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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-79
THE MAY DEPARTMENT STORES COMPANY
(Exact name of registrant as specified in its charter)
New York 43-0398035
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
611 Olive Street, St. Louis, Missouri 63101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 342-6300
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.50 per share New York Stock Exchange
Preferred stock purchase rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
$1.80 Preference Stock (assigned value $50.00 per share), without
par value
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of registrant's common stock held by non-
affiliates as of April 2, 1994: $10,277,612,683
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
248,530,761 shares of common stock, $.50 par value, as of April 2,
1994.
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Documents incorporated by reference:
1. Portions of Registrant's 1993 Annual Report to Shareowners are
incorporated into Parts I and II.
2. Portions of Registrant's 1994 Proxy Statement, dated April 18,
1994, are incorporated into Part III.
PART I
Items 1 and 2. Business and Description of Property
Registrant, a corporation, was organized under the laws of the
State of New York on June 4, 1910, as the successor to a business
founded by David May, who opened his first store in Leadville,
Colorado, in 1877. Registrant is the largest department store
retailer in the country, operating quality regional department
store companies nationwide. At fiscal year-end 1993, registrant
operated 301 department stores in 29 states and the District of
Columbia. The department store companies and their headquarters
are: Lord & Taylor, New York City; Foley's, Houston; Robinsons-
May, Los Angeles; Hecht's, Washington, D.C.; Kaufmann's,
Pittsburgh; Filene's, Boston; Famous-Barr, St. Louis; and Meier &
Frank, Portland, Ore.
In addition, registrant operates Payless ShoeSource, headquartered
in Topeka, Kan. At fiscal 1993 year-end, 3,779 stores were
operated in 49 states, the District of Columbia, Puerto Rico and
the Virgin Islands.
Registrant employs approximately 53,000 full-time and 60,000 part-
time associates in 49 states, the District of Columbia, Puerto
Rico, the Virgin Islands and eight offices overseas.
The following portions of registrant's 1993 Annual Report to
Shareowners are incorporated herein by reference: Management's
Discussion and Analysis (pages 12-17); Six Year Summary by Business
Segment (pages 28-29).
A. Property Ownership
(i) Department Stores
The following summarizes the property ownership of
department stores at January 29, 1994:
% of Gross
Number of Building
Stores Sq. Footage
Entirely or mostly owned* 175 63%
Entirely or mostly leased 70 21
Owned on leased land* 56 16
301 100%
* Includes a total of 23 department stores subject to
financing.
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A. Property Ownership (continued)
(ii) Payless ShoeSource
Payless ShoeSource store locations are substantially all
leased, usually on a 10- to 15-year basis with renewal
options.
B. Credit Sales
Sales at registrant's department stores are made for cash or
credit, including registrant's 30-day charge accounts and open-end
credit plans, which include revolving charge accounts and revolving
installment accounts. During the fiscal year ended January 29,
1994, 62.4% of the total sales of registrant's department stores
were made through registrant's credit plans. All sales of Payless
ShoeSource are made either for cash or through third-party credit
cards.
In 1991, registrant formed three national banks (May National Bank
of Arizona (MBA), May National Bank of Ohio (MBO) and May National
Bank of Maryland (MBM)), which are indirectly wholly owned and
consolidated subsidiaries of registrant. MBM notified the Office
of the Comptroller of the Currency that it has commenced
liquidation, completion of which will occur in the first quarter of
1994.
During the last fiscal year, MBA and MBO (and, through August 4,
1993, MBM) extended credit to certain customers of registrant's
Robinsons-May, Kaufmann's, Meier & Frank and G. Fox department
stores companies. Throughout 1993, MBA and MBO (MBM through August
4, 1993) sold the resulting accounts receivables at face value, to
their parent, May Funding, Inc. In addition, MBA and MBO (MBM
through August 4, 1993) process remittances for May Funding, Inc.
and certain of registrant's department store credit card accounts
receivable. MBA and MBO receive processing fee revenue for this
service.
C. Competition in Retail Merchandising
Registrant's retail merchandising business is conducted under
highly competitive conditions. During the past five years, the
retail industry has seen major changes which have increased
competition. Although registrant is the nation's largest
department store retailer, it has thousands of competitors at the
local level which compete with registrant's individual department
and Payless ShoeSource stores. Competition at the local level is
characterized by numerous factors including convenience of
facilities, reputation, procurement of merchandise, product mix,
advertising, price, quality, service and credit availability.
Registrant believes that it is in a strong competitive position
with regard to each of these factors. Registrant has been able to
perform in a competitive environment through effective
merchandising.
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D. Executive Officers of Registrant
The names and ages (as of April 20, 1994) of all executive officers
of registrant, and the positions and offices held with registrant
by each such person are as follows:
Name Age Positions and Offices
David C. Farrell 60 Chairman and Chief Executive Officer
Thomas A. Hays 61 Deputy Chairman
Jerome T. Loeb 53 President and Chief Financial Officer
Richard L. Battram 59 Vice Chairman
Anthony J. Torcasio 48 President and Chief Executive Officer,
May Merchandising Company
Louis J. Garr, Jr. 54 Executive Vice President and General
Counsel
R. Dean Wolfe 50 Executive Vice President
William D. Edkins 41 Senior Vice President
Lonny J. Jay 52 Senior Vice President
Jan R. Kniffen 45 Senior Vice President
Richard A. Brickson 46 Secretary and Senior Counsel
Andrew T. Hall 33 Vice President
Each of the above named executive officers shall remain in office
until the annual meeting of directors following the next annual
meeting of shareowners of registrant, or until their respective
successors shall have been elected and shall qualify. Messrs.
Farrell, Hays, Loeb and Battram also serve as directors of
registrant.
Each of the executive officers has been an officer of registrant
for at least the last five years, with the following exceptions:
Mr. Torcasio was president of the former L.S. Ayres division and
president and chief executive officer of Famous-Barr during the
past five years. In 1993, Mr. Torcasio became president and chief
executive officer of May Merchandising Company and became an
executive officer of registrant. Mr. Edkins was associated with
the management consulting firm McKinsey & Company, Inc., from 1984
to 1990 and became an executive officer of registrant in 1990. Mr.
Hall was associated with the public accounting firm of Arthur
Andersen & Co. from 1983 to 1993 and became an executive officer of
registrant in 1994.
Item 3. Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
registrant or any of its subsidiaries is a party or of which any of
their property is the subject. In the Notes to Consolidated
Financial Statements (registrant's 1993 Annual Report to
Shareowners at page 26) the registrant reported that it is a
defendant in a lawsuit filed in Montgomery, Alabama, by certain
former bondholders who allege, among other things, that the
registrant reacquired certain indebtedness with lower-interest cost
debt in violation of the bond indentures. The lawsuit seeks either
reinstatement of the indebtedness plus reimbursement of the
4
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Item 3. Legal Proceedings (continued)
plaintiffs' attorneys fees or contractual damages in excess of $25
million. The lawsuit also seeks punitive damages in excess of $100
million. The registrant believes its actions were legal and proper
and will vigorously defend its position. While the final outcome
of this lawsuit cannot be determined with certainty, the registrant
believes that the final outcome will not have a material adverse
effect on the registrant's results of operations or its financial
position.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
during the 13 weeks ended January 29, 1994.
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareowner Matters
Common Stock Split, Dividends and Market Prices (page 17) of
registrant's 1993 Annual Report to Shareowners are incorporated
herein by reference.
Item 6. Selected Financial Data
The Eleven Year Financial Summary (pages 30 and 31) of registrant's
1993 Annual Report to Shareowners is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and Analysis (pages 12-17), Summary of
Significant Accounting Policies (page 18) and Notes to Consolidated
Financial Statements (pages 23-29) of registrant's 1993 Annual
Report to Shareowners are incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
Summary of Significant Accounting Policies (page 18), Consolidated
Financial Statements (pages 19-22), Notes to Consolidated
Financial Statements (pages 23-29) and Report of Independent Public
Accountants (page 32) of registrant's 1993 Annual Report to
Shareowners are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
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PART III
Items 10, 11, 12, 13. Directors and Executive Officers of
Registrant, Executive Compensation,
Security Ownership of Certain Beneficial
Owners and Management, Certain
Relationships and Related Transactions
Pursuant to paragraph G (Information to be Incorporated by
Reference) of the General Instructions to Form 10-K, the
information required by Items 10, 11, 12 and 13 (other than
information about executive officers of registrant) is incorporated
by reference from the definitive proxy statement dated April 18,
1994, and filed pursuant to Regulation 14A. Information about
executive officers of registrant is set forth in Part I of this
Form 10-K, under the heading "Items 1 and 2. Business and
Description of Property."
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) Documents filed as part of this report:
(1) Financial Statements. Incorporated by reference to
registrant's 1993 Annual Report to Shareowners (Exhibit
13):
Location in
Annual Report
Summary of Significant Accounting Policies 18
Financial Statements-
Consolidated Statement of Earnings for
the three fiscal years ended
January 29, 1994 19
Consolidated Balance Sheet -
January 29, 1994, and January 30, 1993 20
Consolidated Statement of Cash Flows
for the three fiscal years ended
January 29, 1994 21
Consolidated Statement of Shareowners'
Equity for the three fiscal years
ended January 29, 1994 22
Notes to Consolidated Financial Statements 23-29
Report of Independent Public Accountants 32
Location in
this Report
(2) Supplemental Financial Statement
Schedules (for the three fiscal years
ended January 29, 1994):
Report of Independent Public Accountants
on financial statement schedules 10
II Amounts receivable from employees 11-12
V Property and equipment 13
VI Accumulated depreciation and
amortization of property and
equipment 14
VIII Valuation and qualifying accounts 15
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Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K (continued)
(3) Exhibits: Location
3(a) Restated Certificate of Filed
Incorporation of herewith.
Registrant, dated March 22, 1994
3(b) By-Laws of Registrant, as amended Filed
herewith.
11 Computation of Net Earnings Filed
Per Share herewith.
12 Computation of Ratio of Filed
Earnings to Fixed Charges herewith.
13 The May Department Stores Filed
Company 1993 Annual Report to herewith.
Shareowners (only those portions
specifically incorporated by
reference shall be deemed filed
with the Commission)
21 Subsidiaries of Registrant Filed
herewith.
23 Consent of Independent Public Page 10 of
Accountants this Report.
99 Form 11-K Annual Report of the Filed
Profit Sharing and Savings Plan herewith.
of The May Department Stores
Company for the fiscal year ended
December 31, 1993
(4) Reports on Form 8-K
The registrant has not filed any reports on Form 8-K
during the last quarter covered by this report.
All other schedules and exhibits of registrant for which provision
is made in the applicable regulations of the Securities and
Exchange Commission have been omitted as they are not required or
are inapplicable or the information required thereby has been given
otherwise.
7
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
THE MAY DEPARTMENT STORES COMPANY
Date: April 20, 1994 By: /s/ Jerome T. Loeb
Jerome T. Loeb
Director, President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of registrant and in the capacities and on the dates
indicated.
Date Signature Title
Principal Executive Officer:
April 20, 1994 /s/ David C. Farrell Director, Chairman
David C. Farrell and Chief
Executive Officer
Principal Financial and
Accounting Officer:
April 20, 1994 /s/ Jerome T. Loeb Director,
Jerome T. Loeb President and
Chief Financial
Officer
Directors:
April 20, 1994 /s/ Thomas A. Hays Director and
Thomas A. Hays Deputy Chairman
April 20, 1994 /s/ Richard L. Battram Director and Vice
Richard L. Battram Chairman
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Date Signature Title
April 20, 1994 /s/ Helene L. Kaplan Director
Helene L. Kaplan
April 20, 1994 /s/ Edward H. Meyer Director
Edward H. Meyer
April 20, 1994 /s/ Russell E. Palmer Director
Russell E. Palmer
April 20, 1994 /s/ Andrall E. Pearson Director
Andrall E. Pearson
April 20, 1994 /s/ Michael R. Quinlan Director
Michael R. Quinlan
April 20, 1994 /s/ William P. Stiritz Director
William P. Stiritz
April 20, 1994 /s/ Robert D. Storey Director
Robert D. Storey
April 20, 1994 /s/ Murray L. Weidenbaum Director
Murray L. Weidenbaum
April 20, 1994 /s/ Edward E. Whitacre, Jr. Director
Edward E. Whitacre, Jr.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The May Department Stores Company:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in The
May Department Stores Company's Annual Report to Shareowners
incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 21, 1994. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole.
Schedules II, V, VI and VIII included in this Form 10-K are the
responsibility of the company's management and are presented for
the purpose of complying with the Securities and Exchange
Commission's rules and are not part of the consolidated financial
statements. These schedules have been subjected to the auditing
procedures applied in the audit of the consolidated financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
1010 Market Street
St. Louis, Missouri 63101-2089
February 21, 1994
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by reference
in this Annual Report on Form 10-K for the year ended January 29,
1994, into the Company's previously filed Registration Statements
on Form S-3 (No. 33-37966, 33-38585 and 33-46021) and Form S-8 (No.
33-26016, 33-38104 and 33-51849).
ARTHUR ANDERSEN & CO.
1010 Market Street
St. Louis, Missouri 63101-2089
April 20, 1994
10
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<TABLE>
<CAPTION>
SCHEDULE II
Page 1 of 2
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
(Thousands) AMOUNTS RECEIVABLE FROM EMPLOYEES (A)
FOR THE THREE FISCAL YEARS ENDED JANUARY 29, 1994
Inter- Balance Balance Balance Balance
est Due at (B) at (B) at (B) at
Name of Employee Rate Date 2/2/91 Activity 2/1/92 Activity 1/30/93 Activity 1/29/94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Donald R. Andrus 9% 4/01/98(*) $ 200 $ - $ 200 $ (50) $ 150 $ (75) $ 75
Richard Bennet - - - - - - - 200 (200) -
- - - - - - - 92 (92) -
Joseph Bornhorst - - - - - 101 (101) - - -
Susan Brodbeck - - - - - 114 114 (114) -
John Busch - - - 100 (100) - - - - -
Lucy Cindric - - - - - 100 (1) 99 (99) -
Maxine Clark - 1/02/03(*) - - - - - 200 200
Joseph S. Davis - - 145 - 145 - 145 (145) -
Fred DiIorio 9% 8/01/95(*) 536 - 536 - 536 - 536
Steven J. Douglass - - - - - - - 409 (409) -
Dave Garner - - - - - - - 25 (25) -
- - - - - - - 210 (210) -
Sandy Gonzalez - - - 220 220 (220) - - -
Bill Harmon - - - - - - - 117 (117) -
Pam Hicks - - - 100 100 (100) - - -
Marshall Hilsberg - 4/30/94(*) 550 - 550 (275) 275 - 275
Judith K. Hofer - - 250 - 250 - 250 (250) -
Eugene S. Kahn - 2/24/93 - - - 60 60 - 60
- 4/30/97(*) - - - - - 150 150
- - 285 - 285 - 285 (285) -
- 1/02/03(*) - - - 315 315 - 315
Matthew Langweber - - 175 - 175 - 175 (175) -
John Lefebvre 7% 10/30/00(*) 412 (58) 354 75 429 - 429
Stan Leff - - - 175 175 - 175 (175) -
Jay Levitt - - - 120 (120) - - - - -
John McClymonds - - - - - 110 (110) - - -
Richard Maloney 8% 7/01/95(*) 100 - 100 (25) 75 - 75
(A) All of the listed loans were made in connection with executive employment or relocation, are due on
the date indicated and were unsecured, unless otherwise indicated.
(B) Represents additions and (collections).
(*) Collateral is mortgage on certain real estate.
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE II
Page 2 of 2
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
(Thousands) AMOUNTS RECEIVABLE FROM EMPLOYEES (A)
FOR THE THREE FISCAL YEARS ENDED JANUARY 29, 1994
Inter- Balance Balance Balance Balance
est Due at (B) at (B) at (B) at
Name of Employee Rate Date 2/2/91 Activity 2/1/92 Activity 1/30/93 Activity 1/29/94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph M. Melvin 9% 1/02/01(*) $ 250 $ - $ 250 $ (175) $ 75 $ - $ 75
Robert L. Mettler - - 375 - 375 - 375 (375) -
Jerry Miller - - - 130 (130) - - - - -
David P. Mullen - 1/01/97(*) - 750 750 (250) 500 - 500
Duane Nicks - - - - - - - 140 (140) -
Paul Oscarson - - - - - - - 125 (125) -
Joe Petrome - - - - - - - 100 (100) -
Warren Phillips - - 134 (41) 93 (93) - - -
Tom Remby - - - 30 (10) 20 (20) - - -
- 9/30/93 - 98 98 (81) 17 - 17
9% 10/29/93(*) - - - 75 75 - 75
John G. Rutenis - - 475 - 475 (475) - - -
Eric Salus - - - 300 300 (300) - - -
- - - 70 (70) - - - - -
Gerald A. Sampson - - - 100 (100) - - - - -
- - - 500 500 - 500 (500) -
Steve Sloane - - - - - - - 100 (100) -
Earl Sluss 7% 5/01/00(*) 300 - 300 - 300 - 300
Kenneth F. Sokol - - 200 (200) - - - - -
Robert Soroka 7% 12/01/00(*) 270 - 270 (143) 127 - 127
- - 163 (163) - - - - -
Terry Talley - - 200 - 200 - 200 (200) -
- - - - - - - 75 (75) -
Ronald F. Tanler 300 - 300 - 300 (300) -
Richard Tao - - - 500 (500) - - - - -
Heywood Wilansky - - 250 (250) - - - - -
- - - 350 350 (350) - - -
- 4/30/99 - - - 750 750 - 750
Kenneth Wilkerson 7% 4/01/00(*) 500 - 500 - 500 - 500
Charles Wilson - - - 100 (100) - - - - -
(A) All of the listed loans were made in connection with executive employment or relocation, are due on
the date indicated and were unsecured, unless otherwise indicated.
(B) Represents additions and (collections).
(*) Collateral is mortgage on certain real estate.
</TABLE>
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SCHEDULE V
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
PROPERTY AND EQUIPMENT FOR THE THREE FISCAL YEARS
ENDED JANUARY 29, 1994
(Millions) Balance Balance
beginning Additions, (Retire- end of
Classification of period at cost ments) period
FISCAL YEAR ENDED
JANUARY 29, 1994:
Land $ 247 $ 17 $ (16) $ 248
Buildings and
improvements 2,496 313 (136) 2,673
Furniture, fixtures
and equipment 1,887 370 (214) 2,043
Property under
capital leases 101 - (18) 83
Total $ 4,731 $ 700 $ (384) $ 5,047
FISCAL YEAR ENDED
JANUARY 30, 1993:
Land $ 235 $ 22 $ (10) $ 247
Buildings and
improvements 2,409 177 (90) 2,496
Furniture, fixtures
and equipment 1,795 205 (113) 1,887
Property under
capital leases 101 - - 101
Total $ 4,540 $ 404 $ (213) $ 4,731
FISCAL YEAR ENDED
FEBRUARY 1, 1992:
Land $ 236 $ 13 $ (14) $ 235
Buildings and
improvements 2,192 267 (50) 2,409
Furniture, fixtures
and equipment 1,646 232 (83) 1,795
Property under
capital leases 106 - (5) 101
Total $ 4,180 $ 512 $ (152) $ 4,540
Notes to Schedules V and VI:
Property and equipment are depreciated on a straight-line basis
over their estimated useful lives which are 25 to 50 years for
buildings, 15 to 22 years for improvements and 3 to 15 years for
furniture, fixtures and equipment.
During the period of 1989 through 1991, the registrant sold a total
of 66 of its department stores properties to MCAC for $634 million
and simultaneously leased back the properties. As the registrant
was a 50% partner in MCA, the sale/leasebacks were accounted for as
loans from MCAC and the historical property balances and activity
remained in the financial statements. Upon dissolution of the MCA
partnership in 1992, May received a majority ownership interest in
MCAC and, therefore, the MCAC loans were eliminated on a
consolidated basis and the financial statements continue to reflect
the historical property balances for these locations.
Leasehold improvements are amortized on a straight-line basis over
their estimated useful lives or the lease term whichever is
shorter. Property under capital leases is amortized over the
related lease terms.
13
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SCHEDULE VI
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY AND EQUIPMENT
FOR THE THREE FISCAL YEARS ENDED JANUARY 29, 1994
(Millions)
Balance Depre- Balance
beginning ciation (Retire- end of
Classification of period expense ments) period
FISCAL YEAR ENDED
JANUARY 29, 1994:
Buildings and
improvements $ 730 $ 131 $ (69) $ 792
Furniture, fixtures
and equipment 806 196 (188) 814
Property under
capital leases 37 3 (10) 30
Total $ 1,573 $ 330 $ (267) $ 1,636
FISCAL YEAR ENDED
JANUARY 30, 1993:
Buildings and
improvements $ 646 $ 126 $ (42) $ 730
Furniture, fixtures
and equipment 709 192 (95) 806
Property under
capital leases 34 3 - 37
Total $ 1,389 $ 321 $ (137) $ 1,573
FISCAL YEAR ENDED
FEBRUARY 1, 1992:
Buildings and
improvements $ 562 $ 112 $ (28) $ 646
Furniture, fixtures
and equipment 599 184 (74) 709
Property under
capital leases 34 3 (3) 34
Total $ 1,195 $ 299 $ (105) $ 1,389
See Notes on Schedule V.
14
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SCHEDULE VIII
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE FISCAL YEARS ENDED JANUARY 29, 1994
(Millions)
Charges
Balance to costs Balance
beginning and (Deductions) end of
of period expenses (a) period
FISCAL YEAR ENDED
JANUARY 29, 1994
Allowance for
doubtful accounts $ 82 $ 70 $ (76) $ 76
FISCAL YEAR ENDED
JANUARY 30, 1993
Allowance for
doubtful accounts $ 88 $ 78 $ (84) $ 82
FISCAL YEAR ENDED
FEBRUARY 1, 1992:
Allowance for
doubtful accounts $ 84 $ 105 $ (101) $ 88
(a) Write-off of accounts determined to be uncollectible, net of
recoveries of $22 million in each of 1993, 1992 and 1991.
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Exhibit 21
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT
The corporations listed below are subsidiaries of registrant, and
all are included in the consolidated financial statements of
registrant as subsidiaries (unnamed subsidiaries, considered in the
aggregate as a single subsidiary, would not constitute a
significant subsidiary):
Jurisdiction
in which
Name organized
May Capital, Inc. Delaware
May Centers Associates Corporation Missouri
May Funding, Inc. Nevada
May Holdings, Inc. Delaware
The May Department Stores Credit Company Delaware
Payless ShoeSource, Inc. Missouri
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EXHIBIT 3(a)
Restated
Certificate of Incorporation
of
THE MAY DEPARTMENT STORES COMPANY
under Section 807 of the
Business Corporation Law
Dated: March 18, 1994
Filed: March 22, 1994
<PAGE>
Restated
Certificate of Incorporation
of
The May Department Stores Company
under Section 807 of the
Business Corporation Law
We, the undersigned, Louis J. Garr, Jr. and Richard A.
Brickson, being respectively the Executive Vice President and
the Secretary of The May Department Stores Company, hereby
certify:
1. The name of the Corporation is:
The May Department Stores Company
2. The Certificate of Incorporation of the Corporation
was filed with the Department of State on June 4, 1910.
3. The text of the Certificate of Incorporation is
hereby restated, without amendment or change, to read in full
as follows:
"Certificate of Incorporation
of
The May Department Stores Company
Pursuant to the Provisions of the Business Corporation Law
FIRST.
The name of the Corporation shall be
THE MAY DEPARTMENT STORES COMPANY.
SECOND.
The purposes of the Corporation are as follows:
(a) To purchase, acquire and take over such of the chattels
real, leases, fixtures, merchandise, bills receivable, book
accounts, contracts, cash on hand and in bank, patents, copyrights,
trademarks, trade names, good will and other real and personal
<PAGE>
property, assets and effects of The Shoenberg Mercantile Company,
a corporation organized under the laws of the State of Missouri,
The May Shoe & Clothing Company, a corporation organized under the
laws of the State of Colorado, and The May Company, a corporation
organized under the laws of the State of Ohio (which three
corporations are engaged in the same or similar general business as
the business for which this Corporation is organized, as
hereinafter set forth), as are necessary for and are now used in
the conduct of the businesses of said corporations respectively;
and also the leases of the property now occupied by The Shoenberg
Mercantile Company for the conduct of its business in St. Louis,
Missouri, the real property situated at 16th and Champa Streets,
Denver, Colorado and now occupied by The May Shoe & Clothing
Company for the conduct of its business, and the stables of The
Shoenberg Mercantile Company at Francis Street and Cass Avenue,
St. Louis, Missouri, which leases and real property are owned by
The May Real Estate & Investment Company, a corporation organized
under the laws of the State of Missouri, subject to the debts,
obligations and contracts of said corporations, respectively, and
to pay therefor the sum of $20,000,000 by the issue and delivery of
50,000 shares of the full paid and non-assessable 7% cumulative
Preferred Stock of this Company, and 150,000 shares of its full
paid and non-assessable common stock, and also an additional sum in
cash or notes of this Company not exceeding $1,000,000, with power
to the incorporators and directors to change and modify the terms
of purchase as they may see fit. To empower any of the present
directors of any of the aforesaid corporations to be and become
organizers, incorporators, directors and stockholders of this
Corporation, to vote for and authorize the acquisition of the
properties and shares of stock of said corporations, or any of
them, and to relieve the incorporators, directors and stockholders
of this Corporation from any disqualification which might otherwise
exist from so acting.
(b) To establish and conduct general department stores and dry
goods stores.
(c) To carry on all or any of the business of dry goods
merchants, cloth manufacturers, furriers, haberdashers, hosiers,
manufacturers, importers, wholesale and retail dealers of and in
textile fabrics of all kinds; milliners, dressmakers, mantuamakers,
tailors, hatters, clothiers, furnishers, outfitters, glovers, lace
manufacturers, feather dressers, boot and shoe makers;
manufacturers and importers and wholesale and retail dealers of and
in leather goods, household furniture, ironmongery, china and
glassware, crockery and other household fittings and utensils,
ornaments, bric-a-brac, stationery, notions and fancy goods,
dealers in meats and provisions, drugs, chemicals, and other
articles and commodities of personal and household use and
consumption, and generally of and in all manufactured goods,
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materials, provisions, produce and other personal property of every
kind, nature and description, except bills of exchange.
(d) To carry on all or any of the businesses of coach and
carriage builders, saddlers, harness makers, decorators, sanitary
engineers, electrical engineers and contractors, in all of the
branches thereof, gas fitters, coal and wood dealers, land, estate
and house agents, builders, contractors, auctioneers, cabinet
makers, upholsterers, furniture removers, owners of depositories,
warehousemen, carriers, storekeepers, of the issuing, redemption,
selling and dealing in trading stamps and similar devices;
manufacturers of and dealers in hardware, jewelry, plated goods,
perfumery, soap, toilet articles of all kinds, and articles
required for ornament, recreation or amusement, drugs, medicines,
chemicals and paints; gold and silversmiths, dealers in precious
stones, watchmakers, newspaper proprietors, booksellers, dealers in
musical instruments, manufacturers of and dealers in bicycles,
tricycles and motor carriages, and sporting goods of all kinds; and
also refreshment contractors, restaurant keepers, wine and liquor
dealers, tobacconists and dealers in mineral, aerated and other
liquors; barbers and hairdressers, farmers, dairymen, market
gardeners, nurserymen and florists, photographers and dealers in
photographic supplies, printers, lithographers and engravers,
dealers in domestic, trained and fancy animals.
(e) To purchase or otherwise acquire, own and hold unlimitedly
within and without the State of New York, and in any part of the
world, to sell, assign, transfer, lease, pledge, alter, export,
import and deal in, personal property of every kind, nature and
description which may be suitable, necessary, useful or advisable
in connection with any or all of the objects hereinbefore or
hereinafter set forth or which may be commonly supplied or dealt in
by persons engaged in any of the businesses of the Corporation, or
which may seem capable of being profitably dealt with in connection
with any of the said businesses.
(f) To provide and conduct, for profit or otherwise,
refreshment rooms, newspaper rooms, reading and writing rooms,
dressing rooms, and other conveniences for the use of customers and
others.
(g) To grant to other persons, associations or corporations
the right or privilege to carry on any kind of business on the
premises of the Company on such terms as the Company shall deem
expedient or proper.
(h) To take, purchase, exchange, hire, lease or otherwise
acquire, and to own and hold unlimitedly within and without the
State of New York, and in any part of the world, to occupy,
control, maintain, manage, sell, convey, exchange, lease, sublease
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or otherwise alienate or dispose of, and to mortgage, or otherwise
encumber, and to otherwise handle and deal in, real estate, and
real property, either improved or unimproved, and any interest or
right therein.
(i) To erect or cause to be erected, construct, or cause to be
constructed, to maintain, improve, rebuild, enlarge, alter, repair,
raise and remove, and to buy, sell, own, use, occupy, manage, lease
and control, any and all kinds of buildings, houses, stores, lofts,
offices, warehouses, mills, shops, factories, hotels, restaurants,
apartments, tenements, machinery, plants, edifices, works and
structures of every kind, nature and description.
(j) To convert and appropriate any land that may be acquired
by the Corporation in any part of the world into and for ways,
roads, paths, streets, alleys, lanes, sidewalks, courts, lawns,
parks, boulevards, building lots, town sites and pleasure grounds;
to plot, clear, grade, survey, develop, improve, cultivate, manage
and administer any land owned or controlled by the Corporation.
(k) To borrow or raise money for the purposes of the Company,
to secure the same and any interest therein, and for that purpose
or any other purpose, subject to the provisions and restrictions
hereinafter set forth, to mortgage and charge all or any part of
the present or after-acquired property, rights and franchises of
the Company, and to issue notes, bonds, debentures and other
evidences of indebtedness.
(l) To guarantee the payment of principal or interest on any
notes, debentures, bonds or other obligations of any corporation or
corporations, so far as the same may be permitted by corporations
organized under the Business Corporations Law.
(m) To subscribe for, or cause to be subscribed for, to
purchase, invest in, acquire, hold, own, sell, assign, transfer,
mortgage, pledge, exchange, distribute, or otherwise dispose of the
whole or any part of the shares of stock, bonds, mortgages,
debentures, notes, coupons, and other securities, obligations,
contracts and evidences of indebtedness of any corporation,
domestic or foreign, and to issue and exchange therefor its shares
of stock, bonds, or other obligations, and to exercise in respect
to any such shares of stock, bonds or other securities, any and all
rights, powers and privileges of individual owners or holders,
including the right to vote thereon, and to aid in any manner as
permitted by law, any corporation or association of which any bonds
or other securities, or evidences of indebtedness or stock, are
held by this Corporation, and to do any acts or things designed to
protect, preserve, improve or enhance the value of any such stock,
bonds or other securities, or evidences of indebtedness, and to
organize or promote or facilitate the organization of subsidiary
companies.
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<PAGE>
(n) To act as agent or representative of corporations, firms
and individuals, and as such to develop and extend the business
interests of firms, corporations and individuals.
(o) To undertake or aid any enterprise and to carry out any
transactions whatever which may be lawfully undertaken and carried
out by capitalists so far as the same may be carried on by
corporations organized under the Business Corporations Law of the
State of New York.
(p) To edit, print, publish, sell, advertise and circulate
books, papers, pamphlets, reports, maps, plans, documents of every
kind, nature and description, and to carry on a general publishing
business and a general newspaper business.
(q) To buy, lease or otherwise acquire, the good will,
franchises, rights and property of any person, firm, association or
corporation, and to pay for the same in cash, property, the stock
or bonds of this Company, or otherwise; and to hold, or in any
manner dispose of, the whole or any part of the property so
acquired; to consent, carry on, operate, manage, control, improve
and develop, the whole or any part of any business or property so
acquired, either in the name of such other person or persons, firm,
association or corporation, or in the name of this Corporation,
provided that such business is one that may be carried on by a
corporation organized under the Business Corporations Law of the
State of New York, and to exercise all the powers necessary or
convenient in and about the conduct and management of such
business.
(r) To sell or exchange all or any part of the property,
assets, good will, and undertaking of the Company, and to accept in
payment or exchange therefor, the stocks, bonds, or other
securities of any other corporation, either domestic or foreign.
(s) To use the surplus profits of said corporation for the
purchase of any portion of the shares of its capital stock,
preferred or common, provided, however, that the capital stock
shall not be reduced except in accordance with the requirements of
the Stock Corporation Law.
(t) To apply for, obtain, register, purchase, lease, or
otherwise acquire, to hold, use, own, operate and introduce, and to
sell, assign, or otherwise dispose of, any and all trade marks,
formulae, secret processes, trade names and distinctive marks,
patents, inventions, improvements and processes used in connection
with, or secured under, letters patent, or similar rights granted
by the United States or by any other country or government, or
otherwise, and to use, exercise and develop, grant licenses in
respect of the same, or any interest therein, and otherwise turn
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<PAGE>
the same to account, and to carry on any business which the
Corporation may deem advantageous to effectuate the use, exercise
or development thereof, in so far as the same is not inconsistent
with the Laws of the State of New York.
(u) To do all and everything necessary, suitable, useful or
proper for the accomplishment of any of the purposes or the
attainment of any of the objects, or the furtherance of any of the
powers hereinbefore set forth, as principal or agent, either alone
or in association with other corporations, firms or individuals,
and to do every other act or acts, thing or things incidental or
appurtenant to, or growing out of, or connected with any of the
aforesaid purposes, objects or powers, or any part or parts
thereof, and to do any such acts or things to the same extent and
as fully as natural persons might or could do in any part of the
world.
To conduct and transact its business in any or all of its
branches in any of the states, territories, colonies or
dependencies of the United States, in the District of Columbia and
in any and all foreign countries; to have one or more offices
therein; to hold, purchase, mortgage and convey real and personal
property, without limit as to amount, in any such state, territory,
colony, dependency, district or foreign country, but always subject
to the laws thereof.
The objects and powers specified in any clause contained in
this Article Second shall, except where otherwise expressed, be in
no wise limited or restricted by reference to or inference upon the
terms of any other clause of this Article or any other Article of
this certificate; but the objects and powers specified in each of
the clauses of this Article shall be regarded as independent
objects, purposes and powers.
The foregoing enumeration of specific powers shall not be held
to limit or restrict in any manner, the general powers of the
Company, and the enjoyment thereof, as conferred by the laws of the
State of New York upon corporations organized under the provisions
of the Business Corporations Law.
(v) To establish, maintain, own, lease, operate, buy, sell, or
otherwise acquire or dispose of, broadcasting stations of every
kind and description, including radio and television, and including
equipment therefor and appurtenances thereto, and in connection
therewith to transmit or otherwise broadcast, rebroadcast,
distribute, or retransmit by means of radio, electricity, or any
other means, whether now or hereafter invented or devised, sounds
and images of every class and description, and in conjunction
therewith or otherwise to broadcast, rebroadcast, disseminate,
transmit or retransmit news, music, entertainment, speeches,
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<PAGE>
sermons, advertising, educational and informative matter, or any of
them, or combinations of any of them, for the purpose of
entertaining, instructing or informing the persons hearing or
seeing the same; to hire speakers, musicians, artists, and
entertainers of all kinds for the said purposes; and generally, to
the extent permitted by law, to do any act or thing in connection
with the foregoing that may be necessary or convenient to carry out
these purposes.
THIRD.
The capital of the Corporation shall be at least equal to the
sum of the aggregate par value of all issued shares having par
value, plus One Hundred Dollars ($100) in respect to every issued
share without par value, plus such amounts as, from time to time,
by resolution of the Board of Directors, may be transferred
thereto.
FOURTH.
The total number of shares which the Corporation is authorized
to issue is 725,134,474, of which 124,596 shares are to be without
par value, 9,878 shares are to have a par value of $100 each,
725,000,000 shares are to have a par value of $.50 each.
The shares which the Corporation may henceforth issue are to
be classified into 51,323 shares of Preferred Stock without par
value (hereinafter called "Preferred Stock"), 73,273 shares of
$1.80 Preference Stock without par value (hereinafter called
"Preference Stock"), 9,878 shares of 3 3/4% Cumulative Preferred
Stock of the par value of $100 each (hereinafter called "3 3/4%
Cumulative Preferred Stock"), 700,000,000 shares of common stock of
the par value of $.50 each (hereinafter called "Common Stock"), and
25,000,000 shares of Preference Stock of the par value of $.50 each
(hereinafter called "Preference Shares").
The holders of shares of Common Stock shall not have any
preemptive right to purchase shares or other securities to be
issued by the Corporation or subjected to rights or options to
purchase.
The designations, preferences, privileges and voting powers of
the shares of each class, and the restrictions or qualifications
thereof are as follows:
A.
1. The Preferred Stock may be issued from time to time as
follows:
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(a) As shares of one or more series of Preferred Stock (the
designations, preferences, privileges and voting powers of the
shares of each of the first series of Preferred Stock, and the
restrictions or qualifications thereof not set forth in
subdivisions 1 to 9 hereof being set forth in subdivisions 10, 11
and 12 hereof respectively), and in the resolution or resolutions
providing for the issue of shares of each subsequent series, before
issuance, the Board of Directors is expressly authorized to fix:
(i) the distinctive serial designation of such series;
(ii) the annual dividend rate for such series;
(iii) the redemption price or prices for such series,
which may consist of a redemption price or scale of redemption
prices applicable only to redemption for a sinking fund (which
term as used herein shall include any fund or requirement for
the periodic retirement of shares), and a different redemption
price or scale of redemption prices applicable to any other
redemption;
(iv) the obligation, if any, of the Corporation to retire
shares of such series pursuant to a sinking fund; and
(v) the terms, if any, upon which shares of such series
shall be convertible into, or exchangeable for, shares of
stock or any other class or classes, including the price or
prices or the rate or rates of conversion or exchange and the
terms of adjustment, if any;
(b) All shares of the Preferred Stock shall be of equal rank
with each other, regardless of series, and shall be identical with
each other in all respects except as in paragraph (a) of
subdivision 1, and in paragraph (b) of subdivision 8, and in
subdivisions 10, 11 and 12 provided; and the shares of the
Preferred Stock of any one series shall be identical with each
other in all respects except as to the dates from and after which
dividends thereon shall be cumulative;
(c) In case the stated dividends and the amounts payable on
liquidation are not paid in full, the shares of all series of the
Preferred Stock shall share ratably in the payment of dividends,
including accumulations, if any, in accordance with the sums which
would be payable on said shares if all dividends were declared and
paid in full, and in any distribution of assets other than by way
of dividends in accordance with the sums which would be payable on
such distribution if all sums payable were discharged in full.
2. The holders of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, but only
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<PAGE>
out of surplus legally available for the payment of dividends,
cumulative cash dividends at the annual rate for each particular
series theretofore fixed by the Board of Directors as hereinbefore
provided, and no more, payable quarter-yearly, on the first days of
March, June, September and December in each year, to stockholders
of record on the respective dates, not exceeding forty days
preceding such dividend payment dates, fixed for the purpose by the
Board of Directors in advance of payment of each particular
dividend. Such dividends on the Preferred Stock shall be payable
before any dividends on any junior stock shall be paid or set apart
for payment and shall be cumulative from and after dates determined
as follows:
(a) if issued during the period commencing immediately after
a record date for a dividend on such series and ending on the
payment date for such dividend, then from and after such dividend
payment date; and
(b) otherwise from and after the first day of March, June,
September or December next preceding the date of issue of such
shares.
3. So long as any of the Preferred Stock remains outstanding,
no dividend whatever shall be paid or declared, nor any
distribution be made on any junior stock (which term as used herein
shall mean the Common Stock and any other class of stock of the
Corporation hereafter authorized which shall rank junior to the
Preferred Stock), other than a dividend payable in junior stock,
nor shall any shares of any junior stock be acquired for a
consideration by the Corporation:
(a) unless all dividends on the Preferred Stock of all series
for all past quarter-yearly dividend periods shall have been paid
and the full dividends thereon for the then current quarter-yearly
dividend period shall have been paid or declared and a sum
sufficient for the payment thereof set apart; and
(b) unless, if at any time the Corporation is obligated to
retire shares of any series of the Preferred Stock pursuant to a
sinking fund, all arrears in respect of the retirement of the
Preferred Stock of all series shall have been made good; and
(c) unless immediately thereafter the capital represented by
the outstanding stocks of the Corporation (excluding treasury stock
held by the Corporation), plus consolidated surplus of all types
computed in accordance with good accounting practice, less the cost
of any stock of the Corporation owned by its subsidiaries, will
aggregate at least $50,000,000 plus $100 with respect to each share
if any of Preferred Stock in excess of 150,000 shares to be
outstanding immediately thereafter; and the certificate of any
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independent firm of public accountants of recognized standing
selected by the Board of Directors shall be conclusive evidence of
the correctness of any computations made under this paragraph (c);
provided, however, that the restrictions set forth in this
subdivision 3 shall not apply to the acquisition of any junior
stock out of the proceeds of sale of any junior stock, nor prevent
the payment of any dividend within sixty days after the date of
declaration thereof, if at said date such declaration complied with
the provisions of this subdivision 3.
Subject to the provisions hereof, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared and paid on
any junior stock from time to time out of the remaining surplus of
the Corporation legally available for the payment of dividends, and
the Preferred Stock shall not be entitled to participate in any
such dividends, whether payable in cash, stock or otherwise.
4. Subject to the provisions hereof, the Board of Directors
shall have power from time to time to fix, determine and vary the
amount of working capital of the Corporation and to direct and
determine the use and disposition of any surplus of the Corporation
over and above the capital of the Corporation, and to use the
surplus of the Corporation for the purpose of acquiring any of the
capital stock of the Corporation, and to reissue and sell any of
the capital stock so acquired.
5. Subject to the provisions of paragraph (d) of subdivision
8 hereof, the Corporation, at the option of the Board of Directors
(or for the purpose of any sinking fund) may redeem the whole or
any part of the Preferred Stock at any time outstanding, or the
whole or any part of any series thereof (except that the $3.40
Cumulative Preferred Stock shall not be redeemable prior to
December 1, 1951) at any time or from time to time, upon notice
duly given as hereinafter specified, at the applicable redemption
price or prices fixed herein or by the Board of Directors as
hereinbefore provided, together with a sum, in the case of each
share so to be redeemed, computed at the annual dividend rate for
the series of which the particular share is a part, from and after
the date on which dividends on such share became cumulative to and
including the date fixed for such redemption, less the aggregate of
the dividends theretofore and on such redemption date paid thereon,
but computed without interest.
