FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 1995
Commission file number 0-6319
JACOBSON STORES INC.
(Exact name of registrant as specified in its charter)
Michigan 38-0686330
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
3333 Sargent Road, Jackson, Michigan 49201
(Address of principal executive offices, including zip code)
(517) 764-6400
(Registrant's telephone number, including area code)
Not Applicable
(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 the latest practicable date.
Common Stock ($1 Par Value):
5,779,021-2/3 Shares Outstanding, excluding
187,200 shares held in treasury, as of July 29, 1995
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For Quarter Ended July 29, 1995
INDEX
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
* Consolidated Balance Sheets - July 29, 1995 and
January 28, 1995 1
* Consolidated Statements of Earnings - Thirteen and
Twenty-Six Week Periods Ended July 29, 1995 and
July 30, 1994 2
* Consolidated Statements of Cash Flows - Thirteen and
Twenty-Six Week Periods Ended July 29, 1995 and
July 30, 1994 3
* Notes to Consolidated Financial Statements 4
Review by Independent Public Accountants 12
Exhibit:
* Report of Independent Public Accountants 13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
PART II: OTHER INFORMATION
Item 2. Changes in Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 6. Exhibits and Reports on Form 8-K 19
All items except those set forth above are inapplicable and have been omitted.
SIGNATURES 20
INDEX OF EXHIBITS
<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
July 29, January 28,
ASSETS 1995 1995
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,024 $ 3,558
Receivables from customers, net 36,513 43,984
Merchandise inventories 84,842 95,848
Prepaid expenses and other assets 5,319 3,639
Deferred taxes 2,190 2,190
--------- ---------
Total current assets 135,888 149,219
--------- ---------
PROPERTY AND EQUIPMENT, NET 98,838 100,258
--------- ---------
OTHER ASSETS 19,585 19,112
--------- ---------
$ 254,311 $ 268,589
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 5,028 $ 3,865
Accounts payable 28,508 30,606
Accrued expenses 14,330 15,112
--------- ---------
Total current liabilities 47,866 49,583
--------- ---------
LONG-TERM DEBT 114,023 120,424
--------- ---------
DEFERRED TAXES 8,405 8,405
--------- ---------
OTHER LIABILITIES 1,898 1,465
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 5,966 5,966
Paid-in surplus 7,109 7,109
Retained earnings 69,443 76,036
Treasury stock (399) (399)
--------- ---------
82,119 88,712
--------- ---------
$ 254,311 $ 268,589
========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
- 1 -
<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share and dividend data)
(unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------- -----------------------
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES, including leased departments $ 93,099 $ 89,917 $ 193,397 $ 187,411
--------- -------- --------- ---------
COSTS AND EXPENSES:
Cost of merchandise sold, buying and
occupancy expenses 67,438 63,529 132,264 126,503
Selling, general and administrative
expenses 31,665 30,632 64,665 62,080
Interest expense, net 2,182 1,899 4,390 3,757
Gain on sale of property -- -- -- (504)
--------- -------- --------- ---------
Total costs and expenses 101,285 96,060 201,319 191,836
--------- -------- --------- ---------
EARNINGS (LOSS) BEFORE
INCOME TAXES (8,186) (6,143) (7,922) (4,425)
PROVISION (CREDIT) FOR
INCOME TAXES (2,865) (2,150) (2,773) (1,549)
--------- -------- --------- ---------
NET EARNINGS (LOSS) $ (5,321) $ (3,993) $ (5,149) $ (2,876)
========= ======== ========= =========
EARNINGS (LOSS) PER COMMON SHARE:
Primary and fully diluted $ (0.92) $ (0.69) $ (0.89) $ (0.50)
========= ======== ========= =========
CASH DIVIDENDS PER SHARE $ 0.125 $ 0.125 $ 0.25 $ 0.25
========= ======== ========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twenty-Six Weeks Ended
----------------------
July 29, July 30,
1995 1994
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (5,149) $(2,876)
Gain on sale of property, net of income tax -- (333)
Adjustments to reconcile net earnings (loss)
to cash provided by operating activities:
Depreciation and amortization 5,098 4,942
Other liabilities 433 (10)
Change in:
Receivables from customers, net 7,471 7,037
Merchandise inventories 11,006 2,775
Prepaid expenses and other assets (1,680) (2,656)
Accounts payable and accrued expenses (2,880) 1,067
Accrued income taxes -- (924)
-------- -------
Net cash provided by operating activities 14,299 9,022
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, net of income tax -- 612
Additions to property and equipment (3,678) (7,025)
Other non-current assets (473) (2,976)
-------- -------
Net cash used in investing activities (4,151) (9,389)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt -- 2,737
Reduction of long-term debt (5,238) (2,045)
Cash dividends paid (1,444) (1,444)
-------- -------
Net cash used in financing activities (6,682) (752)
-------- -------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 3,466 (1,119)
Cash and cash equivalents, beginning of period 3,558 5,899
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,024 $ 4,780
======== =======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
- 3 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
The condensed financial statements included herein have been prepared
by the Company without audit and reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of results for
the interim periods. All adjustments are of a normal and recurring
nature.
Because of the nature of the specialty department store business, the
results for the twenty-six week periods ended July 29, 1995 and July
30, 1994 (which do not include the Christmas holiday season) are not
indicative of the results for the year as a whole.
Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or amended, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and notes to consolidated financial statements
included in the Company's latest annual report on Form 10-K.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF REPORTING
Jacobson Stores Inc. operates specialty department stores in 26 cities
in Michigan, Florida, Indiana, Kentucky and Ohio. The consolidated
financial statements include the accounts of the Company and two
wholly-owned subsidiaries, Jacobson Stores Realty Company and Jacobson
Credit Corp. All significant inter-company transactions and balances
have been eliminated.
FISCAL YEAR
The Company's fiscal year ends on the last Saturday in January.
SALES
Sales are net of returns. Restaurant and alteration revenues are
reflected as a reduction of cost of merchandise sold. Finance charge
revenues are recorded as income when earned and are reflected as a
reduction of selling, general and administrative expenses.
- 4 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
RECEIVABLES FROM CUSTOMERS
An account is reviewed for write-off if payment of 20% (one full
monthly payment) has not been received during the previous four-month
period or if it is otherwise determined that the account is
uncollectible.
MERCHANDISE INVENTORIES
All merchandise inventories are valued at cost, which is lower than
market, as determined by the retail last-in, first-out (LIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major replacements and
improvements are charged to the property and equipment accounts.
Maintenance, repairs and minor replacements are charged to expense as
incurred. When assets are sold, retired or fully depreciated, their
cost and related accumulated depreciation and amortization are removed
from the property and equipment accounts, and any gain or loss is
reflected in the statements of earnings.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are provided on the straight-line basis
over the estimated useful lives of the property and equipment, or over
the respective lease terms, if such periods are shorter.
CAPITALIZATION OF INTEREST
Interest expense incurred on properties under development is
capitalized to reflect properly the costs of properties up to the time
they produce revenues. The amounts capitalized are then amortized over
the respective lives of the depreciable assets.
PRE-OPENING EXPENSES
Expenditures of a non-capital nature associated with opening a new
store are charged to expense using the straight-line method in the 12
months immediately following the opening.
- 5 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
INCOME TAXES
Deferred income taxes result from temporary differences between the tax
basis of an asset or liability and its reported amount in the financial
statements and are adjusted for changes in tax laws and rates.
EARNINGS PER SHARE
Primary earnings per share are computed by dividing net earnings by the
weighted average number of shares of common stock and common stock
equivalents outstanding during the periods. Weighted average shares
outstanding were 5,783,000 and 5,779,000 for the quarters ended July
29, 1995 and July 30, 1994, respectively, and were 5,783,000 and
5,779,000 for the six month periods ended July 29, 1995 and July 30,
1994, respectively.
