<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 1997
================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-3998
LITTON INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-1775499
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
21240 BURBANK BOULEVARD, WOODLAND HILLS, CALIFORNIA 91367-6675
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 598-5000
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 [ ]
On November 28, 1997 there were 46,040,503 shares of Common Stock
outstanding.
Page 1 of 10
Exhibit Index appears on Page 8.
================================================================================
<PAGE> 2
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
INDEX
REPORT ON FORM 10-Q
FOR QUARTER ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations
Three months ended October 31, 1997 and 1996........................... 3
Consolidated Balance Sheets
October 31, 1997 and July 31, 1997..................................... 4
Consolidated Statements of Cash Flows
Three months ended October 31, 1997 and 1996........................... 5
Notes to Consolidated Financial Statements............................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................... 8
Signature............................................................................ 10
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Sales and Service Revenues.......................................... $1,039,035 $1,048,877
---------- ----------
Costs and Expenses
Cost of sales..................................................... 800,017 824,787
Selling, general and administrative............................... 121,991 112,276
Depreciation and amortization..................................... 34,388 34,165
Interest -- net................................................... 10,231 11,305
---------- ----------
Total..................................................... 966,627 982,533
---------- ----------
Earnings before Taxes on Income..................................... 72,408 66,344
Taxes on Income..................................................... (28,963) (26,538)
---------- ----------
Net Earnings.............................................. $ 43,445 $ 39,806
========== ==========
Primary Earnings per Share.......................................... $ 0.92 $ 0.83
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1997 1997
---------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash and marketable securities.................................. $ 56,525 $ 19,894
Accounts receivable, net........................................ 706,962 666,867
Inventories less progress billings.............................. 598,747 629,206
Deferred tax assets............................................. 408,795 414,177
Prepaid expenses................................................ 30,390 30,272
---------- ----------
Total Current Assets.................................... 1,801,419 1,760,416
---------- ----------
Property, Plant and Equipment -- at cost.......................... 1,567,511 1,559,636
Less accumulated depreciation................................... (926,668) (905,091)
---------- ----------
Property, Plant and Equipment, Net................................ 640,843 654,545
---------- ----------
Goodwill and Other Intangibles, Net............................... 727,374 737,554
---------- ----------
Other Assets and Long-term Investments............................ 384,712 367,171
---------- ----------
Total Assets............................................ $3,554,348 $3,519,686
========== ==========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Accounts payable................................................ $ 816,373 $ 869,880
Payrolls and related expenses................................... 229,696 211,686
Taxes on income................................................. 101,755 94,102
Notes payable and current portion of long-term obligations...... 160,029 147,182
Contract liabilities and customer deposits...................... 330,598 316,406
---------- ----------
Total Current Liabilities............................... 1,638,451 1,639,256
---------- ----------
Long-term Obligations............................................. 494,133 507,344
---------- ----------
Postretirement Benefit Obligations Other than Pensions............ 205,513 205,331
---------- ----------
Deferred Tax and Other Long-term Liabilities...................... 131,032 128,736
---------- ----------
Shareholders' Investment
Capital stock
Voting preferred stock -- Series B........................... 2,053 2,053
Common stock................................................. 46,075 45,996
Additional paid-in capital...................................... 305,522 301,839
Retained earnings............................................... 770,919 730,019
Cumulative currency translation adjustment...................... (39,350) (40,888)
---------- ----------
Total Shareholders' Investment.......................... 1,085,219 1,039,019
---------- ----------
Total Liabilities and Shareholders' Investment.......... $3,554,348 $3,519,686
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Cash and cash equivalents at beginning of period......................... $ 4,144 $ 77,105
-------- --------
Cash was provided by (used for) operating activities
Net earnings........................................................... 43,445 39,806
Adjustments to reconcile net earnings to net cash provided by operating
activities
Depreciation and amortization....................................... 34,388 34,165
Changes in assets and liabilities
Accounts receivable............................................... (37,949) 12,487
Inventory......................................................... 30,003 (7,518)
Prepaid expenses.................................................. (100) (6,461)
Accounts payable.................................................. (56,105) (30,796)
Payrolls and related expenses..................................... 17,263 5,703
Deferred and current taxes on income.............................. 14,645 20,493
Contract liabilities and customer deposits........................ 14,192 35,713
Other operating activities.......................................... (3,382) (9,782)
-------- --------
Cash provided by operating activities.................................... 56,400 93,810
-------- --------
Investing activities
Purchase of capital assets............................................. (19,360) (21,909)
Other investing activities............................................. 3,291 13,507
-------- --------
Cash used for investing activities....................................... (16,069) (8,402)
-------- --------
Financing activities
Change in short-term obligations, net.................................. (2,553) (65,024)
Other financing activities............................................. (1,147) (5,150)
-------- --------
Cash used for financing activities....................................... (3,700) (70,174)
-------- --------
Resulting in increase in cash and cash equivalents....................... 36,631 15,234
-------- --------
Cash and cash equivalents at end of period............................... $ 40,775 $ 92,339
======== ========
Supplemental disclosure of cash flow information
Interest paid.......................................................... $ 17,569 $ 18,754
Net income taxes paid.................................................. $ 8,108 $ 8,206
Reconciliation to Consolidated Balance Sheet at October 31, 1997:
Cash and cash equivalents.............................................. $ 40,775
Marketable securities.................................................. 15,750
--------
Total cash and marketable securities........................... $ 56,525
========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1997
1. The amounts included in this report are unaudited; however, in the opinion of
management, all adjustments necessary for a fair statement of results for the
stated periods have been included. These adjustments are of a normal
recurring nature. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. Certain
reclassifications of prior period information were made for comparative
purposes. These interim consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report to Shareholders for the fiscal year ended July 31,
1997. The results of operations for the three months ended October 31, 1997
are not necessarily indicative of operating results for the entire year.