Notice of every such redemption of the Preferred Stock shall
be given by publication at least once in each of two successive
calendar weeks in a newspaper printed in the English language and
customarily published on each business day and of general
circulation in the Borough of Manhattan, The City of New York, the
first publication to be at least thirty days prior to the date
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<PAGE>
fixed for such redemption. At least thirty days' previous notice
of every such redemption shall also be mailed to the holders of
record of the shares so to be redeemed at their respective
addresses as the same shall appear on the books of the Corporation;
but no failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceeding for the
redemption of any shares so to be redeemed.
In case of redemption of a part only of any series of the
Preferred Stock at the time outstanding, the Corporation shall
designate by lot the shares so to be redeemed. The Board of
Directors shall have full power and authority to prescribe the
manner in which the drawings by lot shall be conducted and, subject
to the limitations and provisions herein contained, the terms and
conditions upon which the Preferred Stock shall be redeemed from
time to time.
If such notice of redemption shall have been duly given by
publication, and if, on or before the redemption date specified
therein, all funds necessary for such redemption shall have been
set aside by the Corporation, separate and apart from its other
funds, in trust for the pro rata benefit of the holders of the
shares so called for redemption, so as to be and continue to be
available therefor, then, notwithstanding that any certificate for
shares so called for redemption shall not have been surrendered for
cancellation, all shares so called for redemption shall no longer
be deemed outstanding on and after such redemption date, and all
rights with respect to such shares shall forthwith on such
redemption date cease and terminate, except only the right of the
holders thereof to receive the amount payable on redemption
thereof, without interest.
If such notice of redemption shall have been duly given by
publication or if the Corporation shall have given to the bank or
trust company hereinafter referred to irrevocable authorization
promptly to give or complete such notice by publication, and if on
or before the redemption date specified therein the funds necessary
for such redemption shall have been deposited by the Corporation
with a bank or trust company in good standing, designated in such
notice, organized under the laws of the United States of America or
of the State of New York, doing business in the Borough of
Manhattan, The City of New York, having a capital, surplus and
undivided profits aggregating at least $5,000,000 according to its
last published statement of condition, in trust for the pro rata
benefit of the holders of the shares so called for redemption,
then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, from
and after the time of such deposit all shares of the Preferred
Stock so called for redemption shall no longer be deemed to be
outstanding and all rights with respect to such shares shall
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forthwith cease and terminate, except only the right of the holders
thereof to receive from such bank or trust company at any time
after the time of such deposit the funds so deposited, without
interest, and the right to exercise on or before the date fixed for
redemption, privileges of exchange or conversion, if any, not
theretofore expiring.
Any funds so set aside or deposited by the Corporation which
shall not be required for such redemption because of the exercise
of any such right of conversion or exchange subsequent to the date
of such deposit shall be released or repaid to the Corporation
forthwith. Any funds so set aside or deposited, as the case may be,
and unclaimed at the end of six years from such redemption date
shall be released or repaid to the Corporation, after which the
holders of the shares so called for redemption shall look only to
the Corporation for payment thereof.
Shares of Preferred Stock so redeemed may thereafter, in the
discretion of the Board of Directors, be reissued at any time or
from time to time to the extent and in any manner now or hereafter
permitted by law, except that shares retired for any sinking fund
shall not be reissued.
6. In the event of any voluntary liquidation, dissolution or
winding up of the Corporation, the holders of the Preferred Stock
then outstanding shall be entitled to receive out of the assets of
the Corporation, before any distribution or payment shall be made
to the holders of any junior stock, the respective amounts which
such holders would have been entitled to receive had such shares
been redeemed otherwise than for sinking fund on the date fixed for
payment. In the event of any involuntary liquidation, dissolution
or winding up of the Corporation, the holders of the Preferred
Stock then outstanding shall be entitled to receive out of the
assets of the Corporation, before any distribution or payment shall
be made to the holders of any junior stock, an amount equal to $100
per share, plus in respect of each such share a sum computed at the
annual dividend rate for the series of which such share is a part
from and after the date on which dividends on such share became
cumulative to and including the date fixed for such payment, less
the aggregate of dividends theretofore paid thereon, but computed
without interest. If such payment shall have been made in full to
the holders of the Preferred Stock on voluntary or involuntary
liquidation, dissolution or winding up, the remaining assets of the
Corporation shall be distributed among the holders of junior stock,
according to their respective rights and preferences and pro rata
in accordance with their respective holdings.
7. No holder of Preferred Stock shall be entitled as such, as
a matter of right, to subscribe for or purchase any part of any new
or additional issue of stock of any class whatsoever, or of
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securities convertible into any stock of any class whatsoever,
whether now or hereafter authorized and whether issued for cash or
other consideration or by way of dividend.
8. The consent of the holders of at least two-thirds of the
Preferred Stock at the time outstanding, given in person or by
proxy, either in writing or at a special meeting called for the
purpose, at which the Preferred Stock shall vote separately as a
class, shall be necessary to effect or validate any one or more of
the following:
(a) The creation or authorization of any additional class of
stock of the Corporation ranking prior to or on a parity with the
Preferred Stock or any increase in the authorized amount of the
Preferred Stock, or of any additional class of stock of the
Corporation ranking prior to or on a parity with the Preferred
Stock;
(b) The amendment, alteration or repeal of any of the
provisions of the Certificate of Incorporation of the Corporation
or of any certificate amendatory thereof or supplemental thereto so
as to affect adversely the rights or preferences of the Preferred
Stock or of the holders thereof; provided, however, that if any
such amendment, alteration or repeal shall affect adversely the
rights or preferences of one or more, but not all, of the series of
Preferred Stock at the time outstanding, or shall unequally so
affect the rights or preferences of series of Preferred Stock at
the time outstanding, the consent of the holders of at least two-
thirds in interest of the shares then outstanding of each such
series so affected, similarly given, shall be required in lieu of
the consent of the holders of two-thirds in interest of the
Preferred Stock voting as a class;
(c) The voluntary liquidation, dissolution or winding up of
the Corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Corporation,
or a consolidation or merger with any other corporation (other than
the merger by the Corporation of any corporation all the
outstanding stock of which it then owns); or
(d) The purchase or redemption of less than all of the
Preferred Stock at the time outstanding, unless the full dividend
on the Preferred Stock for all past quarter-yearly dividend periods
shall have been paid or declared and a sum sufficient for the
payment thereof set apart.
Except to the extent provided in this subdivision 8, all
shares of Preferred Stock are specifically excluded from the right
to vote in a proceeding for mortgaging the property and franchises
of the Corporation pursuant to Section 16, for authorizing any
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guaranty pursuant to Section 19, for sale of the franchises and
property pursuant to Section 20, for consolidation pursuant to
Section 86, and for voluntary dissolution pursuant to Section 105,
of the Stock Corporation Law, and for change of name pursuant to
the General Corporation Law.
9. Unless and until four quarter-yearly dividends payable on
the Preferred Stock of any series shall be in default, in whole or
in part, the entire voting power and all voting rights, except as
otherwise provided herein or by statute, shall be vested
exclusively in the Common Stock. If and when four quarter-yearly
dividends (whether or not consecutive) payable on the Preferred
Stock of any series shall be in default, the holders of the
outstanding Preferred Stock, voting separately as a class
regardless of series, shall, in addition to the voting rights
provided by statute and in subdivision 8 above, become entitled to
elect that number of Directors which will constitute one-sixth of
the total number of Directors, or in the event that the one-sixth
of the total number shall not be a whole number, the next higher
whole number of Directors, but in no event fewer than three
Directors, and the holders of the Common Stock, voting separately
as a class, shall be entitled to elect the remaining Directors of
the Corporation. However, if and when all dividends then in default
on the Preferred Stock of each series then outstanding shall
thereafter be paid, the Preferred Stock shall then be divested of
such voting power, but always subject to the same provisions for
the vesting of such voting power in the Preferred Stock in case of
any similar future default or defaults. A meeting of the holders of
the Preferred Stock, for the election of such Directors, at which
the holders of the Preferred Stock shall vote as a class,
regardless of series, shall be held at any time after the accrual
of such voting power, upon notice similar to that provided in the
By-laws for a special meeting of stockholders, upon call by the
Secretary of the Corporation, who shall call such meeting at the
written request of the holders of record of not less than 5% of the
Preferred Stock then outstanding, addressed to him at the principal
business office of the Corporation. Upon termination of the voting
power of the Preferred Stock at any time by reason of the payment
of all accumulated and defaulted dividends on such stock, the terms
of office of all persons who may have been elected Directors of the
Corporation by vote of the holders of the Preferred Stock shall
forthwith terminate.
At all times each stockholder of the Corporation of any class
who at the time possesses voting power for any purpose shall, for
such purpose, be entitled to one vote for each share of such stock
standing in his name on the books of the Corporation.
10. The designations, preferences, privileges and voting
powers of the initial series (presently 23,966 shares) of the
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Preferred Stock without par value of the Corporation and the
restrictions or qualifications thereof which have not been set
forth above are as follows:
(a) The distinctive serial designation of the initial series
of the Preferred Stock is "$3.75 Cumulative Preferred Stock".
(b) The annual dividend rate for the $3.75 Cumulative
Preferred Stock is $3.75 per share.
(c) The redemption price of the $3.75 Cumulative Preferred
Stock, whether for sinking fund or otherwise, is $107.50 per share
as to all shares redeemed prior to July 1, 1947, with successive
reductions of $1.00 per share on July 1, 1947, and on each second
July 1 thereafter to $103.50 per share on and after July 1, 1953.
(d) As a sinking fund for the $3.75 Cumulative Preferred
Stock, so long as any Preferred Stock of such series is
outstanding, the Corporation (subject to the provisions of
paragraph (d) of subdivision 8 above) and to the extent that the
Corporation shall have any funds legally available therefor, shall
retire during the year ending July 1, 1948 and during each year
ending July 1 thereafter, at least 1% of the total number of shares
of such series which shall have been issued prior to the beginning
of the respective year. If less than such number of shares shall
have been retired for sinking fund in any such year (whether or not
such failure was due to the provisions of paragraph (d) of
subdivision 8 above or to the non-availability of funds therefor),
the deficiency in such sinking fund shall be deemed to be in
arrears and until subsequently made good, the restrictions of
subdivision 3 above shall be applicable as therein provided. Shares
acquired by purchase or redemption at any time may be applied to
sinking fund by retirement thereof at any subsequent time. Shares
retired at any time and not theretofore credited to sinking fund
may be credited by the Corporation on the number of shares required
to be retired for sinking fund at any subsequent time. Shares
retired for the sinking fund shall not be reissued, and the
Corporation shall cause its authorized capital stock to be reduced
accordingly in the manner provided by law.
(e) Shares of the $3.75 Cumulative Preferred Stock shall not
be convertible into or exchangeable for shares of stock of any
other class.
11. The designations, preferences, privileges and voting
powers of the next series (presently 9,263 shares) of the Preferred
Stock without par value of the Corporation and the restrictions or
qualifications thereof which have not been set forth above are as
follows:
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(a) The distinctive serial designation of said series of the
Preferred Stock is "$3.40 Cumulative Preferred Stock."
(b) The annual dividend rate for the $3.40 Cumulative
Preferred Stock is $3.40 per share.
(c) The redemption price of the $3.40 Cumulative Preferred
Stock, whether for sinking fund or otherwise, is $103.50 per share,
the $3.40 Cumulative Preferred Stock not being redeemable however
prior to December 1, 1951.
(d) As a sinking fund for the $3.40 Cumulative Preferred
Stock, so long as any Preferred Stock of such series is
outstanding, the Corporation (subject to the provisions of
paragraph (d) of subdivision 8 above) and to the extent that the
Corporation shall have any funds legally available therefor, shall
retire during the year ending July 1,1952 and during each year
ending July 1 thereafter, at least 1% of the total number of shares
of such series which shall have been issued prior to the beginning
of the respective year. If less than such number of shares shall
have been retired for sinking fund in any such year (whether or not
such failure was due to the provisions of paragraph (d) of
subdivision 8 above or to the non-availability of funds therefor)
the deficiency in such sinking fund shall be deemed to be in
arrears and until subsequently made good, the restrictions of
subdivision 3 above shall be applicable as therein provided. Shares
acquired by purchase or redemption at any time may be applied to
sinking fund by retirement thereof at any subsequent time. Shares
retired at any time and not theretofore credited to sinking fund
may be credited by the Corporation on the number of shares required
to be retired for sinking fund at any subsequent time. Shares
retired for the sinking fund shall not be reissued, and the
Corporation shall cause its authorized capital stock to be reduced
accordingly in the manner provided by law.
(e) Shares of the $3.40 Cumulative Preferred Stock shall not
be convertible into or exchangeable for shares of stock of any
other class.
12. The designations, preferences, privileges and voting
powers of the third series (presently 18,094 shares) of the
Preferred Stock, without par value, of the Corporation, and the
restrictions or qualifications thereof, which have not been set
forth above are as follows:
(a) The distinctive serial designation of the third series of
the Preferred Stock is "$3.75 Cumulative Preferred Stock, 1947
Series."
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(b) The annual dividend rate for the $3.75 Cumulative
Preferred Stock, 1947 Series, is $3.75 per share.
(c) The redemption prices of the $3.75 Cumulative Preferred
Stock, 1947 Series, are as follows:
In the case of shares redeemed otherwise than for sinking
fund, $104 per share on all shares redeemed prior to February
1, 1950, with successive reductions of $.50 per share in such
redemption price on February 1, 1950 and on each February 1
thereafter to $100 per share, together in every case with any
accrued and unpaid dividends.
In the case of shares redeemed for sinking fund, $101.50
per share in the case of all shares redeemed prior to February
1, 1950, with successive reductions of $.50 per share in such
redemption price on February 1,1950 and on each February 1
thereafter to $100 per share, together in every case with any
accrued and unpaid dividends.
(d) As a sinking fund for the $3.75 Cumulative Preferred
Stock, 1947 Series, so long as any Preferred Stock of such series
is outstanding, the Corporation (subject to the provisions of
paragraph (d) of subdivision 8 of Article Fourth of the Principal
Certificate), and to the extent that the Corporation shall have any
funds legally available therefor, shall retire during the year
ending January 31, 1950 and during each year ending January 31
thereafter, 1% of the total number of shares of such series which
shall have been issued prior to the beginning of the respective
year. If less than such number of shares shall have been retired
for sinking fund in any such year (whether or not such failure was
due to the provisions of paragraph (d) of subdivision 8 of Article
Fourth of the Principal Certificate or to the non-availability of
funds therefor), the deficiency in such sinking fund shall be
deemed to be in arrears and until subsequently made good, the
restrictions of subdivision 3 of Article Fourth of the Principal
Certificate shall be applicable as therein provided. Shares
acquired by purchase or redemption at any time may be applied to
sinking fund by retirement thereof at any subsequent time. Shares
retired at any time and not theretofore credited to sinking fund
may be credited by the Corporation on the number of shares required
to be retired for sinking fund at any subsequent time. Shares
retired for the sinking fund shall not be reissued and the
Corporation shall cause its authorized capital stock to be reduced
accordingly in the manner provided by law.
(e) Shares of the $3.75 Cumulative Preferred Stock, 1947
Series, shall not be convertible into or exchangeable for shares of
stock of any other class.
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B.
13. The Preferred Stock and the 3 3/4% Cumulative Preferred
Stock shall be of equal rank with each other in all respects, and
neither class shall be senior to or junior to the other.
14. In case the stated dividends and the amounts payable on
liquidation in respect of the Preferred Stock and the 3 3/4%
Cumulative Preferred Stock are not paid in full, each of said
classes shall share ratably in the payment of dividends, including
accumulations, if any, in accordance with the sums which would be
payable to such classes if all dividends were declared and paid in
full, and in any distribution of assets other than by way of
dividends in accordance with the sums which would be payable to
such classes on such distribution if all sums payable were
discharged in full.
C.
15. The holders of 3 3/4% Cumulative Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors, but only out of surplus legally available for the
payment of dividends, cumulative cash dividends at the annual rate
of $3.75 per share and no more, payable quarter-yearly, on the last
days of January, April, July and October in each year, to
stockholders of record on the respective dates, not exceeding forty
days preceding such dividend payment dates, fixed for the purpose
by the Board of Directors in advance of payment of each particular
dividend. Such dividends on the 3 3/4% Cumulative Preferred Stock
shall be payable before any dividends on any junior stock shall be
paid or set apart for payment and shall be cumulative from and
after January 31, 1959.
16. As a sinking fund for the 3 3/4% Cumulative Preferred
Stock, so long as any 3 3/4% Cumulative Preferred Stock is
outstanding, the Corporation (subject to the provisions of
paragraph (d) of subdivision 22) to the extent that the Corporation
shall have any funds legally available therefor, shall retire
during the year ending December 31, 1959 and during each year
ending December 31 thereafter, 1,120 shares of 3 3/4% Cumulative
Preferred Stock. If less than such number of shares shall have been
retired for sinking fund in any such year (whether or not such
failure was due to the provisions of paragraph (d) of subdivision
22 or to the non-availability of funds therefor), the deficiency in
such sinking fund shall be deemed to be in arrears and until
subsequently made good, the restrictions of subdivision 17 shall be
applicable as therein provided. Shares acquired by purchase or
redemption or otherwise held in the treasury at any time may be
applied to sinking fund by retirement thereof at any subsequent
time. Shares retired at any time and not therefore credited to
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sinking fund may be credited by the Corporation on the number of
shares required to be retired for sinking fund at any subsequent
time. Shares retired for the sinking fund shall not be reissued and
the Corporation shall cause its authorized capital stock to be
reduced accordingly in the manner provided by law.
17. So long as any of the 3 3/4% Cumulative Preferred Stock
remains outstanding, no dividend whatever shall be paid or
declared, nor any distribution be made, on any junior stock (which
term as used herein shall mean the Common Stock and any other class
of stock of the Corporation hereafter authorized which shall rank
junior to the 3 3/4% Cumulative Preferred Stock), other than a
dividend payable in junior stock, nor shall any shares of any
junior stock be acquired for a consideration by the Corporation or
any Restricted Subsidiary, nor shall any investment in, or advance
to, any Unrestricted Subsidiary be made by the Corporation or any
Restricted Subsidiary:
(a) unless all dividends on the 3 3/4% Cumulative Preferred
Stock for all past quarter-yearly dividend periods shall have been
paid and the full dividends thereon for the then current quarter-
yearly dividend period shall have been paid or declared and a sum
sufficient for the payment thereof set apart,
(b) unless all arrears in the sinking fund in respect of the
retirement of the 3 3/4% Cumulative Preferred Stock shall have been
made good, and
(c) unless immediately thereafter, the consolidated net worth
will aggregate at least $130,000,000 plus or minus, as the case may
be, an amount equal to the consolidated funded indebtedness
outstanding in excess of or less than $40,000,000, and no dividend
whatever shall be paid or declared, nor any distribution be made,
on any junior stock, other than a dividend payable in junior stock,
nor shall any shares of any junior stock be acquired for a
consideration by the Corporation or any Restricted Subsidiary,
unless after giving effect to such dividend or distribution on, or
such acquisition of, junior stock, the sum of (x) the aggregate
payments for all such purposes subsequent to January 31, 1958 and
(y) the aggregate amount of dividends paid or accrued subsequent to
January 31, 1958 on the Preferred Stock and the 3 3/4% Cumulative
Preferred Stock outstanding from time to time does not exceed the
sum of (i) consolidated net earnings accrued subsequent to January
31, 1958, (ii) $50,000,000 and (iii) the aggregate of the net
proceeds of sales of any junior stock received by the Corporation
subsequent to January 31, 1958 but in an amount not exceeding the
aggregate of the cost to the Corporation of shares of any junior
stock acquired subsequent to January 31, 1958; provided, however,
that the restrictions of this subdivision 17 shall not apply to the
acquisition of any junior stock through the exchange of shares of
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any junior stock or the acquisition of any junior stock, or any
investment in or advance to an Unrestricted Subsidiary, out of the
proceeds of sale of any junior stock, nor prevent the payment of
any dividend within ninety days after the date of declaration
thereof, if at said date such declaration complied with the
provisions of this subdivision 17.
Subject to the provisions hereof, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared and paid on
any junior stock from time to time out of the remaining surplus of
the Corporation legally available for the payment of dividends, and
the 3 3/4% Cumulative Preferred Stock shall not be entitled to
participate in any such dividends, whether payable in cash, stock
or otherwise.
18. Subject to the provisions hereof, the Board of Directors
shall have power from time to time to fix, determine and vary the
amount of working capital of the Corporation and to direct and
determine the use and disposition of any surplus of the Corporation
over and above the capital of the Corporation, and to use the
surplus of the Corporation for the purpose of acquiring any of the
capital stock of the Corporation, and to reissue and sell any of
the capital stock so acquired.
19. Subject to the provisions of paragraph (d) of subdivision
22 hereof, the Corporation, at the option of the Board of Directors
(or for the purpose of any sinking fund), may redeem the whole or
any part of the 3 3/4% Cumulative Preferred Stock at any time
outstanding, at any time or from time to time, upon notice duly
given as hereinafter specified, at the redemption price, whether
for sinking fund or otherwise, of $103 per share, together with a
sum, in the case of each share so to be redeemed, computed at the
annual dividend rate, from and after January 31, 1959 to and
including the date fixed for such redemption, less the aggregate of
the dividends theretofore and on such redemption date paid thereon,
but computed without interest.
Notice of every such redemption of the 3 3/4% Cumulative
Preferred Stock shall be given by publication at least once in each
of two successive calendar weeks in a newspaper printed in the
English language and customarily published on each business day and
of general circulation in the Borough of Manhattan, The City of New
York, the first publication to be at least thirty days prior to the
date fixed for such redemption. At least thirty days' previous
notice of every such redemption shall also be mailed to the holders
of record of the shares so to be redeemed at their respective
addresses as the same shall appear on the books of the Corporation;
but no failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceeding for the
redemption of any shares so to be redeemed.
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In case of redemption of a part only of the 3 3/4% Cumulative
Preferred Stock at the time outstanding, the Corporation shall
designate by lot the shares so to be redeemed. The Board of
Directors shall have full power and authority to prescribe the
manner in which the drawings by lot shall be conducted and, subject
to the limitations and provisions herein contained, the terms and
conditions upon which the 3 3/4% Cumulative Preferred Stock shall
be redeemed from time to time.
If such notice of redemption shall have been duly given by
publication, and if, on or before the redemption date specified
therein, all funds necessary for such redemption shall have been
set aside by the Corporation, separate and apart from its other
funds, in trust for the pro rata benefit of the holders of the
shares so called for redemption, so as to be and continue to be
available therefor, then, notwithstanding that any certificate for
shares so called for redemption shall not have been surrendered for
cancellation, all shares so called for redemption shall no longer
be deemed outstanding on and after such redemption date, and all
rights with respect to such shares shall forthwith on such
redemption date cease and terminate, except only the right of the
holders thereof to receive the amount payable on redemption
thereof, without interest.
If such notice of redemption shall have been duly given by
publication or if the Corporation shall have given to the bank or
trust company hereinafter referred to irrevocable authorization
promptly to give or complete such notice by publication, and if on
or before the redemption date specified therein the funds necessary
for such redemption shall have been deposited by the Corporation
with a bank or trust company in good standing, designated in such
notice, organized under the laws of the United States of America or
of the State of New York, doing business in the Borough of
Manhattan, The City of New York, having a capital, surplus and
undivided profits aggregating at least $5,000,000 according to its
last published statement of condition, in trust for the pro rata
benefit of the holders of the shares so called for redemption,
then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, from
and after the time of such deposit all shares of the 3 3/4%
Cumulative Preferred Stock so called for redemption shall no longer
be deemed to be outstanding and all rights with respect to such
shares shall forthwith cease and terminate, except only the right
of the holders thereof to receive from such bank or trust company
at any time after the time of such deposit the funds so deposited,
without interest.
Any funds so set aside or deposited, as the case may be, and
unclaimed at the end of six years from such redemption date shall
be released or repaid to the Corporation, after which the holders
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of the shares so called for redemption shall look only to the
Corporation for payment thereof.
Shares of 3 3/4% Cumulative Preferred Stock so redeemed may
thereafter, in the discretion of the Board of Directors, be
reissued at any time or from time to time to the extent and in any
manner now or hereafter permitted by law, except that shares
retired for any sinking fund shall not be reissued.
20. In the event of any voluntary liquidation, dissolution or
winding up of the Corporation, the holders of the 3 3/4% Cumulative
Preferred Stock then outstanding shall be entitled to receive out
of the assets of the Corporation, before any distribution or
payment shall be made to the holders of any junior stock, the
amount which such holders would have been entitled to receive had
such shares been redeemed on the date fixed for payment. In the
event of any involuntary liquidation, dissolution or winding up of
the Corporation, the holders of the 3 3/4% Cumulative Preferred
Stock then outstanding shall be entitled to receive out of the
assets of the Corporation, before any distribution or payment shall
be made to the holders of any junior stock, an amount equal to $100
per share, plus in respect of each such share a sum computed at the
annual dividend rate, from and after January 31, 1959 to and
including the date fixed for such payment, less the aggregate of
dividends theretofore paid thereon, but computed without interest.
If such payment shall have been made in full to the holders of the
3 3/4% Cumulative Preferred Stock on voluntary or involuntary
liquidation, dissolution or winding up, the remaining assets of the
Corporation shall be distributed among the holders of junior stock,
according to their respective rights and preferences and pro rata
in accordance with their respective holdings.
21. No holder of 3 3/4% Cumulative Preferred Stock shall be
entitled as such, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of stock of any
class whatsoever, or of securities convertible into any stock of
any class whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of
dividend.
22. The consent of the holders of at least two-thirds of the
3 3/4% Cumulative Preferred Stock at the time outstanding, given in
person or by proxy, either in writing or at a special meeting
called for the purpose, at which the 3 3/4% Cumulative Preferred
Stock shall vote separately as a class, shall be necessary to
effect or validate any one or more of the following:
(a) The creation or authorization of any additional class of
stock of the Corporation ranking prior to or on a parity with the
3 3/4% Cumulative Preferred Stock or any increase in the authorized
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amount of the 3 3/4% Cumulative Preferred Stock or of any class of
stock of the Corporation ranking prior to or on a parity with the
3 3/4% Cumulative Preferred Stock;
(b) The amendment, alteration or repeal of any of the
provisions of the Certificate of Incorporation of the Corporation
or of any certificate amendatory thereof or supplemental thereto so
as to affect adversely the rights or preferences of the 3 3/4%
Cumulative Preferred Stock or of the holders thereof;
(c) The voluntary liquidation, dissolution or winding up of
the Corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Corporation,
or a consolidation or merger with any other corporation (other than
the merger by the Corporation of any subsidiary provided that such
merger involves no action which would otherwise require the giving
of consent under this subdivision 22);
(d) The purchase or redemption of less than all of the 3 3/4%
Cumulative Preferred Stock at the time outstanding, unless the full
dividend on the 3 3/4% Cumulative Preferred Stock for all past
quarter-yearly dividend periods shall have been paid or declared
and a sum sufficient for the payment thereof set apart;
(e) The incurring or assuming by the Corporation of any funded
indebtedness or the parting with control by the Corporation or any
Restricted Subsidiary of any indebtedness or capital stock of a
Restricted Subsidiary which holds funded indebtedness of the
Corporation, or the disposition by a Restricted Subsidiary of any
funded indebtedness of the Corporation, unless immediately
thereafter the consolidated net worth plus the consolidated funded
indebtedness to be outstanding will aggregate at least 350% of the
consolidated funded indebtedness to be outstanding; provided,
however, that nothing contained in this paragraph (e) shall prevent
the Corporation from incurring or assuming additional funded
indebtedness for the purpose of extending, renewing or refunding at
least an equal principal amount of funded indebtedness of the
Corporation then outstanding (other than funded indebtedness owing
to a Restricted Subsidiary);
(f) The (i) mortgaging, pledging or creation of any lien on,
by the Corporation or any Restricted Subsidiary, any of the assets
of the Corporation or any Restricted Subsidiary except to secure
indebtedness for the sole benefit of the Corporation or a wholly-
owned Restricted Subsidiary, (ii) acquiring by the Corporation or
any Restricted Subsidiary of any asset subject to any lien securing
indebtedness (whether or not assumed), or (iii) acquiring by the
Corporation or any Restricted Subsidiary of any asset under an
agreement whereby title is retained for the purpose of securing the
purchase price thereof; provided, however, that nothing contained
in this paragraph (f) shall prevent, restrict or apply to:
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(1) the giving of any purchase money lien (including
vendors' rights under purchase contracts of the character
referred to in clause (iii) above) on assets hereafter
acquired and not theretofore owned by the Corporation or such
Restricted Subsidiary, or the acquiring hereafter of assets
not theretofore owned by the Corporation or such Restricted
Subsidiary subject to any then existing lien securing
indebtedness (whether or not assumed), provided that the
principal amount of the indebtedness or the unpaid portion of
the purchase price, as the case may be, secured by such lien
shall not exceed 75% of the cost of such assets to the
Corporation or the Restricted Subsidiary acquiring the same;
the term "cost of such assets", in the case of any acquisition
of assets of a subsidiary through merger or liquidation, shall
mean the fair market value of such assets at the time of such
acquisition;
(2) refundings or extensions of liens referred to in the
foregoing clause (1) for amounts not exceeding the principal
amounts of the indebtedness so refunded or extended, and
applying only to the same assets theretofore subject to the
same lien and fixed improvements constructed thereon;
(3) deposits or pledges to enable the Corporation or any
Restricted Subsidiary to transact business or to exercise any
privilege or license, or to secure payments of workmen's
compensation, unemployment insurance, old age pensions or
other social security, or to secure the performance of bids,
tenders, contracts (other than for the borrowing of money or
securing of funded indebtedness) or leases to which the
Corporation or any Restricted Subsidiary is a party, or to
secure public or statutory obligations of the Corporation or
any Restricted Subsidiary, or to secure surety, stay or appeal
bonds to which the Corporation or any Restricted Subsidiary is
a party; or other similar deposits or pledges made in the
ordinary course of business;
(4) mechanics', workmen's, repairmen's or carriers'
liens; or other similar liens arising in the ordinary course
of business; or deposits or pledges to obtain the release of
any such liens; or
(5) liens arising out of judgments or awards against the
Corporation or any Restricted Subsidiary with respect to which
the Corporation or such Restricted Subsidiary shall in good
faith be prosecuting an appeal or proceedings for review and
with respect to which it shall have secured a stay of
execution if permitted by law pending such appeal or
proceedings for review; or liens incurred by the Corporation
or any Restricted Subsidiary for the purpose of obtaining a
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stay or discharge in the course of any legal proceedings to
which the Corporation or such Restricted Subsidiary is a
party;
(g) The guarantying by the Corporation or any Restricted
Subsidiary of any dividend or obligation of any other person except
obligations of Restricted Subsidiaries or of the Corporation
incurred in the ordinary course of their or its business;
(h) The issue or sale by a Restricted Subsidiary of any shares
of its capital stock except (i) to the Corporation or to a wholly-
owned Restricted Subsidiary (except that this restriction shall not
prevent the issue or sale of additional shares of common stock of
any Restricted Subsidiary to any holders thereof so long as the pro
rata interest of the Corporation and its Restricted Subsidiaries in
such stock of such Restricted Subsidiary outstanding immediately
prior to such issue or sale is not reduced), and (ii) directors'
qualifying shares;
(i) The incurring or assuming by any Restricted Subsidiary of
funded indebtedness or indebtedness for money borrowed except (x)
indebtedness to the Corporation or to a wholly-owned Restricted
Subsidiary and (y) an aggregate amount not in excess of $10,000,000
for all Restricted Subsidiaries at any time outstanding (excluding
indebtedness permitted by clause (x) of this paragraph); provided
that nothing contained in this paragraph shall prevent any
Restricted Subsidiary from (1) incurring or assuming indebtedness
for the purpose of extending, renewing or refunding at least an
equal principal amount of indebtedness then outstanding (other than
indebtedness owing to the Corporation or a wholly-owned Restricted
Subsidiary) or (2) incurring or assuming indebtedness of the
character arising from transactions described in clauses (1) and
(2) of paragraph (f) if the amount of indebtedness being so
incurred or assumed (less any portion thereof otherwise permitted
to be incurred or assumed under this paragraph) could have been
incurred or assumed at the time by the Corporation as funded
indebtedness under paragraph (e) above without the giving of
consent;
(j) The merger or consolidation of any Restricted Subsidiary,
except that any Restricted Subsidiary may merge or consolidate with
the Corporation or with any subsidiary provided that if such merger
or consolidation be with an Unrestricted Subsidiary the surviving
corporation shall be a Restricted Subsidiary and provided further
that the merger or consolidation involves no action which would
otherwise require the giving of consent under this subdivision 22;
or
(k) The parting with control, by the Corporation (except to a
wholly-owned Restricted Subsidiary or for directors' qualifying
shares), or by a Restricted Subsidiary (except to the Corporation
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or to a wholly-owned Restricted Subsidiary or for directors'
qualifying shares), of any indebtedness or any shares of capital
stock of a Restricted Subsidiary, unless the entire indebtedness
and capital stock of such Restricted Subsidiary at the time owned
by the Corporation and its Restricted Subsidiaries shall be
disposed of at the same time.
For purposes of this subdivision 22 and subdivision 17:
The term "subsidiary" shall mean any corporation, a majority
of the voting shares of which are at the time owned (either alone
or through Restricted Subsidiaries or together with Restricted
Subsidiaries) by the Corporation and its Restricted Subsidiaries.
The term "Unrestricted Subsidiary" shall mean any subsidiary
which the Corporation may designate as an Unrestricted Subsidiary
by resolution adopted by the Board of Directors of the Corporation;
provided, however, that the Corporation may make such a designation
only if such Unrestricted Subsidiary does not hold indebtedness or
capital stock of the Corporation or a Restricted Subsidiary and if
immediately after such designation the consolidated net worth plus
the consolidated funded indebtedness to be outstanding, will
aggregate at least 350% of the consolidated funded indebtedness to
be outstanding.
The term "Restricted Subsidiary" shall mean any subsidiary
other than an Unrestricted Subsidiary.
The term "wholly-owned Restricted Subsidiary" shall mean any
Restricted Subsidiary all of the outstanding funded indebtedness
and all of the outstanding capital stock of which, other than
directors' qualifying shares, are owned by the Corporation and its
other wholly-owned Restricted Subsidiaries.
The term "funded indebtedness" shall mean, as to a particular
corporation, all indebtedness owed by such corporation which by its
terms matures more than one year from the date of the incurring,
extension or renewal thereof.
The terms "consolidated funded indebtedness", "consolidated
surplus of all types" and "consolidated carrying amounts of all
interests in any Unrestricted Subsidiary", shall mean the amounts
of such items which under good accounting practice would appear on
a consolidated balance sheet of the Corporation and its Restricted
Subsidiaries.
The term "consolidated net earnings" for any period shall mean
the amount of consolidated net earnings of the Corporation and its
Restricted Subsidiaries for such period, determined in accordance
with good accounting practice, but excluding therefrom the portion
thereof allocable to minority interests, if any, in such Restricted
Subsidiaries.
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The term "consolidated net worth" shall mean the capital
represented by the outstanding stocks of the Corporation (excluding
treasury stock held by the Corporation), plus consolidated surplus
of all types, less the cost of any stock of the Corporation owned
by its Restricted Subsidiaries and less the consolidated carrying
amounts of all interests in any Unrestricted Subsidiary.
The term "voting shares" shall mean, as to the shares of a
particular corporation, all shares of stock of such corporation, at
the time outstanding, having voting power for the election of
directors or trustees either at all times or only so long as no
senior class of stock has such voting power because of default in
dividends or because of the existence of some other default.
The certificate or opinion of any independent firm of public
accountants of recognized standing selected by the Board of
Directors of the Corporation shall be conclusive evidence of the
correctness of any computation made under this subdivision 22 or
subdivision 17.
23. Unless and until four quarter-yearly dividends payable on
the 3 3/4% Cumulative Preferred Stock shall be in default, in whole
or in part, the entire voting power and all voting rights, except
as otherwise provided herein or by statute, shall be vested
exclusively in the Common Stock. If and when four quarter-yearly
dividends (whether or not consecutive) payable on the 3 3/4%
Cumulative Preferred Stock shall be in default, the holders of the
outstanding 3 3/4% Cumulative Preferred Stock, voting separately as
a class, shall, in addition to the voting rights provided by
statute and in subdivision 22 above, become entitled to elect two
Directors, and the holders of the Common Stock, voting separately
as a class, shall be entitled to elect the remaining Directors of
the Corporation. However, if and when all dividends then in default
on the 3 3/4% Cumulative Preferred Stock then outstanding shall
thereafter be paid, the 3 3/4% Cumulative Preferred Stock shall
then be divested of such voting power, but always subject to the
same provisions for the vesting of such voting power in the 3 3/4%
Cumulative Preferred Stock in case of any similar future default or
defaults. A meeting of the holders of the 3 3/4% Cumulative
Preferred Stock, for the election of such Directors, at which the
holders of the 3 3/4% Cumulative Preferred Stock shall vote as a
class, shall be held at any time after the accrual of such voting
power, upon notice similar to that provided in the By-laws for a
special meeting of stockholders, upon call by the Secretary of the
Corporation, who shall call such meeting at the written request of
the holders of record of not less than 5% of the 3 3/4% Cumulative
Preferred Stock then outstanding, addressed to him at the principal
business office of the Corporation. Upon termination of the voting
power of the 3 3/4% Cumulative Preferred Stock at any time by
reason of the payment of all accumulated and defaulted dividends on
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such stock, the terms of office of all persons who may have been
elected Directors of the Corporation by vote of the holders of the
3 3/4% Cumulative Preferred Stock shall forthwith terminate.
At all times each stockholder of the Corporation of any class
who at the time possesses voting power for any purpose shall, for
such purpose, be entitled to one vote for each share of such stock
standing in his name on the books of the Corporation.
Except as otherwise required by law and except to the extent
provided in subdivision 22 or in this subdivision 23, the 3 3/4%
Cumulative Preferred Stock shall have no right or power to vote on
any question or in any proceeding or to be represented at or to
receive notice of any meeting of stockholders.
D.
24. The designation and the relative voting, dividend,
liquidation and other rights, preferences and limitations of the
$1.80 Preference Stock shall be as follows:
(1) Whenever dividends on the Preferred Stock and the 3
3/4% Cumulative Preferred Stock at the annual rates
hereinabove set forth have been paid or set apart for payment,
and after all accrued dividends thereon for any prior periods
have been paid or set apart for payment, and all sinking fund
and other requirements with respect to such Preferred Stock
and 3 3/4% Cumulative Preferred Stock have been met, the
holders of the $1.80 Preference Stock, without par value
(hereinafter referred to as the "Preference Stock") at the
time outstanding shall be entitled to receive, but only when
and as declared by the Board of Directors, out of funds
legally available for the payment of dividends, cumulative
preferential dividends, at the annual dividend rate of one
dollar eighty cents ($1.80) per share payable quarterly on the
first days of March, June, September and December in each
year, to stockholders of record on the respective dates fixed
for the purpose by the Board of Directors. The dividends on
shares of the Preference Stock shall be cumulative and no
dividend shall be declared with respect to any share of the
Preference Stock unless like dividends are declared on all
shares of the Preference Stock, but redemption or purchase of
shares of the Preference Stock at prices not exceeding the
redemption price specified in paragraph (2) below shall not be
deemed a declaration or payment of such dividends. The
dividends on shares of the Preference Stock shall be
cumulative from and after the first day of the calendar month
in which the Effective Date, as hereinafter defined, shall
occur (the "dividend accumulation date") and unless dividends
on all outstanding shares of the Preference Stock at the
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annual dividend rate of one dollar eighty cents ($1.80) per
share from such date shall have been paid for all dividend
periods through the next preceding quarter annual dividend
period, but without interest on cumulative dividends, no
dividends shall be paid or declared and no other distribution
shall be made on the Common Stock, and no Common Stock shall
be purchased or otherwise acquired for value by the
Corporation. The holders of the Preference Stock shall not be
entitled to receive any dividends thereon other than the
dividends referred to in this paragraph (1).
(2) After September 30, 1970, the Corporation, by action
of its Board of Directors, may redeem at any time the whole of
the Preference Stock, or from time to time any part of the
Preference Stock, by paying in cash the amount of $50 per
share, together with a sum in the case of each share so to be
redeemed computed at the annual dividend rate of one dollar
eighty cents ($1.80) from the dividend accumulation date to
the date fixed for such redemption, less the aggregate of the
dividends theretofore and on such redemption date paid
thereon.
(3) Notice of every redemption shall be given by mailing
notice of such redemption to the holders of record of the
shares of Preference Stock so to be redeemed, at their
respective addresses as the same shall appear on the books of
the Corporation, at least thirty (30) days prior to the
redemption date. In case of the redemption of a part only of
the Preference Stock at the time outstanding, the Corporation
shall select by lot the shares so to be redeemed. The Board of
Directors shall have full power and authority, subject to the
limitations and provisions herein contained, to prescribe the
manner in which, and the terms and conditions upon which, the
shares of the Preference Stock shall be redeemed from time to
time. If such notice of redemption shall have been duly given
and if on or before the redemption date specified in such
notice all funds necessary for such redemption shall have been
set aside by the Corporation, separate and apart from its
other funds, in trust for the account of the holders of the
shares to be redeemed, so as to be and continue to be
available therefor, then, notwithstanding that any certificate
for such shares so called for redemption shall not have been
surrendered for cancellation, from and after the date fixed
for redemption, the shares represented thereby shall no longer
be deemed outstanding, the right to receive dividends thereon
shall cease to accrue and all rights with respect to such
shares so called for redemption shall forthwith on such
redemption date cease and terminate, except only the right of
the holders thereof to receive, out of the funds so set aside
in trust, the amount payable upon redemption thereof, without
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interest; provided, however, that the Corporation may, at any
time after September 30, 1970, after giving notice of any such
redemption as hereinbefore provided, at any time prior to the
redemption date specified in such notice, deposit in trust,
for the account of the holders of the shares to be redeemed,
funds necessary for such redemption with a bank or trust
company in good standing organized under the laws of the
United States of America or of the States of New York,
California, Missouri or Oregon having capital, surplus and
undivided profits aggregating at least $5,000,000, designated
in such notice of redemption, and, upon such deposit in trust,
all shares with respect to which such deposit shall have been
made shall no longer be deemed to be outstanding, and all
rights with respect to such shares shall forthwith cease and
terminate, except only the right of the holders thereof to
receive, out of the funds so deposited in trust, from and
after the date of such deposit, (A) on each quarter-annual
dividend payment date occurring prior to the date fixed for
redemption, the amount of the quarter-annual dividend provided
for in paragraph (1) hereof, and (B) on the date fixed for
redemption, the amount payable upon the redemption thereof, in
each case without interest. Any funds so deposited for such
redemption not required for such purpose shall be forthwith
returned to the Corporation.