Fully diluted earnings per share are computed based on the additional
assumption that the Company's 6-3/4% Convertible Subordinated
Debentures due 2011 were converted to common stock at the date of
issuance with a corresponding increase in net earnings to reflect a
reduction in related interest expense, net of income taxes. Weighted
average shares outstanding used in the computation of fully-diluted
earnings per share were 6,840,000 and 6,835,000 for the quarters ended
July 29, 1995 and July 30, 1994, respectively, and were 6,839,000 and
6,835,000 for the six month periods ended July 29, 1995 and July 30,
1994, respectively.
(2) CUSTOMER CREDIT AND RECEIVABLES
Receivables from customers were as follows:
<TABLE>
<CAPTION>
July 29, January 28,
(in thousands) 1995 1995
------------------------------------------------------------------
<S> <C> <C>
Receivables from customers $ 37,213 $ 44,777
Less reserve for doubtful accounts 700 793
-------- --------
$ 36,513 $ 43,984
======== ========
</TABLE>
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
(3) MERCHANDISE INVENTORIES
Merchandise inventories were as follows:
<TABLE>
<CAPTION>
July 29, January 28,
(in thousands) 1995 1995
-----------------------------------------------------------------
<S> <C> <C>
Inventories at first-in, first-out
(FIFO) cost $ 101,276 $ 111,336
Less LIFO reserves 16,434 15,488
--------- ---------
$ 84,842 $ 95,848
========= =========
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment are set forth below:
<TABLE>
<CAPTION>
July 29, January 28,
(in thousands) 1995 1995
------------------------------------------------------------------
<S> <C> <C>
Land and improvements $ 9,489 $ 9,472
Buildings and improvements 90,929 92,663
Furniture, fixtures & equipment 44,905 44,299
Leasehold improvements 10,848 10,824
Construction in progress 4,273 2,116
Capital leases 9,610 9,610
-------- --------
170,054 168,984
Less accumulated depreciation
and amortization 71,216 68,726
-------- --------
$ 98,838 $100,258
======== ========
</TABLE>
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
(5) LONG-TERM LEASES
The Company is obligated under non-cancelable long-term leases for
certain stores or portions of stores, and for certain fixtures and
equipment. Many of the leases contain renewal options. Most require
payment of taxes, insurance, and other costs applicable to the
property, and some require additional rentals based on percentages of
sales.
Capital leases provide the Company with the economic benefits and risks
of ownership. These leases are capitalized and treated as installment
purchases of depreciable property. Capital leases are included in the
balance sheets as property and equipment while the related lease
obligations are included in long-term debt. Interest based on these
obligations and amortization based on the lease terms are charged to
current operations in lieu of rental expense.
All other leases are considered operating leases. Operating leases are
accounted for by recording rental expense over the terms of the leases.
Additional rentals based on percentages of sales are recorded as rental
expense for both capital and operating leases.
(6) FINANCING
Jacobson Credit Corp. has available an unsecured line of credit of
$35,000,000 under a three year Revolving Credit Agreement with two
banks. The Agreement provides for either or both of two interest rate
alternatives, at the Company's option, which historically are below the
prime rate of interest of the lending banks. Borrowings under this
Agreement mature on June 30, 1998. On each June 30, this maturity date
extends one year unless terminated by written notice. The Agreement
requires a facility fee equal to 1/4 of 1% of the line per annum.
Compensating balances are not required. No borrowings were outstanding
under the Agreement at July 29, 1995.
The 6-3/4% Convertible Subordinated Debentures are convertible to
shares of the Company's common stock at any time prior to maturity,
unless previously redeemed, at $32.67 per share, subject to adjustment
in certain events. The debentures are redeemable, in whole or in part,
at the option of the Company at declining premiums to December 15,
1996, and thereafter at par. Mandatory annual sinking fund payments of
$1,725,000 are required beginning December 15, 1996. At July 29, 1995,
1,056,000 shares of authorized common stock were reserved for
conversion.
- 8 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
The Company has a 10-year Term Loan Agreement with two banks which
provides for borrowings of up to $40,000,000 on an unsecured basis at
market rates in effect at the time of such borrowings. The Term Loan
Agreement provides for payments of interest only through December 31,
1995, with quarterly principal repayments commencing March 31, 1996. At
July 29, 1995, the Company has $20,000,000 outstanding under this
facility at a fixed rate of 7.73% and $10,000,000 at a variable rate
below prime.
Loan agreements include, among other things, covenants requiring
minimum working capital, minimum net worth and minimum cash flow and
restricting capital stock redemptions and dividend payments.
Long-term debt, less current maturities, consisted of the following:
<TABLE>
<CAPTION>
July 29, January 28,
(in thousands) 1995 1995
---------------------------------------------------------------------------
<S> <C> <C>
6-3/4% Convertible Subordinated Debentures
due 2011 $34,500 $34,500
Mortgage notes and collateral trust bonds due
through 2013, at rates from 6.44% to 8.45% 38,395 41,124
Unsecured term loan due 2002, at a fixed rate
of 7.73% 20,000 20,000
Unsecured term loan due 2002, at a variable
rate below prime 10,000 10,000
Industrial development revenue bond obligations,
due through 2015, at variable rates below prime 9,595 9,628
Notes under revolving credit agreement due
1998, at a variable rate below prime -- 3,500
-------- --------
112,490 118,752
Capital lease obligations 1,533 1,672
-------- --------
$114,023 $120,424
======== ========
</TABLE>
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
(7) ACCRUED EXPENSES
Accrued expenses were as follows:
<TABLE>
<CAPTION>
July 29, January 28,
(in thousands) 1995 1995
------------------------------------------------------------------
<S> <C> <C>
Wages and vacation pay $ 6,713 $ 6,720
Pension 1,401 1,293
Taxes, other than income taxes 2,246 2,247
Interest 854 927
Other 3,116 3,925
-------- --------
$ 14,330 $ 15,112
======== ========
</TABLE>
(8) STOCK OPTIONS
At July 29, 1995, 94,600 shares of Jacobson Stores Inc. common stock
were reserved for issuance under a stock option plan adopted in 1983.
No more options may be granted under this plan. At July 29, 1995,
141,750 shares of Jacobson Stores Inc. common stock were reserved for
issuance under a plan adopted in 1994 and options for an additional
258,250 shares were available for grant to directors and employees.
(9) PREFERRED STOCK PURCHASE RIGHTS
The Company has a Preferred Stock Purchase Rights Plan, under which a
Right is attached to each share of the Company's Common Stock. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Preferred Stock at an exercise
price of $100, subject to adjustment. The Company has reserved 100,000
shares of Series A Preferred Stock for issuance on exercise of the
Rights. The Rights trade with the Company's Common Stock and will
become exercisable 10 days after any person or group acquires 25% or
more of the Company's Common Stock or commences or announces an offer
for 30% or more of the
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 29, 1995
Company's Common Stock. After the Rights become exercisable, if the
Company is acquired in a merger or other business combination or if
50% or more of its assets or earning power are sold, each Right will
entitle the holder to purchase, at the then current exercise price of
the Right, shares of common stock of the acquiring company having a
market value of twice the exercise price of the Right. Alternatively,
if a 25% shareholder acquires the Company by means of a reverse merger
in which the Company and its stock survive, or if such shareholder
engages in self-dealing transactions with the Company or acquires
beneficial ownership of 40% or more of the Company's Common Stock
other than by means of a fair offer to buy all shares, each Right
(except those of the acquiring person or group) will entitle its
holder to purchase, on exercise, shares of the Company's Common Stock
having a market value of twice the current exercise price of each
Right. The Rights may be redeemed by the Company for one cent per
Right until 30 days after a person or group acquires 25% or more of
the Company's Common Stock, and will expire on October 25, 1998.
(10) RETIREMENT PLAN
The Company has a trusteed non-contributory defined benefit pension
plan covering substantially all of its employees. Benefits under the
plan are based on a career average pay formula. Service cost and the
projected benefit obligation under the projected unit credit actuarial
method reflect the impact of estimated increases in compensation on
future pension benefits. Unrecognized pension costs and credits,
including actuarial gains and losses, are amortized over the average
remaining service period of those employees expected to receive
pension benefits. The Company's funding policy satisfies the minimum
funding requirements of the Employee Retirement Income Security Act of
1974 and the Internal Revenue Code of 1986. Pension plan assets are
managed by independent investment managers.