2. The components of inventory balances are summarized below:
<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1997 1997
----------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Raw materials and work in progress........................ $ 987,741 $ 987,717
Finished goods............................................ 47,471 51,196
---------- ----------
1,035,212 1,038,913
Less progress billings.................................... (436,465) (409,707)
---------- ----------
Net inventories........................................... $ 598,747 $ 629,206
========== ==========
</TABLE>
3. Interest (expense) income is shown below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
---------------------
1997 1996
-------- --------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Interest expense............................................. $(12,018) $(13,636)
Interest income.............................................. 1,787 2,331
-------- --------
Net interest expense......................................... $(10,231) $(11,305)
======== ========
</TABLE>
4. On December 8, 1997, the Company announced that it has signed a definitive
purchase agreement to acquire all of the issued and outstanding shares of
capital stock of TASC, Inc. ("TASC") from Primark Corporation for
approximately $432 million in cash. TASC provides information technology and
services to government and commercial customers and, along with PRC Inc.,
will help establish Litton as a major provider of information technology and
system-based solutions for defense and non-defense related applications. This
transaction, expected to be completed in April 1998, is subject to review by
government regulatory agencies and approval by shareholders of Primark
Corporation.
6
<PAGE> 7
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company reported sales of $1.04 billion for the first quarter ended
October 31, 1997, substantially comparable with the $1.05 billion for the first
quarter of fiscal year 1997. Operating profit for the first three months of
fiscal year 1998 increased to $96.0 million from the $91.6 million for the prior
year's first quarter. The higher operating profit and a reduction in interest
expense led to a 9% improvement in net earnings to $43.4 million, compared with
$39.8 million for the first three months of the prior year. Earnings per share
rose 11% to $.92 for the current quarter from $.83 for the first quarter of the
prior year.
Effective August 1, 1997, the Company's Information Systems businesses are
reported as a separate business segment. Accordingly, the segment information
for the first quarter of fiscal year 1997 as discussed below has been restated
to reflect this change.
Sales and operating profit for the Advanced Electronics segment were $413.3
million and $27.1 million, an increase from $370.7 million and $22.5 million,
respectively, for the first quarter of the prior year. These improvements
reflected increased volume and production rate on various programs in the
integrated avionics systems sector, as well as improved operating efficiency.
Backlog for the Advanced Electronics segment was $1.52 billion at the end of the
current quarter, compared with $1.61 billion at July 31, 1997. The Information
Systems segment reported sales of $252.9 million and operating profit of $17.4
million for the first quarter of fiscal year 1998 compared with $260.5 million
and $17.4 million, respectively, for the prior year's first quarter. The slight
decrease in sales was attributable to a slowdown in sales for the PRC Inc.
subsidiary's ("PRC") Super-Minicomputer program, which is an indefinite
delivery/indefinite quantity contract with various U.S. government agencies to
provide computer systems integration and networking solutions. During the first
quarter, PRC received important awards including a contract to provide
telecommunication and engineering segment services to the U.S. Navy, a
fixed-price, indefinite delivery/indefinite quantity contract to provide segment
hardware and software to the Military Health Service System within the
Department of Defense and an indefinite delivery/indefinite quantity contract to
provide software engineering and technical support for the Defense Logistics
Agency. These along with other awards increased PRC's unfunded backlog to $1.9
billion in potential contract values at October 31, 1997 from $1.5 billion at
July 31, 1997. Funded backlog for the Information Systems segment at October 31,
1997 was $502.7 million, compared with $518.1 million at July 31, 1997. As
discussed in Note 4 of Notes to Consolidated Financial Statements, subsequent to
the end of the first quarter, the Company announced that it has signed a
definitive purchase agreement to acquire TASC from Primark Corporation for
approximately $432 million in cash. As a provider of information technology and
services to both government and commercial customers, TASC will expand the
existing capabilities and business base of the Company's Information Systems
segment. This transaction, which is subject to review by government regulatory
agencies and approval by shareholders of Primark Corporation, is expected to be
completed in April 1998. The Marine Engineering and Production segment reported
sales of $238.6 million and operating profit of $30.1 million for the first
quarter of fiscal year 1998, compared with $299.2 million and $35.4 million,
respectively, for the prior year's first quarter. Sales at the Ingalls
Shipbuilding division were impacted by lower construction activity on contracts
nearing completion and contracts completed during fiscal year 1997, partially
offset by contracts moving into more advanced stages of production and the
startup on new contracts. Operating margin improved as a result of increased
earnings rates on programs maturing in the production process and continued cost
reduction efforts. Current construction activities include five Aegis
destroyers, two LHD class amphibious assault ships and six deepwater supply
vessels under a contract with a supplier of marine services to build 14 such
deepwater supply vessels. Backlog for this segment at October 31, 1997 was $3.09
billion, compared with $3.23 billion at July 31, 1997. Sales and operating
profit for the Electronic Components and Materials segment continued to benefit
from strong demand from the telecommunications industry for its commercial
electronic products. Operating margin for this segment also reflected continued
cost reduction efforts and process improvements.
Net interest expense was $10.2 million in the first quarter of the current
fiscal year, a decrease over the $11.3 million for the prior year's first
quarter. The decrease was due to the net reduction in debt by more than $100
million during fiscal year 1997.
7
<PAGE> 8
Cash and marketable securities amounted to $56.5 million at October 31,
1997, compared with $19.9 million at fiscal year-end 1997. During the current
quarter, cash flow from operations provided the funds to meet operating needs,
make capital expenditures, and repurchase 57,500 shares of Common stock, leaving
approximately 2.9 million shares authorized to be repurchased. Management
believes that cash flow from operations, along with available credit
commitments, will be sufficient to meet operating requirements. In connection
with the previously mentioned acquisition of TASC, the Company expects to
generate the funds from available credit commitments, which amounted to $300
million at October 31, 1997, and from short to medium-term debt offerings
available under previously filed Form S-3 Registration Statements.