(4) Before any amount shall be paid to, or any assets
distributed among, the holders of the Common Stock upon any
liquidation, dissolution or winding up of the Corporation, and
after paying or providing for the payment of all creditors of
the Corporation, and after paying or providing for the payment
of all amounts which may be payable in respect of the
Preferred Stock and 3 3/4% Cumulative Preferred Stock in such
event, the holders of shares of the Preference Stock at the
time outstanding shall be entitled to be paid in cash in the
event of voluntary or involuntary liquidation, dissolution or
winding up, the amount of $50 per share, together with a sum
in the case of each such share computed at the annual dividend
rate of one dollar eighty cents ($1.80) per share, from the
dividend accumulation date to the date fixed for the payment
of such distributive amount, less the aggregate of the
dividends theretofore and on such date paid thereon; but no
payments on account of such distributive amounts shall be made
to the holder of any share of the Preference Stock unless
there shall likewise be paid at the same time to the holder of
each other share of the Preference Stock at the time
outstanding a like proportionate distributive amount. The
holders of the Preference Stock shall not be entitled to
receive any amounts with respect thereto upon any liquidation,
dissolution or winding up of the Corporation other than the
Amounts referred to in this paragraph. Neither the
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consolidation or merger of the Corporation with any other
corporation or corporations, nor the sale or transfer by the
Corporation of all or any part of its assets, shall be deemed
to be a liquidation, dissolution or winding up of the
Corporation.
(5) Whenever the full dividends on all shares of the
Preference Stock at the time outstanding for all past quarter-
annual dividend periods shall have been paid or declared and
set apart for payment, then such dividends (payable in cash,
stock or otherwise) as may be determined by the Board of
Directors may be declared and paid on the Common Stock, but
only out of funds legally available for the payment of
dividends.
(6) In the event of any liquidation, dissolution or
winding up of the Corporation, all assets and funds of the
Corporation remaining after paying or providing for the
payment of all creditors of the Corporation and after paying
or providing for the payment to the holders of shares of the
Preferred Stock, the 3 3/4% Cumulative Preferred Stock and the
Preference Stock of the full distributive amounts to which
they are entitled as herein provided, shall be divided among
and paid to the holders of the Common Stock according to their
respective rights and interests.
(7) No holder of shares of the Preference Stock shall be
entitled as of right to purchase or subscribe for any part of
any unissued stock of the Corporation or of any additional
stock of the Corporation of any class to be issued by reason
of any increase of the authorized capital stock of the
Corporation, or of bonds, certificates of indebtedness,
debentures or other securities convertible into or
exchangeable for stock of the Corporation or to which shall
appertain any warrants or other instruments that shall confer
upon the holder or owner thereof the right to subscribe for,
purchase or receive from the Corporation any shares of its
capital stock.
(8) The consent of the holders of at least two-thirds of
the Preference Stock at the time outstanding, given in person
or by proxy, either in writing or at a special meeting called
for the purpose, at which the Preference Stock shall vote
separately as a class, shall be necessary to effect or
validate any one or more of the following:
(a) The creation or authorization of any additional
class of stock of the Corporation ranking prior to or on
a parity with the Preference Stock or any increase in the
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authorized amount of the Preference Stock, or of any
additional class of stock of the Corporation ranking prior
to or on a parity with the Preference Stock;
(b) The amendment, alteration or repeal of any of
the provisions of the Certificate of Incorporation of the
Corporation or of any certificate amendatory thereof or
supplemental thereto so as to affect adversely the rights
or preferences of the Preference Stock or of the holders
thereof;
(c) The voluntary liquidation, dissolution or
winding up of the Corporation, or the sale, lease or
conveyance of all or substantially all of the property or
business of the Corporation, or a consolidation or merger
with any other corporation (other than the merger by the
Corporation of any corporation all the outstanding stock
of which it then owns).
(9) Unless and until four quarter-yearly dividends
payable on the Preference Stock shall be in default, in whole
or in part, the entire voting power and all voting rights,
except as otherwise provided herein or by statute, shall be
vested exclusively in the Common Stock. If and when four
quarter-yearly dividends (whether or not consecutive) payable
on the Preference Stock shall be in default, the holders of
the outstanding Preference Stock, voting separately as a
class, shall, in addition to the voting rights provided by
statute and in paragraph (8) above, become entitled to elect
two Directors, and the holders of the Common Stock, voting
separately as a class, shall be entitled to elect the
remaining Directors of the Corporation. However, if and when
all dividends then in default on the Preference Stock then
outstanding shall thereafter be paid, the Preference Stock
shall then be divested of such voting power, but always
subject to the same provisions for the vesting of such voting
power in the Preference Stock in case of any similar future
default or defaults. A meeting of the holders of the
Preference Stock, for the election of such Directors, at which
the holders of the Preference Stock shall vote as a class
shall be held at any time after the accrual of such voting
power, upon notice similar to that provided in the By-laws for
a special meeting of stockholders, upon call by the Secretary
of the Corporation, who shall call such meeting at the written
request of the holders of record of not less than 5% of the
Preference Stock then outstanding, addressed to him at the
principal business office of the Corporation. Upon termination
of the voting power of the Preference Stock at any time by
reason of the payment of all accumulated and defaulted
dividends on such stock, the terms of office of all persons
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who may have been elected Directors of the Corporation by vote
of the holders of the Preference Stock shall forthwith
terminate.
(10) All shares of Preference Stock acquired by the
Corporation, whether upon purchase, redemption or otherwise,
shall be cancelled and no such shares shall be reissued by the
Corporation. The Corporation shall not purchase, redeem or
otherwise acquire for value any shares of the Preference Stock
at any time unless at the date of such purchase, redemption or
acquisition dividends on all outstanding shares of the
Preference Stock shall be or shall have been paid or declared
and set apart for payment at the annual dividend rate of one
dollar eighty cents ($1.80) per share for all past quarter-
annual dividend periods.
E.
25. The Preference Shares may be issued from time to time in
series. The Board of Directors of the Corporation is authorized to
establish and designate series and to fix the number of Preference
Shares and the relative rights, preferences and limitations as
between series, subject to such limitations as may be prescribed by
law, provided that so long as any shares of Preferred Stock, 3 3/4%
Cumulative Preferred Stock or Preference Stock are outstanding
Preference Shares shall not rank with respect to the payment of
dividends or distributions upon liquidation, or both, prior to or
on a parity with any such outstanding shares of Preferred Stock, 3
3/4% Cumulative Preferred Stock or Preference Stock. In
particular, subject to the aforementioned limitation and proviso,
the Board of Directors may establish, designate and fix the
following with respect to each series of Preference Shares:
establish and specify a designation of such series; fix the
dividend rights of holders of Preference Shares of each such
series; fix the terms on which Preference Shares of each such
series may be redeemed if the Preference Shares of such series are
to be redeemable; fix the rights of the holders of Preference
Shares of each such series upon dissolution or any distribution of
assets; fix the terms or amount of the sinking fund, if any, to be
provided for the purchase or redemption of Preference Shares of
each such series; fix the terms upon which the Preference Shares of
each such series may be converted into or exchanged for any shares
of any other class or classes of capital stock of the Corporation
or any one or more series of Preference Shares if the Preference
Shares of such series are to be convertible or exchangeable, fix
the voting rights, if any, of the Preference Shares of each such
series; and any other relative rights, preferences or limitations
of Preference Shares of the series consistent herewith and
applicable law. The holders of Preference Shares shall not have any
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preemptive right to purchase shares or other securities to be
issued by the Corporation or subjected to rights or options to
purchase.
26. There is hereby established a series of the Corporation's
authorized shares of the Preference Shares, to be designated as the
"Series X Cumulative Preference Shares, par value $.50 per share."
Shares of such series are hereinafter referred to as "Series X
Shares." The authorized number of Series X Shares shall be
5,000,000 shares. The relative rights, preferences and limitations
of the Series X Shares, insofar as not already fixed by any other
provision of this Certificate of Incorporation shall, as fixed by
the Board of Directors of the Corporation in the exercise of
authority conferred by this Certificate of Incorporation, and as
permitted by Section 502 of the Business Corporation Law (the
"BCL"), be as follows:
(1) Stated Amount. The stated amount of each Series X Share
shall be $20.00.
(2) Dividends.
(A) General Dividend Obligations. When and as declared by the
Board of Directors, the Corporation shall pay to the holders of the
Series X Shares, out of the assets of the Corporation legally
available for the payment of dividends under the BCL, preferential
dividends at the times and in the amounts provided for in this
paragraph (2).
(B) Calculation of Base Dividends. The Base Dividends (as
hereinafter defined) on each Series X Share shall accrue and be
calculated cumulatively on a daily basis (based upon a 360-day year
consisting of four equal 90-day quarterly periods) at the rate and
in the manner prescribed herein from and including the date of
issuance of such share to and including the earlier of the
Redemption Date (as hereinafter defined) or the Liquidation Date
(as hereinafter defined) thereof, whether or not such Base
Dividends shall have been declared and whether or not there shall
be (at the time such Base Dividends are calculated or become
payable or at any other time) profits, surplus or other funds of
the Corporation legally available for the payment of dividends. For
purposes of this paragraph (2), the date on which the Corporation
shall initially issue any Series X Share shall be deemed to be its
"date of issuance" as set forth on the stock certificate
representing such share, regardless of the number of times transfer
of such share shall be made on the stock records maintained by or
for the Corporation and regardless of the number of certificates
which may be thereafter issued to evidence such share (whether by
reason of transfer of such share or for any other reason).
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(C) Amount of Base Dividends. Base dividends (the "Base
Dividends") shall accrue and be calculated on each Series X Share
as follows:
(1) For all periods ending on or prior to April 1, 1986,
at a rate of $0.175 per Series X Share per quarterly period.
(2) For all periods ending after April 1, 1986, but on or
prior to April 1, 1987, at a rate of $0.20 per Series X Share
per quarterly period.
(3) For all periods ending after April 1,1987, but on or
prior to October 1, 1987, or the date of filing of the
Certificate of Amendment contemplated by paragraph 2(C)(4),
whichever is later, at a rate of $0.25 per Series X Share per
quarterly period.
(4) Subject to the foregoing clause (3), for all periods
ending after October 1, 1987, at such a rate as shall be
determined by the Board of Directors and set forth in a
Certificate of Amendment of this Certificate of Incorporation,
amending this subparagraph (C) to make specific provision with
respect thereto; provided, that, notwithstanding any other
provision hereof, the dividend payable with respect to any
Series X Share held by a holder who has exercised such
holder's rights pursuant to paragraph 4(E) or 4(G)(ii) shall
(if such accrual and calculation would result in a higher
dividend than that which would accrue and be calculated
pursuant to said Certificate of Amendment, but not otherwise)
accrue and be calculated pursuant to paragraph 2(C)(3) for all
periods ending after October 1, 1987.
To the extent not paid on the first Business Day of any January,
April, July or October, commencing on April 1, 1985 (collectively,
the "Base Dividend Reference Dates," and individually, the "Base
Dividend Reference Date"), all Base Dividends which have accrued on
each Series X Share then outstanding during the period from and
including the preceding Base Dividend Reference Date (or from and
including the date of issuance of such Series X Share in the case
of the initial Base Dividend Reference Date) to such Base Dividend
Reference Date shall be added to the Liquidation Value of such
share and shall remain a part thereof until such Base Dividends are
paid.
(D) Series X Supplemental Dividends. In addition to the Base
Dividends provided in paragraph (2)(C) above, there shall accrue
and be calculated cumulatively a supplemental annual dividend on
each Series X Share in respect of the first two years following the
date of issuance thereof as provided below (the "Series X
Supplemental Dividends"):
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(i) The Series X Supplemental Dividends (if any) accrued
on each Series X Share in respect of all prior periods from
the date of issuance of such share through and including the
April 1, 1986 Base Dividend Reference Date shall be an amount
equal to the number determined by the following formula (if
such amount is greater than zero):
Net Cash Flow - $16,682,000
2 X Outstanding Series X Shares
where Net Cash Flow (as hereinafter defined) is the amount
thereof from the Parklabrea Property (as hereinafter defined)
for the Corporation's fiscal year ending in calendar 1986 and
Outstanding Series X Shares is the number of Series X Shares
outstanding at April 1, 1986.
(ii) The Series X Supplemental Dividend (if any) accrued
on each Series X Share on April 1, 1987, in respect of all
prior periods from the April 1, 1986 Base Dividend Reference
Date through and including such subsequent Base Dividend
Reference Date shall be an amount equal to the number
determined by the following formula (if such amount is greater
than zero):
Net Cash Flow - $17,555,000
2 X Outstanding Series X Shares
where Net Cash Flow is the amount thereof from the Parklabrea
Property for the Corporation's fiscal year ending in calendar
1987 and Outstanding Series X Shares is the number of Series
X Shares outstanding at April 1, 1987.
The Series X Supplemental Dividends shall accrue and be
calculated on each outstanding Series X Share as of the
appropriate Base Dividend Reference Date as described above,
whether or not such Series X Supplemental Dividends shall have
been declared and whether or not there shall be (at the time
such Series X Supplemental Dividends are calculated or become
payable or at any other time) profits, surplus or other funds
of the Corporation legally available for the payment of
dividends. To the extent the Series X Supplemental Dividends
accrued on any Series X Share are not paid on the Base
Dividend Reference Date as of which such accrued Series X
Supplemental Dividends are to be calculated, then such accrued
Series X Supplemental Dividends shall be added to the
Liquidation Value of such Series X Share and shall remain a
part thereof until such Series X Supplemental Dividends are
paid.
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(E) Distribution of Partial Dividend Payments. If at any time
the Corporation shall pay less than the total amount of the Base
Dividends or the Series X Supplemental Dividends then accrued on
the Series X Shares, each such payment shall be distributed among
the holders of the Series X Shares so that an equal amount of each
such dividend shall be paid with respect to each such outstanding
share.
(F) Priority. So long as any Series X Shares shall remain
outstanding, the Corporation shall not declare or pay any dividend
or other distribution with respect to any Junior Securities (as
hereinafter defined), or purchase, acquire or redeem any Junior
Securities or otherwise make any payment on account of, or set
apart money for a sinking or other analogous fund for, the
purchase, redemption or other retirement of any Junior Securities
or otherwise make any distribution in respect thereof, either
directly or indirectly and whether in cash or property or in
obligations, securities or capital shares of the Corporation (other
than dividends or distributions consisting solely of Common Stock,
as hereinafter defined), unless all dividends accrued on the Series
X Shares for all previous dividend periods immediately preceding
such acquisition, redemption, dividend or distribution shall have
been paid or declared and sufficient funds therefor set apart in
trust for holders of the Series X Shares.
(3) Liquidation. Upon any liquidation (complete or partial),
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the Series X Shares shall be entitled,
before any distribution or payment is made upon any Junior
Securities, to be paid out of the assets of the Corporation legally
available for distribution to its shareholders (whether from
capital, surplus or earnings) for each Series X Share held by them,
an amount in cash equal to the Liquidation Value, as of the
Liquidation Date, of each such outstanding Series X Share, and the
holders of the Series X Shares shall not be entitled to any further
payment with respect thereto. If upon any such liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets of the Corporation to be distributed among
the holders of the Series X Shares shall be insufficient to permit
payment to the holders of Series X Shares of the amounts which they
are entitled to be paid as aforesaid, then all such assets of the
Corporation shall be distributed ratably among the holders of the
Series X Shares based upon the Liquidation Value of the Series X
Shares held by each of them. Upon any such liquidation, dissolution
or winding up of the Corporation, after the holders of the Series
X Shares shall have been paid in full the amounts to which they
shall be entitled, the remaining assets of the Corporation may be
distributed to the holders of Junior Securities. Written notice of
such liquidation, dissolution or winding up of the Corporation
shall be mailed by certified or registered mail, return receipt
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requested, not less than 60 days prior to the date of such
liquidation, dissolution or winding up stated therein (the
"Liquidation Date"), to each record holder of any Series X Share at
the address for such record holder shown on the Corporation's
records. Such written notice shall state the Liquidation Date, the
amount of the Liquidation Value and the place where the amounts
distributable shall be payable. Neither the consolidation or merger
of the Corporation into or with any other corporation or
corporations, nor the sale or transfer by the Corporation of all or
any part of its assets, nor the reduction of the capital stock of
the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of any of the
provisions of this paragraph (3).
(4) Redemptions.
(A) Redemption Price. For each Series X Share which is to be
redeemed by the Corporation at any time and for any reason in a
redemption pursuant to this paragraph (4), the Corporation shall be
obligated on the Redemption Date (as hereinafter defined),
regardless of whether the Corporation shall be able or legally
permitted to make such payment on the Redemption Date, to pay to
the holder thereof upon surrender by such holder at the
Corporation's principal office of the certificate representing such
Series X Share duly endorsed in blank (or accompanied by an
appropriate form of assignment) an amount equal to the Liquidation
Value of such Series X Share on the Redemption Date (the
"Redemption Price"); provided, however, that nothing herein shall
be construed to require any actual payment before such payment can
be made without contravening applicable law.
(B) Number of Each Holder's Shares to be Redeemed; Partial
Redemption Payments. The number of Series X Shares to be redeemed
from each holder thereof in each redemption pursuant to paragraph
(4)(D) shall be the number of Series X Shares determined by
multiplying the total number of such shares to be redeemed by a
fraction, the numerator of which shall be the total number of
Series X Shares then held by such holder and the denominator of
which shall be the total number of Series X Shares then
outstanding. Notwithstanding the foregoing or any other provision
of this paragraph (4), if at the time of any redemption of Series
X Shares pursuant to this paragraph (4) the Corporation shall not
have redeemed all of the Series X Shares which the Corporation
shall have become obligated to redeem at or prior to such time, the
number of Series X Shares to be redeemed from each holder thereof
shall be the number of Series X Shares determined by multiplying
the total number of Series X Shares to be redeemed times a
fraction, the numerator of which shall be the total number of
Series X Shares which the Corporation shall have become obligated
to redeem from such holder at or prior to such time (but which the
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Corporation shall not have redeemed at or prior to such time) and
the denominator of which shall be the total number of Series X
Shares which the Corporation shall have become obligated to redeem
from all holders thereof at or prior to such time (but which the
Corporation shall not have redeemed at or prior to such time).
(C) Failed Redemptions; Priority of Series X Redemptions. If
on any Redemption Date the aggregate of (i) the funds of the
Corporation legally available for the making of redemptions of
Series X Shares and not prohibited from being used by the
Corporation for such purpose by the terms of any agreement to which
the Corporation is a party or by which it is bound, plus (ii) the
funds of all Subsidiaries legally available for the payment of
dividends to the Corporation (directly or indirectly through one or
more Subsidiaries) and not prohibited from being used by such
Subsidiaries for such purpose by the terms of any agreement to
which any such Subsidiary is a party or by which it is bound and
which, upon receipt by the Corporation, would be legally available
for the making of redemptions of Series X Shares and not prohibited
from being used by the Corporation for such purpose by the terms of
any agreement to which the Corporation is a party or by which it is
bound, is insufficient to redeem the entire number of Series X
Shares required under this paragraph (4) to be redeemed on any such
date, such aggregate funds shall be used to redeem the maximum
possible number of such Series X Shares required to have been
redeemed on any Redemption Date which have not theretofore been
redeemed. The Corporation shall not declare or pay any dividend or
other distribution with respect to any Junior Securities, or
purchase, acquire or redeem any Junior Securities or otherwise make
any payment on account of, or set apart money for a sinking or
other analogous fund for, the purchase, redemption or other
retirement of any Junior Securities or otherwise make any
distribution in respect thereof, either directly or indirectly and
whether in cash or property or in obligations, securities or
capital shares of the Corporation (other than dividends or
distributions consisting solely of Common Stock), unless all
payments of the Redemption Price of all Series X Shares theretofore
called for redemption shall have been made as required by the terms
hereof.
(D) Scheduled Redemptions. Irrespective of any other
redemptions made pursuant to this paragraph (4), on the first day
of April of each of the years 1988 through 1992 (or if such day is
not a Business Day, the immediately succeeding Business Day)
commencing on April 1, 1988 (the "Scheduled Redemption Dates"), the
Corporation shall purchase and redeem 1,000,000 Series X Shares (or
such lesser number thereof as may then be outstanding).
(E) Holder Option to Redeem. At any time during the period
commencing on September l, 1987 and ending on November 1, 1987, any
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holder of Series X Shares may, at the option of such holder, give
written notice to the Corporation pursuant to paragraph 4(G)(i)
hereof to require the Corporation to redeem all, but not less than
all, of the outstanding Series X Shares held by such holder. In the
event any holder elects to require a redemption pursuant to this
paragraph (4)(E), the Corporation's obligation to pay the
Redemption Price for such Series X Shares on the Redemption Date in
respect of such redemption may, at the option of the Corporation,
be satisfied by the delivery of cash or equity or debt securities
issued by the Corporation, or any combination thereof; provided,
however, that (x) the Corporation shall not discriminate among
holders of the Series X Shares in respect of the type of
consideration to be delivered to each of them upon such redemption,
and (y) the sum of the amount of the cash (if any) plus the Fair
Market Value (as hereinafter defined) of the equity securities of
the Corporation (if any) plus the Fair Market Value of the debt
securities of the Corporation (if any) so delivered must equal or
exceed the Redemption Price.
(F) Change of Control Redemption. In the event of a Change of
Control (as hereinafter defined) of the Corporation, then at any
time prior to the date 90 days after notice by the Corporation to
the holders of the Series X Shares of such event given after the
occurrence of such event, any holder of Series X Shares may, at the
option of such holder, give written notice to the Corporation
pursuant to paragraph 4(G) to require the Corporation to redeem
all, but not less than all, of the outstanding Series X Shares held
by such holder. In the event any holder elects to require a
redemption pursuant to this paragraph (4)(F), the Corporation shall
satisfy its obligation to pay the Redemption Price on the
Redemption Date in respect of such redemption by the delivery
thereof in cash to such holder.
(G) Notices of Redemption.
(i) A notice of any redemption of Series X Shares
requested by a holder thereof pursuant to paragraph 4(E) or
4(F) (an "Optional Redemption Notice") shall specify the date
of redemption of such Series X Shares which shall be not less
than 60 nor more than 90 days from the date of such notice,
but which may be subject to postponement under the
circumstances specified in paragraph 4(H) with respect to a
redemption proposed to be accomplished in whole or in part
with Non-Listed Securities, as therein defined, and shall be
mailed by certified or registered mail, return receipt
requested, to the Corporation at its principal offices not
more than 60 or less than 30 days prior to the Redemption Date
specified in such Optional Redemption Notice. The Optional
Redemption Notice shall also specify the number of Series X
Shares and the certificate numbers thereof which are to be
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redeemed and, in the event of a redemption pursuant to
paragraph (4)(E), the name of a nationally recognized
investment banking firm which such holder desires to make any
determination of Fair Market Value required by paragraph
(4)(H). Upon receipt of an Optional Redemption Notice the
Corporation shall become obligated to redeem on the Redemption
Date all Series X Shares therein specified (subject to
postponement, as aforesaid).
(ii) Within 3 Business Days of receipt of an Optional
Redemption Notice, the Corporation shall give notice (a
"Piggyback Notice") of such Optional Redemption Notice to all
record holders of Series X Shares. The Piggyback Notice shall
set forth the Redemption Date and identify the investment
banking firm specified in the Optional Redemption Notice and
state whether such Optional Redemption Notice has been given
pursuant to paragraph 4(E) or 4(F). Each such holder may, by
notice (a "Piggyback Response Notice") received by the
Corporation within 15 Business Days after such holder's
receipt of the Piggyback Notice (which receipt shall be deemed
to occur two days after the date of mailing of the Piggyback
Notice by certified or registered mail to such holder's
address of record), require the Corporation to redeem all, but
not less than all, of the Series X Shares held by the holder
giving such Piggyback Response Notice on the Redemption Date
specified in the Optional Redemption Notice (subject to
postponement, as aforesaid). Each Piggyback Response Notice
shall specify the number of Series X Shares and the
certificate numbers thereof which are to be redeemed and, in
the case of a Piggyback Response Notice in respect of an
Optional Redemption Notice pursuant to paragraph 4(E), either
(x) its approval of the investment banking firm specified in
the original Optional Redemption Notice, or (y) the name of
another nationally recognized investment banking firm which
such holder desires to make any determination of Fair Market
Value required by paragraph 4(H).
(iii) If a single nationally recognized investment banking
firm shall be specified and/or approved by the holders of a
majority of the Series X Shares represented by the Optional
Redemption Notice pursuant to paragraph 4(E) and all related
Piggyback Response Notices, such firm, will be engaged by the
Corporation (at its sole cost and expense) to make any
determination of Fair Market Value required by paragraph 4(H).
If no single firm shall be specified and/or approved by such
a majority, or if such firm so specified and/or approved shall
be unable or unwilling to act the Corporation shall designate
and engage (at its sole cost and expense) a nationally
recognized investment banking firm to make any determination
of Fair Market Value required by paragraph 4(H). The
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nationally recognized investment banking firm designated and
engaged pursuant to this paragraph 4(G)(iii) is referred to
herein as the "Designated Firm."
(H) Valuation and Delivery of Securities In Satisfaction of
Redemption Price. If the Corporation proposes to deliver Non-Listed
Securities in full or partial satisfaction of its obligation to
redeem Series X Shares pursuant to paragraph 4(E), it shall forward
the proposed terms of any such securities (the "Proposed Terms") to
the Designated Firm and to all holders of the Series X Shares who
have forwarded an Optional Redemption Notice or a related Piggyback
Response Notice to the Corporation promptly upon the date of
designation and engagement of such Designated Firm pursuant to
paragraph 4(G)(iii) and will identify the Designated Firm to all
such holders. The Corporation shall cooperate with and use all
reasonable efforts to enable the Designated Firm promptly to
determine the value of such security by reference to such factors
as are generally considered by the financial community in the
determination of the value of a security and, upon completion
thereof, will promptly obtain a report of such valuation (a
"Valuation Report"). If the Proposed Terms are forwarded to the
Designated Firm more than 15 Business Days prior to the Redemption
Date specified in the Optional Redemption Notice, the redemptions
requested therein (and in any related Piggyback Response Notice)
may be postponed by the Corporation until five Business Days after
the receipt of the Valuation Report by the Corporation.
Notwithstanding the foregoing, if the Corporation has not received
the Valuation Report within 90 days after the date of the Optional
Redemption Notice, the Corporation shall redeem the Series X Shares
specified in such Optional Redemption Notice and all related
Piggyback Response Notices on such 90th day (or if such day is not
a Business Day, on the next succeeding Business Day) by payment of
cash or securities which are listed on a national securities
exchange or quoted in the NASDAQ System or the domestic over-the-
counter market.
(I) Dividends After the Redemption Date. No Series X Share
shall be entitled to any dividends accrued in respect of any period
beginning on or after its Redemption Date (unless the Corporation
fails to pay the Redemption Price for such Series X Share or
deposit monies for such payment as provided below for any reason
whatsoever), and on such Redemption Date and upon payment of the
Redemption Price or deposit by the Corporation in trust for the
account of the holders of such Series X Shares of the Redemption
Price thereof with a bank or trust company doing business in the
Borough of Manhattan, City of New York, and having a capital and
surplus of Fifty Million Dollars ($50,000,000), all rights of the
holder of such Series X Share, as a shareholder of the Corporation
by reason of the ownership of such share, shall cease, except (if
payment of the Redemption Price has not been made) the right to
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receive the Redemption Price (without interest) for such share upon
presentation and surrender of the certificate representing such
share to such bank or trust company, and such share shall not
thereafter be deemed to be outstanding for any purpose.
(5) Voting.
(A) The holders of the issued and outstanding Series X Shares
shall be entitled to one vote for each Series X Share held by them
and shall have the right to vote on all matters submitted to a vote
of the holders of Common Stock for all purposes.
(B) So long as any Series X Shares remain outstanding, and in
addition to any other approvals required by law, without the prior
approval of the holders of at least two-thirds of the Series X
Shares at the time outstanding, either expressed in a written
consent of such holders or by an affirmative vote at a meeting duly
called and held for that purpose:
(i) The Corporation shall not authorize, create or issue
any shares, or securities convertible into such shares, of any
class of stock having preference over Series X Shares with
respect to either the payment of dividends or rights upon
dissolution, liquidation, winding up of the Corporation or
distribution of assets to its shareholders by way of return of
capital, whether voluntary or involuntary.
(ii) The Corporation shall not sell, lease or convey
(other than by mortgage) all or substantially all of the
property or business of the Corporation and shall not effect
a statutory merger or consolidation of or with any other
corporation or corporations unless as a result of such merger
or consolidation and after giving effect thereto (a) the
Corporation or a Subsidiary shall be the surviving
corporation, (b) the Series X Shares then outstanding shall
continue to be outstanding, (c) there shall be no alteration
or change in the designations or preferences, privileges,
restrictions or other rights applicable to outstanding Series
X Shares, in any material respect prejudicial to the holders
thereof, and (d) there shall not be created or thereafter
exist by reason of such merger or consolidation any new class
or series of stock having preference over Series X Shares with
respect to either dividends or rights upon dissolution,
liquidation, winding up or distribution of assets to
shareholders by way of return of capital of the Corporation.
(iii) The Corporation shall not (x) amend, alter or repeal
any of the provisions of its Certificate of Incorporation or
of this certificate in any manner which materially adversely
affects the preferences, privileges, restrictions or other
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rights of the Series X Shares or the holders thereof, (y)
increase the number of Series X Shares which the Corporation
is authorized to issue or (z) change the fiscal year of the
Corporation; provided, however, that nothing in this paragraph
(5) shall be construed to limit, impair or otherwise affect
the Corporation's right and obligation to file the Certificate
of Amendment of the Certificate of Incorporation referred to
in clause (4) of paragraph (2)(C).
(iv) The Corporation shall maintain its financial books
and records in such a manner as to readily permit the
ascertainment of the Net Cash Flow from the Parklabrea
Property.
(C) (i) In the event that four or more quarterly dividend
payments on the Series X Shares are in arrears or any
redemption payment required to be made pursuant to paragraph
(4) is in arrears, the holders of the then outstanding Series
X Shares, voting as a class, with each Series X Share having
one vote, shall be entitled to elect two members of the Board
of Directors of the Corporation at the next annual meeting of
shareholders or at a special meeting of such holders of the
Series X Shares called for such purpose as hereinafter set
forth until all such arrearages in dividends or redemptions in
respect of the Series X Shares shall have been paid in full by
the Corporation, at which time all voting rights provided for
by this paragraph 5(C) shall be divested from the Series X
Shares (subject to similar revival or divestiture at any time
or from time to time). At any time after the holders of the
Series X Shares shall have become entitled to elect members of
the Board of Directors of the Corporation, the Secretary of
the Corporation may, and upon the written request of the
holders of record of 25% or more of the Series X Shares then
outstanding addressed to the Secretary at the principal
offices of the Corporation the Secretary shall, call a special
meeting of the holders of the outstanding Series X Shares for
the election by such holders of additional directors to be
held within 45 days of the receipt of such notice at the place
and upon the notice provided by law and in the By-laws of the
Corporation for the holding of special meetings of
shareholders; provided, however, that the Secretary need not
call any such special meeting of the holders of the Series X
Shares if the annual meeting of shareholders is to convene
within 120 days after receipt by the Secretary of such
request. If such special meeting shall not be called in
accordance herewith by the Secretary within 45 days after
receipt of such request, then the holders of record of the
Series X Shares who made such request may designate in writing
one of their number to call such meeting at the place and upon
the notice above provided, and the person so designated shall,
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for that purpose, have access to the stock books of the
Corporation relating to the Series X Shares. If at any such
annual or special meeting or any adjournment thereof, the
holders of at least a majority of the Series X Shares then
outstanding shall be present or represented by proxy, the By-
laws of the Corporation shall automatically be amended to
increase the then authorized number of directors of the
Corporation by two and the holders of such Series X Shares
shall be entitled to elect the additional directors provided
for. The directors so elected shall serve until their
successors are elected and qualified, provided, however, that
whenever the holders of the Series X Shares shall be divested
of voting power as herein provided, the terms of the persons
elected as directors by the holders of such shares as a class
shall forthwith terminate and the By-Laws shall be
automatically amended to decrease the number of directors
accordingly.
(ii) Vacancies among directors elected by holders of the
Series X Shares during any period in which members of the
Board of Directors shall have been elected by holders of the
Series X Shares shall be filled until the next meeting by the
vote or written consent of the holders of a majority of the
then outstanding shares of Series X Shares. The holders of at
least two-thirds of the Series X Shares shall have the right
to remove, with or without cause, a director elected pursuant
to Paragraph 5(C)(i) hereof, by vote at any annual or special
meeting of shareholders or by action by written consent of
such holders.
(iii) Upon the written request of any two persons elected
or designated as directors by the holders of the outstanding
Series X Shares, special meetings of the Board of Directors
shall be called by the President of the Corporation on three
days' notice to each director, either personally or by mail or
by telegram; if such special meeting shall not be so called
within five days after receipt of such request, then any two
persons elected or designated as directors by the Series X
Shares may call such meeting, upon the notice above provided,
to be held at the principal offices of the Corporation or in
such other place as may be permitted pursuant to the By-laws
of the Corporation.
(6) Closing of the Books. The Corporation will not close its
books against the transfer of any Series X Share.
(7) Registration of Transfer. The Corporation shall keep at
its principal office (or such other place as the Corporation
reasonably designates) a register for the registration of Series X
Shares. Upon the surrender of any certificate representing Series
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X Shares at such place, the Corporation shall, at the request of
the registered holder of such certificate, execute and deliver a
new certificate or certificates in exchange therefor representing
in the aggregate the number of Series X Shares represented by the
surrendered certificate (and the Corporation shall forthwith cancel
such surrendered certificate), subject to the requirements of
applicable securities laws. Each such new certificate shall be
registered in such name and shall represent such number of Series
X Shares as shall be requested by the holder of the surrendered
certificate and shall be substantially identical in form to the
surrendered certificate; and dividends shall accrue on the Series
X Shares represented by such new certificate from the date or dates
to which dividends have been fully paid on the Series X Shares
represented by the surrendered certificate (or, if no dividends
have yet been so paid, from the date of issuance thereof) at the
rate and in the manner applicable to Series X Shares represented by
such surrendered certificate. The issuance of new certificates
shall be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such issuance;
provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that
of the holder of the surrendered certificate.
(8) Definitions. For purposes of this Section 26, each of the
following terms shall have the meanings set forth below, and such
meanings shall be equally applicable to the singular and plural
forms of such terms:
(A) "Business Day" means any day which is not a Saturday or a
Sunday or a bank holiday in either New York, New York, or St.
Louis, Missouri.
(B) "Change in Control" means any change in a majority of the
members of the Board of Directors of the Corporation pursuant to
one or more annual elections of directors or pursuant to any
transaction or series of related transactions which, in any such
case, has not received the affirmative vote or written consent of
at least a majority of the outstanding Series X Shares.
(C) "Common Stock" means the authorized shares of common
stock, par value $1.66 2/3 per share, of the Corporation.
(D) "Fair Market Value" of any security other than a Non-
Listed Security means the average of the closing prices of such
security's sales on all national securities exchanges on which such
security may at the time be listed, or, if there shall have been no
sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of
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such day, or, if on any day such security shall not be so listed,
the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or if on any day
such security shall not be quoted in the NASDAQ System, the average
of the high and low bid and asked prices on such day in the
domestic over-the-counter market as reported by the National
Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over the Measuring Trading
Period (as hereinafter defined). The "Fair Market Value" of a Non-
Listed Security shall be the value thereof determined by the
Designated Firm pursuant to paragraph (4)(H).
(E) "Junior Security" means any equity security of any kind
which the Corporation or any Subsidiary shall at any time issue or
be authorized to issue other than (i) the Series X Shares, (ii) the
Preferred Stock and (iii) the $1.80 Preference Stock.
(F) "Liquidation Value" of any Series X Share as of any
particular date shall be equal to the sum of $20, plus any unpaid
Base Dividends on such share that have been added to the
Liquidation Value of such share on any Base Dividend Reference Date
pursuant to paragraph 2(C) and not thereafter paid, plus any unpaid
Series X Supplemental Dividends on such share that have been added
to the Liquidation Value of such share pursuant to paragraph (2)(D)
and not thereafter paid; and, in the event of any liquidation,
dissolution or winding up of the Corporation or the redemption of
such share, accrued and unpaid Base Dividends on such share shall
be added to the Liquidation Value of such share on the Liquidation
Date or the Redemption Date, as the case may be, calculated
cumulatively on a daily basis to the Liquidation Date or the
Redemption Date thereof, as the case may be.
(G) "Measuring Trading Period" shall mean the 15 consecutive
trading days ending prior to the fifth trading day prior to the
Redemption Date specified in an Optional Redemption Notice.
(H) "Net Cash Flow" means the amount (determined on an accrual
basis in accordance with generally accepted accounting principles
consistently applied) obtained by deducting Operating Expenses (as
hereinafter defined) from Gross Revenue (as hereinafter defined).
As used herein, "Gross Revenue" shall mean the gross income from
all sources whatsoever resulting from the operation of the
Parklabrea Property (as hereinafter defined), including, without
limitation, all revenues from residential rent, other apartment
income, minimum rent, percentage rent and common area charges from
commercial tenants, real estate taxes, other commercial revenue,
and all income from those portions of the Parklabrea Property
commonly known as the Tennis Place, the Community Center and the
Design Center. As used herein, "Operating Expenses" shall mean only
the following expenses of operating the Parklabrea Property:
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payroll, contracted services, repairs and maintenance, painting,
utilities, advertising, administration expenses and fees,
management fees, insurance, real estate taxes, other taxes
(excluding income and franchise taxes), operating expenses of the
Tennis Place, the Community Center, the Design Center, and interest
on the obligation secured by that certain Purchase Money Deed of
Trust and Security Agreement with Assignment of Rents dated as of
June 1, 1973, recorded June 1, 1973 in the Official Records of Los
Angeles County, California in Book T8254, Page 8, as Instrument No.
1498. Operating Expenses shall not include depreciation, or leasing
commissions, tenant work or any other capital expenditure not
approved in writing by Metropolitan Life Insurance Company, a New
York corporation ("Metropolitan"), or any expenditure which in
accordance with generally accepted accounting principles would be
amortized over a period of time as opposed to being an expense in
a given fiscal year. The items of Gross Revenue and Operating
Expenses shall generally follow the income and expense statement
provided in that certain booklet entitled "Parklabrea Associates,
Partnership Meeting, January 8, 1985, Financial Package" (copies of
which are in the possession of the Corporation and Metropolitan),
except that depreciation with respect to the Parklabrea Property
and income and expenses in connection with any property other than
the Parklabrea Property shall be excluded from the computation of
Net Cash Flow. For certainty, there shall not be included in the
computation of Net Cash Flow any extraordinary items such as
proceeds from sales, refinancings, condemnation awards or insurance
proceeds (excluding business interruption insurance proceeds, if
any), nor any funds from or expenses related to any new buildings
or pertaining to that certain parcel known as the "Superblock" (as
hereinafter defined).
(I) "Non-Listed Security" means any security which is not
listed on any national securities exchange or quoted in the NASDAQ
System or the domestic over-the-counter market.
(J) "Parklabrea Property" means the interest of the
Corporation and May Centers, Inc., a wholly owned subsidiary of the
Corporation, as successors to the interest of either or both of
Parklabrea Associates, a California partnership, and Metropolitan
Life Insurance Company, in all real, personal, tangible and
intangible property owned by Parklabrea Associates immediately
prior to its dissolution, except all real, personal, tangible and
intangible property in, on or pertaining to the Superblock.
(K) "Redemption Date" as to any Series X Share means (i) the
Scheduled Redemption Date referred to in paragraph (4)(B), unless
the context otherwise requires, or (ii) the date specified in an
Optional Redemption Notice given pursuant to paragraph (4)(G)(i) or
any postponement thereof as contemplated by paragraph 4(H).
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(L) "Subsidiary" means any corporation at least a majority of
the Voting Stock of which is, at the time as of which any
determination is being made, ownedby the Corporation either
directly or indirectly through one or more Subsidiaries. "Voting
Stock" means any share of stock having general voting power in
electing the board of directors (irrespective of whether at the
time stock of any other class or classes has or might have voting
power by reason of the happening of any contingency).
(M) "Superblock" means that certain parcel legally described
as Parcel A of Parcel Map L.A. No. 4299 in Map Book 134 at Page 27
of Parcel Maps, Los Angeles County, California.
27. There is hereby established a series of the Corporation's
authorized Preference Shares, to be designated as the "Junior
Participating Preference Shares, par value $.50 per share." Shares
of such series are hereinafter referred to as "Junior Preference
Shares." The authorized number of Junior Preference Shares shall
be 1,000,000 shares. The relative rights, preferences and
limitations of the Junior Preference Shares, insofar as not already
fixed by any other provision of this Certificate of Incorporation
shall, as fixed by the Board of Directors of the Corporation in the
exercise of authority conferred by this Certificate of
Incorporation, and as permitted by Section 502 of the Business
Corporation Law, be as follows:
1. Designation and Amount. The shares of such series shall
be designated as "Junior Participating Preference Shares, par value
$.50 per share" (the "Junior Preference Shares"), and the number of
shares constituting such series shall be 1,000,000.
2. Dividends and Distributions.
(A) The holders of Junior Preference Shares shall be entitled
to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends
payable in cash on the fifteenth day of January, April, July and
October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a
Junior Preference Share or fraction of a Junior Preference Share,
in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $47.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock,
par value $1.66-2/3 per share, of the Corporation (the "Common
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Stock") since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any Junior Preference Share or
fraction of a Junior Preference Share. In the event the Corporation
shall at any time (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, (iii) combine the outstanding shares of Common Stock
into a smaller number of shares or (iv) issue any shares of its
capital stock in a reclassification of the outstanding Common
Stock, then in each such case the amount to which holders of Junior
Preference Shares were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Junior Preference Shares as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $47.00 per Junior
Preference Share shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding Junior Preference Shares from the Quarterly Dividend
Payment Date next preceding the date of issue of such Junior
Preference Shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Junior Preference Shares
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on Junior Preference Shares in an amount
less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-
by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of Junior Preference Shares entitled to receive payment of
a dividend or distribution declared thereon, which record date
shall be no more than 30 days prior to the date fixed for the
payment thereof.