(11) SUPPLEMENTARY CASH FLOW INFORMATION
The Company considers all short-term investments with a maturity at
date of purchase of three months or less to be cash equivalents.
Investing and financing activities not reported in the Consolidated
Statements of Cash Flows, because they do not involve cash, include
equipment acquired through capital lease obligations. There were no
new capital lease obligations in the twenty-six weeks this year or in
1994.
Interest paid (net of interest capitalized) totalled $4,367,000 and
$3,629,000 for the twenty-six week periods ended July 29, 1995 and
July 30, 1994, respectively. Income tax payments totalled $64,000 and
$2,178,000 for the twenty-six week periods ended July 29, 1995 and
July 30, 1994, respectively.
- 11 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 29, 1995
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, have performed a
limited review of the condensed consolidated financial statements for
the twenty-six week period ended July 29, 1995. Since they did not
perform an audit, they express no opinion on the financial statements
referred to above.
- 12 -
<PAGE>
EXHIBIT
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To Jacobson Stores Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
JACOBSON STORES INC. (a Michigan corporation) and subsidiaries as of July 29,
1995 and the related condensed consolidated statements of earnings and cash
flows for the twenty-six week period then ended. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above 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 of Jacobson Stores Inc. and
subsidiaries as of January 28, 1995, and the related consolidated statements
of earnings, shareholders' equity and cash flows for the year then ended (not
presented herein), and, in our report dated March 3, 1995, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 28, 1995, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan
August 10, 1995
- 13 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 29, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The registrant, Jacobson Stores Inc., a Michigan corporation, operates
specialty department stores catering to discerning customers with preferences
for fine merchandise. The Company emphasizes quality merchandise, fully
staffed stores, personalized customer service and attractive, comfortable
shopping surroundings. Each store features a full line of fashion apparel and
accessories for women, men and children, and most offer accessories for the
home.
The Company owns a substantial portion of the real property used in its
business, primarily through its consolidated, wholly-owned real estate
subsidiary, Jacobson Stores Realty Company ("Jacobson Realty"). The Company
finances customer receivables through Jacobson Credit Corp. ("Jacobson
Credit"), its consolidated, wholly-owned finance subsidiary. As used in this
report, the terms "registrant", "Company" and "Jacobson's" refer to Jacobson
Stores Inc. and its subsidiaries unless the context indicates otherwise.
Jacobson's operates in two regions, with stores in twenty-six cities in
Michigan, Indiana, Kentucky, Ohio and Florida. The Company maintains separate
staffs of buyers for each region in order to better respond to customers'
lifestyles and merchandise preferences. The principal merchandising and
distribution functions are performed through regional distribution facilities.
Functions common to all stores, such as management coordination, sales
promotion, data processing and accounting, are centralized at the corporate
headquarters in Jackson, Michigan.
a. OPERATING RESULTS: THIRTEEN WEEKS ENDED JULY 29, 1995 TO THIRTEEN
WEEKS ENDED JULY 30, 1994
Sales for the quarter ended July 29, 1995, totalled $93,099,000, an
increase of 3.5% from 1994. Comparable store sales decreased 0.4%.
The cost of merchandise sold, buying and occupancy expenses, expressed as
a percentage of sales, increased to 72.4% for the quarter from 70.7% one
year ago, primarily due to higher markdowns.
Selling, general and administrative expenses, expressed as a percentage
of sales, decreased to 34.0% in the quarter from 34.1% in 1994. The
decrease is due primarily to reduced payroll and health care costs in
comparable stores, partially offset by first-year costs associated with
a new store opened in Louisville, Kentucky, in fall 1994.
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 29, 1995
Interest expense, expressed as a percentage of sales, increased to 2.3%
for the quarter from 2.1% one year ago, reflecting primarily increased
borrowings on the term loan and revolving
credit facilities.
The estimated effective annual income tax rate was 35% in both years and
includes estimated provisions for Federal, State and local income taxes.
1995 net loss for the thirteen weeks totalled $5,321,000 or 92 cents per
common share compared to $3,993,000 or 69 cents per share in the same
period last year. As a percentage of sales, net loss was 5.7% in 1995 as
compared to 4.4% in 1994.
b. OPERATING RESULTS: TWENTY-SIX WEEKS ENDED JULY 29, 1995 TO
TWENTY-SIX WEEKS ENDED JULY 30, 1994
Sales for the twenty-six weeks ended July 29, 1995, increased 3.2% to
$193,397 from 1994. Comparable store sales decreased 0.8%.
The cost of merchandise sold, buying and occupancy expenses, expressed as
a percentage of sales, increased to 68.4% for the twenty-six weeks from
67.5% for the same period one year ago, principally due to higher
markdowns.
Selling, general and administrative expenses, expressed as a percentage
of sales, increased to 33.4% from 33.1% one year ago, reflecting
first-year costs associated with a new store opened in Louisville,
Kentucky, in fall 1994, partially offset by lower payroll and health care
costs in comparable stores.
Interest expense, expressed as a percentage of sales, totalled 2.3% for
the twenty-six weeks versus 2.0% one year ago, reflecting primarily
increased borrowings on term loan and revolving credit facilities.
The estimated effective annual income tax rate was 35% in both years and
includes estimated provisions for Federal, State and local income taxes.
1995 net loss for the twenty-six weeks totalled $5,149,000 or 89 cents
per common share compared to $2,876,000 or 50 cents per share in 1994. As
a percentage of sales, net loss was 2.7% in 1995 as compared to 1.5% in
1994.
Net loss for the twenty-six weeks ended July 30, 1994, included an
after-tax gain on sale of property of $333,000 or 5 cents per share.
- 15 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 29, 1995
c. LIQUIDITY AND CAPITAL RESOURCES
At July 29, 1995, the Company's current ratio was 2.84 to 1 and working
capital totalled $88,022,000, including $7,024,000 of cash and cash
equivalents. At January 28, 1995, the current ratio was 3.01 to 1 and
working capital totalled $99,636,000, including $3,558,000 of cash and
cash equivalents.
The Company utilizes cash flows from operations and short-term borrowings
to fund its seasonal working capital needs. To support its seasonal
requirements, the Company maintains a $35,000,000 unsecured revolving
credit line through Jacobson Credit Corp. This facility provides for
either or both of two interest rate alternatives. At July 29, 1995, there
were no borrowings under this facility. The Company also maintains a
10-year term loan facility which provides for borrowings of up to
$40,000,000 on an unsecured basis at market rates in effect at the time
of such borrowings. At July 29, 1995, the Company had borrowed
$30,000,000 under this facility. These facilities provide sufficient
capacity to fund present and anticipated working capital requirements.
A part of the Company's financial strategy is to own or obtain long-term
leases of its properties. Capital expenditures to modernize and refixture
existing stores and support facilities generally are financed with
internally generated funds. New stores and major expansion projects
generally are financed by first mortgages or comparable financing through
Jacobson Stores Realty Company, or through long-term leases. Future
expansion is expected to be financed in a similar manner.
d. CASH FLOWS
Cash and cash equivalents increased $3,466,000 in the twenty-six weeks
ended July 29, 1995 compared to a decrease of $1,119,000 in the
twenty-six weeks ended July 30, 1994. Cash flows are impacted by
operating, investing and financing activities. In the twenty-six weeks
this year, operating activities provided $14,299,000 of cash, compared to
$9,022,000 of cash provided in 1994, primarily due to planned inventory
reductions in 1995.
Investing activities used cash of $4,151,000 in the twenty-six weeks this
year compared to $9,389,000 in 1994. Investing activities included
capital expenditures for the acquisition and fixturing of new stores, and
expansion, modernization and refixturing of existing stores and support
facilities totalling $3,678,000 in the first six months of 1995 compared
to $7,025,000 last year.