Effective in the first quarter of fiscal year 1998, the Company adopted
Statement of Position 96-1 ("SOP 96-1"), "Environmental Remediation
Liabilities", issued by the American Institute of Certified Public Accountants.
The adoption of SOP 96-1 did not have an impact on the Company's results of
operations or financial position.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 3.1: Amended and Restated By-laws of the Company as of October
16, 1997.
Exhibit 3.2: Amendment to Restated and Amended By-laws of the Company, as
adopted by the Board of Directors on December 4, 1997.
Exhibit 10: Litton Industries, Inc. Group Bonus Plan, as adopted by the
Company's Compensation and Selection Committee of the Board
of Directors on October 15, 1997.
Exhibit 11: Statement of Computation of Earnings per Share included
herein on page 9.
Exhibit 27: Financial Data Schedule.
(b) Reports on Form 8-K: There were no reports on Form 8-K filed during the
first quarter ended October 31, 1997.
8
<PAGE> 9
EXHIBIT 11
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
PRIMARY EARNINGS PER SHARE AND FULLY DILUTED EARNINGS PER SHARE
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings available for common shares and common stock equivalent
shares deemed to have a dilutive effect:
Earnings....................................................... $ 43,445 $ 39,806
Provision for cash dividends on preferred stock (Series B)..... (205) (205)
----------- -----------
Net earnings available for common shares and common stock
equivalent shares deemed to have a dilutive effect............... $ 43,240 $ 39,601
=========== ===========
Primary earnings per share........................................ $ 0.92 $ 0.83
=========== ===========
FULLY DILUTED EARNINGS PER SHARE
Net earnings available for common shares and common stock
equivalent shares deemed to have a dilutive effect............... $ 43,240 $ 39,601
=========== ===========
Fully diluted earnings per share.................................. $ 0.92 $ 0.83
=========== ===========
Shares used in primary earnings per share computation
Weighted average common shares outstanding (net of treasury
shares).......................................................... 46,025,779 46,560,603
Common stock equivalents.......................................... 1,176,796 1,156,559
----------- -----------
Total common shares and common stock equivalent shares deemed to
have a dilutive effect........................................... 47,202,575 47,717,162
=========== ===========
Shares used in fully diluted earnings per share computation
Total common shares and common stock equivalent shares deemed to
have a dilutive effect........................................... 47,202,575 47,717,162
=========== ===========
</TABLE>
9
<PAGE> 10
SIGNATURE
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.
LITTON INDUSTRIES, INC.
(Registrant)
By /s/ Carol A. Wiesner
--------------------------------------
Carol A. Wiesner
Vice President and Controller
(Chief Accounting Officer)
December 12, 1997
10
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
BY-LAWS
OF
LITTON INDUSTRIES, INC.
(A DELAWARE CORPORATION)
as of
October 16, 1997
<PAGE> 2
BY-LAWS
OF
LITTON INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. OFFICES................................................. 1
Section 1. Registered Office....................................... 1
Section 2. Other Offices........................................... 1
ARTICLE II. MEETINGS OF STOCKHOLDERS................................ 1
Section 1. Place and Date of Meetings.............................. 1
Section 2. Purpose of Annual Meeting............................... 2
Section 3. Notice of Meetings...................................... 2
Section 4. Voting.................................................. 2
Section 5. Quorum and Adjournment.................................. 3
Section 6. Stockholders' List...................................... 3
Section 7. Special Meetings........................................ 4
ARTICLE III. DIRECTORS............................................... 4
Section 1. Powers.................................................. 4
Section 2. Number and Term......................................... 4
Section 3. Meetings................................................ 5
Section 4. Chairman of the Board of Directors...................... 5
Section 5. Executive Committee..................................... 6
Section 6. Other Committees........................................ 7
Section 7. Action by Telephonic Conference......................... 8
Section 8. Action by Consent without Meeting....................... 8
Section 9. Quorum.................................................. 9
Section 10. Resignation............................................ 9
Section 11. Vacancies.............................................. 9
Section 12. Removal................................................ 10
Section 13. Compensation........................................... 10
Section 14. Advisory Directors..................................... 10
</TABLE>
<PAGE> 3
BY-LAWS
OF
LITTON INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV. OFFICERS................................................ 11
Section 1. Officers................................................ 11
Section 2. Staff Vice Presidents................................... 12
Section 3. Other Officers and Agents............................... 12
Section 4. Duties.................................................. 13
ARTICLE V. CAPITAL STOCK........................................... 16
Section 1. Shares.................................................. 16
Section 2. Certificates of Stock................................... 16
Section 3. Lost, Stolen, Destroyed Certificates.................... 16
Section 4. Transfer of Shares...................................... 17
ARTICLE VI. MISCELLANEOUS........................................... 17
Section 1. Seal.................................................... 17
Section 2. Fiscal Year............................................. 17
Section 3. Signatories............................................. 17
Section 4. Notice and Waiver of Notice............................. 18
Section 5. Dividends............................................... 18
Section 6. Record Date............................................. 19
Section 7. Amendments.............................................. 19
</TABLE>
<PAGE> 4
BY-LAWS
OF
LITTON INDUSTRIES, INC.