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3. Voting Rights. The holders of Junior Preference Shares
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each Junior Preference Share shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall
at any time (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of the outstanding Common
Stock, then in each such case the number of votes per share to
which holders of Junior Preference Shares were entitled immediately
prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of Junior Preference Shares and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to
a vote of shareholders of the Corporation.
(C) (i) If at any time dividends on any Junior Preference
Shares shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default
period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all
Junior Preference Shares then outstanding shall have been
declared and paid or set apart for payment. During each
default period, the holders of Junior Preference Shares,
voting separately as a class, shall have the right to elect
two Directors.
(ii) During any default period, such voting right of the
holders of Junior Preference Shares may be exercised initially
at a special meeting called pursuant to subparagraph (C)(iii)
of this Paragraph 3 or at any annual meeting of shareholders,
and thereafter at annual meetings of shareholders, provided
that neither such voting right nor the right of the holders of
Junior Preference Shares as hereinafter provided to increase
in certain cases the authorized number of Directors shall be
exercised unless the holders of 25% in number of Junior
Preference Shares outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock
shall not affect the exercise by the holders of Junior
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Preference Shares of such voting right. At any meeting at
which the holders of Junior Preference Shares shall exercise
such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two Directors or, if such
right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the
holders of the Junior Preference Shares shall have the right
to make such increase in the number of Directors as shall be
necessary to permit the election by them of the required
number. After the holders of the Junior Preference Shares
shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except
by vote of the holders of Junior Preference Shares as herein
provided or pursuant to the rights of any equity securities
ranking senior to or pari passu with the Junior Preference
Shares.
(iii) Unless the holders of Junior Preference Shares
shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of
Directors may order, or any shareholder or shareholders owning
in the aggregate not less than 10% of the total number of
Junior Preference Shares outstanding, may request, the calling
of a special meeting of the holders of Junior Preference
Shares, which meeting shall thereupon be called by the
Chairman of the Board, the President, a Vice-President or the
Secretary of the Corporation. Notice of such meeting and of
any annual meeting at which holders of Junior Preference
Shares are entitled to vote pursuant to this subparagraph
(C)(iii) shall be given to each holder of record of Junior
Preference Shares by mailing a copy of such notice to him at
his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may
be called on similar notice by any shareholder or shareholders
owning in the aggregate not less than 10% of the total number
of Junior Preference Shares outstanding. Notwithstanding the
provisions of this subparagraph (C)(iii), no such special
meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual
meeting of the shareholders.
(iv) In any default period the holders of Common Stock,
and other classes of stock of the Corporation if applicable,
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shall continue to be entitled to elect the whole number of
Directors until the holders of Junior Preference Shares shall
have exercised their right to elect two Directors voting as a
class, after the exercise of which right (x) the Directors so
elected by the holders of Junior Preference Shares shall
continue in office until their successors shall have been
elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may
(except as provided in subparagraph (C)(ii) of this Paragraph
3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which
elected the Director whose office shall have become vacant.
References in this subparagraph (C) to Directors elected by
the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Junior Preference Shares as a
class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Junior Preference Shares
as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the Certificate
of Incorporation or the by-laws irrespective of any increase
made pursuant to the provisions of subparagraph (C)(ii) of
this Paragraph 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the
Certificate of Incorporation or the by-laws). Any vacancies in
the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(D) Except as set forth herein, holders of Junior Preference
Shares shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preference Shares as provided
in Paragraph 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
Junior Preference Shares outstanding shall have been paid in full,
the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
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for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Junior Preference Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Preference Shares, except
dividends paid ratably on the Junior Preference Shares and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding
up) with the Junior Preference Shares, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Junior Preference Shares; or
(iv) purchase or otherwise acquire for consideration any
Junior Preference Shares, or any shares of stock ranking on a
parity with the Junior Preference Shares, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under subparagraph (A) of this Paragraph 4, purchase or otherwise
acquire such shares at such time and in such manner.
5. Reacquired Shares. Any Junior Preference Shares purchased
or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become
authorized but unissued Preference Shares and may be reissued as
part of a new series of Preference Shares to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
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6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Junior Preference Shares unless, prior thereto, the holders of
Junior Preference Shares shall have received $100.00 per share,
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment (the "Liquidation Preference"). Following the payment of
the full amount of the Liquidation Preference, no additional
distributions shall be made to the holders of Junior Preference
Shares unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following
the payment of the full amount of the Liquidation Preference and
the Common Adjustment in respect of all outstanding Junior
Preference Shares and shares of Common Stock, respectively, holders
of Junior Preference Shares and holders of shares of Common Stock
shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Junior Preference Shares and
shares of Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Liquidation
Preference and the liquidation preferences of all other series of
Preference Shares, if any, which rank on a parity with the Junior
Preference Shares, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that
there are not sufficient assets available to permit payment in full
of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time (i) declare
any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
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7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property (payable in kind), then in any such case the Junior
Preference Shares shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time (i) declare any dividend on the
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine the outstanding
shares of Common Stock into a smaller number of shares, or (iv)
issue any shares of its capital stock in a reclassification of the
outstanding common stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or
change of Junior Preference Shares shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
8. No Redemption. The Junior Preference Shares shall not be
redeemable.
9. Ranking. The Junior Preference Shares shall rank junior
to all other equity securities of any kind which the Corporation
shall at any time issue or be authorized to issue other than the
Common Stock, as to the payment of dividends and the distribution
of assets.
10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Junior Preference Shares so as to affect them
adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding Junior Preference Shares, voting
separately as a class.
11. Fractional Shares. Junior Preference Shares may be issued
in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in liquidating distributions
and to have the benefit of all other rights of holders of Junior
Preference Shares.
28. There is hereby established a series of the Corporation's
authorized Preference Shares, to be designated as the "ESOP
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Preference Shares, par value $.50 per share." Shares of such series
are hereinafter referred to as "ESOP Preference Shares." The
authorized number of ESOP Preference Shares shall be 800,000
shares. The relative rights, preferences and limitations of the
ESOP Preference Shares, insofar as not already fixed by any other
provision of this Certificate of Incorporation shall, as fixed by
the Board of Directors of the Corporation in the exercise of
authority conferred by this Certificate of Incorporation, and as
permitted by Section 502 of the New York Business Corporation Law
(the "BCL"), be as follows:
(1) Designation and Amount; Special Purpose Restricted
Transfer Issue.
(A) The shares of such series shall be designated as "ESOP
Preference Shares, par value $.50 per share" (the "ESOP Preference
Shares"), and the number of shares constituting such series shall
be 800,000. Each ESOP Preference Share shall have a stated value of
$507.00 per share.
(B) ESOP Preference Shares shall be issued only to Irving
Trust Company, as trustee (the "Trustee") of the Profit Sharing
Plan of the Corporation, as amended from time to time, or any
successor to such plan (the "Plan"), including the employee stock
ownership plan component (the "ESOP"). All references to the holder
of ESOP Preference Shares shall mean the Trustee or any company
with which or into which the Trustee may merge or any successor
trustee under the trust agreement with respect to the Plan. In the
event of any transfer of record ownership of ESOP Preference Shares
to any person other than any successor trustee under the Plan, the
ESOP Preference Shares so transferred, upon such transfer and
without any further action by the Corporation or the holder
thereof, shall be automatically converted into shares of Common
Stock on the terms otherwise provided for the conversion of ESOP
Preference Shares into shares of Common Stock pursuant to Section
5 hereof and no such transferee shall have any of the voting
powers, preferences and relative, participating, optional or
special rights ascribed to ESOP Preference Shares hereunder but,
rather, only the powers and rights pertaining to the Common Stock
into which such ESOP Preference Shares shall be so converted. In
the event of such a conversion, the transferee of the ESOP
Preference Shares shall be treated for all purposes as the record
holder of the shares of Common Stock into which such ESOP
Preference Shares have been automatically converted as of the date
of such transfer. Certificates representing ESOP Preference Shares
shall bear a legend to reflect the foregoing provisions.
Notwithstanding the foregoing provisions of this paragraph (B) of
Section 1, ESOP Preference Shares (i) may be converted into shares
of Common Stock as provided by Section 5 hereof and the shares of
Common Stock issued upon such conversion may be transferred by the
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holder thereof as permitted by law and (ii) shall be redeemable by
the Corporation upon the terms and conditions provided by Sections
6, 7 and 8 hereof.
(2) Dividends and Distributions
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of ESOP Preference Shares shall be entitled to
receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, cash dividends ("ESOP Preference
Dividends") in an amount per share equal to $38.025 per share per
annum, and no more, payable semi-annually in arrears, one-half on
the 30th day of April and one-half on the 30th day of October of
each year (each a "Dividend Payment Date") commencing on October
30, 1989, to holders of record at the start of business on such
Dividend Payment Date. In the event that any Dividend Payment Date
shall fall on any day other than a "Business Day" (as hereinafter
defined), the dividend payment due on such Dividend Payment Date
shall be paid on the Business Day immediately preceding such
Dividend Payment Date. ESOP Preference Dividends shall begin to
accrue on outstanding ESOP Preference Shares from the date of
issuance of such ESOP Preference Shares. ESOP Preference Dividends
shall accrue on a daily basis whether or not the Corporation shall
have earnings or surplus at the time, but ESOP Preference Dividends
accrued after issuance on the ESOP Preference Shares for any period
less than a full semi-annual period between Dividend Payment Dates
(or, in the case of the first dividend payment, from the date of
issuance through the first Dividend Payment Date) shall be computed
on the basis of a 360-day year of 30-day months. Accrued but
unpaid ESOP Preference Dividends shall cumulate as of the Dividend
Payment Date on which they first become payable, but no interest
shall accrue on accumulated but unpaid ESOP Preference Dividends.
(B) So long as any ESOP Preference Shares shall be
outstanding, no dividend shall be declared or paid or set apart for
payment on any other series of stock ranking on a parity with the
ESOP Preference Shares as to dividends, unless there shall also be
or have been declared and paid or set apart for payment on the ESOP
Preference Shares dividends for all dividend payment periods of the
ESOP Preference Shares ending on or before the dividend payment
date of such parity stock, ratably in proportion to the respective
amounts of dividends accumulated and unpaid through such dividend
period on the ESOP Preference Shares and accumulated and unpaid on
such parity stock through the dividend payment period on such
parity stock next preceding such dividend payment date. In the
event that full cumulative dividends on the ESOP Preference Shares
have not been declared and paid or set apart for payment when due,
the Corporation shall not declare or pay or set apart for payment
any dividends or make any other distributions on, or make any
payment on account of the purchase, redemption or other retirement
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of any other class of stock or series thereof of the Corporation
ranking, as to dividends or as to distributions in the event of a
liquidation, dissolution or winding-up of the Corporation, junior
to the ESOP Preference Shares until full cumulative dividends on
the ESOP Preference Shares shall have been paid or declared and set
apart for payment; provided, however, that the foregoing shall not
apply to (i) any dividend payable solely in any shares of any stock
ranking, as to dividends and as to distributions in the event of a
liquidation, dissolution or winding-up of the Corporation, junior
to the ESOP Preference Shares or (ii) the acquisition of shares of
any stock ranking, as to dividends or as to distributions in the
event of a liquidation, dissolution or winding-up of the
Corporation, junior to the ESOP Preference Shares in exchange
solely for shares of any other stock ranking, as to dividends and
as to distributions in the event of a liquidation, dissolution or
winding-up of the Corporation, junior to the ESOP Preference
Shares.
(3) Voting Rights. The holders of ESOP Preference Shares
shall have the following voting rights:
(A) The holders of ESOP Preference Shares shall be entitled to
vote on all matters submitted to a vote of the shareholders of the
Corporation, voting together with the holders of Common Stock as
one class. The holder of each ESOP Preference Share shall be
entitled to a number of votes equal to the number of shares of
Common Stock into which such ESOP Preference Share could be
converted on the record date for determining the shareholders
entitled to vote, rounded to the nearest one one-hundredth of a
vote; it being understood that whenever the "Conversion Price" (as
defined in Section 5 hereof) is adjusted as provided in Section 9
hereof, the number of votes of the ESOP Preference Shares shall
also be similarly adjusted.
(B) Except as otherwise required by law or set forth herein,
holders of ESOP Preference Shares shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as
set forth herein) for the taking of any corporate action; provided,
however, that the vote of at least 66-2/3% of the outstanding ESOP
Preference Shares, voting separately as a series, shall be
necessary to adopt any alteration, amendment or repeal of any
provision of the Certificate of Incorporation of the Corporation
(including any such alteration, amendment or repeal effected by any
merger or consolidation in which the Corporation is the surviving
or resulting corporation), if such amendment, alteration or repeal
would alter or change the powers, preferences, or special rights of
the ESOP Preference Shares so as to affect them adversely.
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(4) Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of ESOP Preference
Shares shall be entitled to receive out of assets of the
Corporation which remain after satisfaction in full of all valid
claims of creditors of the Corporation and which are available for
payment to shareholders, and subject to the rights of the holders
of any stock of the Corporation ranking senior to or on a parity
with the ESOP Preference Shares in respect of distributions upon
liquidation, dissolution or winding up of the Corporation, before
any amount shall be paid or distributed among the holders of Common
Stock or any other shares ranking junior to the ESOP Preference
Shares in respect of distributions upon liquidation, dissolution or
winding up of the Corporation, liquidating distributions in the
amount of $507.00 per share, plus an amount equal to all accrued
and unpaid dividends thereon to the date fixed for distribution,
and no more. If upon any liquidation, dissolution or winding up of
the Corporation, the amounts payable with respect to the ESOP
Preference Shares and any other stock ranking as to any such
distribution on a parity with the ESOP Preference Shares are not
paid in full, the holders of the ESOP Preference Shares and such
other stock shall share ratably in any distribution of assets in
proportion to the full respective preferential amounts to which
they are entitled. After payment of the full amount to which they
are entitled as provided by the foregoing provisions of this
paragraph 4(A), the holders of ESOP Preference Shares shall not be
entitled to any further right or claim to any of the remaining
assets of the Corporation.
(B) Neither the merger or consolidation of the Corporation
with or into any other corporation, nor the merger or consolidation
of any other corporation with or into the Corporation, nor the
sale, lease, exchange or other transfer of all or any portion of
the assets of the Corporation, shall be deemed to be a dissolution,
liquidation or winding up of the affairs of the Corporation for
purposes of this Section 4, but the holders of ESOP Preference
Shares shall nevertheless be entitled in the event of any such
merger or consolidation to the rights provided by Section 8 hereof.
(C) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, stating
the payment date or dates when, and the place or places where, the
amounts distributable to holders of ESOP Preference Shares in such
circumstances shall be payable, shall be given by hand delivery, by
courier, by standard form of telecommunication or by first-class
mail (postage prepaid), delivered, sent or mailed, as the case may
be, not less than twenty (20) days prior to any payment date stated
therein, to the holders of ESOP Preference Shares, at the address
shown on the books of the Corporation or any transfer agent for the
ESOP Preference Shares.
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(5) Conversion into Common Stock.
(A) A holder of shares of ESOP Preference Shares shall be
entitled, at any time prior to the close of business on the date
fixed for redemption of such shares pursuant to Sections 6, 7 and
8 hereof, to cause any or all of such shares to be converted into
shares of Common Stock, initially at a conversion price equal to
$50.70 per share of Common Stock, with each ESOP Preference Share
being valued at $507.00 for such purpose, and which price shall be
adjusted as hereinafter provided (and, as so adjusted, is
hereinafter sometimes referred to as the "Conversion Price") (that
is, a conversion rate initially equivalent to ten (10) shares of
Common Stock for each ESOP Preference Share so converted, which is
subject to adjustment as the Conversion Price is adjusted as
hereinafter provided in Section 9).
(B) Any holder of ESOP Preference Shares desiring to convert
such shares into shares of Common Stock shall surrender the
certificate or certificates representing the ESOP Preference Shares
being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating
thereto), at the principal executive office of the Corporation or
the offices of the transfer agent for the ESOP Preference Shares or
such office or offices in the continental United States of an agent
for conversion as may from time to time be designated by notice to
the holders of the ESOP Preference Shares by the Corporation or the
transfer agent for the ESOP Preference Shares, accompanied by
written notice of conversion. Such notice of conversion shall
specify (i) the number of shares of ESOP Preference Shares to be
converted and the name or names in which such holder wishes the
certificate or certificates for Common Stock and for any ESOP
Preference Shares not to be so converted to be issued and (ii) the
address to which such holder wishes delivery to be made of such new
certificates to be issued upon such conversion.
(C) Upon surrender of a certificate representing an ESOP
Preference Share or Shares for conversion, the Corporation shall
issue and send by hand delivery, by courier or by first class mail
(postage prepaid) to the holder thereof or to such holder's
designee, at the address designated by such holder, a certificate
or certificates for the number of shares of Common Stock to which
such holder shall be entitled upon conversion. In the event that
there shall have been surrendered a certificate or certificates
representing ESOP Preference Shares, only part of which are to be
converted, the Corporation shall issue and send to such holder or
such holder's designee, in the manner set forth in the preceding
sentence, a new certificate or certificates representing the number
of ESOP Preference Shares which shall not have been converted.
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(D) The issuance by the Corporation of shares of Common Stock
upon a conversion of ESOP Preference Shares into shares of Common
Stock made at the option of the holder thereof shall be effective
as of the earlier of (i) the delivery to such holder or such
holder's designee of the certificates representing the shares of
Common Stock issued upon conversion thereof or (ii) the
commencement of business on the second business day after the
surrender of the certificate or certificates for the ESOP
Preference Shares to be converted, duly assigned or endorsed for
transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto) and accompanied by all documentation
required to effect the conversion, as provided by this Section 28.
On and after the effective date of conversion, the person or
persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock, but no allowance or
adjustment shall be made in respect of dividends payable to holders
of Common Stock in respect of any period prior to such effective
date. The Corporation shall not be obligated to pay any dividends
which shall have been declared and shall be payable to holders of
ESOP Preference Shares on a Dividend Payment Date if such Dividend
Payment Date for such dividend is subsequent to the effective date
of conversion of such shares.
(E) The Corporation shall not be obligated to deliver to
holders of ESOP Preference Shares any fractional share of Common
Stock issuable upon any conversion of such ESOP Preference Shares,
but in lieu thereof may make a cash payment in respect thereof in
any manner permitted by law.
(F) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely
for issuance upon the conversion of ESOP Preference Shares as
herein provided, free from any preemptive rights, such number of
shares of Common Stock as shall from time to time be issuable upon
the conversion of all the ESOP Preference Shares then outstanding.
Nothing contained herein shall preclude the Corporation from
issuing shares of Common Stock held in its treasury upon the
conversion of ESOP Preference Shares into Common Stock pursuant to
the terms hereof. The Corporation shall prepare and shall use its
best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by
law, and shall comply with all requirements as to registration or
qualification of the Common Stock, in order to enable the
Corporation lawfully to issue and deliver to each holder of record
of ESOP Preference Shares such number of shares of its Common Stock
as shall from time to time be sufficient to effect the conversion
of all ESOP Preference Shares then outstanding and convertible into
shares of Common Stock.
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(6) Redemption At the Option of the Corporation.
(A) The ESOP Preference Shares shall be redeemable, in whole
or in part, at the option of the Corporation at any time after
April 20, 1999, or at any time after the date of issuance, if
permitted by paragraph (D) of this Section 6, at $507.00 per share,
plus, in each case, an amount equal to all accrued and unpaid
dividends thereon to the date fixed for redemption. Payment of the
redemption price shall be made by the Corporation in cash or shares
of Common Stock, or a combination thereof, as permitted by
paragraph (E) of this Section 6. From and after the date fixed for
redemption, dividends on ESOP Preference Shares called for
redemption will cease to accrue, such ESOP Preference Shares will
no longer be deemed to be outstanding and all rights in respect of
such ESOP Preference Shares shall cease, except the right to
receive the redemption price. If less than all of the outstanding
ESOP Preference Shares are to be redeemed, the Corporation shall
either redeem a portion of the ESOP Preference Shares of each
holder determined pro rata based on the number of ESOP Preference
Shares held by each holder or shall select the ESOP Preference
Shares to be redeemed by lot, as may be determined by the Board of
Directors of the Corporation.
(B) Unless otherwise required by law, notice of redemption
will be sent to the holders of ESOP Preference Shares at the
address shown on the books of the Corporation or any transfer agent
for the ESOP Preference Shares by hand delivery, by courier, by
standard form of telecommunication or by first class mail (postage
prepaid) delivered, sent or mailed, as the case may be, not less
than twenty (20) days nor more than sixty (60) days prior to the
redemption date. Each such notice shall state: (i) the redemption
date; (ii) the total number of ESOP Preference Shares to be
redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of such ESOP Preference Shares to be
redeemed from such holder; (iii) the redemption price; (iv) the
place or places where certificates for such ESOP Preference Shares
are to be surrendered for payment of the redemption price; (v) that
dividends on the ESOP Preference Shares to be redeemed will cease
to accrue on such redemption date; and (vi) the conversion rights
of the ESOP Preference Shares to be redeemed, the period within
which conversion rights may be exercised, and the Conversion Price
and number of ESOP Preference Shares of Common Stock issuable upon
conversion of an ESOP Preference Share at the time. Upon surrender
of the certificate for any ESOP Preference Shares so called for
redemption and not previously converted (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation
shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the date fixed for redemption and
at the redemption price set forth in this Section 6.
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(C) In the event of a change in any statute, rule or
regulation of the United States of America or any administrative or
judicial interpretation thereof which (i) has the effect of
limiting or making unavailable to the Corporation all or any of the
tax deductions for amounts paid (including dividends) on the ESOP
Preference Shares when such amounts are used as provided under
Section 404(k)(2) of the Internal Revenue Code of 1986, as amended
and in effect on the date ESOP Preference Shares are initially
issued, or (ii) relates, directly or indirectly, to the ESOP and
adversely affects the Corporation (including, without limitation,
by resulting in a "Determination of Taxability" pursuant to the
Note Purchase Agreement (as hereinafter defined)), the Corporation
may, in its sole discretion and notwithstanding anything to the
contrary in paragraph (A) of this Section 6, elect to redeem any or
all of such ESOP Preference Shares for the amount payable in
respect of the ESOP Preference Shares upon liquidation of the
Corporation pursuant to Section 4 hereof.
(D) In the event that the Plan is terminated or the ESOP is
terminated or eliminated from the Plan in accordance with its
terms, and notwithstanding anything to the contrary in paragraph
(A) this Section 6, the Corporation shall, as soon thereafter as
practicable, call for redemption all then outstanding ESOP
Preference Shares at the following redemption prices per share:
During the
Twelve-Month
Period Beginning Price Per
April 20, Share
1989 . . . . . . . . . . . . . . . . . $564.04
1990 . . . . . . . . . . . . . . . . . 558.33
1991 . . . . . . . . . . . . . . . . . 552.63
1992 . . . . . . . . . . . . . . . . . 546.93
1993 . . . . . . . . . . . . . . . . . 541.22
1994 . . . . . . . . . . . . . . . . . 535.52
1995 . . . . . . . . . . . . . . . . . 529.82
1996 . . . . . . . . . . . . . . . . . 524.11
1997 . . . . . . . . . . . . . . . . . 518.41
1998 . . . . . . . . . . . . . . . . . 512.70
(E) The Corporation, at its option, may make payment of the
redemption price required upon redemption of ESOP Preference Shares
in cash or in shares of Common Stock, or in a combination of such
Common Stock and cash, any such shares of Common Stock to be valued
for such purposes at their Fair Market Value (as defined in
paragraph (G) of Section 9 hereof).
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(7) Other Redemption Rights.
ESOP Preference Shares shall be redeemed by the Corporation
for cash or, if the Corporation so elects, in shares of Common
Stock, or a combination of such shares of Common Stock and cash,
any such shares of Common Stock to be valued for such purpose at
their Fair Market Value, at a redemption price of $507.00 per share
plus accrued and unpaid dividends thereon to the date fixed for
redemption, at the option of the holder, at any time and from time
to time upon notice to the Corporation given not less than five (5)
business days prior to the date fixed by the holder in such notice
for such redemption, upon certification by such holder to the
Corporation of the following events: (i) when and to the extent
necessary for such holder to provide for distributions required to
be made to participants under, or to satisfy an investment election
provided to participants in accordance with, the Plan; (ii) when
and to the extent necessary for such holder to make any payments of
principal, interest or premium due and payable (whether as
scheduled, upon acceleration or otherwise) under the Note Purchase
Agreement among the Trustee and certain institutional investor
parties thereto (the "Note Purchase Agreement") or any
indebtedness, expenses or costs incurred by the holder for the
benefit of the Plan; or (iii) in the event that the Plan is not
initially determined by the Internal Revenue Service to be
qualified within the meaning of Section 401(a) and 4975(e)(7) of
the Internal Revenue Code of 1986, as amended.
(8) Consolidation, Merger, etc.
(A) In the event that the Corporation shall consummate any
consolidation or merger or similar business combination, pursuant
to which the outstanding shares of Common Stock are by operation of
law exchanged solely for or changed, reclassified or converted
solely into stock of any successor or resulting corporation
(including the Corporation) that constitutes "qualifying employer
securities" with respect to a holder of ESOP Preference Shares
within the meaning of Section 409(1) of the Internal Revenue Code
of 1986, as amended, and Section 407(d)(5) of the Employee
Retirement Income Security Act of 1974, as amended, or any
successor provisions of law, and, if applicable, for a cash payment
in lieu of fractional shares, if any, the ESOP Preference Shares of
such holder shall, in connection with such consolidation, merger or
similar business combination, be assumed by and shall become
preferred stock of such successor or resulting corporation, having
in respect of such corporation, insofar as possible, the same
powers, preferences and relative, participating, optional or other
special rights (including the redemption rights provided by
Sections 6, 7 and 8 hereof), and the qualifications, limitations or
restrictions thereon, that the ESOP Preference Share had
immediately prior to such transaction, except that after such
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transaction each ESOP Preference Share shall be convertible,
otherwise on the terms and conditions provided by Section 5 hereof,
into the number and kind of qualifying employer securities so
receivable by a holder of the number of shares of Common Stock into
which such ESOP Preference Shares could have been converted
immediately prior to such transaction; provided, however, that if
by virtue of the structure of such transaction, a holder of Common
Stock is required to make an election with respect to the nature
and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holders of the ESOP
Preference Shares, then the ESOP Preference Shares shall, by virtue
of such transaction and on the same terms as apply to the holders
of Common Stock, be converted into or exchanged for the aggregate
amount of stock, securities, cash or other property (payable in
kind) receivable by a holder of the number of shares of Common
Stock into which such ESOP Preference Shares could have been
converted immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election to receive
any kind or amount of stock, securities, cash or other property
(other than such qualifying employer securities and a cash payment,
if applicable, in lieu of fractional shares) receivable upon such
transaction (provided that, if the kind or amount of qualifying
employer securities receivable upon such transaction is not the
same for each non-electing share, then the kind and amount so
receivable upon such transaction for each non-electing share shall
be the kind and amount so receivable per share by the plurality of
the non-electing shares). The rights of the ESOP Preference Shares
as preferred stock of such successor or resulting corporation shall
successively be subject to adjustments pursuant to Section 9 hereof
after any such transaction as nearly equivalent as practicable to
the adjustment provided for by such section prior to such
transaction. The Corporation shall not consummate any such merger,
consolidation or similar transaction unless all then outstanding
ESOP Preference Shares shall be assumed and authorized by the
successor or resulting corporation as aforesaid.
(B) In the event that the Corporation shall consummate any
consolidation or merger or similar business combination, pursuant
to which the outstanding shares of Common Stock are by operation of
law exchanged for or changed, reclassified or converted into other
stock or securities or cash or any other property, or any
combination thereof, other than any such consideration which is
constituted solely of qualifying employer securities (as referred
to in paragraph (A) of this Section 8) and cash payments, if
applicable, in lieu of fractional shares, outstanding ESOP
Preference Shares shall, without any action on the part of the
Corporation or any holder thereof (but subject to paragraph (C) of
this Section 8), be automatically converted by virtue of such
merger, consolidation or similar transaction immediately prior to
such consummation into the number of shares of Common Stock into
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which such ESOP Preference Shares could have been converted at such
time so that each ESOP Preference Share shall, by virtue of such
transaction and on the same terms as apply to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of
stock, securities, cash or other property (payable in like kind)
receivable by a holder of the number of shares of Common Stock into
which such ESOP Preference Shares could have been converted
immediately prior to such transaction; provided, however, that if
by virtue of the structure of such transaction, a holder of Common
Stock is required to make an election with respect to the nature
and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holder of the ESOP
Preference Shares, then the ESOP Preference Shares shall, by virtue
of such transaction and on the same terms as apply to the holders
of Common Stock, be converted into or exchanged for the aggregate
amount of stock, securities, cash or other property (payable in
kind) receivable be a holder of the number of shares of Common
Stock into which such ESOP Preference Shares could have been
converted immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election as to the
kind or amount of stock, securities, cash or other property
receivable upon such transaction (provided that, if the kind or
amount of stock, securities, cash or other property receivable upon
such transaction is not the same for each non-electing share, then
the kind and amount of stock, securities, cash or other property
receivable upon such transaction for each non-electing share shall
be the kind and amount so receivable per share by a plurality of
the non-electing shares).
(C) In the event the Corporation shall enter into any
agreement providing for any consolidation or merger or similar
business combination described in paragraph (B) of this Section 8,
then the Corporation shall as soon as practicable thereafter (and
in any event at least ten (10) business days before consummation of
such transaction) give notice of such agreement and the material
terms thereof to each holder of ESOP Preference Shares and each
such holder shall have the right to elect, by written notice to the
Corporation, to receive, upon consummation of such transaction (if
an when such transaction is consummated), from the Corporation or
the successor of the Corporation, in redemption and retirement of
such ESOP Preference Shares, a cash payment equal to the following
amount per share:
During the
Twelve-Month
Period Beginning Price Per
April 20, Share
1989 . . . . . . . . . . . . . . . . . $545.03
1990 . . . . . . . . . . . . . . . . . 541.22
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1991 . . . . . . . . . . . . . . . . . 537.42
1992 . . . . . . . . . . . . . . . . . 533.62
1993 . . . . . . . . . . . . . . . . . 529.82
1994 . . . . . . . . . . . . . . . . . 526.01
1995 . . . . . . . . . . . . . . . . . 522.21
1996 . . . . . . . . . . . . . . . . . 518.41
1997 . . . . . . . . . . . . . . . . . 514.61
1998 . . . . . . . . . . . . . . . . . 510.80
No such notice of redemption shall be effective unless given to the
Corporation prior to the close of business on the fifth business
day prior to consummation of such transaction, unless the
Corporation or the successor of the Corporation shall waive such
prior notice, but any notice of redemption so given prior to such
time may be withdrawn by notice of withdrawal given to the
Corporation prior to the close of business on the fifth business
day prior to consummation of such transaction.
(9) Anti-dilution Adjustments.
(A) In the event the Corporation shall, at any time or from
time to time while any of the ESOP Preference Shares are
outstanding, (i) pay a dividend or make a distribution in respect
of the Common Stock in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares,
recapitalization of the Corporation (including a recapitalization
effected by a merger or consolidation to which Section 8 hereof
does not apply) or otherwise, the Conversion Price in effect
immediately prior to such action shall be adjusted by multiplying
such Conversion Price by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately before
such event, and the denominator of which is the number of shares of
Common Stock outstanding immediately after such event. An
adjustment made pursuant to this paragraph 9(A) shall be given
effect, upon payment of such a dividend or distribution, as of the
record date for the determination of stockholders entitled to
receive such dividend or distribution (on a retroactive basis) and
in the case of a subdivision or combination shall become effective
immediately as of the effective date thereof.
(B) In the event that the Corporation shall, at any time or
from time to time while any of the ESOP Preference Shares are
outstanding, issue to holders of shares of Common Stock as a
dividend or distribution, including by way of a reclassification of
shares or a recapitalization of the Corporation, any right or
warrant to purchase shares of Common Stock (but not including as
such a right or warrant any security convertible into or
exchangeable for shares of Common Stock) at a purchase price per
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share less than the Fair Market Value (as hereinafter defined) of
a share of Common Stock on the date of issuance of such right or
warrant, then, subject to the provisions of paragraphs (E) and (F)
of this Section 9, the Conversion Price shall be adjusted by
multiplying such Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the
number of shares of Common Stock which could be purchased at the
Fair Market Value of a share of Common Stock at the time of such
issuance for the maximum aggregate consideration payable upon
exercise in full of all such rights or warrants, and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock that could be
acquired upon exercise in full of all such rights and warrants.
(C) In the event the Corporation shall, at any time or from
time to time while any of the ESOP Preference Shares are
outstanding, issue, sell or exchange shares of Common Stock (other
than pursuant to any right or warrant to purchase or acquire shares
of Common Stock (including as such a right or warrant any security
convertible into or exchangeable for shares of Common Stock) and
other than pursuant to any employee or director incentive or
benefit plan or arrangement, including any employment, severance or
consulting agreement, of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted) for a consideration
having a Fair Market Value, on the date of such issuance, sale or
exchange, less than the Fair Market Value of such shares on the
date of issuance, sale or exchange, then, subject to the provisions
of paragraphs (E) and (F) of this Section 9, the Conversion Price
shall be adjusted by multiplying such Conversion Price by the
fraction the numerator of which shall be the sum of (i) the Fair
Market Value of all the shares of Common Stock outstanding on the
day immediately preceding the first public announcement of such
issuance, sale or exchange plus (ii) the Fair Market Value of the
consideration received by the Corporation in respect of such
issuance, sale or exchange of shares of Common Stock, and the
denominator of which shall be the product of (a) the Fair Market
Value of a share of Common Stock on the day immediately preceding
the first public announcement of such issuance, sale or exchange
multiplied by (b) the sum of the number of shares of Common Stock
outstanding on such day plus the number of shares of Common Stock
so issued, sold or exchanged by the Corporation. In the event the
Corporation shall, at any time or from time while any ESOP
Preference Shares are outstanding, issue, sell or exchange any
right or warrant to purchase or acquire shares of Common Stock
(including as such a right or warrant any security convertible into
or exchangeable for shares of Common Stock), other than any such
issuance to holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of shares or
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a recapitalization of the Corporation) and other than pursuant to
any employee or director incentive or benefit plan or arrangement
(including any employment, severance or consulting agreement) of
the Corporation or any subsidiary of the Corporation heretofore or
hereafter adopted, for a consideration having a Fair Market Value,
on the date of such issuance, sale or exchange, less than the Non-
Dilutive Amount (as hereinafter defined), then, subject to the
provisions of paragraphs (E) and (F) of this Section 9, the
Conversion Price shall be adjusted by multiplying such Conversion
Price by a fraction the numerator of which shall be the sum of (I)
the Fair Market Value of all the shares of Common Stock outstanding
on the day immediately preceding the first public announcement of
such issuance, sale or exchange plus (II) the Fair Market value of
the consideration received by the Corporation in respect of such
issuance, sale or exchange of such right or warrant plus (III) the
Fair Market Value at the time of such issuance of the consideration
which the Corporation would receive upon exercise in full of all
such rights or warrants, and the denominator of which shall be the
product of (i) the Fair Market value of a share of Common Stock on
the day immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (ii) the sum of the number
of shares of Common Stock outstanding on such day plus the maximum
number of shares of Common Stock which could be acquired pursuant
to such right or warrant at the time of the issuance, sale or
exchange of such right or warrant (assuming shares of Common Stock
could be acquired pursuant to such right or warrant at such time).
(D) In the event the Corporation shall, at any time or from
time to time while any of the ESOP Preference Shares are
outstanding, make an Extraordinary Distribution (as hereinafter
defined) in respect of the Common Stock, whether by dividend,
distribution, reclassification of shares or recapitalization of the
Corporation (including a recapitalization or reclassification
effected by a merger or consolidation to which Section 8 hereof
does not apply) or effect a Pro Rata Repurchase (as hereinafter
defined) of Common Stock, the Conversion Price in effect
immediately prior to such Extraordinary Distribution or Pro Rata
Repurchase shall, subject to paragraphs (E) and (F) of this Section
9, be adjusted by multiplying such Conversion Price by the fraction
the numerator of which is the difference between (i) the product of
(x) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase
multiplied by (y) the Fair Market Value of a share of Common Stock
on the day before the ex-dividend date with respect to an
Extraordinary Distribution which is paid in cash and on the
distribution date with respect to an Extraordinary Distribution
which is paid other than in cash, or on the applicable expiration
date (including all extensions thereof) of any tender offer which
is a Pro Rata Repurchase, or on the date of purchase with respect
to any Pro Rata Repurchase which is not a tender offer, as the case
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may be, and (ii) the Fair Market Value of the Extraordinary
Distribution minus the aggregate amount of regularly scheduled
quarterly dividends declared by the Board of Directors of the
Corporation and paid by the Corporation in the twelve months
immediately preceding such Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the case
may be, and the denominator of which shall be the product of (a)
the number of shares of Common Stock outstanding immediately before
such Extraordinary Dividend or Pro Rata Repurchase minus, in the
case of Pro Rata Repurchase, the number of shares of Common Stock
repurchased by the Corporation multiplied by (b) the Fair Market
Value of a share of Common Stock on the day before the ex-dividend
date with respect to an Extraordinary Distribution which is paid in
cash and on the distribution date with respect to an Extraordinary
Distribution which is paid other than in cash, or on the applicable
expiration date (including all extensions thereof) of any tender
offer which is a Pro Rata Repurchase or on the date of purchase
with respect to any Pro Rata Repurchase which is not a tender
offer, as the case may be. The Corporation shall send each holder
of ESOP Preference Shares (i) notice of its intent to make any
dividend or distribution and (ii) notice of any offer by the
Corporation to make a Pro Rata Repurchase, in each case at the same
time as, or as soon as practicable after, such offer is first
communicated (including by announcement of a record date in
accordance with the rules of any stock exchange on which the Common
Stock is listed or admitted to trading) to holders of Common Stock.
Such notice shall indicate the intended record date and the amount
and nature of such dividend or distribution, or the number of
shares subject to such offer for a Pro Rata Repurchase and the
purchase price payable by the Corporation pursuant to such offer,
as well as the Conversion Price and the number of shares of Common
Stock into which an ESOP Preference Share may be converted at such
time.
(E) Notwithstanding any other provisions of this Section 9,
the Corporation shall not be required to make any adjustment to the
Conversion Price unless such adjustment would require an increase
or decrease of at least one percent (1%) in the Conversion Price.
Any lesser adjustment shall be carried forward and shall be made no
later than the time of, and together with, the next subsequent
adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at
least one percent (1%) in the Conversion Price.
(F) If the Corporation shall make any dividend or distribution
on the Common Stock or issue any Common Stock, other capital stock
or other security of the Corporation or any rights or warrants to
purchase or acquire any such security, which transaction does not
result in an adjustment to the Conversion Price pursuant to the
foregoing provisions of this Section 9, the Board of Directors of
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the Corporation shall consider whether such action is of such a
nature that an adjustment to the Conversion Price should equitably
be made in respect of such transaction. If in such case the Board
of Directors of the Corporation determines that an adjustment to
the Conversion Price should be made, an adjustment shall be made
effective as of such date, as determined by the Board of Directors
of the Corporation. The determination of the Board of Directors of
the Corporation as to whether an adjustment to the Conversion Price
should be made pursuant to the foregoing provisions of this
paragraph 9(F), and, if so, as to what adjustment should be made
and when, shall be final and binding on the Corporation and all
shareholders of the Corporation. The Corporation shall be entitled
to make such additional adjustments in the Conversion Price, in
addition to those required by the foregoing provisions of this
Section 9, as shall be necessary in order that any dividend or
distribution in shares of capital stock of the Corporation,
subdivision, reclassification or combination of shares of stock of
the Corporation or any recapitalization of the Corporation shall
not be taxable to the holders of the Common Stock.
(G) For purposes of this Section 28, the following definitions
shall apply:
"Business Day" shall mean each day that is not a Saturday,
Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open.
"Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security of the
Corporation or any other issuer for any day shall mean the last
reported sales price, regular way, or, in the event that no sale
takes place on such day, the average of the reported closing bid
and asked prices, regular way, in either case as reported on the
New York Stock Exchange Composite Tape or, if such security is not
listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security
is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the NASDAQ National
Market System or, if such security is not quoted on such National
Market System, the average of the closing bid and asked prices on
each such day in the over-the-counter market as reported by NASDAQ
or, if bid and asked prices for such security on each such day
shall not have been reported through NASDAQ, the average of the bid
and asked prices for such day as furnished by any New York Stock
Exchange member firm regularly making a market in such security
selected for such purpose by the Board of Directors of the
Corporation or a committee thereof, in each case, on each trading
day during the Adjustment Period. "Adjustment Period" shall mean
the period of five (5) consecutive trading days preceding, and
including, the date as of which the Fair Market Value of a security
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is to be determined. The "Fair Market Value" of any security which
is not publicly traded or of any other property shall mean the fair
value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or
property selected in good faith by the Board of Directors of the
Corporation or a committee thereof, or, if no such investment
banking or appraisal firm is in the good faith judgment of the
Board of Directors or such committee available to make such
determination, as determined in good faith by the Board of
Directors of the Corporation or such committee.
"Extraordinary Distribution" shall mean any dividend or other
distribution to holders of Common Stock (effected while any of the
ESOP Preference Shares are outstanding) (i) of cash, where the
aggregate amount of such cash dividend or distribution together
with the amount of all cash dividends and distributions made during
the preceding period of 12 months, when combined with the aggregate
amount of all Pro Rata Repurchases (for this purpose, including
only that portion of the aggregate purchase price of such Pro Rata
Repurchase which is in excess of the Fair Market Value of the
Common Stock repurchased as determined on the applicable expiration
date (including all extensions thereof) of any tender offer or
exchange offer which is a Pro Rata Repurchase, or the date of
purchase with respect to any other Pro Rata Repurchase which is not
a tender offer or exchange offer made during such period), exceeds
twelve and one-half percent (12 1/2%) of the aggregate Fair Market
Value of all shares of Common Stock outstanding on the day before
the ex-dividend date with respect to such Extraordinary
Distribution which is paid in cash and on the distribution date
with respect to an Extraordinary Distribution which is paid other
than in cash, and/or (ii) of any shares of capital stock of the
Corporation (other than shares of Common Stock), other securities
of the Corporation (other than securities of the type referred to
in paragraph (B) or (C) of this Section 9), evidences of
indebtedness of the Corporation or any other person or any other
property (including shares of any subsidiary of the Corporation) or
any combination thereof. The Fair Market Value of an Extraordinary
Distribution for purposes of paragraph (D) of this Section 9 shall
be equal to the sum of the Fair Market Value of such Extraordinary
Distribution plus the amount of any cash dividends which are not
Extraordinary Distributions made during such 12-month period and
not previously included in the calculation of an adjustment
pursuant to paragraph (D) of this Section 9.