- 16 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 29, 1995
Financing activities used cash of $6,682,000 in the twenty-six weeks this
year compared to $752,000 last year. Year-to-date this year, the Company
paid off $3,500,000 under its revolving credit line and used $1,738,000
to service current maturities of long-term debt. In the same period last
year, the Company obtained $2,737,000 in first mortgage financing and
used $2,045,000 to service current maturities of long-term debt. The
Company paid common stock dividends of $1,444,000 in each twenty-six week
period in 1995 and 1994.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets are adequate to fund
its operations, debt maturities and strategies
for future growth.
e. CORPORATE DEVELOPMENT
The Company's strategy is to achieve consistent long-term growth both by
maintaining and improving market share in its existing communities and by
entering new markets. The Company evaluates potential new locations and
expects to open new stores as desirable opportunities arise and resources
permit. The Company reviews the performance of its less profitable
existing stores from time to time to determine whether it would be in the
Company's best interest to close any of these stores. Store openings and
closings could have a significant impact on the Company's sales, expenses
and capital requirements. In addition, store closings would likely entail
significant one-time charges to effect the closing and to recognize any
impairment of assets.
In March 1994, the Company signed a lease for a 161,000 square foot
building and related parking in the Oxmoor Center, Louisville, Kentucky.
The Company renovated the building and opened the store in November 1994.
In April 1994, the Company purchased the store building in the Grande
Boulevard Mall in Jacksonville, Florida, which it had leased since
opening in 1983. The Company obtained first mortgage financing to fund
the purchase.
In May 1994, the Company acquired ownership of its styling salon
operations, which previously were operated as a leased department. The
Company and the former salon operator terminated their License Agreement
and the Company purchased the salon assets for cash.
In October 1994, the Company signed a lease for a 120,000 square foot
store in a shopping center to be constructed in Leawood, Kansas, a suburb
of Kansas City. The store is targeted to open in the Spring 1996.
In May 1995, the Company signed a lease for an 80,000 square foot store
to be constructed in Mizner Park, a mixed-use retail, residential and
office development in Boca Raton, Florida. The store is targeted to open
in the Fall 1996.
- 17 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended July 29, 1995
ITEM 2. CHANGES IN SECURITIES
Effective May 25, 1995, the Company amended its By-Laws. One amendment
combines in one section the description of the standing committees of the
Board of Directors of the Company. The new section provides that the Company
shall have an Audit Committee, a Compensation Committee and a Directors
Committee, each to be composed of three or more outside directors (except for
the Directors Committee which will also include the Chairman of the Board),
and shall have such responsibilities as are set forth in a charter approved by
the Board of Directors annually.
The other amendments restate the By-Law sections defining the duties of the
Chairman of the Board, the Vice Chairman of the Board and the President.
Generally, the Chairman of the Board will preside at all Board and shareholder
meetings and will be a voting member of all Board committees other than the
Audit and Compensation Committees. He will perform the duties of the President
or Chief Executive Officer in their absence and such other duties as are given
by the Board. Generally, the Vice Chairman of the Board must be a director and
he will perform the duties of, and be subject to the restrictions upon, the
Chairman of the Board in his absence. Generally, the President must carry into
effect the orders and resolutions of the Board and shall perform other duties
necessary or appropriate to his office, subject to the direction of the Board
and the Chief Executive Officer. He will perform the duties of, and be subject
to the restrictions upon, the Chairman of the Board in the absence of the
Chairman of the Board and the Vice Chairman of the Board.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 25, 1995. At
the annual meeting, Kathleen McCree Lewis, Michael T. Monahan, Richard Z.
Rosenfeld and James L. Wolohan were elected as directors of the Company to
serve until the 1998 Annual Meeting of Shareholders or until their successors
are elected and qualified. The following votes were cast for or were withheld
from voting with respect to the election of each of the following persons:
<TABLE>
<CAPTION>
Votes
-----------------------
Authority
Name For Withheld
--------------------- --------- ---------
<S> <C> <C>
Kathleen McCree Lewis 5,371,484 49,605
Michael T. Monahan 5,374,771 46,318
Richard Z. Rosenfeld 5,373,750 47,339
James L. Wolohan 5,372,750 48,339
</TABLE>
There were no abstentions or broker non-votes in connection with the election
of the directors at the Annual Meeting.
- 18 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended July 29, 1995
In addition, at the Annual Meeting, the shareholders voted on the proposal to
appoint Arthur Andersen LLP, independent certified public accountants, as
auditors for the fiscal year ending January 27, 1996. The following table
shows the number of votes for and against the proposal and
the number of votes abstaining with respect to the proposal:
For Against Abstain
--- ------- -------
5,404,431 11,942 4,716
There were no broker non-votes in connection with the appointment of the
Company's auditors at the Annual Meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(ii) By-Laws of Jacobson Stores Inc. (As amended May 25, 1995)
4(a) First Amendment to Term Loan Agreement
11 Computation of Earnings Per Share
15 Letter from Independent Public Accountants
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during its fiscal
quarter ended July 29, 1995.
All exhibits except as set forth above have been omitted as not applicable or
not required.
- 19 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
For Quarter Ended July 29, 1995
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.
JACOBSON STORES INC.
----------------------------------
(Registrant)
Date: September 8, 1995 BY: /s/ Mark K. Rosenfeld
----------------------------------
MARK K. ROSENFELD
Chairman of the Board and Chief
Executive Officer
Date: September 8, 1995 BY: /s/ Paul W. Gilbert
----------------------------------
PAUL W. GILBERT
Vice Chairman of the Board
(Principal Financial Officer)
- 20 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
INDEX OF EXHIBITS
3(ii) By-Laws of Jacobson Stores Inc. (As amended May 25, 1995)
4(a) First Amendment to Term Loan Agreement
11 Computation of Earnings Per Share
15 Letter from Independent Public Accountants
27 Financial Data Schedule
All exhibits except as set forth above have been omitted as not applicable or
not required.
EXHIBIT 3(ii)
JACOBSON STORES INC.