---------------------------
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office shall be established
and maintained at the office of CSC The United States Corporation Company, in
the City of Dover, in the County of Kent, in the State of Delaware, and said
corporation shall be the resident agent of this Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices, either
within or outside of the State of Delaware, at such place or places as the Board
of Directors may from time to time appoint or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND DATE OF MEETINGS -- The annual meeting of
stockholders, and all other meetings of the stockholders, shall be held at such
place and on such date as shall be fixed by resolution of the Board of Directors
and stated in the
1
<PAGE> 5
notice of the meeting, provided that an annual meeting shall be held within
thirteen months after the Corporation's last annual meeting.
SECTION 2. PURPOSE OF ANNUAL MEETING -- At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted, provided that no business other than that stated in the notice of
meeting shall be transacted at any meeting without unanimous consent of all the
stockholders entitled to vote at the meeting.
SECTION 3. NOTICE OF MEETINGS -- Written or printed notice, stating the
place and time of the meeting and the general nature of the business to be
considered, shall be given by the Secretary to each stockholder entitled to vote
at the last known post office address. Notice shall be given at least ten days
before the meeting in the case of an annual meeting or a special meeting called
upon request by the directors, and at least forty-five days before the meeting
in the case of a special meeting called upon request of the stockholders.
SECTION 4. VOTING -- Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and in accordance with the
provisions of these By-laws shall be entitled to one vote, in person or by
proxy, for each share of voting stock held by such stockholder. All elections
for directors shall be decided by plurality votes; all other questions shall be
decided by majority vote, except as otherwise provided by the Certificate of
Incorporation or the laws of the State of Delaware. No
2
<PAGE> 6
proxy shall be voted after three years from its date unless such proxy provides
for a longer period.
SECTION 5. QUORUM AND ADJOURNMENT -- Except as otherwise required by law,
by the Certificate of Incorporation or by these By-laws, the presence, in person
or by proxy, of stockholders holding a majority of the stock of the Corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote, present in person or by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 6. STOCKHOLDERS' LIST -- The Secretary shall prepare, at least ten
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder
for any purpose germane to the meeting during ordinary business hours for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting, or, if not so specified, at the place where the
3
<PAGE> 7
meeting is to be held. The list shall also be kept at the time and place of the
meeting during the whole time thereof and may be inspected by any stockholder
who is present.
SECTION 7. SPECIAL MEETINGS -- Special meetings of the stockholders
entitled to vote may be called at the request in writing by stockholders of
record owning at least fifty-one percent of the issued and outstanding voting
shares of common stock of the Corporation. Written request must be delivered to
the Chairman of the Board, the President, or the Secretary. A special meeting of
the stockholders may also be called by resolution of the Board of Directors or
the Executive Committee of the Board of Directors.
ARTICLE III
DIRECTORS
SECTION 1. POWERS -- The Board of Directors shall exercise all of the
powers of the Corporation except such as are by law, or by the Certificate of
Incorporation of the Corporation, or by these By-laws conferred upon or reserved
to the stockholders.
SECTION 2. NUMBER AND TERM -- The number of directors shall be fixed from
time to time by resolution of the Board of Directors but shall be not less than
five nor more than eleven. In order to assure compliance with the Shipping Act,
1916, as amended, and the Merchant Marine Act, 1936, as amended, no more than a
minority of the number of directors necessary to constitute a quorum of the
Board of Directors, as provided in Section 10 of this Article III, shall be
aliens. Each director shall hold office
4
<PAGE> 8
until the next annual meeting of stockholders and until a successor is elected
and qualified, provided that a director may resign at any time. Directors need
not be stockholders.
SECTION 3. MEETINGS --
(a) The newly elected directors may hold their first meeting for the
purpose of organization and the transaction of business, if a quorum be present,
immediately after the annual meeting of the stockholders, or the time and place
of such meeting may be fixed by consent in writing of all the directors.
(b) Regular meetings of the directors may be held without notice at such
places and times as shall be determined from time to time by resolution of the
directors.
(c) Special meetings of the Board of Directors may be called by the
Chairman of the Board of Directors, by the President, or by the Secretary on the
written request of any two directors upon notice to each director and shall be
held at such place or places as may be determined by the directors, or as shall
be stated in the call of the meeting.
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS -- The Chairman of the Board
of Directors shall be elected by the Board of Directors. The Chairman shall
preside at the meetings of the Board of Directors and at all meetings of the
stockholders of the Corporation. The Chairman shall perform such other duties
and services as shall be assigned by the Board of Directors. The Chairman of the
Board of Directors shall be an officer or former officer of the Corporation.
During the absence or disability of the Chairman of the Board of Directors, the
President shall preside at all meetings of the Board of Directors and of the
stockholders of the Corporation, and the
5
<PAGE> 9
President or CEO shall exercise all of the functions of the Chairman of the
Board of Directors.
SECTION 5. EXECUTIVE COMMITTEE --
(a) The Board of Directors shall elect from among its membership an
Executive Committee to consist of not less than three members. Between the
meetings of the Board of Directors and while such Board is not in session, the
Executive Committee shall have all the powers and exercise all the duties of the
Board of Directors unless prohibited under Section 141 of the Delaware General
Corporation Law, including the powers to authorize the issuance of the stock of
the Corporation and to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware General Corporation Law.
(b) The Executive Committee shall report all of its actions to the Board
of Directors, and its powers herein created shall be subject to such limitation
as may be imposed by the Board of Directors, acting at any regular meeting or at
any special meeting for which notice of such action has been given. The
Committee shall keep regular minutes of its proceedings and report the same to
the Board of Directors when required.
(c) The meetings of the Executive Committee shall be called by the
Secretary of the Corporation, from time to time, at the direction and upon the
request of any member of the Executive Committee. Notice of such meeting shall
in each instance be given to each member of the Committee at the last known
business address, at least one day
6
<PAGE> 10
before the meeting, either orally or in writing, delivered personally or by mail
or telegraph.
(d) A quorum of the Committee shall consist of a majority of the members
of the Committee.