"Fair Market Value" shall mean, as to shares of Common Stock
or any other class of capital stock or securities of the
Corporation or any other issuer which are publicly traded, the
average of the Current Market Prices of such shares or securities
for each day of the Adjustment Period.
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"Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any right or warrant to purchase or
acquire shares of Common Stock (including any security convertible
into or exchangeable for shares of Common Stock) shall mean the
difference between (i) the product of the Fair Market Value of a
share of Common Stock on the day preceding the first public
announcement of such issuance, sale or exchange multiplied by the
maximum number of shares of Common Stock which could be acquired on
such date upon the exercise in full of such rights and warrants
(including upon the conversion or exchange of all such convertible
or exchangeable securities), whether or not exercisable (or
convertible or exchangeable) at such date, and (ii) the aggregate
amount payable pursuant to such right or warrant to purchase or
acquire such maximum number of shares of Common Stock; provided,
however, that in no event shall the Non-Dilutive Amount be less
than zero. For purposes of the foregoing sentence, in the case of
a security convertible into or exchangeable for shares of Common
Stock, the amount payable pursuant to a right or warrant to
purchase or acquire shares of Common Stock shall be the Fair Market
Value of such security on the date of the issuance, sale or
exchange of such security by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or any subsidiary thereof, whether
for cash, shares of capital stock of the Corporation, other
securities of the Corporation, evidences of indebtedness of the
Corporation or any other person or any other property (including
shares of a subsidiary of the Corporation), or any combination
thereof, effected while any of the ESOP Preference Shares are
outstanding, pursuant to any tender offer or exchange offer subject
to Section 13(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor provision of law, or
pursuant to any other offer available to substantially all holders
of Common Stock; provided, however, that no purchase of shares by
the Corporation or any subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase. For purposes
of this paragraph (G) of this Section 9, shares shall be deemed to
have been purchased by the Corporation or any subsidiary thereof
"in open market transactions" if they have been purchased
substantially in accordance with the requirements of Rule 10b-18 as
in effect under the Exchange Act, on the date ESOP Preference
Shares are initially issued by the Corporation or on such other
terms and conditions as the Board of Directors of the Corporation
or a committee thereof shall have determined are reasonably
designed to prevent such purchases from having a material effect on
the trading market for the Common Stock.
(H) Whenever an adjustment to the Conversion Price and the
related voting rights of the ESOP Preference Shares is required
pursuant to this Section 28, the Corporation shall forthwith place
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on file with the transfer agent for the Common Stock and the ESOP
Preference Shares, and with the Secretary of the Corporation, a
statement signed by two officers of the Corporation stating the
adjusted Conversion Price determined as provided herein and the
resulting conversion ratio, and the voting rights (as appropriately
adjusted), of the ESOP Preference Shares. Such statement shall set
forth in reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment, including
any determination of Fair Market Value involved in such
computation. Promptly after each adjustment to the Conversion
Price and the related voting rights of the ESOP Preference Shares,
the Corporation shall mail a notice thereof and of the then
prevailing conversion ratio to each holder of ESOP Preference
Shares.
(10) Ranking; Attributable Capital And Adequacy of
Surplus; Retirement of Shares.
(A) The ESOP Preference Shares shall rank senior the Common
Stock as to the payment of dividends and the distribution of assets
on liquidation, dissolution and winding up of the Corporation, and,
unless otherwise provided in the Certificate of Incorporation of
the Corporation, as the same may be amended, or a Certificate of
Amendment relating to a subsequent series of Preference Stock, par
value $0.50 per share, of the Corporation, the ESOP Preference
Shares shall rank junior to all series of the Corporation's
Preference Stock, par value $0.50 per share, as to the payment of
dividends and the distribution of assets on liquidation,
dissolution or winding up.
(B) In addition to any vote of shareholders required by law or
by Section 3(B) of this Section 28, the vote of the holders of a
majority of the outstanding ESOP Preference Shares shall be
required to increase the par value of the Common Stock or otherwise
increase the capital of the Corporation allocable to the Common
Stock for the purpose of the BCL if, as a result thereof, the
surplus of the Corporation for purposes of the BCL would be less
than the amount of Preference Dividends that would accrue on the
then outstanding ESOP Preference Shares during the following three
years.
(C) Any ESOP Preference Shares acquired by the Corporation by
reason of the conversion or redemption of such shares as provided
by this Section 28, or otherwise so acquired, shall be retired as
ESOP Preference Shares and restored to the status of authorized but
unissued shares of Preference Shares, par value $0.50 per share, of
the Corporation, undesignated as to series, and may thereafter be
reissued as part of a new series of such Preference Shares as
permitted by law.
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(11) Miscellaneous.
(A) All notices referred to herein shall be in writing, and
all notices hereunder shall be deemed to have been given upon the
earlier of delivery thereof if by hand delivery, by courier or by
standard form of telecommunication or three (3) business days after
the mailing thereof if sent by registered mail (unless first-class
mail shall be specifically permitted for such notice under the
terms of this Section 28) with postage prepaid, addressed: (i) if
to the Corporation, to its office at 611 Olive Street, St. Louis,
Missouri 63101 (Attention: Secretary), or to the transfer agent for
the ESOP Preference Shares, or other agent of the Corporation
designated as permitted by this Section 28 or (ii) if to any holder
of the ESOP Preference Shares or Common Stock, as the case may be,
to such holder at the address of such holder as listed in the stock
record books of the Corporation (which may include the records of
any transfer agent for the ESOP Preference Shares or Common Stock,
as the case may be) or (iii) to such other address as the
Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(B) The term "Common Stock" as used in this Section 28 means
the Corporation's Common Stock, par value $1.00 per share, as the
same exists at the date of filing of a Certificate of Amendment
relating to ESOP Preference Shares or any other class of stock
resulting from successive changes or reclassifications of such
Common Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value. In the
event that, at any time as a result of an adjustment made pursuant
to Section 9 of this Section 28, the holder of any ESOP Preference
Share upon thereafter surrendering such shares for conversion,
shall become entitled to receive any shares or other securities of
the Corporation other than shares of Common Stock, the Conversion
Price in respect of such other shares or securities so receivable
upon conversion of ESOP Preference Shares shall thereafter be
adjusted, and shall be subject to further adjustment from time to
time, in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to Common Stock contained in Section
9 hereof, and the provisions of Sections 1 through 8, 10 and 11 of
this Section 28 with respect to the Common Stock shall apply on
like or similar terms to any such other shares or securities.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any
issuance or delivery of ESOP Preference Shares or shares of Common
Stock or other securities issued on account of ESOP Preference
Shares pursuant hereto or certificates representing such shares or
securities. The Corporation shall not, however, be required to pay
any such tax which may be payable in respect of any transfer
involved in the issuance or delivery of ESOP Preference Shares or
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Common Stock or other securities in a name other than that in which
the ESOP Preference Shares with respect to which such shares or
other securities are issued or delivered were registered, or in
respect of any payment to any person with respect to any such
shares or securities other than a payment, to the registered holder
thereof, and shall not be required to make any such issuance,
delivery or payment unless and until the person otherwise entitled
to such issuance, delivery or payment has paid to the Corporation
the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid or is not payable.
(D) In the event that a holder of ESOP Preference Shares shall
not by written notice designate the name in which shares of Common
Stock to be issued upon conversion of such shares should be
registered or to whom payment upon redemption of ESOP Preference
Shares should be made or the address to which the certificate or
certificates representing such shares, or such payment, should be
sent, the Corporation shall be entitled to register such shares,
and make such payment, in the name of the holder of such ESOP
Preference Shares as shown on the records of the corporation and to
send the certificate or certificates representing such shares, or
such payment, to the address of such holder shown on the records of
the Corporation.
(E) Unless otherwise provided in the Certificate of
Incorporation, as the same may be amended, of the Corporation, all
payments in the form of dividends, distributions on voluntary or
involuntary dissolution, liquidation or winding-up or otherwise
made upon the ESOP Preference Shares and any other stock ranking on
a parity with the ESOP Preference Shares with respect to such
dividend or distribution shall be pro rata, so that amounts paid
per ESOP Preference Share and such other stock shall in all cases
bear to each other the same ratio that the required dividends,
distributions or payments, as the case may be, then payable per
share on the ESOP Preference Shares and such other stock bear to
each other.
(F) The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the ESOP Preference
Shares. Upon any such appointment or discharge of a transfer
agent, the Corporation shall send notice thereof by hand delivery,
by courier, by standard form of telecommunication or by first-class
mail, (postage prepaid), to each holder of record of ESOP
Preference Shares.
FIFTH.
The Secretary of State of the State of New York is designated
as the agent of the Corporation upon whom process in any action or
proceeding against it may be served.
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The office of the Corporation is to be located in the City,
County and State of New York, and the address to which the
Secretary of State shall mail a copy of process in any action or
proceeding against the Corporation which may be served upon him is
c/o CT Corporation System, 1633 Broadway, New York, New York 10019.
The name and address of the registered agent which is to be
the agent of the Corporation upon whom process in any action or
proceeding against it may be served are CT Corporation System, 1633
Broadway, New York, New York 10019.
SIXTH.
The duration of the Corporation shall be perpetual.
SEVENTH.
The number of directors shall be fixed by the By-Laws. It
shall not be necessary for any director of the Corporation to be a
stockholder thereof.
EIGHTH.
No mortgage, lien or incumbrance of any kind upon any part of
the real or personal property, assets, effects, undertaking or good
will of the Corporation shall be created or be valid or effective
unless the same shall have been previously authorized by the
consent of the holders of at least three-fourths of the Common
Stock of the Corporation then outstanding given in person or by
proxy, either in writing or at a general or special meeting called
for that purpose; but this prohibition shall not be deemed or
construed to apply to nor shall it operate to prevent the giving of
purchase money mortgages or other purchase money liens on property
to be hereafter acquired by the Corporation, nor shall it be deemed
or construed to apply to nor shall it operate to prevent the
pledging by it as collateral for loans made to it in the regular
course of its business of municipal or government securities, or of
securities listed on the New York Stock Exchange.
NINTH.
No contract or other transaction between this Corporation and
any other corporation shall be affected by the fact that directors
of this Corporation are interested in or are directors or officers
of such other corporation, and any director individually may be a
party to or may be interested in any contract or transaction of
this Corporation; and no contract or transaction of this
Corporation with any person or persons, firm or association shall
be affected by the fact that any director or directors of this
Corporation is a party to or interested in such contract or
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transaction, or in any way connected with such person or persons,
firm or association, and each and every person who may become a
director of this Corporation is hereby relieved from any disability
that might otherwise prevent his contracting with this Corporation
for the benefit of himself or any firm, association or corporation
in which he may be in any wise interested.
TENTH.
The right and authority to purchase, exchange, hire, lease or
otherwise acquire, and to sell, assign, transfer, convey, exchange,
lease, or otherwise alienate or dispose of any real or personal
property of the Corporation shall be vested in the Board of
Directors, except as otherwise provided by Section No. 16 of Stock
Corporation Law of the State of New York, and this right and
authority shall be absolute without submitting the proposition or
any particular proposition for acquiring or disposing of any real
or personal property to the stockholders of the Corporation, and
without requiring the consent, approval or ratification of the
stockholders or of any stockholder thereof, except as otherwise
provided by Section No. 16 of the Stock Corporation Law of the
State of New York.
ELEVENTH.
The directors shall have the further power to provide by the
By-Laws or otherwise, for the selection from among their own
number, of an executive committee of such number as they may from
time to time designate, and to delegate to such executive committee
all or any of the powers of the Board of Directors in so far as the
delegation of such power is not contrary to law.
TWELFTH.
A. In addition to any affirmative vote required by law or
this Certificate of Incorporation or the By-Laws of the
Corporation, and except as otherwise expressly provided in Section
B of this Article Twelfth, a Business Combination (as hereinafter
defined) with, or proposed by or on behalf of, any Interested
Shareholder (as hereinafter defined) or any Affiliate or Associate
(as hereinafter defined) of any Interested Shareholder or any
person who thereafter would be an Affiliate or Associate of such
Interested Shareholder shall require the affirmative vote of not
less than sixty-six and two-thirds percent (66 2/3%) of the votes
entitled to be cast by the holders of all the then outstanding
shares of Voting Stock (as hereinafter defined), voting together as
a single class, excluding Voting Stock beneficially owned by any
Interested Shareholder or any Affiliate or Associate of such
Interested Shareholder. Such affirmative vote shall be required
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notwithstanding the fact that no vote may be required, or that a
lesser percentage or separate class vote may be specified, by law
or in any agreement with any national securities exchange or
otherwise.
B. The provisions of Section A of this Article Twelfth shall
not be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote, if
any, as is required by law or by any other provision of this
Certificate of Incorporation or the By-Laws of the Corporation, or
any agreement with any national securities exchange, if all of the
conditions specified in either of the following Paragraphs 1 or 2
are met or, in the case of a Business Combination not involving the
payment of consideration to the holders of the Corporation's
outstanding Capital Stock (as hereinafter defined), if the
condition specified in the following Paragraph 1 is met:
1. The Business Combination shall have been approved,
either specifically or as a transaction which is within an
approved category of transactions, by a majority (whether such
approval is made prior to or subsequent to the acquisition of,
or announcement or public disclosure of the intention to
acquire, beneficial ownership of the Voting Stock that caused
the Interested Shareholder to become an Interested
Shareholder) of the Board of Directors of the Corporation (the
"Board of Directors") prior to the date on which the
Continuing Directors (as hereinafter defined) comprise less
than a majority of the entire Board of Directors.
2. All of the following conditions shall have been met:
a. The aggregate amount of cash and the Fair Market
Value (as hereinafter defined), as of the date of the
consummation of the Business Combinations, of consideration
other than cash to be received per share by holders of Common
Stock in such Business Combination shall be at least equal to
the highest amount determined under clauses (i), (ii), (iii)
and (iv) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Shareholder for any share of Common Stock in
connection with the acquisition by the Interested
Shareholder of beneficial ownership of shares of Common
Stock (x) within the two-year period immediately prior to
the first public announcement of the proposed Business
Combination (the "Announcement Date") or (y) in the
transaction in which it became an Interested Shareholder,
whichever is higher, in either case as adjusted for any
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subsequent stock split, stock dividend, subdivision or
reclassification with respect to Common Stock;
(ii) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which the
Interested Shareholder became an Interested Shareholder
(the "Determination Date"), whichever is higher, as
adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to Common
Stock;
(iii) (if applicable) the price per share equal to
the Fair Market Value per share of Common Stock determined
pursuant to the immediately preceding clause (ii),
multiplied by the ratio of (x) the highest per share price
(including any brokerage commission, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Shareholder for any share of Common Stock in
connection with the acquisition by the Interested
Shareholder of beneficial ownership of shares of Common
Stock within the two-year period immediately prior to the
Announcement Date, as adjusted for any subsequent stock
split, stock dividend, subdivision or reclassification
with respect to Common Stock to (y) the Fair Market Value
per share of Common Stock on the first day in such two-
year period on which the Interested Shareholder acquired
beneficial ownership of any share of Common Stock, as
adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to Common
Stock; and
(iv) the Corporation's net income per share of
Common Stock for the four full consecutive fiscal quarters
immediately preceding the Announcement Date, multiplied by
the higher of the then price/earnings multiple (if any) of
such Interested Shareholder or the highest price/earnings
multiple of the Corporation within the two-year period
immediately preceding the Announcement Date (such
price/earnings multiples being determined as customarily
computed and reported in the financial community).
b. The aggregate amount of cash and the Fair Market
Value, as of the date of the consummation of the Business
Combination, of consideration other than cash to be received
per share by holders of shares of any class or series of
outstanding Capital Stock, other than Common Stock, shall be
at least equal to the highest amount determined under clauses
(i), (ii), (iii) and (iv) below:
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(i) (if applicable) the highest per share
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Shareholder for any share of such class or
series of Capital Stock in connection with the acquisition
by the Interested Shareholder of beneficial ownership of
shares of such class or series of Capital Stock (x) within
the two-year period immediately prior to the Announcement
Date or (y) in the transaction in which it became an
Interested Shareholder, whichever is higher, in either
case as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to
such class or series of Capital Stock;
(ii) the Fair Market Value per share of such class
or series of Capital Stock on the Announcement Date or on
the Determination Date, whichever is higher, as adjusted
for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to such class
or series of Capital Stock;
(iii) (if applicable) the price per share equal to
the Fair Market Value per share of such class or series of
Capital Stock determined pursuant to the immediately
preceding clause (ii), multiplied by the ratio of (x) the
highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees)
paid by or on behalf of the Interested Shareholder for any
share of such class or series of Capital Stock in
connection with the acquisition by the Interested
Shareholder of beneficial ownership of shares of such
class or series of Capital Stock within the two-year
period immediately prior to the Announcement Date, as
adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to such class
or series of Capital Stock to (y) the Fair Market Value
per share of such class or series of Capital Stock on the
first day in such two-year period on which the Interested
Shareholder acquired beneficial ownership of any share of
such class or series of Capital Stock, as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of
Capital Stock; and
(iv) (if applicable) the highest preferential amount
per share to which the holders of shares of such class or
series of Capital Stock would be entitled in the event of
any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation regardless of
whether the Business Combination to be consummated
constitutes such an event.
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The provisions of this Paragraph 2 shall be required to be met
with respect to every class or series of outstanding Capital
Stock, whether or not the Interested Shareholder has
previously acquired beneficial ownership of any shares of a
particular class or series of Capital Stock.
c. The consideration to be received by holders of a
particular class or series of outstanding Capital Stock shall
be in cash or in the same form as previously has been paid by
or on behalf of the Interested Shareholder in connection with
its direct or indirect acquisition of beneficial ownership of
shares of such class or series of Capital Stock. If the
consideration so paid for shares of any class or series of
Capital Stock varied as to form, the form of consideration for
such class or series of Capital Stock shall be either cash or
the form used to acquire beneficial ownership of the largest
number of shares of such class or series of Capital Stock
previously acquired by the Interested Shareholder.
d. After the Determination Date and prior to the
consummation of such Business Combination: (i) there shall
have been no failure to declare and pay at the regular date
therefor any full quarterly dividends (whether or not
cumulative) payable in accordance with the terms of any
outstanding Capital Stock; (ii) there shall have been no
reduction in the annual rate of dividends paid on the Common
Stock (except as necessary to reflect any stock split, stock
dividend or subdivision of the Common Stock); (iii) there
shall have been an increase in the annual rate of dividends
paid on the Common Stock as necessary to reflect any
reclassification (including any reverse stock split,
recapitalization, reorganization or any similar transaction
that has the effect of reducing the number of outstanding
shares of Common Stock); and (iv) such Interested Shareholder
shall not have become the beneficial owner of any additional
shares of Capital Stock except as part of the transaction that
results in such Interested Shareholder becoming an Interested
Shareholder and except in a transaction that, after giving
effect thereto, would not result in any increase in the
Interested Shareholder's percentage beneficial ownership of
any class or series of Capital Stock.
e. A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Act")
(or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to all Shareholders of the
Corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
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statement is required to be mailed pursuant to such Act or
subsequent provisions). The proxy or information statement
shall contain on the first page thereof, in a prominent place,
any statement as to the advisability (or inadvisability) of
the Business Combination that the Continuing Directors, or any
of them, may choose to make and, if deemed advisable by a
majority of the Continuing Directors, the opinion of an
investment banking firm selected by a majority of the
Continuing Directors as to the fairness (or not) of the terms
of the Business Combination from a financial point of view to
the holders of the outstanding shares of Capital Stock other
than the Interested Shareholder and its Affiliates of
Associates (as hereinafter defined), such investment banking
firm to be paid a reasonable fee for its services by the
Corporation.
f. Such Interested Shareholder shall not have made any
major change in the Corporation's business or equity capital
structure.
C. The following definitions shall apply with respect to this
Article Twelfth:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Shareholder or (ii) any other company (whether or not itself
an Interested Shareholder) which is or after such merger or
consolidation would be an Affiliate or Associate of an
Interested Shareholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer
or other disposition or security arrangement, investment,
loan, advance, guarantee, agreement to purchase, agreement to
pay, extension of credit, joint venture participation or other
arrangement (in one transaction or a series of transactions)
with or for the benefit of any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder involving
any assets, securities or commitments of the Corporation, any
Subsidiary or any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder which (except for any
arrangement, whether as employee, consultant or otherwise,
other than as a director, pursuant to which any Interested
Shareholder or any Affiliate or Associate thereof shall
directly or indirectly, have any control over or
responsibility for the management of any aspect of the
business or affairs of the Corporation, with respect to which
arrangements the value tests set forth below shall not apply),
together with all such other arrangements (including all
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contemplated future events), has an aggregate Fair Market
Value and/or involves aggregate commitments of $10,000,000 or
more or constitutes more than 5 percent of the book value of
the total assets (in the case of transactions involving assets
or commitments other than Capital Stock) or 5 percent of the
Shareholders' equity (in the case of transactions in Capital
Stock) of the entity in question (the "Substantial Part"), as
reflected in the most recent fiscal year-end consolidated
balance sheet of such entity existing at the time the
Shareholders of the Corporation would be required to approve
or authorize the Business Combination involving the assets,
securities and/or commitments constituting any Substantial
Part, except for transactions made in the ordinary course of
the Corporation's business, consistent with past practices; or
c. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or for any
amendment to the Corporation's By-Laws; or
d. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether or not with
or otherwise involving an Interested Shareholder) that has the
effect, directly or indirectly, of increasing the
proportionate share of any class or series of Capital Stock,
or any securities convertible into Capital Stock or into
equity securities of any Subsidiary, that is beneficially
owned by any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder; or
e. any agreement, contract or other arrangement
providing for any one or more of the actions specified in the
foregoing clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock
of the Corporation authorized to be issued from time to time
under Article Fourth of this Certificate of Incorporation, and
the term "Voting Stock" shall mean all Capital Stock which by
its terms may be voted on all matters submitted to
shareholders of the Corporation generally.
3. The term "person" shall mean any individual, firm,
company or other entity and shall include any group comprised
of any person and any other person with whom such person or
any Affiliate or Associate of such person has any agreement,
arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital
Stock.
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4. The term "Interested Shareholder" shall mean any
person (other than the Corporation or any Subsidiary and other
than any profit-sharing, employee stock ownership or other
employee benefit plan of the Corporation or any Subsidiary or
any trustee of or fiduciary with respect to any such plan when
acting in such capacity and other than any holder of all of
the outstanding shares of Series X Cumulative Preference
Shares) who (a) is or has announced or publicly disclosed a
plan or intention to become the beneficial owner of Voting
Stock representing ten percent (10%) or more of the votes
entitled to be cast by the holders of all then outstanding
shares of Voting Stock; or (b) is an Affiliate or Associate of
the Corporation and at any time within the two-year period
immediately prior to the date in question was the beneficial
owner of Voting Stock representing ten percent (10%) or more
of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock.
5. A person shall be a "beneficial owner" of any Capital
Stock (a) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; (b)
which such person or any of its Affiliates or Associates has,
directly or indirectly, (i) the right to acquire (whether such
right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding; or (c) which is beneficially owned, directly or
indirectly, by any other person with which such person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of Capital Stock. For the purposes
of determining whether a person is an Interested Shareholder
pursuant to Paragraph 4 of this Section C, the number of
shares of Capital Stock deemed to be outstanding shall include
shares deemed beneficially owned by such person through
application of this Paragraph 5 of Section C, but shall not
include any other shares of Capital Stock that may be issuable
pursuant to any agreement, arrangement or understanding, or
upon exercise of conversion rights, warrants or options, or
otherwise.
6. The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended as in effect
on March 20, 1985 (the term "registrant" in said Rule 12b-2
meaning in this case the Corporation).
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7. The term "Subsidiary" means any company of which a
majority of any class of equity security is beneficially owned
by the Corporation; provided, however, that for the purposes
of the definition of Interested Shareholder set forth in
Paragraph 4 of this Section C, the term "Subsidiary" shall
mean only a company of which a majority of each class of
equity security is beneficially owned by the Corporation.
8. The term "Continuing Director" means any member of
the Board of Directors of the Corporation (the "Board of
Directors"), while such person is a member of the Board of
Directors, who is not an Affiliate or Associate or
representative of the Interested Shareholder and was a member
of the Board of Directors prior to the time that the
Interested Shareholder became an Interested Shareholder, and
any successor of a Continuing Director while such successor is
a member of the Board of Directors, who is not an Affiliate or
Associate or representative of the Interested Shareholder and
is recommended or elected to succeed the Continuing Director
by a majority of Continuing Directors.
9. The term "Fair Market Value" means (a) in the case of
cash, the amount of such cash; (b) in the case of stock, the
highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such
stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States
securities exchange registered under the Act on which such
stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a
share of such stock during the 30-day period preceding the
date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any similar
system then in use, or if no such quotations are available,
the fair market value on the date in question of a share of
such stock as determined by a nationally recognized investment
banking firm selected by a majority of the Continuing
Directors; and (c) in the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by a nationally recognized investment
banking firm selected by a majority of the Continuing
Directors.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than
cash to be received" as used in Paragraphs 2.a and 2.b of
Section B of this Article Twelfth shall include the shares of
Common Stock and/or the shares of any other class or series of
Capital Stock retained by the holders of such shares.
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D. The Board of Directors shall have the power and duty to
determine for the purposes of this Article Twelfth, on the basis of
information known to them after reasonable inquiry, all questions
arising under this Article Twelfth, including, without limitation,
(a) whether a person is an Interested Shareholder, (b) the number
of shares of Capital Stock or other securities beneficially owned
by any person, (c) whether a person is an Affiliate or Associate of
another, (d) whether a Proposed Action is with, or proposed by, or
on behalf of an Interested Shareholder or an Affiliate or an
Associate of an Interested Shareholder, (e) whether the assets that
are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $10,000,000 or
more, and (f) whether the assets or securities that are the subject
of any Business Combination constitutes a Substantial Part. Any
such determination made in good faith shall be binding and
conclusive on all parties.
E. Nothing contained in this Article Twelfth shall be
construed to relieve any Interested Shareholder from any fiduciary
obligation imposed by law.
F. The fact that any Business Combination complies with the
provisions of Section B of this Article Twelfth shall not be
construed to impose any fiduciary duty, obligation or
responsibility on the Board of Directors, or any member thereof, to
approve such Business Combination or recommend its adoption or
approval to the shareholders of the Corporation, nor shall such
compliance limit, prohibit or otherwise restrict in any manner the
Board of Directors, or any member thereof, with respect to
evaluations of or actions and responses taken with respect to such
Business Combination.
G. For the purposes of this Article Twelfth, a Business
Combination or any proposal to amend, repeal or adopt any provision
of this Certificate of Incorporation inconsistent with this Article
Twelfth (collectively "Proposed Action") is presumed to have been
proposed by, or on behalf of, an Interested Shareholder or an
Affiliate or Associate of an Interested Shareholder or a person who
thereafter would become such if (1) after the Interested
Shareholder became such, the Proposed Action is proposed following
the election of any director of the Corporation who, with respect
to such Interested Shareholder, would not qualify to serve as a
Continuing Director or (2) such Interested Shareholder, Affiliate,
Associate or person votes for or consents to the adoption of any
such Proposed Action, unless as to such Interested Shareholder,
Affiliate, Associate or person a majority of the Continuing
Directors make a good faith determination that such Proposed Action
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is not proposed by or on behalf of such Interested Shareholder,
Affiliate, Associate or person, based on information known to them
after reasonable inquiry.
H. Notwithstanding any other provisions of this Certificate
of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that a lesser percentage or separate class
vote may be specified by law, this Certificate of Incorporation or
the By-Laws of the Corporation), any proposal to amend, repeal or
adopt any provision of this Certificate of Incorporation
inconsistent with this Article Twelfth which is proposed by or on
behalf of an Interested Shareholder or an Affiliate or Associate of
an Interested Shareholder shall require the affirmative vote of the
holders of not less than sixty-six and two-thirds percent (66 2/3%)
of the votes entitled to be cast by the holders of all the then
outstanding shares of Voting Stock, voting together as a single
class, excluding Voting Stock beneficially owned by any Interested
Shareholder; provided, however, that prior to the time such number
of persons constituting a quorum of the Board of Directors are
nominated by or on behalf of the Interested shareholder and elected
to the Board of Directors, this Section H shall not apply to, and
such sixty-six and two-thirds percent (66 2/3%) vote shall not be
required for, any amendment, repeal or adoption recommended by a
majority of the Board of Directors prior to the date on which the
Continuing Directors comprise less than a majority of the Board of
Directors.
THIRTEENTH.
The business and affairs of the Corporation shall be managed
under the direction of a Board of Directors consisting of not less
than three nor more than twenty-one directors, the exact number of
directors to be determined from time to time by resolution adopted
by affirmative vote of a majority of the entire Board of Directors.
The directors shall be divided into three classes, designated Class
I, Class II and Class III. Each class shall consist, as nearly as
may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. At the 1985 annual
meeting of shareholders, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term and Class III
directors for a three-year term. At each succeeding annual meeting
of shareholders beginning in 1986, successors to the class of
directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class
elected to fill a vacancy resulting from an increase in such class
shall hold office until the next annual meeting of shareholders,
and until his successor has been elected and qualified, but in no
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case will a decrease in the number of directors shorten the term of
any incumbent director. A director shall hold office until the
annual meeting for the year in which his term expires and until his
successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal
from office. Any vacancy on the Board of Directors that results
from an increase in the number of directors may be filled by a
majority of the Board of Directors then in office, provided that a
quorum is present, and any other vacancy occurring in the Board of
Directors may be filled by a majority of the directors then in
office, even if less than a quorum, or by a sole remaining
director. A director or the entire Board of Directors may be
removed only for cause.
Notwithstanding the foregoing, whenever the holders of any
class or series of stock (other than Common Stock) issued by the
Corporation shall have the right, voting separately by class or
series, to elect directors at an annual or special meeting of
shareholders, the election, term of office, filling of vacancies
and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation applicable thereto, and
such directors so elected shall not be divided into classes
pursuant to this Article Thirteenth unless expressly provided by
such terms.
4. This restatement of the Certificate of Incorporation
of The May Department Stores Company was duly authorized by
resolution of the Board of Directors of said Corporation.
IN WITNESS WHEREOF we have signed this certificate this 18th
day of March, 1994.
Louis J. Garr, Jr.
Louis J. Garr, Jr.,
Executive Vice President
Richard A. Brickson
Richard A. Brickson, Secretary
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STATE OF MISSOURI )
) ss.
CITY OF ST. LOUIS )
Richard A. Brickson, being duly sworn, deposes and says:
That he is Secretary of The May Department Stores Company, the
Corporation mentioned and described in the foregoing instrument;
that he has read and signed the same and that the statements
contained therein are true.
Richard A. Brickson
Richard A. Brickson
Sworn to before me this
18th day of March, 1994.
My Commission Expires _____________________________.
Sarah Jane Westover
Notary Public
(Notarial Seal)
Sarah Jane Westover
Notary Public-State of Missouri
My Commission Expires Aug. 10, 1995
St. Louis County
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EXHIBIT 3(b)
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
BY-LAWS
OF
THE MAY DEPARTMENT STORES COMPANY
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
[As in effect, May 21, 1993]
<PAGE>
BY-LAWS
OF
THE MAY DEPARTMENT STORES COMPANY
__________________
ARTICLE I.
MEETINGS OF STOCKHOLDERS
Section 1. The annual meeting of stockholders shall be held
on such date not earlier than May 20 and not later than July 10 and
at such place and time as may be fixed by the board and stated in
the notice thereof, for the purpose of the election of directors
and for the transaction of only such other business as is properly
brought before the meeting in accordance with these by-laws. The
annual meeting may be adjourned from day to day until its business
is completed.
Section 2. Written notice of the date, time and place of each
annual meeting of the stockholders shall be mailed at least ten
days previous to the date of such meeting, postage prepaid, to each
stockholder of record in the Company entitled to vote thereat, at
such address as shall appear on the books of the Company.
Section 3. Special meetings of the stockholders may be called
by resolution of the board of directors. The business transacted
at any special meeting of stockholders shall be confined to the
object or objects specified in the notice therefor, and matters
germane thereto.
Section 4. Written notice of every special meeting of stock-
holders stating the date, time, place and object thereof, shall be
mailed, postage prepaid, at least ten days before the date
specified for such meeting to each stockholder of record in the
Company entitled to vote thereat, at such address as shall appear
on the books of the Company.
Section 5. Except as otherwise provided in the Certificate of
Incorporation, and subject to the provisions and limitations
therein contained, at all meetings of stockholders each stockholder
of record shall be entitled to cast one vote for each share
appearing on the stock book of the Company as standing in his name,
which vote may be cast either in person or by proxy, or power of
attorney, but no proxy shall be voted on after three years from its
date.
Section 6. Whenever a stockholder shall vote by proxy, the
authority or proxy shall be in writing, subscribed by the stock-
<PAGE>
holder in whose name the said stock shall stand on the books of the
Company, and shall, if requested by any stockholder, or proxy, be
exhibited at the time of such meeting to the presiding officer and
filed by him with the secretary of the Company.
Section 7. No stockholder who is in default in the payment of
any part of his subscription for any stock of the Company or who is
disqualified by law, shall be entitled to vote at any meeting of
stockholders.
Section 8. Every pledgor of stock standing in his name on the
books of the Company shall be deemed the owner thereof.
Section 9. Except as otherwise provided by law or in the
Certificate of Incorporation, the holders of not less than a
majority of the common stock issued and outstanding, entitled to
vote thereat, present in person or by proxy or power of attorney,
are requisite for and shall constitute a quorum at all meetings of
stockholders for the transaction of business, including the
election of directors. The holders of a majority of the common
stock present in person or by proxy or power of attorney at any
meeting, whether or not constituting a quorum, shall have power to
adjourn the meeting from time to time (provided that each ad-
journment shall be for a period not exceeding twenty days), without
notice other than announcement at the meeting, and at any adjourned
meeting, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 10. The stockholders shall at each annual meeting
choose two persons (who need not be stockholders and who shall not
be candidates for election to the board of directors) to act as
inspectors of election at all meetings of stockholders until the
close of the next annual meeting. In case of a failure to elect
inspectors, or if any inspector shall refuse to serve or neglect to
attend any meeting, or if his office shall become vacant, the
chairman of the meeting may appoint an inspector or inspectors, as
the case may be, to act at such meeting.
Section 11. To be properly brought before the annual or any
special stockholders' meeting, business must be either (a) speci-
fied in the notice of meeting (or any supplement thereto) given by
or at the direction of the board, (b) otherwise properly brought
before the meeting by or at the direction of the board or (c)
otherwise properly brought before the meeting by a stockholder. In
addition to any other applicable requirements, for business to be
properly brought before the annual or any special stockholders'
meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the secretary of the Company. To be
timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Company not less
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than 75 days nor more than 90 days prior to the meeting; provided,
however, that in the event that less than 90 days' notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the 15th day
following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made, whichever first
occurs. Such stockholder's notice to the secretary shall set forth
as to each matter the stockholder proposes to bring before the
meeting (i) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such
business at the meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of
shares of common stock of the Company which are beneficially owned
by the stockholder and (iv) any material interest of the
stockholder in such business.
Notwithstanding anything in the by-laws to the contrary, no
business shall be conducted at the annual or any special meeting
except in accordance with the procedures set forth in this Section
11, provided, however, that nothing in this Section 11 shall be
deemed to preclude discussion by any stockholder of any business
properly brought before the meeting.
The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of
this Section 11, and if he should so determine and declare, any
such business not properly brought before the meeting shall not be
transacted.
Section 12. Except as provided in Section 1 of Article II,
only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nomina-
tions of persons for election to the board of directors of the
Company at the annual meeting may be made at that meeting by or at
the direction of the board of directors, by any nominating
committee or person appointed by the board of directors or by any
stockholder of the Company entitled to vote for the election of
directors at the meeting who complies with the notice procedures
set forth in this Section 12. Such nominations, other than those
made by or at the direction of the board of directors, shall be
made pursuant to timely notice in writing to the secretary of the
Company. To be timely, a stockholder's notice must be delivered to
or mailed and received at the principal executive offices of the
Company not less than 75 days nor more than 90 days prior to the
meeting; provided, however, that in the event that less than 90
days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on
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the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made,
whichever first occurs. Such stockholder's notice to the secretary
shall set forth (a) as to each person whom the stockholder proposes
to nominate for election or re-election as a director, (i) the
name, age, business address and residence address of the person,
(ii) the principal occupation or employment of the person, (iii)
the class and number of shares of common stock of the Company which
are beneficially owned by the person, and (iv) any other informa-
tion relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to
Rule 14a under the Securities Exchange Act of 1934, as amended; and
(b) as to the stockholder giving the notice (i) the name and record
address of the stockholder and (ii) the class and number of shares
of common stock of the Company which are beneficially owned by the
stockholder. Such notice shall be accompanied by the executed
consent of each nominee to serve as a director if so elected. The
Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to
determine the eligibility of such proposed nominee to serve as a
director of the Company.
The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine and declare, the defective nomination shall be dis-
regarded.
ARTICLE II.
THE BOARD OF DIRECTORS
Section 1. The business and affairs of the Company shall be
managed and conducted by a board of thirteen directors.
Newly created directorships resulting from an increase in the
number of directors and vacancies occurring in the board of
directors for any reason may be filled by vote of a majority of the
directors then in office, although less than a quorum. A director
elected to fill a newly created directorship, and a director
elected to fill a vacancy, shall be elected to hold office until
the next ensuing annual meeting of stockholders of the Company, or
until his successor shall be chosen and qualified in his stead.
Section 2. The directors shall prescribe rules and regula-
tions for voting at all elections and shall cause the result of
each such election to be filed with the minutes of the proceedings
of the board of directors, or of any committee of the board of
directors appointed in accordance with Section 12 of this Article
II.
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<PAGE>
Section 3. The board of directors at its first meeting after
each annual meeting of stockholders, or at any subsequent meeting
at which such action may be appropriate, shall elect a chairman of
the executive committee, a chairman of the board, a president, a
vice chairman of the board, one or more vice presidents, a
secretary, a controller, and a treasurer, and such other officers
as it may determine. The board of directors shall by resolution
provide for the authority and duties of any and all such officers
in the management of the Company to the extent not so provided in
these By-laws.
The dates of the commencement and expiration of the term of
office of any such officer may be fixed by the board of directors
at the time of his election; but unless so fixed, such officer
shall hold office from the date of his election until the first
meeting of the board of directors following the next ensuing annual
meeting of stockholders, or until his successor is elected.
The chairman of the executive committee, the chairman of the
board, the president and the vice chairman of the board shall be
members of the board of directors. No other officers need be
members of the board of directors.
Any two offices, except the offices of president and secre-
tary, may be held by the same person.
Section 4. If for any reason the election of officers shall
not be held on or as of the date fixed therefor, the board of
directors shall designate another day for such election.
Section 5. The board of directors may also appoint such
additional officers and agents, including additional vice presi-
dents, one or more assistant treasurers, one or more assistant
secretaries and one or more assistant controllers, as it may from
time to time deem advisable, and may remove any of the persons so
appointed at its pleasure, and may, in its discretion, contract for
a definite period of employment for any officer or agent upon such
terms as it may deem advisable. The board of directors may by
resolution provide for the powers and duties of any and all such
additional officers and agents so appointed.
Section 6. One-third of all the directors shall be required
to be present at any meeting to constitute a quorum for the trans-
action of business, but the director or directors present at any
meeting may adjourn said meeting from time to time and from place
to place until such quorum is present.
All matters coming before the board of directors shall, except
as otherwise provided by law or by these By-laws, be determined by
a majority vote of the members present, provided that a quorum
shall be present.
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<PAGE>
Any one or more members of the board of directors or of any
committee thereof may participate in any meeting of such board or
of such committee thereof by means of a conference telephone or
similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at any such
meeting.
Section 7. The directors may hold their meetings and cause
the books of the Company (except the Stock and Transfer Books) to
be kept within or without the State of New York, at such place or
places as they may from time to time determine.
Section 8. Subject to Section 15 of this Article II, there
shall be an annual meeting of the board of directors on the day of
the annual meeting of stockholders in each year or as soon
thereafter as convenient, such annual meeting to be at such place
and time (and, if applicable, on such date) as the chairman of the
board shall designate by written notice to the directors, and
regular meetings shall be held on such dates and at such times and
places either as the directors shall by resolution provide or as
the chairman of the board shall designate by written notice to the
directors. Except as above provided, no notice of said annual
meeting or such regular meetings of the board of directors need be
given.
Section 9. Special meetings of the board of directors may be
called by the chairman of the executive committee, the chairman of
the board, the president, the vice chairman of the board, or the
secretary or the treasurer. Notice of each special meeting shall
be deposited in the mail, sent by telegram or delivered by hand to
each director not later than the day preceding the date of such
meeting, but need not specify the object or objects of such special
meeting. Special meetings shall be called by one of the foregoing
officers in like manner on the written request of five directors,
specifying the object or objects of such special meeting. In the
event that one of the foregoing officers shall fail to call a
meeting within two days after receipt of such request, such meeting
may be called in like manner by the directors making such request.
Section 10. If any vacancy shall occur in the board of
directors by reason of death, removal, resignation or otherwise,
such vacancy may be filled by the vote of a majority of the re-
maining directors.
Section 11. Any director may resign his office at any time,
such resignation to be made in writing and delivered to the chair-
man of the executive committee, the chairman of the board, the
president, the vice chairman of the board, or the secretary.
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Section 12. The board of directors shall by a majority vote of
its entire number appoint an executive committee, including the
chairman thereof, such executive committee to consist of such
chairman, who shall be a director, and such additional number of
directors, not less than two, as the board of directors shall from
time to time determine, and may from time to time designate the
number of such executive committee that shall constitute a quorum
and may provide for the holding of regular meetings thereof. In
the absence of any such designation, a majority of the members of
the executive committee shall constitute a quorum. To the extent
permitted by law and by the Certificate of Incorporation, the
executive committee shall have and may exercise all the powers
vested in the board of directors during the intervals between the
meetings of the board of directors. The affirmative vote of a
majority of those present at a meeting of the executive committee,
at which a quorum is present, shall be necessary for the adoption
of any resolution. The executive committee shall, whenever called
upon, report to the board of directors, and be subject to its
direction, and the board of directors may remove members and
appoint new members thereof to fill vacancies therein, and may
increase or decrease the membership thereof. The executive
committee shall designate from among its members a secretary and
may designate from among its members an acting chairman to serve in
the absence of the chairman of the executive committee. Meetings
of the executive committee shall be called by the chairman of the
executive committee or, upon the request of not less than two
members, by the secretary thereof by notice deposited in the mail,
sent by telegram or delivered by hand not less than two days prior
to the date of such meeting. Waiver of notice by any member of the
executive committee, whether before or after the meeting to which
such waiver relates, shall be equivalent to notice.