(A Michigan Corporation)
BYLAWS
(As amended May 25, 1995)
TABLE OF CONTENTS
Page
ARTICLE I - OFFICES......................................... 1
ARTICLE II - MEETINGS OF SHAREHOLDERS........................ 1
Section 1. Time and Places of Meetings..................... 1
Section 2. Annual Meetings................................. 1
Section 3. Notice of Annual Meeting........................ 1
Section 4. Shareholder List................................ 1
Section 5. Adjournment of Annual Meeting................... 2
Section 6. Delayed Annual Meeting.......................... 2
Section 7. Special Meetings................................ 2
Section 8. Notice of Special Meetings...................... 2
Section 9. Quorum.......................................... 2
Section 10. Vote Required................................... 3
Section 11. Voting Rights................................... 3
Section 12. Conduct of Meetings............................. 3
Section 13. Inspectors of Election.......................... 3
ARTICLE III - DIRECTORS....................................... 4
Section 1. Number and Term of Directors.................... 4
Section 2. Powers.......................................... 4
Section 3. Vacancies....................................... 4
Section 4. Resignation and Removal......................... 4
Section 5. Nominations..................................... 4
Section 6. Compensation of Directors....................... 4
Section 7. Place of Meetings............................... 4
Section 8. Annual Organizational Meeting................... 5
Section 9. Regular Meetings................................ 5
Section 10. Special Meetings................................ 5
Section 11. Purpose Need Not be Stated...................... 5
Section 12. Quorum.......................................... 5
Section 13. Action Without a Meeting........................ 5
Section 14. Meeting by Telephone or Similar Equipment....... 5
Section 15. Written Notice.................................. 6
Section 16. Waiver of Notice................................ 6
- i -
<PAGE>
ARTICLE IV - COMMITTEES OF DIRECTORS......................... 6
Section 1. Executive Committee............................. 6
Section 2. Audit Committee................................. 7
Section 3. Other Committees................................ 7
Section 4. Membership and Vacancies on Committees.......... 7
Section 5. Reporting on Committee Actions.................. 7
ARTICLE V - OFFICERS........................................ 7
Section 1. Election of Officers............................ 7
Section 2. Chairman of the Board........................... 7
Section 3. Vice Chairman of the Board...................... 7
Section 4. President....................................... 8
Section 5. Chief Executive Officer......................... 8
Section 6. Chief Operating Officer......................... 8
Section 7. Vice Presidents................................. 8
Section 8. Secretary....................................... 8
Section 9. Treasurer....................................... 9
Section 10. Controller...................................... 9
Section 11. Assistant Secretary and Assistant Treasurer..... 9
Section 12. Delegation of Powers............................ 9
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS......................... 10
Section 1. Obligation to Indemnify and Right of
Indemnification.............................. 10
Section 2. Third Party Actions............................. 10
Section 3. Actions by or in the Right of the Corporation... 10
Section 4. Successful Defense.............................. 11
Section 5. Determination of Conduct........................ 11
Section 6. Partial Indemnification......................... 11
Section 7. Payment of Expenses in Advance.................. 11
Section 8. Indemnification Not Exclusive................... 11
Section 9. Contract Right.................................. 12
Section 10. Insurance....................................... 12
Section 11. Continuation.................................... 12
Section 12. Definitions..................................... 12
Section 13. Savings Clause.................................. 12
Section 14. Other Employees and Agents...................... 13
ARTICLE VII - SUBSIDIARIES.................................... 13
Section 1. Subsidiaries.................................... 13
Section 2. Subsidiary Officers not Executive Officers...... 13
- ii -
<PAGE>
ARTICLE VIII - CERTIFICATES OF STOCK........................... 13
Section 1. Form............................................ 13
Section 2. Facsimile Signature............................. 14
Section 3. Lost Certificates............................... 14
Section 4. Transfers of Stock.............................. 14
Section 5. Fixing of Record Date by Board.................. 14
Section 6. Provision for Record Date in the Absence of
Board Action................................. 14
Section 7. Adjournments.................................... 15
Section 8. Registered Shareholders......................... 15
ARTICLE IX - GENERAL PROVISIONS.............................. 15
Section 1. Dividends....................................... 15
Section 2. Checks.......................................... 15
Section 3. Fiscal Year..................................... 15
Section 4. Seal............................................ 15
ARTICLE X - CONTROL SHARE ACQUISITIONS...................... 15
ARTICLE XI - AMENDMENTS...................................... 15
- iii -
<PAGE>
BYLAWS
OF
JACOBSON STORES INC.
(As amended May 25, 1995)
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. TIME 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. 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 2. ANNUAL MEETINGS. Annual meetings of the shareholders shall be
held on the fourth Thursday of May if not a legal holiday, and if a legal
holiday, then on the next secular day following, at such hour as shall be
stated in the notice of the meeting, at which they shall elect by a plurality
vote the successors of the class of directors whose term expires at the
meeting, together with directors to fill vacancies or newly created
directorships, and transact such other business as may properly be brought
before the meeting.
SECTION 3. NOTICE OF ANNUAL MEETING. Written notice of the annual
meeting shall be given personally or by mail to each shareholder entitled to
vote thereat at least ten (10) and not more than sixty (60) days before the
date of the meeting. Attendance of a shareholder at a meeting shall constitute
a waiver of notice, except when the shareholder attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to transaction
of any business because the meeting is not lawfully called or convened.
SECTION 4. 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.
<PAGE>
SECTION 5. ADJOURNMENT OF ANNUAL MEETING. If a quorum be not present at
the annual meeting, the shareholders present in person or by proxy may adjourn
to such future time as shall be agreed upon by them, and notice of such
adjournment shall be mailed, postage prepaid, to each shareholder at least
five (5) days before such adjourned meeting; but if a quorum be present, they
may adjourn from day to day as they see fit and no notice of such adjournment
need be given.
SECTION 6. DELAYED ANNUAL MEETING. If for any reason other than those
enumerated in Section 5 of this Article, the annual meeting of the
shareholders shall not be held on the day hereinbefore designated, such
meeting may be called and held as a special meeting and the same proceedings
may be had thereat as at an annual meeting, PROVIDED, HOWEVER, that the notice
of such meeting shall be mailed to the shareholders at least fifteen (15) days
prior to the date fixed for such delayed annual meeting.
SECTION 7. SPECIAL MEETINGS. Except as otherwise required by law and
subject to the rights of the holders of Preferred Stock, special meetings of
shareholders of the corporation may be called only by (i) the Board of
Directors pursuant to a resolution approved by a majority of the entire Board
of Directors, (ii) any committee of the Board of Directors designated by a
resolution approved by a majority of the entire Board of Directors, (iii) the
Chief Executive Officer of the corporation, or (iv) any other officer or
officers designated by the Board of Directors by resolution approved by a
majority of the entire Board of Directors.
SECTION 8. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of shareholders, stating the time, place and object thereof, shall be
given personally or by mail to each shareholder entitled to vote thereat, at
least ten (10) and not more than sixty (60) days before the date fixed for the
meeting.
SECTION 9. 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 for the transaction of business at all
meetings of the shareholders, except as otherwise provided by statute or by
the Articles of Incorporation. 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.
2
<PAGE>
SECTION 10. VOTE REQUIRED. When an action, other than the election of
directors, is to be taken by a vote of the shareholders, it shall be
authorized by a majority of the votes cast by the holders of shares entitled
to vote thereon, unless a greater vote is required by the Articles of
Incorporation of this corporation or by the laws of the State of Michigan.
Except as otherwise provided by the Articles of Incorporation, directors shall
be elected by a plurality of the votes cast at any election.
SECTION 11. 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. A proxy
shall be valid only with respect to the particular meeting, or any adjournment
or adjournments thereof, to which it specifically pertains.
SECTION 12. CONDUCT OF MEETINGS. Meetings of shareholders generally
shall be governed by the following rules:
(a) The chairman of the meeting shall have absolute authority over
matters of procedure, and there shall be no appeal from the ruling of
the chairman.
(b) If disorder should arise which prevents the continuation of
the legitimate business of the meeting, the chairman may quit the chair
and announce the adjournment of the meeting; and upon his so doing, the
meeting is immediately adjourned.
(c) The chairman may ask or require that anyone not a bona fide
shareholder or proxy leave the meeting.
(d) A resolution or motion shall be considered for vote only if
proposed by a shareholder or a duly authorized proxy and seconded by an
individual who is a shareholder or a duly authorized proxy other than
the individual who proposed the resolution or motion.
SECTION 13. 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 other acts as are proper to conduct the election or vote
with fairness to all shareholders.
3
<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF DIRECTORS. The number of directors which
shall constitute the whole Board shall be not less than three and shall be
determined from time to time by resolution of the Board of Directors as set
forth in the Articles of Incorporation, as the same may be amended. The
directors, other than those who may be elected by the holders of any class or
series of stock having a preference over Common Stock as to dividends 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 and hold office for a term
expiring at the annual meeting of shareholders held in the third year
following the year of their election. Directors need not be shareholders.
SECTION 2. 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 these Bylaws, directed or required to be
exercised or done by the shareholders.
SECTION 3. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled as provided in the Articles of Incorporation.
SECTION 4. RESIGNATION AND REMOVAL. 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. Any or all of the directors may be removed, but only for cause,
as provided in the Articles of Incorporation.
SECTION 5. NOMINATIONS. Nominations of candidates for election as
directors of the corporation at any meeting of shareholders called for
election of directors may be made by the Board of Directors, the Chairman of
the Board, or a nominating committee appointed by the Board of Directors, or
by any shareholder entitled to vote in the election of directors generally as
set forth in the Articles of Incorporation.
SECTION 6. COMPENSATION OF DIRECTORS. Each director who is not a
salaried officer of or legal counsel to the corporation may receive as
compensation for his or her 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. PLACE OF MEETINGS. The Board of Directors of the corporation
may hold meetings, both regular and special, either within or without the
State of Michigan.