(e) The Chairman of the Executive Committee, unless otherwise provided by
resolution or resolutions of the Board of Directors, shall be elected by a
majority of the members of the Executive Committee, and whenever any change
shall be made in the membership of any such Committee, a new Chairman shall be
elected in the same manner.
SECTION 6. OTHER COMMITTEES --
(a) The Board of Directors may by resolution or resolutions passed by a
majority of the whole Board of Directors, designate one or more additional
committees, each committee to consist of two or more of the directors of the
Corporation which, to the extent provided in said resolution or resolutions or
in these By-laws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation, and
may have power to authorize the seal of the Corporation to be affixed to all
papers which may require it.
(b) In addition to the regular members of each committee, the Board of
Directors may designate one or more alternate members who may replace any absent
or disqualified member at any meeting of the committee. In the event of the
absence or disqualification of any member of such committee or committees at a
time when the Board of Directors is not in session, the members of the committee
present at any
7
<PAGE> 11
meeting and not disqualified from voting, regardless of whether a quorum is
present, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
(c) Such committee or committees shall have such name or names as may be
stated in these By-laws or as may be determined from time to time by resolution
adopted by the Board of Directors. The Chairman of each such committee, unless
otherwise provided by the Board of Directors in such resolution or resolutions
designating such committee, shall be elected by a majority of the members of
each such committee and whenever any change shall be made in the membership of
any such committee, a new Chairman shall be elected in the same manner. The
committees shall keep regular minutes of their proceedings and report the same
to the Board of Directors when required.
SECTION 7. ACTION BY TELEPHONIC CONFERENCE -- Members of the Board of
Directors or any committee designated by such Board, may participate in a
meeting of such Board or committee by means of a telephone conference or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
the person at such meeting.
SECTION 8. ACTION BY CONSENT WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or governing
body, or any committee thereof may be taken without a meeting if all the members
of the Board or committee, as the case may be, consent thereto in writing, and
the writing or
8
<PAGE> 12
writings are filed with the minutes of proceedings of the Board of Directors,
governing body, or committee.
SECTION 9. QUORUM -- The vote of a majority of the Directors present at
any meeting at which a quorum is present shall be necessary to constitute the
act of the Board of Directors, unless provided otherwise by law or by the
Certificate of Incorporation or these By-laws. A quorum of other committees,
including the Executive Committee as provided in Section 6(d) above, shall
consist of a majority of the members of the committee. If there shall be less
than a quorum at any meeting of the Board of Directors or a committee, a
majority of those present may adjourn the meeting from time to time.
SECTION 10. RESIGNATION -- Any director, member of a committee or other
officer may resign at any time by delivering a written resignation to the
Chairman of the Board of Directors or to the Secretary. Such resignation shall
take effect at the time specified therein, and if no time is specified, at the
time of its receipt by the Chairman or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 11. VACANCIES -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office, by
a majority vote, may appoint any qualified person to fill such vacancy, who
shall hold office for the unexpired term and until a successor shall be duly
chosen.
9
<PAGE> 13
SECTION 12. REMOVAL -- Any director or directors may be removed, either
with or without cause, at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote at a
special meeting of the stockholders called for that purpose.
SECTION 13. COMPENSATION -- The Board of Directors shall determine, by
resolution, the compensation of directors and advisory directors. Nothing herein
contained shall be construed to preclude any Director from serving in any other
capacity and receiving compensation therefor.
SECTION 14. ADVISORY DIRECTORS --
(a) The Board of Directors may elect one or more advisory directors who
shall have such powers and shall perform such duties as the directors shall
assign to them. Advisory directors shall, upon election, serve until the next
annual meeting of stockholders.
(b) Advisory directors shall receive notices of all meetings of the Board
of Directors called by the Chairman of the Board, by the President, or by the
Secretary (on written request of any two directors) in the same manner and at
the same time as the directors. They shall attend said meetings referred to in
said notices in an advisory capacity, but will not cast a vote or be counted to
determine a quorum. Any advisory directors may be removed either with or without
cause, by a majority of the directors at the time in office, at any regular or
special meeting of the Board of Directors.
10
<PAGE> 14
(c) Nothing herein contained shall be construed to preclude any advisory
director from serving the Corporation in any other capacity as an officer, agent
or otherwise, and receiving compensation therefor.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS --
(a) The officers of the Corporation shall be a Chief Executive Officer, a
President, a Secretary, a Treasurer, a Controller, and if deemed necessary,
expedient or desirable by the Board of Directors, one or more Vice Presidents
(one or more of whom may be designated Executive or Senior Vice President), one
or more Assistant Secretaries and one or more Assistant Treasurers. The officers
shall be elected by the Board of Directors at their first meeting after the
annual meeting of stockholders. The Board of Directors shall also designate the
Chairman of the Board or the President as the Chief Executive Officer of the
Corporation. Any number of offices may be held by the same person, except as
otherwise required by applicable state law.
(b) In order to assure compliance with the Shipping Act, 1916, as amended,
and the Merchant Marine Act, 1936, as amended, the Chairman of the Board and the
President shall be citizens of the United States and no Vice President or other
individual shall be authorized to act in the absence or disability of the
Chairman of the Board and the President unless such individual is a citizen of
the United States.
11
<PAGE> 15
(c) Unless otherwise provided for in a resolution of the Board of
Directors, each officer shall be chosen for a term that shall continue until the
organizational meeting of the Board of Directors following the next annual
meeting of stockholders and until a successor shall have been chosen and
qualified.
(d) All officers of the Corporation shall have such authority and perform
such duties in the management and operation of the Corporation as shall be
prescribed in the By-laws or in the resolutions of the Board of Directors
appointing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office except
to the extent that such authority and duties may be inconsistent with a
resolution of the Board of Directors.