The board of directors may, by a majority vote of its entire
number, appoint such other committees, each consisting of three or
more directors, as the board of directors may at any time and from
time to time deem appropriate; subject to the limitations contained
in Section 712 of the New York Business Corporation Law, the board
of directors from time to time may by resolution prescribe for each
such committee such duties, powers and authority as the board of
directors shall deem appropriate.
Section 13. In addition to the powers by these By-laws ex-
pressly conferred upon them, the board of directors may exercise
such powers and do such lawful acts and things as are not pro-
hibited by law or required by the Certificate of Incorporation or
by these By-laws to be exercised and done by the stockholders.
Section 14. Directors as such may be paid such compensation as
the board of directors may from time to time determine. Nothing
herein contained shall be construed to preclude any director from
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<PAGE>
serving the Company in any other capacity and receiving com-
pensation therefor.
Section 15. Anything in this Article II to the contrary not-
withstanding, any action required or permitted to be taken by the
board of directors at any regular, annual or special meeting there-
of, or by any committee thereof, may be taken without a meeting if
all members of the board of directors or such committee consent in
writing to the adoption of a resolution authorizing the action.
The resolution and the written consents thereto by the members of
the board of directors or such committee shall be filed with the
minutes of the proceedings of the board of directors or such
committee.
ARTICLE III.
ELECTED OFFICERS
The elected officers of the Company shall be the chairman of
the executive committee, the chairman of the board, the president,
the vice chairman of the board, the secretary, the treasurer, the
controller, and such other officers of the Company as shall be
elected by the board of directors.
ARTICLE IV.
AUTHORITY AND DUTIES OF OFFICERS
Each officer of the Company shall be subject to the control of
the board of directors and shall have such duties in the management
of the Company as may be provided by appropriate resolution of the
board of directors and/or provided in these By-laws.
ARTICLE V.
DUTIES OF OFFICERS MAY BE DELEGATED
In the case of the absence of any officer of the Company, or
for any other reason that the board of directors may deem suf-
ficient, the board of directors may delegate the powers or duties
of such officer to any other officer or to any other director, or
to any other person for the time being.
ARTICLE VI.
INDEMNIFICATION
Section 1. The Company shall, to the fullest extent now or
hereafter authorized or permitted by applicable law, indemnify any
person who is or was made, or threatened to be made, a party to, or
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is involved in, any threatened, pending or completed action, suit
or proceeding, including, without limitation, those which are
civil, criminal, administrative or investigative, those involving
any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading
statement or other act or omission and those brought or threatened
in any court or administrative or legislative body or agency,
including an action by or in the right of the Company to procure a
judgment in its favor and an action by or in the right of any other
corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is
serving, has served or has agreed to serve in any capacity at the
request of the Company, by reason of the fact that such person, or
his or her testator or intestate, is or was or has agreed to become
a director or officer of the Company, or is serving or has agreed
to serve such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid or to be paid in settlement, and
expenses (including attorneys' fees, costs and charges) incurred as
a result of such action, suit or proceeding, or appeal therein;
provided, however, that, except for proceedings to enforce rights
to indemnification, the Company shall not be obligated to indemnify
any director or officer (or his or her heirs, executors or personal
or legal representatives) in connection with an action, suit or
proceeding (or part thereof) initiated by such person unless such
action, suit or proceeding (or part thereof) was authorized or
consented to by the board of directors of the Company.
Section 2. The Company may indemnify any person (including a
person entitled to indemnification pursuant to Section 1) to whom
the Company is permitted to provide indemnification or the
advancement of expenses to the fullest extent now or hereafter
authorized or permitted by applicable law, whether pursuant to
rights granted pursuant to, or provided by, the New York Business
Corporation Law, or any other law, or other rights created by (a)
a resolution of shareholders, (b) a resolution of directors, or (c)
an agreement providing for such indemnification, it being expressly
intended that this Article VI authorizes the creation of other
rights in any such manner.
Section 3. The Company shall, from time to time, reimburse or
advance to any person referred to in Section 1 the funds necessary
for payment of expenses incurred in connection with any action,
suit or proceeding referred to in Section 1, upon receipt of a
written undertaking by or on behalf of such person to repay such
amount(s) if a judgment or other final adjudication adverse to the
director or officer establishes that (a) his or her acts were
committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of
-9-
<PAGE>
action so adjudicated, or (b) he or she personally gained in fact
a financial profit or other advantage to which he or she was not
legally entitled.
Section 4. The right to be indemnified or to the reimburse-
ment or advancement of expenses pursuant to Section 1 or 3 of this
Article VI or a resolution authorized pursuant to Section 2 of this
Article VI (a) is a contract right pursuant to which the person
entitled thereto may bring suit as if the provisions hereof (or of
any such resolution) were set forth in a separate written contract
between the Company and such person, (b) is intended to be
retroactive and shall, to the extent now or hereafter authorized or
permitted by law, be available with respect to events occurring
prior to the adoption hereof, and (c) shall continue to exist after
the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
ARTICLE VII.
POWER OF OFFICERS TO CONTRACT, ETC.
Section 1. All contracts and agreements, purporting to be the
act of this Company shall be signed by such officer(s) of the
Company or other person(s) as may be designated by resolution of
the board of directors, in order that the same shall be binding
upon the Company.
Section 2. The board of directors may, from time to time,
authorize any officer or officers of the Company, or any other
person or persons, to sign, countersign and endorse bills of ex-
change, checks, notes, leases, deeds and other instruments, agree-
ments and documents in behalf of the Company.
ARTICLE VIII.
ORDER OF BUSINESS
Section 1. The order of business at all meetings of the
stockholders shall be as follows:
1. The election of directors.
2. Other matters to be acted upon.
3. The reports of officers.
4. Election of inspectors of election.
The order of business at any meeting may be changed by a vote
of the holders of a majority of the shares represented at such
meeting.
-10-
<PAGE>
Section 2. The order of business at meetings of the board of
directors shall be as the directors may determine.
ARTICLE IX.
SHARES OF STOCK
Section 1. The interest of each stockholder shall be evi-
denced by a certificate or certificates for shares of stock of the
Company in such form as the board of directors may from time to
time prescribe. The certificates of stock shall be signed by the
chairman of the executive committee, the chairman of the board, the
president, the vice chairman of the board, or a vice president and
the treasurer or an assistant treasurer or the secretary or an
assistant secretary and sealed with the seal of the Company, and
shall be countersigned and registered in such manner, if any, as
the board of directors may by resolution prescribe; provided that,
in case such certificates are required by such resolution to be
signed by a transfer agent or transfer clerk and by a registrar,
the signatures of the above designated officers and the seal of the
Company upon such certificates may be facsimiles, engraved or
printed. In case any such officer who has signed or whose
facsimile signature has been placed upon such certificate shall
have ceased to be such before such certificate is issued, it may be
issued with the same effect as if such officer had not ceased to be
such at the date of its issue.
Section 2. Shares of stock of the Company shall be trans-
ferred only on the books of the Company, by the holder thereof in
person or by his attorney, upon surrender for cancellation of
certificates for the same number of shares, with an assignment and
power of transfer endorsed thereon or attached thereto, duly
executed, with such proof of the authenticity of the signature as
the Company or its agents may reasonably require.
Section 3. The board of directors may direct a new certifi-
cate or certificates of stock to be issued in the place of any
certificate or certificates theretofore issued and alleged to have
been lost, stolen or destroyed; but the board of directors, when
authorizing the issue of such new certificate or certificates, may
in its discretion require the owner of the stock represented by the
certificate so lost, stolen or destroyed, or his legal
representatives, to execute and deliver to the Company a bond with
one or more sureties, in such sum as it may direct, indemnifying
the Company and its agents against any claim that may be made
against it by reason of the issue of such new certificate. The
board of directors, however, may refuse to authorize any such new
certificate except upon the order of a court having jurisdiction in
such matter.
-11-
<PAGE>
Section 4. The board of directors may from time to time
appoint such transfer agents and registrars of shares as it may
deem advisable and may define their powers and duties.
ARTICLE X.
DIVIDENDS
Subject to the limitations and provisions set forth in the
Certificate of Incorporation of the Company, dividends on the stock
of the Company shall be paid at such times and in such amounts as
the board of directors shall, from time to time, determine.
ARTICLE XI.
CORPORATE SEAL
The corporate seal shall consist of the words "THE MAY DEPART-
MENT STORES COMPANY" arranged in a circular form around the words
and figures "Corporate Seal -- 1910 -- New York" and shall be kept
by the secretary in the office of the Company. The impression of
the seal may be made and attested upon contracts, certificates of
stock and other papers requiring the seal of the Company, when
authorized by resolution of the board of directors, by the
secretary, or by an assistant secretary or by any other officer of
the Company, and the board of directors may authorize the use of a
duplicate corporate seal by any assistant secretary or other
officer of the Company.
ARTICLE XII.
FISCAL YEAR
The fiscal year of the Company shall end on the Saturday
closest to the 31st day of January in each year.
ARTICLE XIII.
AMENDMENTS
The foregoing By-laws may be amended or added to, by vote of
two-thirds of all the directors of the Company, at any meeting of
the board of directors, provided that the substance of the proposed
amendment or addition or the subject matter thereof shall have been
submitted in writing at a preceding meeting of the board of
directors or notice thereof shall have been given to the directors
by mail at least ten days before; waiver of notice by any director
being deemed equivalent to such notice to him.
-12-
<PAGE>
The foregoing By-laws may also be amended at any general or
special meeting of stockholders, provided notice of the proposed
amendment shall have been given in the call for such meeting.
ARTICLE XIV.
WAIVER OF NOTICE
Any notice required to be given by law or by the Certificate
of Incorporation or by these By-laws may be waived in writing, and
such waiver may be made either before or after the act or event to
which the same relates.
-13-
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
THE MAY DEPARTMENT STORES COMPANY
COMPUTATION OF NET EARNINGS PER SHARE
FOR THE THREE FISCAL YEARS ENDED JANUARY 29, 1994
(millions, except per share) 1993 1992 1991
<S> <C> <C> <C>
Net earnings $ 711 $ 603 $ 515
ESOP Preferred Dividends, net of tax
benefit on unallocated shares (19) (18) (18)
Dividend requirements on redeemable
preferred stock - - -
Net earnings available for
common shareowners $ 692 $ 585 $ 497
Average common shares outstanding 248.4 247.5 246.8
Net earnings per share $ 2.79 $ 2.36 $ 2.01
Primary Computation
Net earnings available for
common shareowners $ 692 $ 585 $ 497
Net earnings adjustment for
dividend equivalents 1 1 1
Adjusted net earnings $ 693 $ 586 $ 498
Average common shares outstanding 248.4 247.5 246.8
Common share equivalents under stock
option and deferred compensation plans,
based upon the treasury stock method 1.5 1.3 1.2
Average common and common equivalent shares 249.9 248.8 248.0
Primary earnings per share $ 2.77 $ 2.35 $ 2.01
Fully Diluted Computation
Adjusted net earnings $ 693 $ 586 $ 498
Impact of assumed conversion of
ESOP Preference Shares 9 13 13
Adjusted net earnings $ 702 $ 599 $ 511
Average common and common equivalent shares 249.9 248.8 248.0
Additional common stock equivalents
attributable to application of the
treasury stock method 0.1 0.7 0.2
Assumed conversion of ESOP
Preference Shares 15.5 15.8 16.0
Average common and common equivalent shares,
assuming full dilution 265.5 265.3 264.2
Fully diluted earnings per share $ 2.65 $ 2.26 $ 1.93
</TABLE>
NOTE: All share and per share data reflects two-for-one common stock
split for shareowners of record as of June 1, 1993.
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE FIVE FISCAL YEARS ENDED JANUARY 29, 1994
Fiscal Year Ended
Jan. 29, Jan. 30, Feb. 1, Feb. 2, Feb. 3,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Earnings Available for Fixed Charges:
Pretax earnings from continuing operations $ 1,178 $ 791 $ 796 $ 762 $ 799
Fixed charges (excluding interest
capitalized and pretax preferred stock
dividend requirements) 381 432 474 421 357
Dividends on ESOP Preference Shares (29) (29) (30) (30) (23)
Capitalized interest amortization 4 3 3 3 3
1,534 1,197 1,243 1,156 1,136
Fixed Charges:
Gross interest expense (a) $ 297 $ 341 $ 388 $ 347 $ 291
Interest factor attributable to
rent expense 94 94 92 83 73
Other (b) - 4 8 5 4
391 439 488 435 368
Ratio of Earnings to Fixed Charges 3.9 2.7 2.6 2.7 3.1
(a) Represents interest expense on long-term and short-term debt, ESOP debt and amortization of
debt discount and debt issue expense.
(b) Represents the company's proportionate share of interest of unconsolidated 50% owned persons
and pretax preferred stock dividend requirements.
</TABLE>
<PAGE>
EXHIBIT 13
[The following "Management's Discussion and Analysis" section is a reproduction
of the same named section included in the paper format Annual Report on pages
12-17.]
Management's Discussion and Analysis
We are pleased to have achieved our 19th consecutive year of record sales and
earnings per share from continuing operations. During 1993, we completed four
department store company consolidations and the move of May Merchandising
Company to our St. Louis corporate headquarters. These key strategic steps and
our continued execution of our merchandising and customer service strategies
were key factors in our strong financial performance. Our five-year compound
growth rate for earnings per share from continuing operations was 12% - among
the best in the retail industry.
Sales in 1993 were $11.0 billion, an increase of 7.6% over 1992 sales of $10.2
billion. The sales increase over last year reflects the benefit of new store
openings and an increase in store-for-store sales of 4.6%. Store-for-store
sales increases for the first through fourth quarters in 1993 were 2.8%, 5.5%,
5.9% and 4.2%, respectively.
We achieved $2.65 in earnings per share in 1993, a 17.3% increase over last
year's $2.26. Net earnings totaled $711 million compared to $603 million last
year. Return on revenues increased to 6.2% in 1993 from 5.4% in 1992. Return
on equity was 22.1% in 1993 compared to 21.5% in 1992, and return on net
assets was 19.6% in 1993 compared to 16.7% in 1992.
During the first quarter of 1993, the company completed the consolidation of
eight department store companies into four: May Company, California, and
Robinson's, both based in Los Angeles, into Robinsons-May; May Company, Ohio,
into Pittsburgh-based Kaufmann's; Hartford-based G. Fox into Filene's, based
in Boston; and Denver-based May D&F into Foley's, based in Houston. Also
during 1993, the company completed the move of New York-based May
Merchandising Company to St. Louis to form a single corporate center at the
St. Louis corporate headquarters. In addition, May consolidated four
department store data centers into two, now operating in St. Louis and Lorain,
Ohio, outside of Cleveland. With a single corporate center and fewer
department store companies, our ability to communicate, coordinate and react
has increased considerably.
We opened 13 department stores during 1993, adding 1.9 million square feet of
retail space. These openings were Lord & Taylor in Skokie, Ill., North
Atlanta, Ga., and Boston, Mass.; Robinsons-May in West Covina and Glendale,
Calif., and Phoenix, Ariz.; Hecht's in Charlotte, N.C., Fredericksburg and
Richmond, Va., and Frederick, Md.; Kaufmann's in Syracuse, N.Y.; and Filene's
in Boston, Mass., and Nashua, N.H. In addition, we remodeled 25 department
stores in 1993, totaling 2.3 million retail square feet, and expanded five of
these stores. At fiscal year-end, May operated 301 department stores in 29
states and the District of Columbia.
Five department stores were closed during the year, involving 800,000 retail
square feet. Over the past six years, May has closed 93 low-productivity
department stores.
The January 17, 1994, California earthquake damaged a number of Robinsons-May
and Payless ShoeSource stores. Robinsons-May stores in five locations were
temporarily closed as of January 29, 1994. We will reopen stores in the same
locations as quickly as possible.
In 1993, Payless ShoeSource opened 216 net new stores, adding 600,000 square
feet of retail space, continuing its new store pace of the past 10 years.
During the year, Payless ShoeSource opened its first stores in the Virgin
Islands and continued the Payless Kids expansion program by adding 219 stores
adjacent to existing Payless ShoeSource stores, expanding those locations by
a total of 225,000 square feet. The largest area of growth was in the
Northeast with 120 net new stores and 46 Payless Kids expansion stores. At
year-end, Payless ShoeSource operated 3,779 stores in 49 states, the District
of Columbia, Puerto Rico and the Virgin Islands.
Our expansion program for 1994 includes 16 new department stores, adding 2.2
million square feet of retail space. The company plans to remodel 32
department stores in 1994, totaling 2.9 million square feet of retail space,
and to expand 15 of these stores by a total of 500,000 square feet.
Payless ShoeSource will add 240 net new stores in 1994 with more than 750,000
square feet of retail space. In addition, Payless ShoeSource will add 200
Payless Kids expansion stores adjacent to existing stores, bringing the total
Payless Kids expansion stores to 520. The largest area of growth will be in
the Northeast with approximately 115 net new family shoe stores and 50
Payless Kids expansion stores.
May's 1994-1998 expansion plan will add 110 new department stores, totaling
17.9 million retail square feet. During this five-year period, May will
invest $1.9 billion for new stores and will spend an additional $680 million
to remodel existing stores.
The expansion plan for Payless ShoeSource during the 1994-1998 period
involves a capital investment, including the present value of operating
leases, of $1.3 billion to add approximately 1,200 net new family shoe stores
with 3.9 million square feet of retail space and 1,000 adjacent Payless Kids
expansion stores, adding 1.2 million square feet to existing stores. An
additional $110 million will be invested to remodel existing stores.
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net retail sales from
continuing operations (billions) $3.9 $4.2 $4.7 $5.3 $5.8 $7.4 $8.3 $8.9 $9.5 $10.2 $11.0
</TABLE>
<PAGE>
REVIEW OF OPERATIONS
Net earnings totaled $711 million in 1993 compared to $603 million in 1992
and $515 million in 1991. Total company return on revenues was 6.2% in 1993
compared to 5.4% in 1992 and 4.9% in 1991. Fully diluted earnings per share
reached $2.65 in 1993 compared to $2.26 in 1992 and $1.93 in 1991.
During 1992, the company recorded pretax charges of $485 million, $298
million after tax, for special and nonrecurring items. Also during 1992, the
company recorded a $298 million pretax and after tax nonrecurring gain from
the distribution of the May Centers Associates (MCA) partnership assets. See
Special and Nonrecurring Items on page 14. On a full-year basis, the special
and nonrecurring items had no impact on net earnings or earnings per share.
Results for the past three years were as follows:
<TABLE>
<CAPTION>
(dollars in 1993 1992 1991
millions, except % of % of % of
per share) $ Revenues $ Revenues $ Revenues
<S> <C> <C> <C> <C> <C> <C>
Net Retail
Sales $11,020 $10,245 $ 9,462
Revenues $11,529 100.0% $11,150 100.0% $10,615 100.0%
Cost of sales 7,910 68.6 7,691 69.0 7,339 69.1
Selling, general
and administra-
tive expenses 2,196 19.1 2,202 19.7 2,164 20.4
Interest
expense, net 245 2.1 279 2.5 316 3.0
Special and
nonrecurring
items _ _ 187 n/a _ _
Earnings before
income taxes 1,178 10.2 791 8.8* 796 7.5
Provision for
income taxes** 467 39.6 188 38.3 281 35.3
Net earnings $ 711 6.2% $ 603 5.4% $ 515 4.9%
Fully diluted
earnings
per share $ 2.65 $ 2.26 $ 1.93
</TABLE>
* For comparability, shown before special and nonrecurring items.
** Percent of revenues column represents effective income tax rate.
Net Retail Sales. Net retail sales (see page 18 for definition) increases by
business segment for 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1993 vs. 1992 1992 vs. 1991 Five-Year
Store-for- Store-for- Compound
Total Store Total Store Growth Rate
<S> <C> <C> <C> <C> <C>
Department stores 7.1% 5.2% 6.9% 4.5% 7.8%
Payless ShoeSource 10.0 1.7 15.5 2.8 11.7
Total 7.6% 4.6% 8.3% 4.2% 8.4%
</TABLE>
Total sales increases for 1993 reflect the opening of 13 new department
stores and 216 net new Payless ShoeSource stores and a 4.6% store-for-store
increase. Total sales increases for 1992 include the results of six new
department stores and 268 net new Payless ShoeSource stores.
Sales per square foot by segment were as follows:
<TABLE>
<CAPTION>
1993 Five-Year
vs. 1992 Compound
1993 1992 1991 1988 Increase Growth Rate
<S> <C> <C> <C> <C> <C> <C>
Department stores $191 $179 $171 $158 6.5% 3.8%
Payless ShoeSource 165 161 152 137 2.4 3.7
Total $186 $176 $168 $155 5.6% 3.7%
</TABLE>
Sales include leased and licensed department sales of $313, $349 and $356
million in 1993, 1992 and 1991, respectively. Revenues include finance charge
revenues of $330, $329 and $351 million in 1993, 1992 and 1991, respectively.
Finance charge revenues in 1993 were similar to 1992, as accounts receivable
did not increase proportionately with sales due to a greater acceptance of
third party credit cards. The decrease in 1992 finance charge revenues
compared to 1991 was due to faster repayment by customers resulting in lower
average accounts receivable balances subject to finance charge and an
expanded acceptance of third party credit cards.
Cost of Sales. Cost of sales includes cost of merchandise sold and buying and
occupancy costs. Cost of sales was $7.91 billion in 1993 compared to $7.69
billion in 1992, a 2.8% increase. The overall increase of 2.8% was due to a
3.4% increase in revenues, offset by a lower cost of sales rate. As a percent
of revenues, cost of sales was 68.6% in 1993 compared to 69.0% in 1992. The
1993 percent decreased from 1992 due to lower buying and occupancy expenses
resulting from the recent store company consolidations, partially offset by a
small decline in merchandise gross margin. LIFO was a charge of $7 million in
1993 compared to $10 million in 1992.
Cost of sales was $7.69 billion in 1992 compared to $7.34 billion in 1991, a
4.8% increase. The overall increase of 4.8% resulted from a 5.0% increase in
revenues. As a percent of revenues, cost of sales was 69.0% in 1992 compared
to 69.1% in 1991. The decreased 1992 percent compared to 1991 resulted from a
lower LIFO charge ($10 million in 1992 compared to $26 million in 1991). A
small improvement in the buying expense rate was offset by a small decline in
merchandise gross margin.
The impact of LIFO on cost of sales, as a percent of revenues, is shown
below:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cost of sales 68.6% 69.0% 69.1%
LIFO charge 0.1 0.1 0.2
Cost of sales before LIFO 68.5% 68.9% 68.9%
</TABLE>
Selling, General and Administrative Expenses.
Selling, general and administrative expenses were $2.20 billion in 1993
compared to $2.20 billion in 1992, a 0.3% decrease. Selling, general and
administrative expense increases resulting from increased revenues were more
than offset by expense savings achieved through recent store company
consolidations and continued focus on expense control. As a percent of
revenues, selling, general and administrative expenses were 19.1% in 1993
compared to 19.7% in 1992. The California earthquake did not impact 1993
earnings as the losses were covered by insurance.
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings per share from
continuing operations $.82 $.90 $.91 $1.05 $1.28 $1.52 $1.82 $1.87 $1.93 $2.26 $2.65
</TABLE>
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net earnings from continuing
operations (millions) $251 $277 $286 $333 $393 $448 $515 $500 $515 $603 $711
</TABLE>
<PAGE>
Selling, general and administrative expenses were $2.20 billion in 1992
compared to $2.16 billion in 1991, a 1.8% increase. The overall increase was
due to a 5.0% increase in revenues and less equity earnings from the MCA
partnership, partially offset by savings achieved through store company
consolidations, reduced accounts receivable bad debt expense and generally
improved operating expenses. As a percent of revenues, selling, general and
administrative expenses were 19.7% in 1992 compared to 20.4% in 1991.
Adjusting 1992 and 1991 as if the MCA partnership had been dissolved
on the first day of fiscal year 1991, selling, general and administrative
expenses, as a percent of revenues, would have been 19.8% in 1992 and 20.6%
in 1991.
Included in selling, general and administrative expenses were advertising
and sales promotion costs of $404, $400 and $389 million in 1993, 1992 and
1991, respectively.
Special and Nonrecurring Items. During the 1992 third quarter, the company
recorded pretax charges of $485 million, $298 million after tax, for special
and nonrecurring items. The pretax charges consisted of: $240 million for
four department store company consolidations (primarily costs for severance,
associate relocations, inventory liquidations and adjustments, and one-time
transition expenses); $125 million for planned closings of low-productivity
stores and other real estate-related charges including adjustments to reflect
expected values of a number of properties planned for disposition; $60 million
for the costs associated with achieving various operating efficiencies,
including the May Merchandising Company headquarters relocation to St. Louis
and the data center combinations (primarily costs for associate relocations
and excess space carrying costs); $40 million for the cost associated with
retiring high interest rate debt; and $20 million for a special contribution
to The May Department Stores Company Foundation. The cost to retire the debt
was not reflected as an extraordinary item as it was not material to total
company earnings or the earnings trend of the company.
The reserve balance for the $485 million special and nonrecurring charges
was $330 million at January 30, 1993, and $100 million at January 29, 1994.
In 1993 there were no additional provisions for the special and nonrecurring
charges and there were no material adjustments to the individual components.
The cash component of the $485 million special and nonrecurring charges is
estimated to be $325 million.
During the 1992 second quarter, the company recorded a $298 million pretax
and after tax nonrecurring gain from the distribution of the MCA partnership
assets on May 18, 1992. See May Centers Associates on page 27.
The 1992 special and nonrecurring charges and nonrecurring gain are
reflected as special and nonrecurring items on a separate line in the
consolidated statement of earnings. The 1992 special and nonrecurring items
had no impact on full-year net earnings or earnings per share.
During 1991, the company provided pretax charges of $36 million for two
department store company consolidations and $26 million for costs associated
with closing 20 low-productivity stores. Also during 1991, the company
recorded pretax gains of $35 million from real estate transactions and $25
million from the sale of its equity interest in The Caldor Corporation. Due
to the insignificance of the $2 million net impact of these items on pretax
earnings, the 1991 pretax charges and pretax gains were included in selling,
general and administrative expenses.
Interest Expense. Interest expense components were:
<TABLE>
<CAPTION>
(dollars in millions) 1993 1992 1991
<S> <C> <C> <C>
Interest expense $263 $306 $354
Interest income (8) (20) (24)
Capitalized interest (10) (7) (14)
Interest expense, net $245 $279 $316
Percent of revenues 2.1% 2.5% 3.0%
</TABLE>
The 1993 and 1992 decreases in net interest expense were the result of the
elimination of the May Centers Associates Corporation (MCAC) sale/leaseback
debt upon dissolution of the MCA partnership on May 18, 1992, and other net
reductions of debt resulting primarily from each year's cash flows. Adjusting
1992 and 1991 as if the MCA partnership had been dissolved on the first day
of fiscal year 1991, net interest expense, as a percent of revenues, would
have been 2.4% in 1992 and 2.5% in 1991. See May Centers Associates on page
27.
Income Taxes. The effective income tax rates were:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
As reported 39.6% 23.7% 35.3%
Excluding impact of special and
nonrecurring items and MCA 39.6% 38.5% 36.2%
</TABLE>
The 1993 effective income tax rate of 39.6% increased compared to 1992
excluding special and nonrecurring items and MCA equity earnings due to the
1% increase in the tax rate resulting from the 1993 tax law change and
slightly higher state income tax rates. The increase in the 1992 effective
rate of 38.5% compared to 36.2% in 1991 was due to lower tax credits in 1992.
Prior to the dissolution of the MCA partnership on May 18, 1992, MCA
partnership equity earnings were reflected as a reduction in selling, general
and administrative expenses on a net of tax basis. See Taxes on page 24. Also
see Summary of Significant Accounting Policies on page 18 for a discussion of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
Impact of Inflation. Overall, the company's sales growth and earnings have not
been materially impacted by inflation. The department store inflation rate, as
measured by the government's Department Store Inventory Price Index, was 1.3%
during 1993 compared to 0.6% in 1992. As a result of valuing our department
store inventory on a LIFO basis, the current cost of merchandise is reflected
in current operating results. The shoe industry experienced no inflation in
1993 and over the last three years the inflation rate has averaged less than
0.5%.
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock price range
Low price $ 7.42 $ 7.52 $10.50 $15.94 $11.13 $14.38 $17.31 $18.69 $22.63 $26.00 $33.44
High price $10.50 $12.09 $16.25 $22.06 $25.44 $20.00 $26.31 $29.56 $30.19 $37.25 $46.50
</TABLE>
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Book value per common
share $6.61 $7.25 $7.86 $8.50 $9.13 $10.75 $9.32 $10.04 $11.26 $12.82 $14.65
</TABLE>
<PAGE>
Summary Segment Information. May operates in two retail business segments -
department stores and self-service family shoe stores operated by Payless
ShoeSource. The following summarizes the results of these segments for the
past three years. Additional information by business segment is presented in
the Six Year Summary by Business Segment on pages 28 and 29.
May is the largest department store retailer in the United States. May's 301
quality department stores are operated by eight department store companies
across the United States, each operating under long-standing and widely
recognized names. Each store company holds a leading market position in its
region. Results for the department store segment were:
<TABLE>
<CAPTION>
Increase
(dollars in millions) 1993 1992 1991 1993 1992
<S> <C> <C> <C> <C> <C>
Net retail sales $9,054 $8,457 $7,914 7.1% 6.9%
Operating earnings 1,276 1,109 963 15.1 15.1
Return on revenues 13.3% 11.8% 10.6%
Return on net assets 23.9 20.5 18.0
</TABLE>
Department store operating earnings represent LIFO earnings before income
taxes, net interest expense and corporate expense, and exclude goodwill
amortization and special and nonrecurring items. Department store operating
earnings presented above include LIFO charges of $7, $10 and $26 million in
1993, 1992 and 1991, respectively. Department store operating earnings,
excluding LIFO, are presented below on a supplementary basis for comparative
purposes:
<TABLE>
<CAPTION>
Increase
(dollars in millions) 1993 1992 1991 1993 1992
<S> <C> <C> <C> <C> <C>
Operating earnings $1,283 $1,119 $989 14.6% 13.1%
Return on revenues 13.4% 11.9% 10.9%
</TABLE>
Payless ShoeSource, the nation's largest chain of self-service family shoe
stores, sold 174 million pairs of shoes in 1993, representing one of every
six pairs of shoes sold in the United States. At year-end, Payless ShoeSource
operated 3,779 stores in 49 states, the District of Columbia, Puerto Rico and
the Virgin Islands. Results for Payless ShoeSource were:
<TABLE>
<CAPTION>
Increase
(dollars in millions) 1993 1992 1991 1993 1992
<S> <C> <C> <C> <C> <C>
Net retail sales $1,966 $1,788 $1,548 10.0% 15.5%
Operating earnings 225 214 184 5.0 16.1
Return on revenues 11.4% 12.0% 11.9%
Return on net assets 23.9 26.5 29.0
</TABLE>
Provided at the bottom of this page is a summary of net retail sales, sales
per square foot, building area square footage and number of stores for our
eight department store operating companies and Payless ShoeSource.
<TABLE>
<CAPTION>
Net Retail Building Area
Sales in Millions Sales Per Square Footage
of Dollars Square Foot in Thousands Number of Stores
1993 1992 1993 1992 1993 1992 1993 New Closed 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lord & Taylor, New York City $ 1,302 $ 1,227 $219 $212 6,286 5,934 49 3 - 46
Foley's, Houston 1,590 1,496 175 163 9,196 9,642 48 - 2 50
Robinsons-May, Los Angeles 1,320 1,231 160 163 8,626 9,206 48 3 10 55
Hecht's, Washington, D.C. 1,326 1,218 207 199 6,912 6,346 45 4 - 41
Kaufmann's, Pittsburgh 1,240 1,182 192 184 6,774 6,735 40 1 1 40
Filene's, Boston 1,068 992 238 233 4,704 4,599 33 2 2 33
Famous-Barr, St. Louis 884 812 179 164 5,145 5,266 30 - - 30
Meier & Frank, Portland, Ore. 324 299 193 179 1,737 1,739 8 - - 8
Total department stores 9,054 8,457 191 179 49,380 49,467 301 13 15 303
Payless ShoeSource 1,966 1,788 165 161 12,345 11,527 3,779 216(net) - 3,563
Total $11,020 $10,245 $186 $176 61,725 60,994 4,080 229 15 3,866
Net retail sales represent sales of stores open at the end of 1993.
Sales per square foot is calculated on total revenues and average gross retail square footage.
Building area represents gross retail square footage of stores open at the end of the period presented.
</TABLE>
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales per square foot $100 $112 $122 $138 $143 $155 $164 $168 $168 $176 $186
</TABLE>
<PAGE>
REVIEW OF FINANCIAL CONDITION
During 1993, we further strengthened our balance sheet and financial
condition with our strong financial performance. We continue to meet our
objective of generating superior shareowner returns, while maintaining access
to capital at all times at reasonable costs.
Return on Equity. Return on equity is our principal measure in evaluating our
performance for shareowners and our ability to profitably invest shareowners'
funds. Our objective is to sustain performance that places our return on
equity in the top quartile of the retail industry. Our return on beginning
equity in 1993 was 22.1% compared to 21.5% in 1992 and 20.7% in 1991.
Return on Net Assets. Return on net assets measures performance independent
of capital structure. Return on net assets represents pretax earnings before
special and nonrecurring items, net interest expense and the interest
component of operating leases, divided by beginning of the year net assets
(including present value of operating leases). Return on net assets was 19.6%
in 1993 compared to 16.7% in 1992 and 16.0% in 1991. The improvement in the
1993 return on net assets compared to 1992 was due to the growth in earnings
and a decrease in beginning of the year net assets of $368 million due to
the impact of the 1992 MCA partnership dissolution and the 1992 special and
nonrecurring charges.
Financing Activities. During 1993, the company retired $100 million of high
interest rate debt. The cost associated with retiring the debt was recorded
in 1992. See Special and Nonrecurring Items on page 27.
During 1992, the company issued $200 million of 8-3/8% debentures due in
2022. The proceeds from the issuance were added to the company's general
funds and were available for the purchase of certain of the company's other
indebtedness, capital expenditures, working capital needs and other general
corporate purposes, including investments and acquisitions. During 1992, the
company retired $360 million of high interest rate debt. Also, upon
dissolution of the MCA partnership on May 18, 1992, the company received a
majority ownership interest in MCAC and, therefore, $618 million of MCAC
sale/leaseback debt was eliminated on a consolidated basis. See May Centers
Associates and Special and Nonrecurring Items on page 27.
During 1991, the company obtained $434 million of long-term financing,
consisting of $375 million from the issuance of 30-year debentures, $2
million from the issuance of medium-term notes and $57 million from MCAC
sale/leaseback transactions (MCAC loans). The proceeds from these financings
were used to repay the company's outstanding commercial paper and short-term
indebtedness, and for general corporate purposes.
Financial Condition Ratios. Our debt-to-capitalization ratio and fixed charge
coverage continue to be strong and consistent with our capital structure
objectives and provide us with substantial financial flexibility.
The debt-to-capitalization ratio was 45%, 49% and 54% at the end of 1993,
1992 and 1991, respectively. The decrease in the debt-to-capitalization ratio
over the past two years was primarily due to the elimination of the MCAC
loans and other net reductions in debt, along with the continued growth in
retained earnings. For purposes of the debt-to-capitalization ratio, total
debt is defined as short-term and long-term debt (including the ESOP debt
reduced by unearned compensation, and excluding one-half of the MCAC loans
and one-half of the capital lease obligation payable to May Centers, Inc.,
due to our 50% partnership interest in MCA prior to the MCA partnership
dissolution), redeemable preferred stock and the capitalized value of all
leases, including operating leases. Capitalization is defined as total debt,
noncurrent deferred taxes, ESOP Preference Shares and shareowners' equity.
See Profit Sharing on page 23 for discussion of the ESOP.
Fixed charge coverage was 3.1x in 1993 and 2.4x in each of 1992 and 1991.
Fixed charge coverage, excluding the impact of the special and nonrecurring
items, was 2.7x in 1992. The improvement in coverage in both 1993 and 1992
(excluding the impact of the special and nonrecurring items) resulted from
net reductions in debt and lower average interest rates, partially offset by
increased real property rent expense. In addition, fixed charge coverage
improved as a result of the increased level of pretax earnings. Fixed charges
are defined as gross interest expense (excluding one-half of the interest
expense related to the MCAC loans prior to the MCA partnership dissolution),
interest expense on the ESOP debt, total rent expense and the pretax
equivalent of dividends on redeemable preferred stock.
Our bonds are rated A by Standard & Poor's Corporation and A2 by Moody's
Investors Service, Inc. Our commercial paper is rated A1 and P1 by Standard &
Poor's and Moody's, respectively.
Cash Flow. Cash flow from operations (earnings and depreciation/amortization)
reached over $1 billion for the first time in 1993. Cash flow from operations
was 9.2% of revenues in 1993 compared to 8.5% of revenues in 1992 and 7.9% of
revenues in 1991. The company's cash flow as a percent of revenues continues
to be one of the highest in the retail industry. Internally generated funds
continue to be our primary source of liquidity. The company's objective is to
use short-term debt only to finance seasonal requirements.
Sources and (uses) of cash flows are summarized below:
<TABLE>
<CAPTION>
(millions) 1993 1992 1991
<S> <C> <C> <C>
Earnings and depreciation/amortization $1,059 $ 944 $ 834
Working capital (increases) decreases (216) (142) 23
Other operating activities 73 13 (51)
Investing activities (588) (394) (515)
Net long-term debt (repayments) issuances (192) (248) 313
Other financing activities (262) (208) (418)
(Decrease) increase in
cash and cash equivalents $ (126) $ (35) $ 186
</TABLE>
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Return on equity 17.0% 16.1% 15.5% 15.7% 17.0% 18.6% 18.0% 21.8% 20.7% 21.5% 22.1%
</TABLE>
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Return on net assets 18.3% 18.9% 18.8% 17.7% 17.4% 17.5% 18.0% 17.2% 16.0% 16.7% 19.6%
</TABLE>
<PAGE>
Capital Expenditures. We use our strong financial condition to make capital
expenditures to enhance shareowners' returns. Return on net assets, internal
rate of return and sales per square foot are emphasized as the principal
operating measures as we invest in new stores and remodels and eliminate
unproductive space.
Capital expenditures in 1994 will approximate $950 million (including $160
million representing the capital value of new operating leases). Capital
expenditures for the 1994-1998 period are planned at $5.0 billion (including
$800 million representing the capital value of new operating leases). We plan
to use internal cash flow to finance substantially all of these expenditures.
Available Credit. During the 1993 second quarter, the company replaced its $750
million available credit agreement with a similar $750 million agreement which
expires in 1998. In addition, as of January 29, 1994, the company had a shelf
registration statement filed with the Securities and Exchange Commission
which would enable it to issue up to $550 million of additional debt
securities.
[The following "Common Stock Split, Dividends and Market Prices" section is a
reproduction of the same named section included in the paper format Annual
Report on page 17.]
Common Stock Split, Dividends and Market Prices.
In June 1993, the company effected a two-for-one split in the form of a 100%
common stock dividend (the "stock split"). All share and per share data
included in this annual report have been restated to reflect the stock split.
Our policy is to increase dividends on common stock consistent with our
earnings growth over time. The 1994 annual dividend rate was increased 13%,
$.12 per share, to $1.04 per share, the 19th consecutive annual dividend
increase. The new annual dividend of $1.04 per share will be effective with
the June 1994 dividend payment. Dividends paid have increased at a compound
rate of 7.6% during the past five years. The company has paid consecutive
quarterly dividends since December 1, 1911.
The quarterly price ranges of the common stock and dividends per share in
1993 and 1992 were:
<TABLE>
<CAPTION>
1993 1992
Market Price Dividends Market Price Dividends
Quarter High Low Per Share High Low Per Share
<S> <C> <C> <C> <C> <C> <C>
First $39 3/4 $33 7/16 $.20 3/4 $31 5/8 $27 $.20 1/4
Second 41 1/8 34 5/8 .23 29 15/16 26 .20 3/4
Third 46 1/4 39 1/2 .23 35 3/4 28 7/8 .20 3/4
Fourth 46 1/2 37 1/2 .23 37 1/4 33 7/8 .20 3/4
Year $46 1/2 $33 7/16 $.89 3/4 $37 1/4 $26 $.82 1/2
</TABLE>
The approximate number of common shareowners as of March 1, 1994, was 46,000.
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash flow (millions)
Depreciation and
amortization $402 $437 $467 $542 $605 $714 $784 $794 $834 $944 $1,059
Net earnings $251 $277 $286 $333 $393 $448 $515 $500 $515 $603 $ 711
</TABLE>
<TABLE>
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends per common share
(year-end rate) $.33 $.39 $.46 $.51 $.56 $.62 $.69 $.77 $.81 $.83 $.92
</TABLE>
<PAGE>
[The following "Summary of Significant Accounting Policies" section is a
reproduction of the same named section included in the paper format Annual
Report on page 18.]
Summary of Significant Accounting Policies
Fiscal Year. The company's fiscal year ends on the Saturday closest to
January 31. Fiscal years 1993, 1992 and 1991 ended on January 29, 1994,
January 30, 1993, and February 1, 1992, respectively. Each year included 52
weeks. References to years in this annual report relate to fiscal years
rather than calendar years.
Basis of Reporting. The consolidated financial statements include the
accounts of the company and all wholly owned subsidiaries (the company).
Prior to dissolution of the May Centers Associates (MCA) partnership in 1992,
the company's 50% partnership investment in MCA was accounted for using the
equity method of accounting. See May Centers Associates on page 27.
Net Retail Sales and Revenues. Net retail sales (sales) represent the sales
of stores operating at the end of the latest period, and exclude finance
charge revenues and the sales of stores which have been closed and not
replaced. Sales include sales of merchandise and services and sales of leased
and licensed departments. Sales are net of returns and exclude sales tax.
Store-for-store sales represent sales of those stores open during both years.
Revenues include finance charge revenues and all sales from all stores
operating during the period.
Cost of Sales. Cost of sales includes the cost of merchandise sold and buying
and occupancy costs.
Preopening Expenses. Costs associated with the opening of new stores are
expensed during the year incurred.