4
<PAGE>
SECTION 8. ANNUAL ORGANIZATIONAL MEETING. The annual organizational
meeting of the Board of Directors may be held before or after the annual
meeting of shareholders, for the purpose of electing officers and such other
purposes as may come before the meeting. No notice of such meeting shall be
necessary in order legally to constitute the meeting, provided a quorum of
directors then in office shall be present. If such meeting is not held on the
same date and in the same place as 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
may be held without notice at such time and at such place as shall from time
to time be determined by the Board.
SECTION 10. SPECIAL MEETINGS. Subject to the provisions of Section 15 of
this Article III, special meetings of the Board of Directors may be called by
the Chairman of the Board, President, or Secretary or by any two (2)
Continuing Directors (as defined in the Articles of Incorporation) on two (2)
days' notice to each director.
SECTION 11. PURPOSE NEED NOT BE STATED. Neither the business to be
transacted at nor the purpose of any regular or special meeting of the Board
of Directors need be specified in the notice of such meeting.
SECTION 12. QUORUM. At all meetings of the Board of Directors a majority
of the 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. 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 13. 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.
SECTION 14. 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.
5
<PAGE>
SECTION 15. WRITTEN NOTICE. Notices to directors shall be in writing and
delivered personally or mailed to the directors at their addresses appearing
on the books of the corporation. Notice by mail shall be deemed to be given at
the time when the same shall be mailed. Notice to directors may also be given
by telegram. Notwithstanding the foregoing, notice shall be given by telegram
if the date of the meeting to which such notice relates is within three (3)
days of the date that such notice is given.
SECTION 16. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provision 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. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting has not been lawfully called
or convened.
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may appoint an
Executive Committee composed of three or more Directors. The Executive
Committee shall have and may exercise the following authority of the Board of
Directors:
(a) The Executive Committee shall have the authority of the Board
of Directors, between meetings of the Board, to take such actions and
adopt such resolutions as may be necessary, appropriate or convenient in
the ordinary course of business of the corporation; including (without
limitation) the authorization of leases of real or personal property,
seasonal borrowings, bank depository resolutions, and regular quarterly
dividends on Preferred Stock of the corporation.
(b) Whenever and as often as the Board of Directors designates,
the Executive Committee shall have such further authority as the Board
of Directors designates, subject to prohibitions set forth in the
Business Corporation Act of Michigan; including the full powers and
authorities of the Board of Directors, between meetings of the Board, to
take any and all actions and adopt any and all resolutions that may be
necessary, appropriate or convenient with respect to any matters
designated by the Board of Directors.
The Executive Committee may meet with or without prior notice on call of
any member; provided, that when the Executive Committee consists of three
members, it shall be necessary for all three members to participate and concur
in decisions of the Committee, and when the Committee consists of more than
three members, it shall be necessary for at least three members or a majority
of the members of the Committee (whichever is greater) to participate and
concur in decisions of the Committee. Such participation may be attendance at
a meeting, by telephone, by written consent, or otherwise.
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SECTION 2. AUDIT, COMPENSATION AND DIRECTORS COMMITTEES. The Board of
Directors shall appoint an Audit Committee, a Compensation Committee, and a
Directors Committee, each of which shall be composed of three or more outside
directors, who are independent of the management of this corporation, not
employed by the corporation, and free of any relationship that would interfere
with their exercise of independent judgment as a committee member. Each such
committee shall have such responsibilities as shall be set forth in the
committee's charter, which shall be reviewed and approved annually by the
Board of Directors.
SECTION 3. OTHER COMMITTEES. The Board of Directors may establish and
appoint such other committees of the Board of Directors, consisting of such
directors and having such powers and duties, as the Board determines.
SECTION 4. MEMBERSHIP AND VACANCIES ON COMMITTEES. The Board of
Directors may remove members from or add members to any committee of the
Board, and fill vacancies on such committee.
SECTION 5. REPORTING ON COMMITTEE ACTIONS. All actions taken by any
committee of the Board shall be reported to the Board of Directors at the next
meeting of the Board. However, no delay in reporting any action of any
committee shall affect the validity of such action, or of any actions taken in
the name and on behalf of the corporation pursuant thereto.
ARTICLE V
OFFICERS
SECTION 1. ELECTION OF OFFICERS. All officers of the corporation shall
be elected by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD. 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. He shall not be a member of the Audit
Committee or the Compensation Committee, but shall be a voting member of all
other standing committees of the Board of Directors. In case of the absence or
inability to act of the President or Chief Executive Officer, the Chairman of
the Board shall exercise all of the duties and responsibilities of such
officer until the Board of Directors shall otherwise direct.
SECTION 3. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board,
if any, shall be elected from the membership of the Board of Directors; and in
the absence or disability of the Chairman of the Board, shall have such other
duties and powers as may be imposed or given by the Board of Directors. In
case of the absence or inability to act of the Chairman of the Board, the Vice
Chairman of the Board shall exercise all of the duties and responsibilities of
such officer until the Board of Directors shall otherwise direct. In such
event, he shall not be a member of the Audit Committee or the Compensation
Committee, but shall be a voting member of all other standing committees of
the Board of Directors.
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<PAGE>
SECTION 4. PRESIDENT. The President shall, subject to the direction of
the Board of Directors or the Chief Executive Officer, if any, 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 the office,
subject, however, to the right of the Chief Executive Officer and of the
directors to delegate any specific powers to any other officer or officers of
the corporation. In case of the absence or inability to act of both the
Chairman of the Board and the Vice Chairman of the Board, or the Chief
Executive Officer, the President shall exercise all of the duties and
responsibilities of such officer until the Board of Directors shall otherwise
direct. In the absence or disability of the Chairman and Vice Chairman of the
Board, the President shall not be a member of the Audit Committee or the
Compensation Committee, but shall be a voting member of all other standing
committees of the Board of Directors.
SECTION 5. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, in
addition to the duties as Chairman or Vice 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 Executive Officer shall have the power, subject
to the control of the Board of Directors, to appoint, suspend, or discharge
and to prescribe the duties and to fix the compensation of such agents and
employees of the corporation, other than the officers appointed by the Board,
as the Chief Executive officer may deem necessary.
SECTION 6. 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 7. VICE PRESIDENTS. Any Executive Vice President, any Senior
Vice President, and each Vice President shall have such authority and
responsibilities as designated by the Board of Directors, the Executive
Committee, the Chairman or Vice Chairman of the Board, or the President.
SECTION 8. 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 books of the corporation true minutes of the proceedings
of all such meetings; shall keep the seal of the corporation and shall have
authority to affix the same to all instruments where its use is required;
shall give all notices required by statute, bylaw or resolution; and shall
perform such other duties as may be delegated by the Board of Directors, the
Executive Committee, the Chairman or Vice Chairman of the Board, or the
President.
8
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SECTION 9. 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; shall deposit all
monies, securities and other valuable effects in the name of the corporation
in such depositaries as may be designated for that purpose by the Board of
Directors; shall disburse the funds of the corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render to
the Board of Directors, Chairman and Vice Chairman of the Board, and
President, at the regular meetings of the Board, and whenever requested by
them, an account of all transactions as Treasurer and of the financial
condition of the corporation; shall deliver to the Chairman and Vice Chairman
of the Board and the President, and shall keep in force, a bond in form,
amount and with a surety or sureties satisfactory to the Board, conditioned
for faithful performance of the duties of office, by the Treasurer and any
Assistant Treasurers and for restoration to the corporation in case of death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and property of whatever kind belonging to the corporation;
and shall in addition perform such other duties as may be delegated by the
Board of Directors, the Executive Committee, the Chairman or Vice Chairman of
the Board, or the President.
SECTION 10. CONTROLLER. The Controller shall be responsible for
establishment and maintenance of internal accounting and other control systems
for this corporation and its wholly-owned subsidiaries; liaison with
independent auditors; and such other duties as may be designated by the Board
of Directors, the Executive Committee, the Chairman or Vice Chairman of the
Board, or the President.
SECTION 11. ASSISTANT SECRETARY AND ASSISTANT TREASURER. Any Assistant
Secretary, in the absence of the Secretary, shall perform the duties and
exercise the powers of the Secretary. Any Assistant Treasurer, in the absence
of or disability of the Treasurer, shall perform the duties and exercise the
power of the Treasurer. If there is more than one Assistant Secretary and/or
Assistant Treasurer, their respective duties and responsibilities shall be as
designated by the Board of Directors, the Executive Committee, the Chairman or
Vice Chairman of the Board, or the President.