(e) Any officer may be removed, with or without cause, by the Board of
Directors. Any vacancy in any office may be filled by the Board of Directors.
SECTION 2. STAFF VICE PRESIDENTS -- The Chief Executive Officer may
appoint key executives to the position of staff vice president. Such staff vice
presidents shall not be corporate officers and shall exercise such powers and
perform such duties as are assigned to them by the Chief Executive Officer, the
President, or other officer of the Corporation.
SECTION 3. OTHER OFFICERS AND AGENTS -- The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
12
<PAGE> 16
SECTION 4. DUTIES --
(a) Chief Executive Officer ("CEO") -- The Board of Directors shall
appoint the CEO. The CEO shall have the general power to supervise, direct,
manage and control the business and affairs of the Corporation. The CEO shall
have the general power to appoint, remove or suspend all employees and agents of
the Corporation, subject to the power of the Board of Directors and the
provisions of these By-laws. Except as the Board of Directors shall, by
resolution, otherwise determine, the CEO shall exercise for, and in the name of
the Corporation, in the CEO's own and sole judgment, all of the rights, powers
and privileges of ownership, including the right to vote thereon, of any and all
securities of any nature whatsoever held by or in the name of the Corporation.
The CEO shall exercise all of the powers usually appertaining to the office held
by the CEO of a corporation.
(b) President -- Except when the Board of Directors shall authorize the
execution thereof in some other manner, the President is authorized and
empowered to execute and deliver all bonds, mortgages, and other contracts,
instruments, amendments and supplements thereto, for and on behalf of the
Corporation, as the President shall deem appropriate and in the best interest of
the Corporation. The President may designate any other officer or employee to
execute and deliver such documents or to ratify and approve the execution and
delivery thereof, and such action by the President and any officer or employee
so designated shall be binding on the Corporation. The President shall cause the
corporate seal to be affixed to any instrument requiring it and attested by the
13
<PAGE> 17
signature of the Secretary or an Assistant Secretary. The President shall
perform such other duties as may be required by the Board of Directors.
(c) Treasurer -- The Treasurer shall have custody of the corporate funds
and securities and shall cause full and accurate account of the receipts and
disbursements of the Corporation to be kept in books and records belonging to
the Corporation. The Treasurer shall establish and maintain bank accounts in the
name of the Corporation in such bank or banks, as the Treasurer, with the
approval of the Chairman of the Board or the President or the Chief Financial
Officer, may deem appropriate; deposit all moneys or other valuables in the name
and to the credit of the Corporation in such depositories; designate the person
or persons and the conditions under which such person(s) may withdraw funds
therefrom; and, revoke the authorization of such person(s). The Treasurer shall
disburse the funds of the Corporation as may be ordered by the Chairman of the
Board or the President or Chief Financial Officer, taking proper vouchers for
such disbursement when appropriate. The Treasurer shall render to the Board of
Directors at their regular meetings, or to the Chairman of the Board, or to the
President at their request, an account of all the Treasurer's transactions. If
required by the Board of Directors, the Treasurer shall give the Corporation a
bond for the faithful discharge of the Treasurer's duties in such amount and
with such surety as the Board of Directors shall prescribe.
(d) Secretary -- The Secretary shall give, or cause to be given, notice of
all meetings of the stockholders and directors, and all other notices required
by law or by these By-laws. In case of the Secretary's absence or refusal or
neglect so to do, any
14
<PAGE> 18
such notices may be given by any person directed by the President, or by the
directors, or stockholders, upon whose requisition the meeting is called as
provided in these Bylaws. The Secretary shall record all the proceedings of the
meetings of the Corporation and of the Board of Directors in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to the
Secretary by the Board of Directors, the Chairman of the Board or the President.
The Secretary shall have the custody of the seal of the Corporation and shall
affix the same to all instruments requiring it, when authorized by the Board of
Directors, the Chairman of the Board, or the President, and attest the same.
(e) Controller -- The Controller shall have custody of the financial
records of the Corporation and shall keep full and accurate books and records of
the financial transactions of the Corporation. The Controller shall determine
the methods of accounting and reporting for all entities comprising the
Corporation, and shall be responsible for assuring adequate systems of internal
control. The Controller shall render to the Chairman of the Board, the
President, and the Board of Directors at its regular meetings whenever they may
request it, a report on the financial condition of the Corporation and of the
results of its operations. If required by the Board of Directors, the Controller
shall give the Corporation a bond for the faithful discharge of his duties in
such amount and with such surety as the Board of Directors shall prescribe.
15
<PAGE> 19
ARTICLE V
CAPITAL STOCK
SECTION 1. SHARES -- The shares of the capital stock of the Corporation
shall be represented by certificates or shall be uncertificated. Each registered
holder of shares of capital stock, upon request to the Corporation, shall be
provided with a stock certificate, representing the number of shares owned by
such holder. Absent specific request for such a certificate by the registered
owner or transferee, all shares shall be uncertificated upon the original
issuance by the Corporation or upon the surrender for transfer of the
certificate representing such shares to the Corporation or its transfer agent.
SECTION 2. CERTIFICATES OF STOCK -- Certificates of stock, numbered
consecutively and containing the seal of the Corporation, signed by the CEO, the
President, or a Vice President, the Treasurer, or an Assistant Treasurer, or by
the Secretary, or an Assistant Secretary, shall be in such form, not
inconsistent with the Certificate of Incorporation, as shall be approved by the
Board of Directors. When such certificates are signed by either a transfer agent
(other than the Corporation), or a registrar (other than the Corporation), the
signatures of such officers may be facsimiles.