Income Taxes. Effective with the beginning of 1993, the company adopted
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." The cumulative effect of adopting SFAS No. 109 was insignificant
and, therefore, no adjustments were reflected in the financial statements. SFAS
No. 109 requires income taxes to be accounted for using a balance sheet
approach known as the liability method, as compared to the previous approach
known as the deferred method. The liability method accounts for deferred
income taxes by applying statutory tax rates in effect at the date of the
balance sheet to differences between the book and tax basis of assets and
liabilities. Adjustments to deferred taxes resulting from statutory rate
changes flow through the tax provision in the year of the change.
Earnings Per Share. Primary earnings per share are computed by dividing net
earnings less dividend requirements on redeemable preferred stock and ESOP
Preference Shares (net of related income tax benefits on unallocated shares)
by the average common shares outstanding and common share equivalents during
the period. Fully diluted earnings per share assume conversion of the ESOP
Preference Shares into common stock and adjust net earnings for the
additional expense required to fund the ESOP debt service resulting from the
assumed replacement of the ESOP Preference Shares dividends with common stock
dividends. The average common shares outstanding and common share equivalents
used to calculate fully diluted earnings per share were 265.5, 265.3 and
264.2 million in 1993, 1992 and 1991, respectively. References to earnings per
share in this annual report relate to fully diluted earnings per share.
With the adoption of SFAS No. 109 in the 1993 first quarter, the tax benefit
to the company from dividends paid on the unallocated shares of common stock
assumed held by the ESOP is no longer reflected in fully diluted earnings per
share. The impact on 1993 fully diluted earnings per share was a decrease of
$.02.
Cash Equivalents. Cash equivalents consist primarily of commercial paper with
maturities less than three months. Cash equivalents are stated at cost, which
approximates fair value.
Accounts Receivable. In accordance with industry practice, installments on
deferred payment accounts receivable maturing in more than one year have been
included in current assets.
Merchandise Inventories. Department store merchandise inventories (83% of the
company's consolidated inventories in 1993 and 1992) are valued by the retail
method and are stated on the LIFO (last-in, first-out) cost basis, which is
lower than market. The accumulated LIFO provision was $217 and $210 million in
1993 and 1992, respectively. Payless ShoeSource merchandise inventories are
valued by the retail method and are stated on the lower of average cost or
market basis.
Property and Equipment. Property and equipment are recorded at cost. Property
and equipment are depreciated on a straight-line basis over their estimated
useful lives. Investments in properties under capital leases and leasehold
improvements are amortized over the shorter of their useful lives or their
related lease terms.
Goodwill. Goodwill represents the excess of cost over the fair value of net
tangible assets acquired at the dates of acquisition. Substantially all amounts
are amortized using the straight-line method over a 40-year period. Goodwill is
presented in the consolidated balance sheet net of accumulated amortization
of $94 and $77 million in 1993 and 1992, respectively.
<PAGE>
[The following "Consolidated Financial Statements" section is a reproduction
of the same named section included in the paper format Annual Report on pages
19-22.]
Consolidated Statement of Earnings
<TABLE>
<CAPTION>
(millions, except per share) 1993 1992 1991
<S> <C> <C> <C>
Net Retail Sales $11,020 $10,245 $ 9,462
Revenues $11,529 $11,150 $10,615
Cost of sales 7,910 7,691 7,339
Selling, general and
administrative expenses 2,196 2,202 2,164
Interest expense, net 245 279 316
Special and nonrecurring items - 187 -
Total cost of sales and expenses 10,351 10,359 9,819
Earnings before income taxes 1,178 791 796
Provision for income taxes 467 188 281
Net earnings $ 711 $ 603 $ 515
Primary Earnings Per Share $ 2.77 $ 2.35 $ 2.01
Fully Diluted Earnings Per Share $ 2.65 $ 2.26 $ 1.93
</TABLE>
See the Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
<PAGE>
Consolidated Balance Sheet
<TABLE>
<CAPTION> January 29, January 30,
(dollars in millions, except per share) 1994 1993
<S> <C> <C>
Assets
Current Assets:
Cash $ 15 $ 17
Cash equivalents 31 155
Accounts receivable, net 2,394 2,367
Merchandise inventories 2,020 1,791
Other current assets 219 324
Total Current Assets 4,679 4,654
Property and Equipment:
Land 248 247
Buildings and improvements 2,673 2,496
Furniture, fixtures and equipment 2,043 1,887
Property under capital leases 83 101
Total property and equipment 5,047 4,731
Accumulated depreciation (1,636) (1,573)
Property and equipment, net 3,411 3,158
Goodwill 619 636
Other Assets 91 97
Total Assets $ 8,800 $ 8,545
Liabilities and Shareowners' Equity
Current Liabilities:
Current maturities of long-term debt $ 113 $ 252
Accounts payable 870 723
Accrued expenses 740 939
Income taxes payable 48 61
Total Current Liabilities 1,771 1,975
Long-term Debt 2,822 2,879
Deferred Income Taxes 373 320
Other Liabilities 182 176
ESOP Preference Shares 380 389
Unearned Compensation (367) (375)
Shareowners' Equity:
Common stock 124 124
Additional paid-in capital 21 34
Retained earnings 3,494 3,023
Total Shareowners' Equity 3,639 3,181
Total Liabilities and Shareowners' Equity $ 8,800 $ 8,545
</TABLE>
Common stock has a par value of $.50 per share; 700 million shares are
authorized and 313.6 million shares were issued. At January 29, 1994,
248.3 million shares were outstanding and 65.3 million shares were held in
treasury. At January 30, 1993, 248.1 million shares were outstanding
and 65.5 million shares were held in treasury.
ESOP Preference Shares have a par value of $.50 per share, stated value of
$507 per share and 800,000 shares are authorized. At January 29, 1994,
750,303 shares (convertible into 15.4 million common shares) were issued and
outstanding. At January 30, 1993, 767,956 shares (convertible
into 15.7 million common shares) were issued and outstanding.
See Preferred and Preference Stock in Notes to Consolidated Financial
Statements for discussion of other preferred stock.
See the Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
<PAGE>
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
(millions) 1993 1992 1991
<S> <C> <C> <C>
Operating Activities:
Net earnings $ 711 $ 603 $ 515
Adjustments for noncash items included in earnings:
Depreciation and amortization 348 341 319
Deferred income taxes (noncurrent) 10 9 14
Deferred and unearned compensation 17 21 21
Adjusted equity earnings of MCA partnership - (7) (33)
Nonrecurring gain - (298) -
Special and nonrecurring charges, net of tax benefit - 298 -
Working capital (increases) decreases* (216) (142) 23
Other assets and liabilities, net 46 (10) (53)
Total Operating Activities 916 815 806
Investing Activities:
Capital expenditures (700) (404) (512)
Disposition of property and equipment 118 72 46
Acquisition of 21% of MCAC - (156) -
Collection of MCI note receivable - 74 -
Other (6) 20 (49)
Total Investing Activities (588) (394) (515)
Financing Activities:
Decrease in notes payable - - (214)
Issuance of long-term debt 12 208 434
Repayment of long-term debt (204) (456) (121)
Purchase of common stock (54) (31) (32)
Issuance of common stock 32 46 44
Dividend payments (240) (223) (216)
Total Financing Activities (454) (456) (105)
(Decrease) Increase in Cash and Cash Equivalents (126) (35) 186
Cash and Cash Equivalents, Beginning of Year 172 207 21
Cash and Cash Equivalents, End of Year $ 46 $ 172 $ 207
*Comprised of:
Accounts receivable, net $ (27) $ 37 $ 90
Merchandise inventories (229) (50) (113)
Other current assets 105 24 (47)
Accounts payable 147 61 (8)
Accrued expenses (199) (199) 24
Income taxes payable (13) (15) 77
Net (increase) decrease in working capital $(216) $(142) $ 23
Cash paid during the year:
Interest $ 257 $ 304 $ 334
Income taxes 322 354 267
</TABLE>
Noncash investing and financing activities include the disposition of $164
million investment in MCA and the elimination of $618 million of MCAC loans
upon dissolution of the MCA partnership in 1992, and conversions of ESOP
Preference Shares into common stock of $9, $5 and $3 million in 1993, 1992
and 1991, respectively.
See the Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
<PAGE>
Consolidated Statement of Shareowners' Equity
<TABLE>
<CAPTION>
Outstanding Additional Total Share-
(dollars in millions, Common Stock Paid-in Retained owners'
shares in thousands) Shares Dollars Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance at February 2, 1991 245,793 $123 $ - $2,344 $2,467
Net earnings - - - 515 515
Dividends paid:
Common stock ($.80 1/2 per share) - - - (198) (198)
ESOP Preference Shares,
net of tax benefit - - - (18) (18)
Preferred stock - - - - -
Common stock issued 2,299 1 46 - 47
Purchase of common stock (1,176) (1) (31) - (32)
Balance at February 1, 1992 246,916 123 15 2,643 2,781
Net earnings - - - 603 603
Dividends paid:
Common stock ($.82 1/2 per share) - - - (205) (205)
ESOP Preference Shares,
net of tax benefit - - - (18) (18)
Preferred stock - - - - -
Common stock issued 2,165 1 50 - 51
Purchase of common stock (974) - (31) - (31)
Balance at January 30, 1993 248,107 124 34 3,023 3,181
Net earnings - - - 711 711
Dividends paid:
Common stock ($.89 3/4 per share) - - - (223) (223)
ESOP Preference Shares,
net of tax benefit - - - (17) (17)
Preferred stock - - - - -
Common stock issued 1,611 1 40 - 41
Purchase of common stock (1,376) (1) (53) - (54)
Balance at January 29, 1994 248,342 $124 $ 21 $3,494 $3,639
</TABLE>
Outstanding common stock excludes shares held in treasury. Treasury share
activity for the last three years is summarized below:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Balance, Beginning of Year 65,530 66,721 67,844
Common stock issued:
Exercise of stock options (967) (1,667) (1,679)
Deferred compensation plan (239) (217) (324)
Restricted stock grants, net of forfeitures 31 (102) (182)
Contribution to Profit Sharing Plan (76) - -
Conversion of ESOP Preference Shares (360) (179) (114)
(1,611) (2,165) (2,299)
Purchase of common stock 1,376 974 1,176
Balance, End of Year 65,295 65,530 66,721
</TABLE>
See the Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
<PAGE>
[The following "Notes to Consolidated Financial Statements" section is a
reproduction of the same named section included in the paper format Annual
Report on pages 23-29.]
Notes to Consolidated Financial Statements
Quarterly Results (Unaudited). Quarterly results are determined in accordance
with the annual accounting policies and include certain items based upon
estimates for the entire year. Summarized quarterly results for the last two
years were as follows:
<TABLE>
<CAPTION>
(millions,
except per share)
1993
Quarter First Second Third Fourth Year
<S> <C> <C> <C> <C> <C>
Revenues $2,422 $2,586 $2,814 $3,707 $11,529
Cost of sales $1,683 $1,791 $1,956 $2,480 $ 7,910
Net Earnings $ 96 $ 117 $ 133 $ 365 $ 711
Primary Earnings
Per Share $ .37 $ .45 $ .51 $ 1.44 $ 2.77
Fully Diluted Earnings
Per Share $ .35 $ .44 $ .49 $ 1.37 $ 2.65
<CAPTION>
(millions,
except per share)
1992
Quarter First Second Third Fourth Year
<S> <C> <C> <C> <C> <C>
Revenues $2,388 $2,486 $2,671 $3,605 $11,150
Cost of sales $1,668 $1,736 $1,874 $2,413 $ 7,691
Net Earnings (Loss) $ 81 $ 393* $ (190)* $ 319 $ 603
Primary Earnings (Loss)
Per Share $ .31 $ 1.56* $(0.78)* $ 1.26 $ 2.35
Fully Diluted Earnings
(Loss) Per Share $ .30 $ 1.48* $(0.72)* $ 1.20 $ 2.26
</TABLE>
* During the 1992 second quarter, the company recorded a $298 million pretax
and after tax nonrecurring gain, $1.12 per share on a fully diluted basis
($1.20 per share on a primary basis), from the distribution of the MCA
partnership assets. (See May Centers Associates on page 27.) During the 1992
third quarter, the company recorded pretax charges of $485 million, $298
million after tax and $1.12 per share on a fully diluted basis ($1.20 per
share on a primary basis), for special and nonrecurring items. (See Special
and Nonrecurring Items on page 27.) On a full-year basis, the special and
nonrecurring items had no impact on net earnings or earnings per share.
There are variables and uncertainties in the factors used to estimate the
annual LIFO provision on an interim basis. The following unaudited
supplementary information shows the pro forma per share impact of LIFO had
the final variables and factors been known at the beginning of each year.
<TABLE>
<CAPTION>
1993 1992
Pro As Pro As
Forma Reported Forma Reported
Quarter
<S> <C> <C> <C> <C>
First $ .00 $ .02 $ .00 $ .02
Second .01 .02 .01 .02
Third .00 .01 .00 .01
Fourth .01 (.03) .01 (.03)
Year $ .02 $ .02 $ .02 $ .02
</TABLE>
Profit Sharing. The company has one qualified profit sharing plan which
covers substantially all associates who are paid for 1,000 hours or more in a
year and have attained age 21. The plan is a defined contribution plan which
provides for discretionary matching allocations at a variable matching rate
generally based upon changes in the company's annual earnings per share, as
defined in the plan. The plan's matching allocation value totaled $35, $31
and $17 million in 1993, 1992 and 1991, respectively.
The company's Profit Sharing Plan includes an Employee Stock Ownership Plan
(ESOP) under which the Profit Sharing Plan borrowed $400 million in 1989,
guaranteed by the company, at an average rate of 8.5% with an average
maturity of 12 years. The proceeds were used to purchase $400 million of a
new class of convertible preference stock of the company (ESOP Preference
Shares). The company issued 788,955 shares of ESOP Preference Shares. Each
share is convertible into 20.4903 shares of common stock and has a stated
value of $24.74 per common share equivalent. The annual dividend rate on the
ESOP Preference Shares is 7.5%, and the shares are redeemable by the holder
or the company in certain situations.
The $396 million outstanding portion of the guaranteed ESOP debt is reflected
in the consolidated balance sheet in long-term debt as the company will
ultimately fund the required debt service. The company's contributions to the
ESOP, along with the dividends on the ESOP Preference Shares, are used to
repay the loan principal and interest. Interest expense associated with the
ESOP debt was $33 million in 1993 and $34 million in each of 1992 and 1991.
ESOP Preference Shares dividends were $29 million in each of 1993 and 1992,
and $30 million in 1991. ESOP debt principal payments began in 1993. ESOP
Preference Shares are released based upon debt service payments and are
allocated to participating associates' accounts. Unearned compensation,
initially an equal, offsetting amount to the $400 million guaranteed ESOP
debt, has been adjusted for the difference between the expense related to the
ESOP and cash payments to the ESOP, and is amortized as principal is repaid.
The company's expense related to the Profit Sharing Plan was $22, $14 and
$11 million in 1993, 1992 and 1991, respectively.
At January 29, 1994, the Profit Sharing Plan beneficially owned 11.7 million
shares of the company's common stock and 100% of the company's ESOP
Preference Shares, which are convertible into 15.4 million shares of the
company's common stock, representing 10.2% of the company's common stock on a
fully converted basis.
Pension. The company has one retirement plan which covers substantially all
associates who are paid for 1,000 hours or more in a year and have attained
age 21. The plan is noncontributory and provides benefits based upon years of
service and pay during employment. The company also maintains a nonqualified
supplementary retirement plan for certain associates and foreign retirement
plans for certain overseas-based associates.
Pension expense is determined by the company based on information provided by
an outside actuarial firm, using assumptions to estimate the total benefits
ultimately payable to associates and then allocating this cost to service
periods. The actuarial assumptions used to calculate pension costs are
reviewed annually. The following tables summarize the funded status of the
<PAGE>
plans, components of pension expense, actuarial assumptions and definitions of
terms.
<TABLE>
<CAPTION>
(millions) 1993 1992
<S> <C> <C>
Actuarial Present Value of Benefit Obligations:
Vested benefit obligation $206 $194
Nonvested benefit obligation 18 16
Accumulated benefit obligation (ABO) 224 210
Estimated effect of future salary increases 56 55
Projected benefit obligation (PBO) 280 265
Plan assets at fair value (primarily
equity and fixed income securities) 234 251
Plan assets less than PBO (46) (14)
Unrecognized obligation 5 6
Unrecognized gain (19) (43)
Unrecognized prior service cost 21 21
Accrued pension cost $(39) $(30)
Plan assets in excess of ABO $ 10 $ 41
</TABLE>
The accrued pension cost primarily represents the unfunded ABO for the
nonqualified supplementary retirement plan.
During 1993, the discount rate assumption was lowered from 8.25% to 7.0% as a
result of decreases during the year in interest rates used as a benchmark in
determining the assumed discount rate. The lower discount rate assumption
increased the 1993 year-end ABO by approximately $30 million.
<TABLE>
<CAPTION>
(millions) 1993 1992 1991
<S> <C> <C> <C>
Components of Pension Expense:
Service cost $ 23 $ 23 $ 22
Interest on PBO 20 20 21
Actual return on assets (22) (12) (43)
Net amortization and deferral 3 (7) 24
Settlement of pension obligations - - (5)
Total $ 24 $ 24 $ 19
</TABLE>
The increase in 1992 pension expense from 1991 was primarily due to a $5
million reduction of expense resulting from the 1991 settlement of certain
retirees' pension obligations.
The change in the actuarial assumptions shown below will increase 1994 pension
expense by approximately $8 million.
<TABLE>
<CAPTION> January 1,
1994 1993 1992
<S> <C> <C> <C>
Actuarial Assumptions:
Discount rate 7.0% 8.25% 8.25%
Expected return on plan assets 7.5 8.25 8.25
Salary increase 5.0 6.0 6.0
</TABLE>
Definitions of Terms:
ABO is the actuarial present value of benefits (both vested and nonvested)
attributed by the pension benefit formula to prior associate service based on
current and past compensation levels.
PBO is the actuarial present value of benefits attributed by the pension
benefit formula to prior associate service taking into consideration future
salary increases.
Accrued pension cost is the balance sheet accrued expense not yet paid
to a plan.
Net amortization and deferral represents the net effect during the period of
the delayed recognition provisions of SFAS No. 87.
Another important element in the retirement programs for associates is the
federal Social Security system into which the company paid $134 million in
1993 as its matching portion of the $134 million contributed by associates.
The company maintains a postretirement benefit plan for certain associates.
Benefits vary by the group of associates covered and include fixed or
variable benefits for life and/or health insurance. Current eligibility is
limited to a small group of associates. During 1993, the company lowered the
discount rate assumption from 8.25% to 7.0%, which resulted in a $5 million
increase in the present value of future obligations. As of January 29,
1994, the company's estimated present value of future obligations for
postretirement benefits was $43 million of which $39 million was accrued. As
provided in Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," an unrecognized
net loss of less than 10% of the liability is not required to be amortized.
The estimated future obligations are based upon assumed annual health care
cost increases of 12% for 1994 and decreasing by 1% annually to 8% for 1998
and future years. A one-percentage-point increase in the assumed annual
health care cost increases would increase the present value of estimated
future obligations for postretirement benefits by $1 million. The
postretirement plan is unfunded. The postretirement expense was $2 million in
1993 and $3 million in each of 1992 and 1991.
Taxes. The provision for income taxes and related percent of pretax earnings
for the last three years were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(dollars in millions) $ % $ % $ %
<S> <C> <C> <C> <C> <C> <C>
Federal $304 $ 259 $237
State and local 68 49 49
Taxes currently payable 372 31.6% 308 38.9% 286 35.9%
Federal 81 (106) (5)
State and local 14 (14) -
Deferred taxes 95 8.0 (120) (15.2) (5) (0.6)
Total $467 39.6% $ 188 23.7% $281 35.3%
</TABLE>
The 1993 federal income tax rate increase, effective retroactive to
January 1, 1993, resulted in an additional $13 million tax provision in 1993.
The provision for deferred income taxes prior to the adoption of SFAS No. 109
consisted of:
<TABLE>
<CAPTION>
(millions) 1992 1991
<S> <C> <C>
Depreciation and amortization $ 8 $ 15
Accrued expenses and reserves (124) (18)
Other, net (4) (2)
Total $(120) $ (5)
</TABLE>
<PAGE>
The reconciliation between the statutory federal income tax rate and the
effective income tax rate for the last three years follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 34.0% 34.0%
State and local income taxes,
net of federal tax benefit 4.5 2.9 4.3
Nonrecurring gain - (12.8) -
Equity earnings of MCA partnership - (0.3) (1.6)
Other, net 0.1 (0.1) (1.4)
Effective income tax rate 39.6% 23.7% 35.3%
</TABLE>
Major components of deferred tax assets and liabilities were as follows:
<TABLE>
<CAPTION>
January 29, January 31,
(millions) 1994 1993
<S> <C> <C>
Accrued expenses and reserves $ 190 $ 282
Deferred and other compensation 92 93
Depreciation/amortization and
basis differences (401) (401)
Other deferred income tax
liabilities, net (72) (10)
Net deferred income taxes (191) (36)
Deferred investment tax credit (3) (6)
Less: Net current deferred
income tax assets (179) (278)
Noncurrent deferred income taxes $(373) $(320)
</TABLE>
January 31, 1993, balances reflect SFAS No.109.
Net current deferred income tax assets are included in other current assets in
the accompanying balance sheet.
Taxes other than income taxes consisted of:
<TABLE>
<CAPTION>
(millions) 1993 1992 1991
<S> <C> <C> <C>
Payroll $165 $164 $162
Real estate and
personal property 79 83 78
Total $244 $247 $240
</TABLE>
Accounts Receivable. During 1993, credit sales under department store credit
programs were $6.0 billion, or 62.4% of 1993 department store sales compared
with 64.2% in 1992 and 66.3% in 1991. An estimated 32 million customers hold
credit cards under the company's various credit programs. During the past
years, we have expanded our acceptance of third party credit cards. Sales
made through third party credit cards, including sales of Payless ShoeSource
stores, totaled $1.5 billion in 1993 compared to $1.1 billion in 1992.
Net accounts receivable consisted of:
<TABLE>
<CAPTION>
January 29, January 30,
(millions) 1994 1993
<S> <C> <C>
Customer accounts receivable $2,368 $2,373
Other accounts receivable 102 76
Total accounts receivable 2,470 2,449
Allowance for uncollectible accounts (76) (82)
Accounts receivable, net $2,394 $2,367
</TABLE>
The carrying value of net accounts receivable approximates fair value.
Other Current Assets. In addition to net current deferred income tax assets,
other current assets consisted of prepaid expenses and supply inventories.
Other Assets. Major components of other assets included:
<TABLE>
<CAPTION>
January 29, January 30,
(millions) 1994 1993
<S> <C> <C>
Notes receivable $44 $38
Deferred debt expense and
restricted construction funds 29 40
</TABLE>
Accrued Expenses. Major components of accrued expenses included:
<TABLE>
<CAPTION>
January 29, January 30,
(millions) 1994 1993
<S> <C> <C>
Insurance costs $199 $194
Sales and use and other taxes 130 120
Consolidations, store closings
and other 113 336
Interest and rent expense 98 98
Salaries, wages and
employee benefits 80 79
Advertising and other
operating expenses 45 54
Construction costs 34 17
</TABLE>
Short-term Debt and Lines of Credit.
Short-term borrowings for the last three years were:
<TABLE>
<CAPTION>
(dollars in millions) 1993 1992 1991
<S> <C> <C> <C>
Balance outstanding at year-end - - -
Average balance outstanding $ 94 $ 36 $ 81
Average interest rate on
average balance 3.3% 3.6% 5.7%
Maximum balance outstanding $ 344 $ 135 $ 249
</TABLE>
The average balance of short-term borrowings outstanding, primarily
commercial paper, and the respective weighted average interest rates are
based on the number of days such short-term borrowings were outstanding during
the year. The company has available credit agreements amounting to $750
million. At January 29, 1994, there were no amounts outstanding under these
agreements.
Long-term Debt. Long-term debt and capital lease obligations were:
<TABLE>
<CAPTION>
January 29, January 30,
(dollars in millions) 1994 1993
<S> <C> <C>
2.25% to 10.75% unsecured notes and
sinking fund debentures
due 1994-2022 $2,780 $2,960
3.0% to 10.0% mortgage notes
and bonds due 1995-2012 72 74
Total debt 2,852 3,034
Capital lease obligations 83 97
2,935 3,131
Less current maturities (113) (252)
Total $2,822 $2,879
</TABLE>
During 1993, the company retired $100 million of high interest rate debt. The
cost associated with retiring the debt was recorded in 1992. See Special and
Nonrecurring Items on page 27.
During 1992, the company issued $200 million of 8-3/8% debentures due in
2022. The proceeds from the issuance were added to the company's general
funds and were available for the purchase of certain of the company's other
indebtedness, capital expenditures, working capital needs and other general
corporate purposes, including investments and acquisitions. During 1992, the
company retired $360 million of high interest rate debt. Also, upon
dissolution of the MCA partnership on May 18, 1992, the company received a
majority ownership interest in MCAC and, therefore, $618 million of MCAC
loans were eliminated on a consolidated basis. See May Centers Associates and
Special and Nonrecurring Items on page 27.
<PAGE>
During 1991, the company obtained $434 million of long-term financing,
consisting of $375 million from the issuance of 30-year debentures, $2
million from the issuance of medium-term notes and $57 million from
sale/leaseback transactions. The proceeds from these financings were used to
repay the company's outstanding commercial paper and short-term indebtedness,
and for general corporate purposes.
The annual maturities of long-term debt, including sinking fund requirements
and anticipated early retirements, are $113, $169, $21, $237 and $244 million
for 1994 through 1998, respectively.
The fair value of the company's total debt was $3.44 billion compared to a
recorded amount of $2.85 billion at January 29, 1994, and was $3.45 billion
compared to $3.03 billion at January 30, 1993. The increase in the spread
between the fair value and recorded amount in 1993 was due to lower interest
rates at the end of 1993 compared to the end of 1992. The fair value was
determined based upon borrowing rates currently available for debt
instruments with similar remaining terms and maturities.
The net book value of property and equipment encumbered under long-term debt
agreements was $124 million at January 29, 1994.
In connection with a 1986 real estate transaction, the company sold $165
million of notes received from the sale of real estate and became
contingently liable for up to $42 million of the purchaser's debt in the
event of default. The fair value of this guarantee is not significant.
Lease Obligations. The company owns approximately 77% of its department
stores and leases substantially all of its Payless ShoeSource stores.
Approximately 79% of real property rent expense was attributable to Payless
ShoeSource stores in 1993.
Rental expense for the company's operating leases consisted of:
<TABLE>
<CAPTION>
(millions) 1993 1992 1991
<S> <C> <C> <C>
Minimum rentals $223 $202 $183
Contingent rentals based on sales 18 19 21
Real property rentals 241 221 204
Equipment rentals 7 8 11
Total $248 $229 $215
</TABLE>
Future minimum lease payments at January 29, 1994, were as follows:
<TABLE>
<CAPTION>
Capital Operating
(millions) Leases Leases Total
<S> <C> <C> <C>
1994 $ 12 $ 209 $ 221
1995 11 195 206
1996 11 180 191
1997 11 160 171
1998 11 143 154
After 1998 165 588 753
Minimum lease payments 221 $1,475 $1,696
Less imputed interest component (138)
Present value of net minimum lease
payments of which $2 million is
included in current liabilities $ 83
</TABLE>
The present value of operating leases was $967 million at January 29, 1994.
The company entered into capital leases with MCI (currently known as
CenterMark Properties, Inc.) in 1988 for certain department store properties,
resulting in initial capital lease obligations of $74 million payable to MCI
through 2017. These leased properties owned by MCI secured a 12%, $74 million
note receivable from MCI, which was repaid in 1992. See May Centers
Associates on page 27.
Property under capital leases is summarized as follows:
<TABLE>
<CAPTION>
January 29, January 30,
(millions) 1994 1993
<S> <C> <C>
Cost $ 83 $101
Accumulated amortization (30) (37)
Total $ 53 $ 64
</TABLE>
Other Liabilities. Other liabilities principally consisted of deferred
compensation liabilities of $178 million and $171 million at January 29,
1994, and January 30, 1993, respectively. Under the company's deferred
compensation plan, eligible associates may elect to defer a portion of their
compensation each year into cash and/or stock unit alternatives. The company
makes payments in shares to settle obligations with most participants who
defer in stock units and maintains shares in treasury sufficient to settle
all outstanding stock unit obligations.
Bondholder Litigation. The company is a defendant in a lawsuit led in
Montgomery, Alabama, by certain former bondholders who allege, among other
things, that the company reacquired certain indebtedness with lower-interest
cost debt in violation of the bond indentures. The lawsuit seeks either
reinstatement of the indebtedness plus reimbursement of the plaintiffs'
attorneys fees or contractual damages in excess of $25 million. The lawsuit
also seeks punitive damages in excess of $100 million. The company believes
its actions were legal and proper and will vigorously defend its position.
While the final outcome of this lawsuit cannot be determined with certainty,
management believes that the final outcome will not have a material adverse
effect on the company's results of operations or its financial position.
<PAGE>
Preferred and Preference Stock. The company is authorized to issue 25,134,474
shares of preferred and preference stock. The following summarizes the
authorized, issued and outstanding shares by type:
<TABLE>
<CAPTION>
Issued and Outstanding
January 29, January 30,
1994 1993
(dollars in millions, Shares
except per share) Authorized $ Shares $ Shares
<S> <C> <C> <C> <C> <C>
Preferred Stock, no par value 51,323 1 12,115 1 12,115
$1.80 Preference Stock,
no par value 73,273 1 26,653 1 26,733
3-3/4% Cumulative Preference
Stock, $1.00 par
value per share 9,878 - - - -
Preference Stock, $.50
par value per share, in
the aggregate, including
ESOP shares 25,000,000 380 750,303 389 767,956
</TABLE>
The Preferred Stock and the $1.80 Preference Stock are included in other
liabilities. The ESOP Preference Shares are shown separately in the
consolidated balance sheet outside of shareowners' equity as the shares are
redeemable by the holder or the company in certain situations.
Common Stock Split. In June 1993, the company effected a two-for-one split in
the form of a 100% common stock dividend (the "stock split"). Also, during
1993, the shareowners approved an amendment to the company's Certificate of
Incorporation to increase the number of shares of common stock authorized
from 350 million to 700 million, and decrease the par value per share of
common stock from $1.00 to $.50. All share and per share data included in
this annual report have been restated to reflect the stock split.
Stock Option and Stock Related Plans. Under the company's common stock option
plans, options are granted at the market price on the date of grant. Options
to purchase may extend for a period of five or 10 years, may be exercised in
installments only after stated intervals of time, and are conditioned upon
continued active employment with the company, except periods following
retirement, disability or death. As the option price is fixed at the market
price on the date of grant, no expense is charged against earnings by the
company. The changes in outstanding stock options were as follows:
<TABLE>
<CAPTION>
1993 1992
Grant Grant
(shares in thousands) Shares Prices Shares Prices
<S> <C> <C> <C> <C>
Outstanding at beginning of year 4,941 $ 8-37 5,417 $ 4-29
Granted 1,227 37-44 1,584 27-37
Exercised (967) 8-36 (1,661) 4-27
Canceled or expired (421) 15-37 (399) 15-36
Outstanding at end of year 4,780 $ 8-44 4,941 $ 8-37
Exercisable at end of year 1,503 $ 8-37 1,133 $ 8-27
Shares available for
additional grants 4,195 5,104
</TABLE>
Under the 1979 Restricted Stock Plan, the company is authorized to grant a
maximum of 3.6 million shares to management associates. No monetary
consideration is paid by associates receiving restricted stock. Restrictions
lapse over periods of up to 10 years as determined at the date of grant.
During 1993 and 1992, the company granted 44,000 and 196,600 shares of
restricted stock, respectively.
Shareowner Rights Plan. The company has a Shareowner Rights Plan (Preferred
Stock Purchase Rights) under which a right is attached to each share of the
company's common stock. The rights may only become exercisable under certain
circumstances involving actual or potential acquisitions of the company's
common stock by a person or affiliated persons. Depending upon the
circumstances, if the rights become exercisable, the holder may be entitled
to purchase units of the company's preference stock, shares of the company's
common stock or shares of common stock of the acquiring person. The rights
will remain in existence until March 3, 1996, unless they are earlier
terminated, exercised or redeemed.
May Centers Associates. On May 18, 1992, the May Centers Associates (MCA)
partnership was dissolved and its assets were distributed to its 50%
partners, the company and an affiliate of The Prudential Life Insurance
Company (The Prudential). The asset distribution resulted in the company
receiving 79% of the stock of May Centers Associates Corporation (MCAC) and
The Prudential receiving 21% of the stock of MCAC and 100% of the stock of
May Centers, Inc. (MCI). MCI, a real estate entity, and MCAC, an entity which
had entered into various sale/leaseback transactions with the company, were
both 100% owned by MCA prior to the distribution. Subsequent to the
distribution, MCI changed its name to CenterMark Properties, Inc. During the
1992 second quarter, the company recorded a $298 million pretax and after tax
nonrecurring gain from the distribution of MCA partnership assets. In the
1992 fourth quarter, the company acquired the 21% of the stock of MCAC held
by The Prudential for $156 million.
The company's investment in the MCA partnership and its results of operations
were recorded using the equity method of accounting. Included in selling,
general and administrative expenses were $7 and $33 million of adjusted
equity earnings of MCA in 1992 and 1991, respectively. Prior to 1992, the
company and MCAC entered into sale/leaseback transactions whereby MCAC
purchased from the company various department store properties. The
sale/leasebacks were accounted for as loans from MCAC (MCAC loans). Upon
dissolution of the MCA partnership on May 18, 1992, the company received
a majority ownership interest in MCAC and, therefore, $618 million of MCAC
loans were eliminated on a consolidated basis.
Special and Nonrecurring Items. During the 1992 third quarter, the company
recorded pretax charges of $485 million, $298 million after tax, for special
and nonrecurring items. The pretax charges consisted of: $240 million for
four department store company consolidations; $125 million for planned
closings of low-productivity stores and other real estate-related charges
including adjustments to reflect expected values of a number of properties
planned for disposition; $60 million for the costs associated with achieving
<PAGE>
various operating efficiencies, including the May Merchandising Company
headquarters relocation to St. Louis and the data center combinations; $40
million for the cost associated with retiring high interest rate debt; and $20
million for a special contribution to The May Department Stores Company
Foundation. The cost to retire the debt was not reflected as an extraordinary
item as it was not material to total company earnings or the earnings trend of
the company.
During the 1992 second quarter, the company recorded a $298 million pretax
and after tax nonrecurring gain from the distribution of the MCA partnership
assets on May 18, 1992. See May Centers Associates on page 27.
The 1992 special and nonrecurring charges and nonrecurring gain are
reflected as special and nonrecurring items on a separate line in the
consolidated statement of earnings. The 1992 special and nonrecurring items
had no impact on full-year net earnings or earnings per share.
During 1991, the company provided pretax charges of $36 million for costs
associated with two department store company consolidations and $26 million
for costs associated with closing 20 low-productivity stores. Also during
1991, the company recorded pretax gains of $35 million from real estate
transactions and $25 million from the sale of its equity interest in The
Caldor Corporation. Due to the insignificance of the $2 million net impact of
these items on pretax earnings, the 1991 pretax charges and pretax gains were
included in selling, general and administrative expenses.
[The following "Six Year Summary by Business Segment" section is a reproduction
of the same named section included in the paper format Annual Report on pages
28-29.]
Notes To Six Year Summary by Business Segment.
Net retail sales exclude finance charge revenues and sales of nonreplaced
closed stores and sold divisions in all periods. The revenues shown below
include finance charge revenues and all sales of all stores operating during
the period.
<TABLE>
<CAPTION>
(millions) 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Department stores $ 9,563 $ 9,362 $ 9,067 $ 8,700 $8,356 $7,742
Payless ShoeSource 1,966 1,788 1,548 1,366 1,246 1,132
Total $11,529 $11,150 $10,615 $10,066 $9,602 $8,874
</TABLE>
Revenues for 1989 included 53 weeks.
Operating earnings represent LIFO earnings before federal and state income
taxes, net interest expense and corporate expense, and exclude special and
nonrecurring items and sold divisions. Goodwill, the fair value adjustment of
property, equipment and leases, and the related amortization and depreciation
of such items have been included in corporate expense and total assets.
In addition, consolidation costs, store closing costs and gains have been
included in corporate expense and, in 1992, are shown on a separate line in
the consolidated statement of earnings. Had these items been included in the
operating segments, operating earnings and total assets for department
stores, corporate and real estate would have been:
<TABLE>
<CAPTION>
(millions) 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C>
Operating Earnings:
Department stores $1,262 $ 722 $ 912 $ 907 $ 941 $ 711
Real estate - 7 49 40 35 73
Corporate expense (63) 127 (33) (66) (88) (34)
Total Assets:
Department stores $7,612 $7,240 $7,297 $7,193 $6,466 $6,004
Corporate and
real estate 356 577 753 524 822 1,128
</TABLE>
Total assets for corporate consist principally of cash, cash equivalents,
goodwill and purchase accounting fair value adjustments, the investment in
MCA partnership (prior to dissolution in 1992) and the net assets of
discontinued operations (Loehmann's in 1988 and earlier years, and Caldor and
Venture in 1989 and earlier years).
Net assets represent total assets of continuing operations plus the present
value of operating leases, minus current liabilities excluding notes payable
and the current portion of long-term debt. Return on net assets by segment
represents operating earnings plus the interest component of operating
leases, divided by net assets at the beginning of the year.
Capital expenditures for department stores exclude amounts related to the
acquisitions of Thalhimers in 1990 and Foley's and Filene's in 1988.
<PAGE>
Six Year Summary by Business Segment
<TABLE>
<CAPTION>
(dollars in millions) 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C>
Net Retail Sales
Department stores $ 9,054 $ 8,457 $7,914 $7,548 $7,081 $6,224
Payless ShoeSource 1,966 1,788 1,548 1,366 1,228 1,132
Total $11,020 $10,245 $9,462 $8,914 $8,309 $7,356
Operating Earnings
Department stores $ 1,276 $ 1,109 $ 963 $ 915 $ 945 $ 792
Payless ShoeSource 225 214 184 161 144 138
Total 1,501 1,323 1,147 1,076 1,089 930
Corporate expense (78) (73) (67) (67) (77) (85)
Interest expense, net (245) (279) (316) (280) (233) (198)
Sold divisions and real estate - 7 32 33 20 43
Special and nonrecurring items - (187) - - - -
Earnings from continuing
operations before income taxes $ 1,178 $ 791 $ 796 $ 762 $ 799 $ 690
LIFO Charge (Credit)
Department stores $ 7 $ 10 $ 26 $ 39 $ (22) $ (3)
Operating Earnings as
% of Revenues
Department stores 13.3% 11.8% 10.6% 10.5% 11.4% 10.2%
Payless ShoeSource 11.4 12.0 11.9 11.7 11.7 12.2
Total Assets
Department stores $ 6,822 $ 6,431 $6,498 $6,389 $5,752 $5,307
Payless ShoeSource 833 728 678 519 442 400
Corporate and real estate 1,145 1,386 1,552 1,328 1,536 1,825
Total $ 8,800 $ 8,545 $8,728 $8,236 $7,730 $7,532
Net Assets
Department stores $ 5,738 $ 5,413 $5,527 $5,499 $4,716 $4,348
Payless ShoeSource 1,418 1,253 1,069 851 749 664
Corporate and real estate 954 1,069 1,507 1,298 1,170 1,120
Total $ 8,110 $ 7,735 $8,103 $7,648 $6,635 $6,132
Return on Net Assets
Department stores 23.9% 20.5% 18.0% 20.0% 22.3% 19.6%
Payless ShoeSource 23.9 26.5 29.0 28.9 28.9 29.3
Total 19.6% 16.7% 16.0% 17.2% 18.0% 17.5%
Capital Expenditures
Department stores $ 545 $ 280 $ 361 $ 450 $ 427 $ 275
Payless ShoeSource 140 120 146 82 51 45
Corporate and real estate 15 4 5 16 44 17
Total $ 700 $ 404 $ 512 $ 548 $ 522 $ 337
Depreciation and Amortization
Department stores $ 255 $ 258 $ 250 $ 231 $ 208 $ 187
Payless ShoeSource 67 58 46 40 36 32
Corporate and real estate 26 25 23 23 25 47
Total $ 348 $ 341 $ 319 $ 294 $ 269 $ 266
</TABLE>
Net retail sales for 1989, a 53-week year, are shown above on a 52-week basis
for comparability.
See Notes to Six Year Summary by Business Segment on page 28.
<PAGE>
[The following "Eleven Year Financial Summary" section is a reproduction of
the same named section included in the paper format Annual Report on pages
30-31.]