SECTION 12. DELEGATION OF POWERS. For any reason deemed sufficient by
the Board of Directors, whether occasioned by absence or otherwise, the Board
may delegate all or any of the powers and duties of any officer to any other
officer or Director, but no officer or Director shall execute, acknowledge or
verify any instrument in more than one capacity.
9
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ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
SECTION 1. OBLIGATION TO INDEMNIFY AND RIGHT TO INDEMNIFICATION. This
corporation shall indemnify each of its directors and officers, and each
person who hereafter becomes a director and/or officer of the corporation, and
each such person shall be entitled to such indemnification without further
action on his or her part, against all expense, liability and loss, arising in
any manner by reason of the fact that such person is or was a director and/or
officer of the corporation, or by reason of any acts of such person, or
omissions of such person to act, as a director and/or officer of the
corporation, to the fullest extent permitted by any present or future
provision of law, including without limitation the indemnification and
advancement of expenses provided for in Section 2-12, inclusive, of this
Article VI.
SECTION 2. THIRD PARTY ACTIONS. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to a
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 he or she is or was a director and/or officer 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 foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, whether
for profit or not, against expenses, including attorneys' fees, judgments,
penalties, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit, or proceeding, if
the person acted in good faith and in a manner he or she 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, if the
person had no reasonable cause to believe his or her conduct was unlawful. The
termination of an 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 which he or she reasonably believed to be in or not opposed to the
best interest 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 3. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
corporation shall indemnify any person who was or is a party to or is
threatened to be made a party to a threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he or she is or was a director and/or officer 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 foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
whether for profit or not, against expenses, including actual and reasonable
attorneys' fees, and amounts paid in settlement 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 and its shareholders. However, indemnification
shall not be made for a claim, issue, or matter in which the person has been
found liable to the corporation unless and only to the extent that the court
in which the action or suit was brought has determined upon application
that, despite the adjudication of liability but in view of all circumstances
of the case, the person is fairly and reasonably entitled to indemnification
for the expenses which the court considers proper.
10
<PAGE>
SECTION 4. SUCCESSFUL DEFENSE. To the extent that a director or officer
of the corporation has been successful on the merits or otherwise in defense
of an action, suit, or proceeding referred to in Section 2 or 3 of this
Article VI, or in defense of a claim, issue, or matter in the action, suit, or
proceeding, he or she shall be indemnified against expenses, including actual
and reasonable attorneys' fees, incurred by him or her in connection with the
action, suit, or proceeding brought to enforce the mandatory indemnification
provided for in this section.
SECTION 5. DETERMINATION OF CONDUCT. Subject to any rights under any
contract between the corporation and any director or officer, any
indemnification under Section 2 or 3 of this Article VI, 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 or officer is
proper in the circumstances because he or she has met the applicable standard
of conduct set forth in Sections 2 and 3. This determination shall be made in
any of the following ways:
(a) By a majority vote of a quorum of the Board consisting of
directors who were not parties to the action, suit or proceeding.
(b) If the quorum described in subdivision (a) is not obtainable,
then by a majority vote of a committee of directors who are not parties
to the action. The committee shall consist of not less than two (2)
disinterested directors.
(c) By independent legal counsel in a written opinion.
(d) By the shareholders.
SECTION 6. PARTIAL INDEMNIFICATION. If a person is entitled to
indemnification under Section 2 or 3 of this Article VI for a portion of the
expenses, including attorneys' fees, judgment, penalties, fines, and amounts
paid in settlement, but not for the total amount thereof, the corporation
shall 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 7. PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred in
defending a civil or criminal action, suit, or proceeding described in Section
2 of 3 of this Article VI shall be paid by the corporation in advance of the
final disposition of the action, suit, or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the expenses
if it is ultimately determined that the person is not entitled to be
indemnified by the corporation. The undertaking shall be by unlimited general
obligation of the person on whose behalf advances are made but need not be
secured.
SECTION 8. INDEMNIFICATION NOT EXCLUSIVE. The indemnification and
advancement of expenses provided for in Sections 2-7, inclusive, of this
Article VI are not exclusive of other rights to which a person seeking
indemnification and advancement of expenses may be entitled under the Restated
Articles of Incorporation, Bylaws, or a contractual agreement. However, the
total amount of expenses advanced and indemnified from all sources combined
shall not exceed the amount of actual expenses incurred by the person seeking
indemnification or advancement of expenses.
11
<PAGE>
SECTION 9. CONTRACT RIGHT. The right to indemnification conferred in
this Article VI shall be a contract right between the corporation and each
director and officer of the corporation, or individual who is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, who serves in such capacity at any time while this Article VI is
in effect. No amendment or repeal of all or any part of this Article VI, nor
the adoption of any provision inconsistent with this Article VI, shall apply
to any acts or omissions occurring prior to such amendment or repeal, or give
rise to or increase any liability of any director or officer with respect to
any acts or omissions occurring prior to such amendment or repeal.
SECTION 10. INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any directors, officers, employees or agents of
the corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not
the corporation would have the power to indemnify such persons against such
expense, liability or loss under any applicable provision of law.
SECTION 11. CONTINUATION. The indemnification and advancement of
expenses provided for in this Article VI shall continue as to a person who
ceases to be a director or officer, and shall inure to the benefit of the
heirs, executors, and administrators of the person.
SECTION 12. DEFINITIONS. For purposes of this Article VI:
(a) 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,
officer, employee or agent of the constituent corporation or is or was
serving at the request of the constituent corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, or other
enterprise whether for profit or not shall stand in the same position
under the provisions of this Article VI with respect to the resulting or
surviving corporation as the person would if he or she had served the
resulting or surviving corporation in the same capacity.
(b) References to "other enterprises" include employee benefit
plans; references to "fines" include excise taxes assessed with respect
to any employee benefit plan; and references to "serving at the request
of the corporation" include any service which imposes duties on, or
involves services by, such director or officer with respect to any
employee benefit plan, its participants or beneficiaries; and a person
who acted in good faith and in a manner he or she reasonably believed to
be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in this Article
VI.
SECTION 13. SAVINGS CLAUSE. If any provision of this Article VI shall be
invalidated on any ground by any court, the corporation shall nevertheless
indemnify each of its directors and offices against 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 third party actions and actions by or in the right
of the corporation, to the fullest extent permitted by any applicable law.
12
<PAGE>
SECTION 14. OTHER EMPLOYEES AND AGENTS. The corporation may, pursuant to
authorization of the Board of Directors, provide indemnification and
advancement of expenses to employees and agents of the corporation other than
directors and officers, to the same extent as provided for directors and
officers, or otherwise as the Board of Directors determines.
ARTICLE VII
SUBSIDIARIES
SECTION 1. SUBSIDIARIES. The Board of Directors, the Chairman of the
Board, President, or any other executive officer designated by the Board of
Directors may vote the shares of stock owned by this corporation in any
subsidiary, whether wholly or partly owned by this corporation, in such manner
as they may deem in the best interests of this 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 Chairman of the Board,
President, or any other 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 this
corporation. The Board of Directors, the Chairman of the Board, President, or
any other executive officer designated by the Board of Directors may instruct
the directors of any such subsidiary corporation as to the manner in which
they 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
this 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 this corporation, nor shall
any such officer of a subsidiary corporation, unless he or she shall also be a
director or executive officer of this corporation, be entitled to have access
to any files, records or other information relating or pertaining to this
corporation, its business and finances, or to attend or receive the minutes of
any meetings of the Board of Directors or any committee of this corporation,
except as and to the extent expressly authorized and permitted by the Board of
Directors, the Chairman of the Board, or President of this corporation.
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 of stock in the corporation owned
by such person.