SECTION 3. LOST, STOLEN, DESTROYED CERTIFICATES -- No certificate for
shares of stock in the Corporation shall be issued in place of any certificate
alleged to have been lost, stolen, or destroyed, except on production of such
evidence of such loss, theft, or destruction and on delivery to the Corporation
of a bond
16
<PAGE> 20
of indemnity in such amount, upon such terms, and secured by such surety, as the
Board of Directors or the Secretary may in its discretion require.
SECTION 4. TRANSFER OF SHARES -- Upon the surrender to the Corporation of
a certificate for shares, property endorsed, the Corporation shall issue a new
certificate to the transferee, cancel the old certificate, and record the
transaction on its books. The person in whose name shares of stock stand on the
books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes, and the Corporation shall not be bound to recognize
any equitable or other claim thereto on the part of any other person.
ARTICLE VI
MISCELLANEOUS
SECTION 1. SEAL -- The corporate seal shall be circular in form and shall
contain the name of the Corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
SECTION 2. FISCAL YEAR -- The fiscal year of the Corporation shall begin
August 1st and end July 31st.
SECTION 3. SIGNATORIES -- All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents of
the
17
<PAGE> 21
Corporation and in such a manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 4. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is required
by these By-laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in a post office box in a sealed post-paid wrapper,
addressed to the person designated at the last known post office address, and
such notice shall be deemed to have been given on the day of such mailing.
Stockholders not entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by statute. Whenever any notice is
required to be given under the provisions of any law, or under the provisions of
the Certificate of Incorporation or these By-laws, a waiver 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.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, at any regular or special meeting,
declare dividends, out of funds legally available therefor, upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the Corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the Corporation.
18
<PAGE> 22
SECTION 6. RECORD DATE --
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders, the Board of Directors
shall fix a record date which shall not be more than sixty nor less than ten
days before the date of such meeting.
(b) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date which shall be not more
than sixty days prior to such action.
SECTION 7. AMENDMENTS -- These By-laws may be altered or repealed and new
By-laws may be adopted as follows: (1) at any annual or special meeting of
stockholders by the affirmative vote of a majority of the issued and outstanding
voting stock, provided, however, that notice of the proposed alteration, repeal
or adoption of the new provision(s) is contained in the notice of such special
meeting, or (2) by the affirmative vote of a majority of the members present at
any regular meeting of the Board of Directors, or at any special meeting of the
Board of Directors, if notice of the proposed alteration, repeal or new
provision(s) is contained in the notice of such special meeting.
19
<PAGE> 1
EXHIBIT 3.2
[LITTON LOGO]
Amendment to
Restated and Amended By-laws of
Litton Industries, Inc.
Adopted December 4, 1997
RESOLVED, that Article III of the By-laws of the Corporation be and hereby is
amended and restated to include the following new Sections:
SECTION 6. AUDIT AND COMPLIANCE COMMITTEE -
(a) The Audit and Compliance Committee shall be charged with oversight of
the Corporation's accounting and compliance functions. The Committee shall
review and recommend outside auditors to the Board of Directors; determine
the scope of the audit; review and monitor internal accounting procedures;
review the responsibilities of internal audit staff; approve compensation for
outside auditors; and review and monitor the ethics and compliance programs
of the Corporation. The specific duties of the Committee shall be determined
by resolution of the Board of Directors at its organization meeting.
(b) The Committee shall consist of at least three independent (non-employee)
directors who shall be chosen by the full Board of Directors. Members shall
serve until their resignation or removal by the Board. The Committee shall
meet at least four times each calendar year. The Committee shall keep regular
minutes of its proceedings and report the same to the Board of Directors when
required.
SECTION 7. COMPENSATION AND SELECTION COMMITTEE -
(a) The Compensation and Selection Committee shall review and recommend
benefit programs for executive officers of the Corporation; and shall approve
and report to the full Board of Directors on the executive compensation
package, including base annual salary, annual bonus awards, long-term
incentive awards, and all other compensation or perquisites, for all members
of the senior executive staff of the Corporation. The specific duties of the
Committee shall be determined by resolution of the Board of Directors at its
organization meeting.
(b) The Committee shall consist of not less than three independent
(non-employee) directors chosen by the full Board of Directors. Members shall
serve until their resignation or removal by the Board of Directors. The
Committee shall meet at least twice each calendar year. The Committee shall
keep regular minutes of its proceedings and report the same to the Board of
Directors when required.
SECTION 8. NOMINATING COMMITTEE -
(a) The Nominating Committee shall identify, review and recommend
candidates for election to the Board of Directors. The Committee shall review
the qualifications of all candidates and, when a vacancy occurs on the Board
<PAGE> 2
of Directors, shall present to the Chairman of the Board or the full Board of
Directors, a list of qualified candidates for consideration. The specific
duties of the Committee shall be determined by resolution of the Board of
Directors at its organization meeting.
(b) The Committee shall consist of the Chairman or Chief Executive Officer or
President and not less than three independent (non-employee) directors chosen
by the full Board of Directors. Members shall serve until their resignation or
removal by the Board of Directors. The Committee shall meet as often as
necessary to fulfill its duties but in no event less than once each calendar
year. The Committee shall keep regular minutes of its proceedings and report
the same to the Board of Directors when required.
RESOLVED FURTHER, that the Sections within Article III of the By-laws of the
Corporation shall be renumbered as necessary to accommodate the inclusion of
the new sections; and
RESOLVED FURTHER, that Article IV of the By-laws of the Corporation be and
hereby is amended to add the following new provisions to Section 4:
(f) CHIEF FINANCIAL OFFICER - The Chief Financial Officer shall provide and
maintain, subject to the direction of the Board of Directors, financial and
accounting controls over the business and affairs of the Corporation. The Chief
Financial Officer shall maintain adequate records of the assets, liabilities
and financial transactions of the Corporation, and shall direct the preparation
of financial statements, reports and analyses. The Chief Financial Officer
shall perform such other duties and exercise such other powers as are incident
to such function, subject to the control of the Board of Directors.