Eleven Year Financial Summary
<TABLE>
<CAPTION>
(dollars in millions,
except per share) 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Retail Sales $11,020 $10,245 $ 9,462 $ 8,914 $8,397 $7,356 $5,833 $5,293 $4,672 $4,289 $3,882
Operations
Revenues $11,529 $11,150 $10,615 $10,066 $9,602 $8,874 $7,480 $7,437 $6,825 $6,361 $5,815
Cost of sales 7,910 7,691 7,339 6,978 6,581 6,098 5,186 5,202 4,775 4,399 4,033
Selling, general and
administrative expenses 2,196 2,202 2,164 2,046 1,989 1,888 1,563 1,572 1,436 1,363 1,240
Interest expense, net 245 279 316 280 233 198 80 92 91 88 81
Earnings from continuing
operations before
income taxes 1,178 791* 796 762 799 690 651 571 523 511 461
Income taxes 467 188* 281 262 284 242 258 238 237 234 210
Net earnings from
continuing operations 711 603 515 500 515 448 393 333 286 277 251
Net earnings 711 603 515 500 498 534 444 381 347 327 297
Depreciation
and amortization 348 341 319 294 269 266 212 209 181 160 151
Cash flow from operations(1) 1,059 944 834 794 784 714 605 542 467 437 402
Net issuances
(repayments) of
long-term debt(2) (192) (248) 313 590 169 891 (61) 159 141 (141) (230)
Capital expenditures 700 404 512 548 522 337 424 435 400 266 198
Dividends on common stock 223 205 198 191 186 184 170 131 124 106 89
Per Share
Net earnings from
continuing operations(3) $ 2.65 $ 2.26 $ 1.93 $ 1.87 $ 1.82 $ 1.52 $ 1.28 $ 1.05 $ .91 $ .90 $ .82
Net earnings(3) 2.65 2.26 1.93 1.87 1.76 1.81 1.44 1.20 1.11 1.06 .97
Dividends paid .90 .83 .81 .77 .69 .62 .56 .51 .46 .39 .33
Annual dividend
rate at year-end .92 .83 .81 .79 .71 .64 .57 .52 .47 .43 .33
Book value 14.65 12.82 11.26 10.04 9.32 10.75 9.13 8.50 7.86 7.25 6.61
Market price - high 46.50 37.25 30.19 29.56 26.31 20.00 25.44 22.06 16.25 12.09 10.50
- low 33.44 26.00 22.63 18.69 17.31 14.38 11.13 15.94 10.50 7.52 7.42
- average of
high and
low 39.97 31.63 26.41 24.13 21.81 17.19 18.28 19.00 13.38 9.81 8.96
Financial Position
Customer accounts
receivable $ 2,368 $ 2,373 $ 2,377 $ 2,456 $2,223 $2,099 $1,590 $1,516 $1,578 $1,514 $1,379
Merchandise inventories 2,020 1,791 1,741 1,628 1,491 1,318 1,044 999 1,035 933 787
Working capital 2,908 2,679 3,052 2,635 2,059 2,094 1,821 1,921 1,529 1,354 1,338
Property and equipment,
net 3,411 3,158 3,151 2,985 2,666 2,506 2,037 1,917 1,846 1,496 1,389
Long-term debt, preferred
and preference stock 3,204 3,270 4,315 3,965 3,406 2,404 1,111 1,153 1,071 778 915
Shareowners' equity 3,639 3,181 2,781 2,467 2,319 3,050 2,723 2,595 2,421 2,233 2,041
Total assets 8,800 8,545 8,728 8,236 7,730 7,532 5,652 5,756 5,221 4,599 4,320
Statistics
Percent of revenues:
Net earnings from
continuing operations 6.2% 5.4% 4.9% 5.0% 5.4% 5.1% 5.3% 4.5% 4.2% 4.4% 4.3%
Cash flow from operations(1) 9.2 8.5 7.9 7.9 8.2 8.1 8.1 7.3 6.8 6.9 6.9
Return on equity 22.1 21.5 20.7 21.8 18.0 18.6 17.0 15.7 15.5 16.1 17.0
Return on net assets 19.6 16.7** 16.0 17.2 18.0 17.5 17.4 17.7 18.8 18.9 18.3
Stores Open at Year-End
Department stores 301 303 318 324 288 297 258 286 301 303 300
Payless ShoeSource 3,779 3,563 3,295 2,967 2,746 2,602 2,436 2,210 1,867 1,662 1,389
Average Shares
Outstanding and
Equivalents
Primary 249.9 248.8 248.0 249.0 267.2 294.8 306.3 313.1 311.1 310.8 307.9
Fully Diluted 265.5 265.3 264.2 264.8 280.0 295.4 306.3 314.9 312.0 311.6 308.5
</TABLE>
All years included 52 weeks, except 1989 and 1984 which included 53 weeks.
* Pretax earnings include a net charge of $187 million from special and
nonrecurring items, and income taxes include a tax benefit of $187 million
from special and nonrecurring items.
** Based on pretax earnings before special and nonrecurring items.
(1) Cash flow from operations represents net earnings and
depreciation/amortization from continuing operations and is different than
cash flow from operating activities as shown on the Statement of Cash
Flows.
(2) Net issuances (repayments) of long-term debt exclude the elimination of
$618 million of MCAC loans in 1992 and $400 million of guaranteed ESOP debt
in 1989.
(3) Represents fully diluted basis. Primary earnings per share were $.12 higher
in 1993, $.09 higher in 1992, $.08 higher in 1991, $.07 higher in 1990,
$.05 higher in 1989 and $.01 higher in each of 1988 and 1986.
<PAGE>
Management's Responsibility and Report of Independent Public Accountants
Report of Management. Management is responsible for the preparation, integrity
and objectivity of the financial information included in this annual report.
The financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis. The financial
statements include amounts based on certain estimates and judgments of
currently available information and management's view of current conditions and
circumstances. Management uses the services of specialists within and outside
the company in making such estimates and judgments.
Management has established and maintains a system of accounting and controls
to provide reasonable assurance that assets are safeguarded against loss from
unauthorized use or disposition and that accounting records provide a
reliable basis for the preparation of financial statements and to ensure that
such financial statements are not misstated due to material fraud or error.
The system of controls includes the careful selection of associates, a division
of responsibilities and the communication and application of formal policies
and procedures that are consistent with high standards of accounting and
administrative practices. An important element of this system is a
comprehensive internal audit program. Management continually reviews, modifies
and improves its systems of accounting and controls in response to changes in
business conditions and operations and to recommendations in the reports
prepared by the independent public accountants and internal auditors.
Management believes that it is essential for the company to conduct its
business affairs in accordance with the highest ethical standards and in
conformity with the law. This standard is described in the company's policies
on business conduct which are publicized throughout the company.
Audit Committee of the Board of Directors.
The Board of Directors, through the activities of its Audit Committee,
participates in the reporting of financial information by the company. The
committee meets regularly with management, the internal auditors and
representatives of the company's independent public accountants. The committee
met four times during 1993 and reviewed the scope, timing and fees for the
annual audit and the results of audit examinations completed by the internal
auditors and independent public accountants, including the recommendations to
improve certain internal controls and the follow-up reports prepared by
management. Representatives of the independent public accountants and the
internal auditors have free access to the committee and the Board of Directors
and attend each meeting of the committee.
The members of the Audit Committee are Russell E. Palmer (chairman),
Edward H. Meyer, Michael R. Quinlan, William P. Stiritz, Robert D. Storey and
Murray L. Weidenbaum.
The Audit Committee reports the results of its activities to the full Board of
Directors.
[The following "Report of Independent Public Accountants" section is a
reproduction of the same named section included in the paper format Annual
Report on page 32.]
Report of Independent Public Accountants.
To the Board of Directors and Shareowners of The May Department Stores Company:
We have audited the accompanying consolidated balance sheet of The May
Department Stores Company (a New York corporation) and subsidiaries as of
January 29, 1994, and January 30, 1993, and the related consolidated statements
of earnings, shareowners' equity and cash flows for each of the three fiscal
years in the period ended January 29, 1994. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The May Department Stores
Company and subsidiaries as of January 29, 1994, and January 30, 1993, and the
results of their operations and their cash flows for each of the three fiscal
years in the period ended January 29, 1994, in conformity with generally
accepted accounting principles.
Arthur Andersen & Co.
1010 Market Street
St. Louis, Missouri 63101-2089
February 21, 1994
<PAGE>
The May Department Stores Company
Exhibit 13 Graphic Material Index
Narrative Location
Within This
Bar Chart Description Electronic Document
Net retail sales from
continuing operations
(billions) Page 1
Earnings per share from
continuing operations Page 2
Net earnings from continuing
operations (millions) Page 2
Common stock price range Page 3
Book value per common share Page 3
Sales per square foot Page 4
Return on equity Page 5
Return on net assets Page 5
Cash flow from depreciation
and amortization and
net earnings (millions) Page 6
Dividends per common share
(year-end rate) Page 6
<PAGE>
EXHIBIT 99
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Year Ended December 31, 1993
A. Full title of the plan if different from that of the issuer
named below:
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
B. Name of issuer of securities held pursuant to the plan and the
address of its principal executive office:
THE MAY DEPARTMENT STORES COMPANY
611 Olive Street
St. Louis, MO 63101
Commission File Number 1-79
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
FINANCIAL STATEMENTS AND EXHIBITS
Listed below are all financial statements and exhibits filed as part of this
annual report on Form 11-K:
Page of this
Financial Statements Form 11-K
Report of Independent Public Accountants 3
Financial Statements of the Plan:
Statement of Financial Condition -
December 31, 1993 4
Statement of Financial Condition -
December 31, 1992 6
Statement of Income and Changes in Plan
Equity for the Year Ended
December 31, 1993 8
Statement of Income and Changes in Plan
Equity for the Year Ended
December 31, 1992 10
Notes to Financial Statements -
December 31, 1993 and 1992 12
Schedule I - Schedule of Investments -
December 31, 1993 17
Schedule II - Schedule of Reportable
Transactions for the Year Ended
December 31, 1993 21
Exhibit
Consent of Independent Public Accountants 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed by the
undersigned, thereunto duly authorized.
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
By: The May Department Stores Company
Date: April 15, 1994 By: /s/ Jerome T. Loeb
Jerome T. Loeb
President and Chief Financial Officer
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The May Department Stores Company
Profit Sharing Plan:
We have audited the accompanying statements of financial condition of The May
Department Stores Company Profit Sharing Plan as of December 31, 1993 and
1992, and the related statements of income and changes in plan equity for the
years then ended. These financial statements and the schedules referred to
below are the responsibility of the Plan Administrator. Our responsibility is
to express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan as of December 31,
1993 and 1992, and the income and changes in plan equity for the years then
ended, in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of
investments and reportable transactions are presented for purposes of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri,
April 15, 1994
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
(Thousands)
Investment Funds
-----------------------------------------
ESOP Preference
---------------------- May
Member Common Money
ASSETS Unallocated Allocated Stock Market
INVESTMENTS, at fair value:
The May Department Stores Company-
Convertible preferred stock $522,853 $ 82,973 $ - $ -
Common stock - - 456,877 -
Short-term investments - - 3,294 48,501
Commingled equity index fund - - - -
U.S. government securities - - - -
Fixed income investments - - - -
-------- -------- -------- -------
Total investments 522,853 82,973 460,171 48,501
OTHER ASSETS:
Receivable (payable) for
allocation to member accounts (25,997) 25,997 - -
Receivable - employer supplemental
contribution - - 5,888 -
Dividends and interest receivable - - 12 136
Receivables - withholdings of
member contributions - - 379 84
Cash - - - -
Interfund receivable (payable) - (11) 812 (228)
-------- -------- -------- -------
Total assets $496,856 $108,959 $467,262 $48,493
======== ======== ======== =======
LIABILITIES AND PLAN EQUITY
LIABILITIES:
Notes payable $396,475 $ - $ - $ -
Accrued interest payable 5,556 - - -
Net amount payable for investment
securities transactions and
other - - 1,264 -
Amounts payable for
administrative expenses - - 336 90
-------- -------- -------- -------
Total liabilities 402,031 - 1,600 90
PLAN EQUITY 94,825 108,959 465,662 48,403
-------- -------- -------- -------
Total liabilities and
plan equity $496,856 $108,959 $467,262 $48,493
======== ======== ======== =======
(Continued on following page)
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
(Thousands)
Investment Funds
----------------
Common Fixed
Stock Income Distribution
ASSETS Index Index Account Total
INVESTMENTS, at fair value:
The May Department Stores Company-
Convertible preferred stock $ - $ - $ - $ 605,826
Common stock - - - 456,877
Short-term investments 480 1,076 1,021 54,372
Commingled equity index fund 42,034 - - 42,034
U.S. government securities - 26,133 - 26,133
Fixed income investments - 5,975 - 5,975
------- ------- ------ ----------
Total investments 42,514 33,184 1,021 1,191,217
OTHER ASSETS:
Receivable (payable) for
allocation to member accounts - - - -
Receivable - employer supplemental
contribution - - - 5,888
Dividends and interest receivable 89 639 - 876
Receivables - withholdings of
member contributions 95 64 - 622
Cash 173 - - 173
Interfund receivable (payable) (393) (180) - -
------- ------- ------ ----------
Total assets $42,478 $33,707 $1,021 $1,198,776
======= ======= ====== ==========
LIABILITIES AND PLAN EQUITY
LIABILITIES:
Notes payable $ - $ - $ - $ 396,475
Accrued interest payable - - - 5,556
Net amount payable for investment
securities transactions and
other 1 - 1,021 2,286
Amounts payable for
administrative expenses 73 63 - 562
------- ------- ------ ----------
Total liabilities 74 63 1,021 404,879
PLAN EQUITY 42,404 33,644 - 793,897
------- ------- ------ ----------
Total liabilities and
plan equity $42,478 $33,707 $1,021 $1,198,776
======= ======= ====== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1992
(Thousands)
Investment Funds
-----------------------------------------
ESOP Preference
---------------------- May
Member Common Money
ASSETS Unallocated Allocated Stock Market
INVESTMENTS, at fair value:
The May Department Stores Company-
Convertible preferred stock $499,586 $56,106 $ - $ -
Common stock - - 461,720 -
Short-term investments - - 2,148 57,480
Commingled equity index fund - - - -
U.S. government securities - - - -
Fixed income investments - - - -
-------- ------- -------- -------
Total investments 499,586 56,106 463,868 57,480
OTHER ASSETS:
Receivable (payable) for
allocation to member accounts (25,737) 25,737 - -
Receivable - employer supplemental
contribution - - 2,733 -
Dividends and interest receivable - - 10 171
Receivables--withholdings of
member contributions - - 277 123
Interfund receivable (payable) - (27) 193 (29)
-------- ------- -------- -------
Total assets $473,849 $81,816 $467,081 $57,745
======== ======= ======== =======
LIABILITIES AND PLAN EQUITY
LIABILITIES:
Notes payable $400,000 $ - $ - $ -
Benefits payable to members - 519 5,160 1,269
Accrued interest payable 5,658 - - -
Amounts payable for
administrative expenses - - 494 167
-------- ------- -------- -------
Total liabilities 405,658 519 5,654 1,436
PLAN EQUITY 68,191 81,297 461,427 56,309
-------- ------- -------- -------
Total liabilities and
plan equity $473,849 $81,816 $467,081 $57,745
======== ======= ======== =======
(Continued on following page)
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1992
(Thousands)
Investment Funds
----------------
Common Fixed
Stock Income Distribution
ASSETS Index Index Account Total
INVESTMENTS, at fair value:
The May Department Stores Company-
Convertible preferred stock $ - $ - $ - $ 555,692
Common stock - - - 461,720
Short-term investments 347 604 2,979 63,558
Commingled equity index fund 39,127 - - 39,127
U.S. government securities - 25,959 - 25,959
Fixed income investments - 6,470 - 6,470
------- ------- ------ ----------
Total investments 39,474 33,033 2,979 1,152,526
OTHER ASSETS:
Receivable (payable) for
allocation to member accounts - - - -
Receivable - employer supplemental
contribution - - - 2,733
Dividends and interest receivable 85 731 - 997
Receivables--withholdings of
member contributions 70 62 - 532
Interfund receivable (payable) 186 (323) - -
------- ------- ------ ----------
Total assets $39,815 $33,503 $2,979 $1,156,788
======= ======= ====== ==========
LIABILITIES AND PLAN EQUITY
LIABILITIES:
Notes payable $ - $ - $ - $ 400,000
Benefits payable to members 303 569 2,979 10,799
Accrued interest payable - - - 5,658
Amounts payable for
administrative expenses 111 101 - 873
------- ------- ------ ----------
Total liabilities 414 670 2,979 417,330
PLAN EQUITY 39,401 32,833 - 739,458
------- ------- ------ ----------
Total liabilities and
plan equity $39,815 $33,503 $2,979 $1,156,788
======= ======= ====== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1993
(Thousands, except unit information)
Investment Funds
---------------------------------
ESOP Preference
---------------------- May
Member Common
Unallocated Allocated Stock
INCREASE IN UNREALIZED APPRECIATION OF
INVESTMENTS $ 52,456 $ 9,067 $ 43,603
-------- -------- ---------
INVESTMENT INCOME:
Dividends 25,585 3,249 10,796
Interest - - 109
-------- -------- ---------
25,585 3,249 10,905
-------- -------- ---------
NET REALIZED GAIN ON INVESTMENTS SOLD
OR DISTRIBUTED - 2,324 3,936
-------- -------- ---------
CONTRIBUTIONS:
Member - - 35,127
Employer allocation (26,200) 26,200 -
Employer ESOP contribution 8,224 - -
Employer supplemental contribution - - 5,888
Member interfund transfers - (187) 1,465
Forfeiture reallocation - - 32
-------- -------- ---------
(17,976) 26,013 42,512
-------- -------- ---------
DEDUCTIONS:
Member terminations and withdrawals - (12,991) (95,279)
Interest expense (33,431) - -
Administrative expenses - - (1,442)
-------- -------- ---------
(33,431) (12,991) (96,721)
-------- -------- ---------
INCREASE (DECREASE) IN PLAN EQUITY 26,634 27,662 4,235
PLAN EQUITY AT DECEMBER 31, 1992 68,191 81,297 461,427
-------- -------- ---------
PLAN EQUITY AT DECEMBER 31, 1993 $ 94,825 $108,959 $ 465,662
======== ======== =========
NUMBER OF UNITS AT DECEMBER 31, 1993 13,564,085
==========
VALUE PER UNIT AT DECEMBER 31, 1993 $33.61
======
(Continued on following page)
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1993
(Thousands, except unit information)
Investment Funds
----------------------------------
Common Fixed
Money Stock Income
Market Index Index Total
INCREASE IN UNREALIZED
APPRECIATION OF INVESTMENTS $ - $ 2,561 $ 419 $ 108,106
-------- ------- ------- ---------
INVESTMENT INCOME:
Dividends - 1,147 - 40,777
Interest 1,760 23 2,302 4,194
-------- ------- ------- ---------
1,760 1,170 2,302 44,971
-------- ------- ------- ---------
NET REALIZED GAIN ON INVESTMENTS
SOLD OR DISTRIBUTED - 120 88 6,468
-------- ------- ------- ---------
CONTRIBUTIONS:
Member 8,119 7,962 5,500 56,708
Employer allocation - - - -
Employer ESOP contribution - - - 8,224
Employer supplemental
contribution - - - 5,888
Member interfund transfers 1,725 (1,551) (1,452) -
Forfeiture reallocation (12) (11) (9) -
-------- ------- ------- ---------
9,832 6,400 4,039 70,820
-------- ------- ------- ---------
DEDUCTIONS:
Member terminations and
withdrawals (19,078) (6,923) (5,753) (140,024)
Interest expense - - - (33,431)
Administrative expenses (420) (325) (284) (2,471)
-------- ------- ------- ---------
(19,498) (7,248) (6,037) (175,926)
-------- ------- ------- ---------
INCREASE (DECREASE) IN
PLAN EQUITY (7,906) 3,003 811 54,439
PLAN EQUITY AT DECEMBER 31,
1992 56,309 39,401 32,833 739,458
-------- ------- ------- ---------
PLAN EQUITY AT DECEMBER 31,
1993 $ 48,403 $42,404 $33,644 $ 793,897
======== ======= ======= =========
NUMBER OF UNITS AT DECEMBER 31,
1993 34,747,501 22,701,682 21,061,337
========== ========== ==========
VALUE PER UNIT AT DECEMBER 31,
1993 $1.35 $1.84 $1.55
===== ===== =====
The accompanying notes are an integral part of this statement.
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1992
(Thousands, except unit information)
Investment Funds
---------------------------------
ESOP Preference
---------------------- May
Member Common
Unallocated Allocated Stock
INCREASE (DECREASE) IN UNREALIZED
APPRECIATION OF INVESTMENTS $128,053 $14,478 $115,819
-------- ------- --------
INVESTMENT INCOME:
Dividends 26,997 2,371 11,036
Interest - - 120
-------- ------- --------
26,997 2,371 11,156
-------- ------- --------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
SOLD OR DISTRIBUTED - 871 4,301
-------- ------- --------
CONTRIBUTIONS:
Member - - 28,944
Employer allocation (25,974) 25,974 -
Employer ESOP contribution 4,578 - -
Employer supplemental contribution - - 2,733
Member interfund transfers - (84) (4,624)
Forfeiture reallocation - - 82
-------- ------- --------
(21,396) 25,890 27,135
-------- ------- --------
DEDUCTIONS:
Member terminations and withdrawals - (5,822) (51,362)
Interest expense (33,947) - -
Decrease in receivable from The May
Department Stores Company (31,516) - -
Administrative expenses - - (588)
-------- ------- --------
(65,463) (5,822) (51,950)
-------- ------- --------
INCREASE (DECREASE) IN PLAN EQUITY 68,191 37,788 106,461
PLAN EQUITY AT DECEMBER 31, 1991 - 43,509 354,966
-------- ------- --------
PLAN EQUITY AT DECEMBER 31, 1992 $ 68,191 $81,297 $461,427
======== ======= ========
NUMBER OF UNITS AT DECEMBER 31, 1992 15,621,808
==========
VALUE PER UNIT AT DECEMBER 31, 1992 $29.54
======
(Continued on following page)
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1992
(Thousands, except unit information)
Investment Funds
----------------------------------
Common Fixed
Money Stock Income
Market Index Index Total
INCREASE (DECREASE) IN
UNREALIZED APPRECIATION OF
INVESTMENTS $ - $ 1,647 $ (119) $ 259,878
------- ------- ------- ---------
INVESTMENT INCOME:
Dividends - 1,125 - 41,529
Interest 2,326 26 2,382 4,854
------- ------- ------- ---------
2,326 1,151 2,382 46,383
------- ------- ------- ---------
NET REALIZED GAIN (LOSS) ON
INVESTMENTS SOLD OR
DISTRIBUTED - (35) (136) 5,001
------- ------- ------- ---------
CONTRIBUTIONS:
Member 9,991 7,021 5,712 51,668
Employer allocation - - - -
Employer ESOP contribution - - - 4,578
Employer supplemental
contribution - - - 2,733
Member interfund transfers 2,249 887 1,572 -
Forfeiture reallocation (37) (24) (21) -
------- ------- ------- ---------
12,203 7,884 7,263 58,979
------- ------- ------- ---------
DEDUCTIONS:
Member terminations and
withdrawals (15,088) (5,171) (5,922) (83,365)
Interest expense - - - (33,947)
Decrease in receivable from
The May Department Stores
Company - - - (31,516)
Administrative expenses (558) (411) (408) (1,965)
------- ------- ------- ---------
(15,646) (5,582) (6,330) (150,793)
------- ------- ------- ---------
INCREASE (DECREASE) IN PLAN
EQUITY (1,117) 5,065 3,060 219,448
PLAN EQUITY AT DECEMBER 31,
1991 57,426 34,336 29,773 520,010
------- ------- ------- ---------
PLAN EQUITY AT DECEMBER 31,
1992 $56,309 $39,401 $32,833 $ 739,458
======= ======= ======= =========
NUMBER OF UNITS AT DECEMBER 31,
1992 42,927,086 23,467,362 22,856,037
========== ========== ==========
VALUE PER UNIT AT DECEMBER 31,
1992 $1.31 $1.68 $1.44
===== ===== =====
The accompanying notes are an integral part of this statement.
<PAGE>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1992
1. DESCRIPTION OF THE PLAN:
The following description of The May Department Stores Company Profit Sharing
Plan ("the Plan") is provided for financial statement purposes only. Members
should refer to the Plan document, the Plan prospectus dated June 1, 1990, and
the Summary Plan Description dated June 1, 1990, with updates, for more
complete information.
General
The Plan is a defined contribution profit sharing plan. The Plan covers
eligible associates of The May Department Stores Company ("May") and its
subsidiaries and affiliates who are members of The May Department Stores
Company Retirement Plan. Participation is voluntary.
Contributions
Plan members may contribute 2% to 15% of their annual pay. Contributions may
be made prior to federal and certain other income taxes pursuant to
Section 401(k) of the Internal Revenue Code.
The employer allocation is variable and discretionary. Generally, the
employer allocation for each Plan year is determined by multiplying a matching
rate times members' basic contributions (generally, contributions up to 5% of
pay), reduced by forfeitures, one-third of annual dividends with respect to
the Employee Stock Ownership Plan ("ESOP") Preference Shares released in
satisfaction of the employer allocation for such Plan year and as a result of
ESOP Loan payments made in such Plan year, administrative expenses and excess
ESOP allocations from prior Plan years (to the extent such amounts have not
been previously used to reduce employer allocations for earlier Plan years).
The matching rate is determined as follows: In the event May has earnings per
share ("EPS") of its common stock for its most recent fiscal year ("current
year") resulting in a 6.0% increase over the EPS for the year immediately
preceding the current year, the matching rate will be 50%. For each
percentage point increase over 6.0% or decrease below 6.0%, there will be a
1.25 percentage point increase in or decrease from the 50% matching rate. The
matching rate formula may be adjusted at any time for unusual events including
discontinued operations, accounting changes, or items of extraordinary gain or
loss.
Investments
Members' contributions may be invested in any of four investment funds:
May Common Stock Fund - For investment of contributions in May common
stock.
Money Market Fund - For investment of contributions in short-term (less
than one year) obligations of high-quality issuers including banks,
corporations, municipalities, the U.S. Treasury and other federal
agencies.
Common Stock Index Fund - For investment of contributions in the common
stock of corporations that make up the Standard & Poor's 500 Stock
Index. Investment mix is determined based on the relative market size
of the 500 corporations, with larger corporations making up a higher
proportion of the fund than smaller corporations. This index represents
the composite performance of the 500 major stocks in the United States.
<PAGE>
Fixed Income Index Fund - For investment of contributions in corporate,
U.S. Government and federal agency securities that make up the Lehman
Brothers Intermediate Government/Corporate Bond Index. The securities
that comprise this index have maturities ranging from one to 10 years,
with an average of four years. (The Lehman Brothers Intermediate
Government/Corporate Bond Index represents the composite performance of
intermediate-term, fixed income securities.)
As of December 31, 1993, the following number of members had an account
balance in the investment funds: 43,594 in the May Common Stock Fund, 16,986
in the Money Market Fund, 14,305 in the Common Stock Index Fund, 12,020 in the
Fixed Income Index Fund, and 42,025 in the ESOP Preference Fund (described
below).
Employer allocations and supplemental contributions are invested in the ESOP
Preference Fund and the May Common Stock Fund, respectively. The employer
allocation to the Plan for the year ended December 31, 1993, will be made in
May 1994 and will be in the form of (a) 32,222 ESOP Preference Shares
($25,997,000 market value; $16,336,000 cost value) and (b) a supplemental
contribution from May of 144,923 shares of May common stock ($5,888,000 market
value).
ESOP Feature
Effective April 1989, the Plan was amended and restated to add an ESOP feature
and acquired 788,955 shares of convertible preferred stock of May (the "ESOP
Preference Shares"). Each ESOP Preference Share cost $507, has a guaranteed
minimum value of $507 and is convertible into 20.49031 shares of May common
stock (the conversion rate has been adjusted to reflect May's 2 for 1 stock
split effective June 1993). The acquisition of the ESOP Preference Shares was
financed with the proceeds of a private placement to a group of institutional
investors of an aggregate $400 million principal amount (the "ESOP Loans")
(see Note 3).
The ESOP Loans are guaranteed by May. The excess of the value of the
unallocated ESOP Preference Shares over the principal amount of guaranteed
ESOP Loans is reflected as "Plan Equity" in the Statement of Financial
Condition as of December 31, 1993 and 1992.
The ESOP Loans are repaid by the Plan from the following sources in the
following order: (a) dividends from May on ESOP Preference Shares previously
allocated to members; (b) dividends from May on unallocated ESOP Preference
Shares; (c) contributions by May; and (d) if so determined by May,
supplemental contributions. During the term of the ESOP Loans, the ESOP
Preference Shares which have not been allocated to members' accounts serve as
collateral for the ESOP Loans.
ESOP Preference Shares are initially held by the Plan in an Unallocated
account. As ESOP Loans are repaid, ESOP Preference Shares are released to a
suspense account pending release to the Member Allocated account in
satisfaction of the employer allocation. Also, dividends on ESOP Preference
Shares previously allocated to members' accounts release additional ESOP
Preference Shares to the Member Allocated account.
If the guaranteed minimum value of the ESOP Preference Shares released for
allocation to members' company accounts as a result of the ESOP Loan payments
(principal and interest) for a year, together with the amount of Plan
forfeitures, is less than the required employer allocation, then May makes
"supplemental" contributions to make up the difference. Supplemental
contributions are made in either shares of May common stock or cash.
If the guaranteed minimum value of the ESOP Preference Shares released for
allocation to members' company accounts as a result of the ESOP Loan payments,
together with the amount of Plan forfeitures, is greater than the required
employer allocation, any "excess" would be applied to satisfy required
employer allocations in future Plan years.
<PAGE>
Vesting
The method of calculating vesting service is the elapsed time approach.
Elapsed time is measured by calculating the time which has elapsed between the
member's hire date and retirement date/termination date (excluding certain
break-in-service periods). Generally, Plan members are vested in company
accounts in accordance with the following schedule:
Years of Vesting Vesting
Service Percentage
Less than 3 years 0%
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 years or more 100%
Plan members are always fully vested in the value of their member accounts.
Payment of Benefits
Amounts in a member's account and the vested portion of a member's company
account are distributed upon retirement, death, disability or termination of
employment. Distributions from the May Common Stock Fund are made in shares
of May common stock if the distribution exceeds 100 shares. Distributions
from the ESOP Preference Fund are made in shares of May common stock. All
other distributions are generally made in cash. Transfers are made from the
investment funds to the Distribution account to fund the Plan's cash
distributions.
Distributions applicable to the November and December 1993 monthly valuations
of the Plan are included in Plan equity as of December 31, 1993. The total of
these distributions is $14,372,000. The number of units and value per unit
reflected on the Statement of Income and Changes in Plan Equity for the year
ended December 31, 1993, are net of the November and December 1993
distributions.
Administration of Plan
The Plan is administered by a Committee consisting of at least five persons
appointed by May. An Administrative Subcommittee has the general
responsibility for administration of the Plan and an Investment Subcommittee
establishes and monitors investment policies and activities. The assets of
the Plan are held in a trust for which The Bank of New York is the Trustee.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Definition of the Plan Year
The Plan year is a calendar year.
Investments
Except for the ESOP Preference Fund, the Plan's investments are stated at fair
value, as determined by the Trustee, based on publicly stated price
information.
As required by Department of Labor reporting regulations, the Plan calculates
the net realized gain (loss) on investments sold or distributed and unrealized
appreciation (depreciation) of investments based upon the market value of the
investments at the beginning of the Plan year or at the time of purchase, if
purchased during the year.
The cost of May common stock sold or distributed is determined on the basis of
average cost. The May Common Stock Fund recognizes gain or loss on May common
stock distributed to members in settlement of their accounts equal to the
difference between average cost and quoted market value (as of the month-end
valuation date) of the shares distributed.
<PAGE>
Each ESOP Preference Share is valued at the greater of (a) the guaranteed
minimum value (original cost) of $507 per share or (b) a conversion value
equal to the market price of May common stock multiplied by the conversion
rate of 20.49031 common shares for each ESOP Preference Share. As of
December 31, 1993 and 1992, the ESOP Preference Shares were valued at the
conversion values of $806.81 and $723.56, respectively.
Federal Income Taxes
The Plan has received a favorable determination letter dated February 1, 1990,
from the Internal Revenue Service that the Plan, as amended April 1, 1989,
meets the requirements of Section 401(a), 401(k) and 4975(e)(7) of the
Internal Revenue Code and that the Trust implementing the Plan is exempt from
federal income tax under Section 501(a) of the Internal Revenue Code.
Employer allocations and contributions, member before-tax contributions and
the income of the Plan are not taxable to the members until distributions or
withdrawals are made.
Administrative Expenses
Salaries and related benefits of associates who administer the Plan are
provided by May. All other administrative expenses (including the allocable
portion of expenses for data processing services provided by May) are paid by
the Plan.
Monthly Valuation of the Trust
The unit value of each investment fund is determined by dividing the month-end
market value of the particular investment fund by the total number of units
outstanding at month-end in all member accounts in such investment fund. As
of each succeeding monthly valuation date, the unit value of each fund is
redetermined and account balances in each fund are adjusted as follows:
(a) All payments made from an account (except for the ESOP Preference
Fund) are valued based on the unit value at the month-end valuation
date. Payments from the ESOP Preference Fund are valued at the
greater of the guaranteed minimum value (plus accrued dividends) or
conversion value, as of the distribution date.
(b) With respect to any dollar amount contributed or allocated during
the month (except for the ESOP Preference Fund), an equivalent
number of additional units are credited to the appropriate accounts
in such investment fund based on the unit value at the month-end
valuation date. Allocations of ESOP Preference Shares are valued
at $507 per share.
(c) In the event that a member's employment is terminated and a portion
of such member's company account has been forfeited, the forfeited
units or ESOP Preference Shares shall be canceled as of the last
day of the Plan year. The dollar amount of such forfeited units or
ESOP Preference Shares is reallocated among the remaining members
of the Plan as of the last day of the Plan year in the same manner
as the employer allocation for such year.
3. NOTES PAYABLE:
Notes payable as of December 31 consisted of the following (in thousands):
1993 1992
ESOP Notes Payable:
Series B, due April 30, 2004 $203,964 $203,964
Series A, due April 30, 2001 192,511 196,036
-------- --------
$396,475 $400,000
======== ========
Effective January 1, 1993, the interest rates on the Series A and B ESOP Notes
were adjusted to 8.32% and 8.49%, respectively. This adjustment was made
because of the change in the federal income tax rate effective January 1,
1993, pursuant to Section 6.1 of the note agreement, dated April 20, 1989.
<PAGE>
Prior to January 1, 1993, the interest rates on Series A and B ESOP Notes were
8.40% and 8.57%, respectively.
The scheduled principle payments for the Series A ESOP Note for the next five
years and thereafter are as follows: 1994 - $7,339,000; 1995 - $11,105,000;
1996 - $15,474,000; 1997 - $20,228,000; 1998 - $25,385,000; and thereafter -
$112,980,000. Principle payments on the Series B ESOP Note begin in 2002.
4. DISTRIBUTION OF ASSETS UPON TERMINATION OF PLAN:
May reserves the right to terminate the Plan, in whole or in part, at any
time.
If an employer shall cease to be a participating employer in the Plan, the
accounts of the members of the withdrawing employer shall be revalued as if
such withdrawal date were a valuation date. The Plan Committee is then to
direct the Trustee either to distribute the accounts of the members of the
withdrawing employer as of the date of such withdrawal on the same basis as if
the Plan had been terminated, or to deposit in a trust established by the
withdrawing employer, pursuant to a plan substantially similar to the Plan,
assets equal in value to the assets allocable to the accounts of the members
of the withdrawing employer.
If the Plan is terminated at any time or contributions are completely
discontinued and May determines that the Trust shall be terminated, the
members' company accounts shall become fully vested and nonforfeitable, all
accounts shall be revalued as if the termination date were a valuation date
and such accounts shall be distributed to members.
If the Plan is terminated or contributions completely discontinued but May
determines that the Trust shall be continued pursuant to the terms of the
Trust agreement, no further contributions shall be made by members or the
employer and the members' company accounts shall become fully vested, but the
Trust shall be administered as though the Plan were otherwise in effect.
<PAGE>
SCHEDULE I
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1993
Number of (Thousands)
Shares or --------------------
Principal Fair
Amount Cost Value
ESOP PREFERENCE FUND
The May Department Stores Company 7.5%
ESOP Preference Stock: (1)
Unallocated 648,053 $328,563 $ 522,853
Member allocated 102,842 52,140 82,973
-------- ----------
ESOP Preference Fund Total $380,703 $ 605,826 (2)
======== ==========
MAY COMMON STOCK FUND
The May Department Stores Company
Common Stock (1) (3) 11,603,222 $190,504 $ 456,877 (2)
The Bank of New York Short-Term
Investment Fund- Master Notes (1) $ 3,293,666 3,294 3,294
-------- ----------
May Common Stock Fund Total $193,798 $ 460,171
======== ==========
MONEY MARKET FUND
The Bank of New York Short-Term
Investment Fund- Master Notes (1) $48,500,885 $ 48,501 $ 48,501
======== ==========
COMMON STOCK INDEX FUND
Chase Investors Commingled Equity
Index Fund 91,826 $ 30,887 $ 42,034
The Bank of New York Short-Term
Investment Fund- Master Notes (1) $ 480,151 480 480
-------- ----------
Common Stock Index Fund Total $ 31,367 $ 42,514
======== ==========
FIXED INCOME INDEX FUND
The Bank of New York Short-Term
Investment Fund- Master Notes (1) $ 1,075,938 $ 1,076 $ 1,076
-------- ----------
(1) Also a party-in-interest.
(2) Investment exceeds 5% of Plan assets.
(3) Number of shares reflect 2 for 1 stock split effective June 1993.
<PAGE>
SCHEDULE I
(Continued)
(Thousands)
--------------------
Principal Fair
Amount Cost Value
FIXED INCOME INDEX FUND (Continued)
U.S. Government Securities
U.S. Treasury Notes:
5.5%, due 2/15/95 $3,500,000 $ 3,494 $ 3,565
7.5%, due 5/15/02 $2,300,000 2,501 2,573
5.625%, due 8/31/97 $2,500,000 2,544 2,565
8.875%, due 2/15/99 $2,000,000 2,170 2,322
4.625%, due 8/15/95 $2,000,000 2,016 2,017
7.875%, due 7/15/96 $1,950,000 2,081 2,109
7.875%, due 2/15/96 $1,200,000 1,292 1,286
7.25%, due 11/15/96 $1,200,000 1,175 1,285
9%, due 5/15/98 $1,000,000 1,120 1,153
8.75%, due 8/15/00 $ 900,000 1,065 1,062
6.25%, due 2/15/03 $1,000,000 1,042 1,033
5.125%, due 6/30/98 $1,000,000 1,013 1,001
8%, due 5/15/01 $ 800,000 791 915
10.5%, due 8/15/95 $ 400,000 425 440
-------- ----------
Total U.S. treasury notes 22,729 23,326
-------- ----------
U.S. Government Agency Securities:
Federal Home Loan Bank Consumer Bonds-
7.7%, due 8/26/96 $ 650,000 695 701
10.3%, due 7/25/95 $ 150,000 157 164
8%, due 7/25/96 $ 150,000 139 162
Federal National Mortgage Association
Securities-
10.6%, due 11/10/95 $ 400,000 424 446
11.7%, due 5/10/95 $ 310,000 344 341
8%, due 7/10/96 $ 200,000 191 217
Debentures-
9.55%, due 12/10/97 $ 400,000 407 465
Tennessee Valley Authority, Power
Bond 1992 Series F, 6.875%,
due 8/1/02 $ 300,000 310 311
-------- ----------
Total U.S. government agency
securities 2,667 2,807
-------- ----------
Total U.S. government
securities 25,396 26,133
-------- ----------
<PAGE>
SCHEDULE I
(Continued)
(Thousands)
--------------------
Principal Fair
Amount Cost Value
FIXED INCOME INDEX FUND (Continued)
Fixed Income Investments
Bank Corporate Bonds:
Bank America Corporation, 7.75%, due
7/15/02 $ 400,000 $ 408 $ 431
Republic NY Corporation, 7.25%, due
7/15/02 $ 100,000 98 105
-------- ----------
Total bank corporate bonds 506 536
-------- ----------
Finance and Insurance Corporate Bonds:
American Express Company, 8.5%, due
8/15/01 $ 200,000 201 226
Associates Corporation North America,
8.375%, due 1/15/98 $ 400,000 424 441
Commercial Credit Corporation, 8.125%,
due 3/1/97 $ 200,000 179 217
Ford Motor Credit Co., 6.25%, due
2/26/98 $ 500,000 506 512
-------- ----------
Total finance and insurance
corporate bonds 1,310 1,396
-------- ----------
Industrial Corporate Bonds:
Coca Cola Company, 7.875%, due 9/15/98 $ 300,000 305 330
Eastman Kodak Company, 9.5%, due
4/15/00 $ 300,000 305 317
The Limited, Inc., 7.8%, due 5/15/02 $ 400,000 396 433
Philip Morris Companies, Inc., 8.625%,
due 3/1/99 $ 300,000 297 335
-------- ----------
Total industrial corporate
bonds 1,303 1,415
-------- ----------
Oil Corporate Bond:
Tenneco Inc., 7.875%, due 10/1/02 $ 300,000 298 319
-------- ----------
Telephone Corporate Bond:
Northern Telcom Ltd., 8.25%, due
6/13/96 $ 300,000 303 322
-------- ----------
Utilities Corporate Bonds:
Consolidated Edison Company of
New York, 1st and Refunding
Mortgage Note, 5.9%, due 12/15/96 $ 300,000 282 300
Duke Power Company, 1st and Refunding
Mortgage Note, 7%, due 6/1/00 $ 195,000 203 206
-------- ----------
Total utilities corporate
bonds 485 506
-------- ----------
<PAGE>
SCHEDULE I
(Continued)
(Thousands)
--------------------
Principal Fair
Amount Cost Value
FIXED INCOME INDEX FUND (Continued)
Foreign Obligations:
Denmark Kingdom Note, 7.75%, due
12/15/96 $ 200,000 $ 193 $ 213
Hanson Overseas Note, 7.375%, due
1/15/03 $ 400,000 440 423
Hydro-Quebec Debenture, Series IF,
7.375%, due 2/1/03 $ 200,000 215 212
International Bank Bond, 5.875%, due
7/16/97 $ 400,000 402 412
Province of Ontario, Canada
Debenture, 8%, due 10/17/01 $ 200,000 200 221
-------- ----------
Total foreign obligations 1,450 1,481
-------- ----------
Total fixed income investments 5,655 5,975
-------- ----------
Fixed Income Index Fund Total $ 32,127 $ 33,184
======== ==========
DISTRIBUTION ACCOUNT
The Bank of New York Short-Term
Investment Fund- Master Notes(1) $1,020,804 $ 1,021 $ 1,021
======== ==========
TOTAL INVESTMENTS AT DECEMBER 31, 1993 $687,517 $1,191,217
======== ==========
(1) Also a party-in-interest.
<PAGE>
SCHEDULE II
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(Thousands, except number of transactions)
Purchases Sales
---------------- -----------------------------------
No. of No. of Sales Gain or
Trans. Cost Trans. Cost Price (Loss)
The Bank of New York
Short-Term Investment
Fund-Master Notes (1) 303 $103,573 194 $110,801 $110,801 $ -
The May Department
Stores Company
Common Stock (1) (2) 41 39,652 79 99,487 105,747 6,260
-------- -------- -------- -------
$143,225 $210,288 $216,548 $ 6,260
======== ======== ======== =======
(1) Also a party-in-interest.
(2) Includes conversion of ESOP Preference Shares.
NOTE- 5% of the December 31, 1992, Plan assets of $1,156,788 is $57,839.
The cost and sales price of all purchase and sale transactions listed
above were at current value at the time of acquisition or disposition,
as applicable.
<PAGE>
EXHIBIT
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report on The May Department Stores Company Profit Sharing Plan financial
statements included in this Form 11-K, into the Company's previously filed
Registration Statements on Form S-8 File No. 33-26016, 33-38104 and 33-51849.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri,
April 15, 1994