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SECTION 2. FACSIMILE SIGNATURE. When 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/or by 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 such person 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
the owner's legal representative, to give the corporation a 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 payment of any
dividend or the distribution or allotment of any rights or evidences of
interest 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 be at least ten (10) and not more than sixty (60) days before
the date of any such meeting, and not more than sixty (60) days before 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
interest 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 date 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.
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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.
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 the laws of
Michigan.
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. 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 3. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
SECTION 4. SEAL. The corporate seal shall have inscribed thereon the
name of the corporation. The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE X
CONTROL SHARE ACQUISITIONS
The provisions of Chapter 7B of the Michigan Business Corporation Act
(Sections 450.790 - 450.799, inclusive, Michigan Compiled Laws, being Sections
21.200(790) - 21.200(799), inclusive, Michigan Statutes Annotated), as the
same exist or may hereafter be amended, shall not apply to control share
acquisitions of shares of stock of this corporation.
ARTICLE XI
AMENDMENTS
These Bylaws may be altered or repealed at any regular meeting of the
shareholders or of the Board of Directors or at any special meeting of the
shareholders or of the Board of Directors.
15
EXHIBIT 4(a)
FIRST AMENDMENT TO
TERM LOAN AGREEMENT
This First Amendment to Term Loan Agreement (the "First Amendment") made
as of the 25th day of May, 1995 ("Amendment Effective Date"), among Comerica
Bank and NBD Bank (formerly known as NBD Bank, N.A.) (individually, "Bank" and
collectively, "Banks"), Comerica Bank, as Agent for the Banks (in such
capacity "Agent") and Jacobson Stores Inc., a Michigan corporation
("Company").
WITNESSETH:
WHEREAS, the Banks, the Agent and the Company have executed and
delivered that certain Term Loan Agreement dated as of November 20, 1992 (the
"Original Agreement");
WHEREAS, the Company, the Agent and the Banks desire to amend the
Original Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises, the Banks, the Agent
and the Company hereby agree as follows:
1. Section 1.15 of the Original Agreement is amended to read in its
entirety as follows:
"1.15 'Consolidated Cash Flow Ratio' shall mean, as of any
date of determination, a ratio, the numerator of which is Consolidated
Cash Flow and the denominator of which is interest expense and rental
expense for Company and its Consolidated Subsidiaries for the four
fiscal quarters preceding such date of determination plus the current
portion of all of Company's and its Consolidated Subsidiaries' long-term
indebtedness (excluding the Excluded Term Debt Payments and including
capitalized lease obligations) as of such date of determination all as
determined in accordance with generally accepted accounting principles
consistently applied; provided, however, in calculating rental expense
for purposes of the denominator of this ratio, rental expense shall be
determined on a cash basis."
2. Section 8.14 of the Original Agreement is amended to read in its
entirety as follows:
"8.14 Consolidated Cash Flow Ratio. Maintain a Consolidated
Cash Flow Ratio of not less than 1.0 to 1.0 through January 27, 1996 and
1.40 to 1.0 thereafter."
3. Company hereby represents and warrants that, after giving effect
to the amendments contained herein, (a) execution, delivery and
performance of the Original Agreement, as amended by this First Amendment,
are within Company's corporate powers, have been duly authorized, are not
in contravention of law or the terms of Company's Articles of
Incorporation or Bylaws, and do not require the consent or approval of any
governmental body, agency or authority; and the Original Agreement, as
amended by this First Amendment, will be valid and binding obligations
<PAGE>
of Company in accordance with its terms; (b) the continuing representations
and warranties of Company set forth in Sections 7.1 through 7.14 of the
Original Agreement are true and correct on and as of the date hereof with the
same force and effect as made on and as of the date hereof; and (c) no Event
of Default, or condition or event which, with the giving of notice or the
running of time, or both, would constitute an Event of Default under the
Original Agreement, has occurred and is continuing as of the date hereof.
4. This First Amendment shall be effective upon execution of this First
Amendment by Company, Agent and Banks.
5. All references to the term "Agreement" and to the terms "hereof",
"hereunder" and similar referential terms in the Original Agreement shall be
deemed to mean or refer to the Original Agreement as amended by this First
Amendment.
6. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Original Agreement.
7. This First Amendment may be executed in counterparts, in accordance
with Section 12.10 of the Original Agreement.
IN WITNESS WHEREOF, the Banks, the Agent and the Company have caused
this First Amendment to be executed by their respective, duly authorized
officers, all as of the date set forth above.
COMPANY:
JACOBSON STORES INC.
By: /s/ Kevin C. Binkley
-----------------------------------
Title: Vice President-Treasurer
--------------------------------
AGENT:
COMERICA BANK
By: /s/ Charles L. Weddell
-----------------------------------
Title: Vice President
--------------------------------
- 2 -
<PAGE>
BANKS:
COMERICA BANK
By: /s/ Charles L. Weddell
-----------------------------------
Title: Vice President
--------------------------------
NBD BANK (formerly known as NBD Bank, N.A.)
By: /s/ Thomas A. Gamm
-----------------------------------
Title: Second Vice President
--------------------------------
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EXHIBIT 11
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands)
(unaudited)
Primary earnings per common share, as set forth in the consolidated statements
of earnings, are computed by dividing net earnings by the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. Fully diluted earnings per share are computed based on the
additional assumption that the Company's 6-3/4% Convertible Subordinated
Debentures due 2011 were converted to common stock at the date of issuance
with a corresponding increase in net earnings to reflect reduction in related
interest expense, net of income taxes, except if anti-dilutive.
These computations are set forth below (in thousands except per share data):
<TABLE>
<CAPTION>
Thirteen Twenty-Six
Weeks Ended Weeks Ended
------------------- -------------------
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE:
Weighted average number of shares
of common stock and common stock
equivalents outstanding -
Primary 5,783 5,779 5,783 5,779
Fully diluted 6,840 6,835 6,839 6,835
======= ======= ======= =======
NET EARNINGS $(5,321) $(3,993) $(5,149) $(2,876)
======= ======= ======= =======
NET EARNINGS, adjusted to reflect
reduction in interest expense
attributable to convertible
debentures, net of income tax $(4,937) $(3,609) $(4,381) $(2,108)
======= ======= ======= =======
NET EARNINGS PER SHARE:
Primary and Fully diluted $ (0.92) $ (0.69) $ (0.89) $ (0.50)
======= ======= ======= =======
</TABLE>
EXHIBIT 15
ARTHUR ANDERSEN LLP
To Jacobson Stores Inc.:
We are aware that Jacobson Stores Inc. has incorporated by reference in
its Form S-8 Registration Statements No. 2-88295 and No. 033-53469 and
Form S-2 Registration Statement No. 33-10532 its Form 10-Q for the quarter
ended July 29, 1995, which includes our report dated August 10, 1995,
covering the unaudited interim condensed consolidated financial
information contained therein. Pursuant to Regulation C of the Securities
Act of 1933, that report is not considered a part of the registration
statement prepared or certified by our firm or a report prepared or
certified by our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
Detroit, Michigan
September 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
AS OF, AND FOR THE TWENTY-SIX WEEK PERIOD ENDED, JULY 29, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND
ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-END> JUL-29-1995
<PERIOD-TYPE> 6-MOS
<CASH> 7,024
<SECURITIES> 0
<RECEIVABLES> 37,213
<ALLOWANCES> 700
<INVENTORY> 84,842
<CURRENT-ASSETS> 135,888
<PP&E> 170,847
<DEPRECIATION> 72,009
<TOTAL-ASSETS> 254,311
<CURRENT-LIABILITIES> 47,866
<BONDS> 114,023
<COMMON> 5,966
0
0
<OTHER-SE> 76,153
<TOTAL-LIABILITY-AND-EQUITY> 254,311
<SALES> 193,397
<TOTAL-REVENUES> 193,397
<CGS> 132,264
<TOTAL-COSTS> 132,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,390
<INCOME-PRETAX> (7,922)
<INCOME-TAX> (2,773)
<INCOME-CONTINUING> (5,149)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,149)
<EPS-PRIMARY> (.89)
<EPS-DILUTED> (.89)
</TABLE>