(g) CHIEF LEGAL OFFICER - The Chief Legal Officer (General Counsel) shall be in
charge of the Corporation's legal affairs. The Chief Legal Officer shall advise
the Board and/or the officers of the Corporation on such legal matters and
prepare such reports as may be required by them. The Chief Legal Officer shall
perform such other duties and exercise such other powers as are incident to
such function, subject to the control of the Board of Directors.
<PAGE> 1
EXHIBIT 10
LITTON INDUSTRIES, INC.
GROUP BONUS PLAN
I. PURPOSE
The purpose of the Litton Industries, Inc. Group Bonus Plan (the "Plan")
is to establish the procedure to reward the Group Executives of Litton's
business operating groups, as such groups are determined from time to time
(the "Group") and other key Group personnel for achieving Group financial
performance consistent with Litton Industries, Inc. ("Litton") corporate
goals.
The participants are expected to conduct their business in an ethical
manner, consistent with the Litton Statement of Principles and Standards
of Conduct and to make decisions that ensure the long-term viability of
each Group and Litton, as well as the success of the applicable Litton
business plan period.
II. PARTICIPANTS
Participants in this Plan shall be the Litton Group Executives and such
other key Group personnel as determined by the Litton Chief Executive
Officer and/or the Litton President.
III. TARGET BONUS
Each participant can earn the maximum percent of base salary (target
bonus), as established by the Litton Chief Executive Officer and/or the
Litton President. Each fiscal year, the target bonus will be communicated
by the Litton President to the Group Executives. For each participant,
base salary shall be the rate of base salary in effect on October 1 of the
relevant fiscal year. The maximum percent of base salary may vary as a
function of Group size, number of divisions and other factors.
IV. PERFORMANCE OBJECTIVES
The applicable financial performance objectives for each fiscal year will
be established by the Litton Chief Executive Officer and/or the Litton
President and approved by the Compensation and Selection Committee of the
Board of Directors (the "Committee"), it being understood that different
criteria may be applied to each Group. Such objectives shall be
established either prior to the beginning of each fiscal year of Litton or
within 90 days after the beginning of such fiscal year. Each year, the
applicable criteria will be communicated to the Group Executives by the
Litton President. The Litton Chief Executive Officer and/or the Litton
President may, subject to the approval of the Committee, adjust any
established financial criteria at any time and in any manner.
<PAGE> 2
V. BONUS AWARDS
A participant's award for any fiscal year will be determined solely on the
basis of the participant's performance. The earned bonus percent of the
target bonus shall be a function of whatever business measure(s) were
deemed appropriate for the applicable fiscal year of Litton as determined
by the Litton Chief Executive Officer and/or the Litton President and
approved by the Committee. The award may be allocated among one or more
performance criteria, including financial criteria, strategic goals,
specific management objectives and similar factors. The participant's
award will be determined by the Litton Chief Executive Officer or Litton
President for each key Group participant, and for each Senior Vice
President, with the approval of the Committee.
Whether or not a bonus would otherwise be awarded, either the Litton Chief
Executive Officer, the Litton President and/or the Committee in their
absolute discretion and for whatever reason, such as, by way of example,
if they believe that any such participant has sacrificed long-term
objectives to achieve short-term goals, may eliminate or reduce any bonus
payments under this Plan to a participant.
Notwithstanding the attainment of any performance criteria set forth from
time to time, the actual amount of, and the formula to be applied for
determining individual bonuses may, at any time, be revised at the
discretion of the Litton Chief Executive Officer and the Litton President
subject to the approval of the Committee.
VI. DEFERRAL OF BONUS
The Committee may adopt provisions for any fiscal year to allow one or
more participants to defer all or part of a bonus award. If the Committee
elects to permit bonus award deferrals, the Committee will prescribe one
or more payment options. The Committee may allow cash awards to be
converted to an equivalent number of shares of Litton common stock or
stock units on such terms and conditions prescribed by the Committee.
VII. CHANGE IN CONTROL
In the event of a change in control of Litton, as defined in the
agreements issued under the Litton Industries, Inc. 1984 Long-Term Stock
Incentive Plan, any bonus awards outstanding as of the date any such
change in control occurs shall immediately become vested and immediately
payable.
<PAGE> 3
VIII. ADMINISTRATION
The Plan will be administered in accordance with the terms and conditions
approved by the Committee.
IX. MISCELLANEOUS
It is understood that the Plan does not constitute an employment contract
between Litton and any participant and that the Plan may be changed,
modified, amended, or terminated at any time either by the Committee by
its own actions or by the Committee upon the recommendation of the Litton
Chief Executive Officer and/or the Litton President.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT OCTOBER 31, 1997 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> OCT-31-1997
<CASH> 40,775
<SECURITIES> 15,750
<RECEIVABLES> 706,962
<ALLOWANCES> 0
<INVENTORY> 598,747
<CURRENT-ASSETS> 1,801,419
<PP&E> 1,567,511
<DEPRECIATION> (926,668)
<TOTAL-ASSETS> 3,554,348
<CURRENT-LIABILITIES> 1,638,451
<BONDS> 494,133
0
2,053
<COMMON> 46,075
<OTHER-SE> 1,037,091
<TOTAL-LIABILITY-AND-EQUITY> 3,554,348
<SALES> 1,039,035
<TOTAL-REVENUES> 1,039,035
<CGS> 800,017
<TOTAL-COSTS> 800,017
<OTHER-EXPENSES> 34,388
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,231
<INCOME-PRETAX> 72,408
<INCOME-TAX> 28,963
<INCOME-CONTINUING> 43,445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,445
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.92
</TABLE>
