any officer may be elected at any meeting
of the Board of Directors. Any officer may hold more than one office and
he may, but need not be a director, except that the same person may not be
Chairman of the Board and Chief Executive Officer and Secretary, and the
Chairman of the Board and Chief Executive Officer shall be a director. The
Board may elect one or more Vice Presidents and any other officers and
assistant officers and may fill any vacancies. The officers shall have
such authority and perform such duties as generally pertain to their
offices and as may lawfully be provided by these By-Laws or by resolution
of the Board of Directors not inconsistent with these By-Laws.
B. The Chairman of the Board and Chief Executive Officer shall have
general supervision over, responsibility for, and control of the other
officers, agents, and employees of the Corporation and shall preside as
Chairman at meetings of the stockholders and the directors. The Chairman
of the Board and Chief Executive Officer shall also perform such duties and
shall also have such authority as may lawfully be required of or conferred
upon him by the Board of Directors.
C. The President and each Vice President shall perform such duties and
shall have such authority as may be lawfully required of or conferred upon
him by the Chairman of the Board and Chief Executive Officer or the Board
of Directors. The President shall, during the absence, disqualification,
or incapacity of the Chairman of the Board and Chief Executive Officer,
exercise all the functions and perform all the duties of the Chairman of
the Board and Chief Executive Officer.
D. The Secretary shall, as Secretary of the meeting, record all
proceedings at stockholders meetings and directors meetings, in books
kept for that purpose. He shall maintain the record of stockholders of the
Corporation, giving the names and addresses of all stockholders and the
number, classes and series of the shares held by each; and, unless
otherwise prescribed by the Board of Directors, he shall maintain the stock
transfer books.
E. The Treasurer shall have custody of all moneys and securities of the
Corporation. He shall deposit the same in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors, disburse the funds of the Corporation as may be required, and
cause books and records of account to be kept in accordance with generally
accepted accounting practices and principles.
F. During the absence, disqualification, or incapacity of any officer of
the Corporation other than the Chairman of the Board and Chief Executive
Officer, the Chairman of the Board and Chief Executive Officer may be
written order, or the Board of Directors may by resolution, delegate the
power of each such officer to any other officer or employee of the
Corporation.
G. Each officer shall be elected to hold office until the next
succeeding regular meeting of the Board of Directors to be held as soon as
practicable after each annual meeting of the stockholders, or for such
longer or shorter term as the Board of Directors may lawfully specify; and
he shall hold office until his successor shall have been elected and
qualified, or until such earlier time as he shall resign, die or be
removed.
H. Any officer may be removed, with or without cause, at any time
whenever the Board of Directors in its absolute discretion shall consider
that the best interests of the Corporation would be served thereby. Any
officer or agent appointed otherwise than by the Board of Directors may be
removed with or without cause at any time by any officer having authority
to appoint such an officer or agent, except as may be otherwise provided in
these By-Laws, whenever such officer in his absolute discretion shall
consider that the best interests of the Corporation will be served thereby.
Any such removal shall be without prejudice to the recovery of damages for
breach of the contract rights, if any, of the person removed. Election or
appointment of an officer or agent shall not of itself create contract
rights.
I. Checks, drafts, notes and orders for the payment of money shall be
signed by such officer or officers or such other person or persons as the
Board of Directors may, from time to time, authorize, and any endorsement
of such paper in the ordinary course of business shall be similarly made,
except that any officer or assistant officer of the Corporation may endorse
checks, drafts or notes for collection or deposit to the credit of the
Corporation. The signature of any such officer or other person may be a
facsimile when authorized by the Board of Directors.
J. Unless otherwise provided by resolution of the Board of Directors,
the Chairman of the Board and Chief Executive Officer may, from time to
time, himself or by such proxies, attorneys, or agents of the Corporation
as he shall designate in the name and on behalf of the Corporation, cast
the votes to which the Corporation may be entitled as a stockholder or
otherwise in any other Corporation, at meetings, or consent in writing to
any action by any such Corporation. He may instruct the person or persons
so appointed as to the manner of casting such votes or giving such consent,
and may execute or cause to be executed on behalf of the Corporation and
under its corporate seal, or otherwise, such written proxies consents,
waivers, or other instruments as he may deem necessary or desirable in the
premises.
ARTICLE VI - SEAL
The seal of the Corporation shall be a flat-face circular die, of
which there may any number of counterparts or facsimiles, in such form as
the Board of Directors shall, from time to time, adopt as the corporate
seal of the Corporation.
ARTICLE VII - AMENDMENTS
These By-Laws may be repealed or changed, and new By-Laws made, by
the stockholders entitled to vote at any annual or special meeting, or by
the Board of Directors at any regular or special meeting. By-Laws made by
the directors may be repealed or changed by the stockholders; and By-Laws
made by the stockholders may be repealed or changed by the directors,
except as, and to the extent that, the stockholders prescribe that the By-
Laws, or any specified By-Law, shall not be altered, amended or repealed by
the directors.
EXHIBIT 11
HEILIG-MEYERS COMPANY
COMPUTATION OF PER SHARE EARNINGS
(Amounts in thousands except per share data)
Three Months Ended Six Months Ended
August 31, August 31, August 31, August 31,
1996 1995 1996 1995
Primary Earnings Per Share:
Average number of
shares outstanding 48,616 48,554 48,571 48,554
Net effect of stock
options 1,059 1,296 718 1,188
Average number of
shares as adjusted 49,675 49,850 49,289 49,742
Net earnings $7,747 $11,316 $20,117 $29,781
Per share amount $ .16 $ .23 $ .41 $ .60
Fully Diluted Earnings Per Share:
Average number of
shares outstanding 48,616 48,554 48,571 48,554
Net effect of stock
options 1,059 1,296 733 1,270
Average number of
shares as adjusted 49,675 49,850 49,304 49,824
Net earnings $7,747 $11,316 $20,117 $29,781
Per share amount $ .16 $ .23 $ .41 $ .60
Earnings Per Common Share:
Earnings per common share is computed by dividing net earnings by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the year. The Company has issued stock options, which are
the Company's only common stock equivalent, at exercise prices ranging from
$5.52 to $35.06. Stock options which were antidilutive for the period ended
August 31, 1996 were not included in the earnings per share calculation.
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