<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-1070
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OLIN CORPORATION
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 13-1872319
- --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
120 LONG RIDGE ROAD, STAMFORD, CT 06904
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(203) 356-2000
- --------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
- -------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
---- ------
AS OF APRIL 30, 1995 THERE WERE OUTSTANDING 24,322,201 SHARES OF THE
REGISTRANT'S COMMON STOCK.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements.
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
ASSETS
- ------
Cash $ 5.4 $ 7.0
Accounts receivable, net 508.7 414.3
Inventories 412.4 386.2
Other current assets 71.5 72.4
-------- --------
Total current assets 998.0 879.9
Investments and advances 103.7 103.1
Property, plant and equipment
(less accumulated depreciation
of $1,658.2 and $1,624.4) 881.0 879.0
Goodwill 106.1 108.8
Other assets 54.3 58.8
-------- --------
Total assets $2,143.1 $2,029.6
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Short-term borrowings and current
installments of long-term debt $ 126.7 $ 29.0
Accounts payable 297.4 332.2
Other current liabilities 281.5 257.0
-------- --------
Total current liabilities 705.6 618.2
Long-term senior debt 297.7 292.8
Long-term subordinated debt 125.0 125.0
Other liabilities 244.9 244.5
Shareholders' equity:
Preferred stock, par value $1 per share:
Authorized 10.0 shares.
Series A Conversion Preferred Stock
Issued 2.76 shares (in 1994) - 2.8
ESOP Preferred Stock
Issued 1.1 shares 84.3 85.6
Guaranteed ESOP obligations (27.0) (27.0)
Common stock, par value $1 per share:
Authorized 60.0 shares.
Issued 24.3 shares (21.5 in 1994) 24.3 21.5
Additional paid-in capital 402.2 400.7
Cumulative translation adjustment (4.0) (3.1)
Retained earnings 290.1 268.6
-------- --------
Total shareholders' equity 769.9 749.1
-------- --------
Total liabilities and
shareholders' equity $2,143.1 $2,029.6
======== ========
</TABLE>
___________________________________
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Income
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------
1995 1994
---- ----
<S> <C> <C>
Sales $766.1 $604.9
Operating expenses:
Cost of goods sold 613.0 487.5
Selling and administration 79.4 76.8
Research and development 7.3 8.5
------ ------
Operating income 66.4 32.1
Interest expense 10.3 9.4
Interest and other income 3.4 1.2
------ ------
Income before taxes 59.5 23.9
Income taxes 21.1 8.6
------ ------
Net income 38.4 15.3
Preferred dividends 1.6 1.7
------ ------
Net income available to
common shareholders $ 36.8 $ 13.6
====== ======
Per share of common stock:
Primary $ 1.52 $ 0.62
Fully diluted $ 1.46 $ 0.62
Dividends $ 0.60 $ 0.55
====== ======
Average common shares outstanding 24.3 19.2
====== ======
</TABLE>
___________________________________
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1995 1994
---- ----
<S> <C> <C>
Operating activities
- --------------------
Net income $ 38.4 $ 15.3
Depreciation and amortization 34.8 33.4
Changes in:
Receivables (90.9) (38.6)
Inventories (23.0) (3.4)
Other current assets 0.9 2.0
Current liabilities other than borrowings (13.9) (16.1)
Noncurrent liabilities 1.7 3.2
Deferred taxes 4.4 (0.9)
----- -----
Net operating activities (47.6) (5.1)
----- -----
Investing activities
- --------------------
Capital expenditures (36.8) (20.4)
Other investments 0.2 0.3
Other transactions 2.6 12.4
----- -----
Net investing activities (34.0) (7.7)
----- -----
Financing activities
- --------------------
Long-term debt repayments (0.1) -
Short-term borrowings 97.2 29.1
Dividends paid (17.1) (14.8)
----- -----
Net financing activities 80.0 14.3
----- -----
Net (decrease) increase in cash (1.6) 1.5
Cash, beginning of period 7.0 3.3
----- -----
Cash, end of period $ 5.4 $ 4.8
===== =====
</TABLE>
___________________________________
The accompanying Notes to Condensed Financial Statements are an
integral part of the condensed financial statements.
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements included herein have been prepared by the
company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and, in the opinion of the company,
reflect all adjustments (consisting only of normal accruals) which are
necessary to present fairly the results for interim periods. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations; however, the company believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements, accounting policies and the notes thereto and management's
discussion and analysis of financial condition and results of operations
included in the company's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. Inventories are valued principally by the dollar value last-in, first-out
(LIFO) method of inventory accounting. It is not practicable, therefore, to
separate the inventory into its components (raw materials, work-in-process
and finished products). Inventories under the LIFO method are based on
annual determination of quantities and costs as of the year-end; therefore,
the consolidated financial statements at March 31, 1995, reflect certain
estimates relating to inventory quantities and costs at December 31, 1995.
3. An Employee Stock Ownership Plan (ESOP) was established in June 1989. The
ESOP purchased from the company approximately 1.3 million shares ($100
million) of a newly-authorized 1.75 million share series of the company's
ESOP preferred stock, financed by $60 million of notes guaranteed by the
company, and a $40 million loan from the company. The company's loan to the
ESOP has been repaid in full to the company as of December 31, 1992. Such
loan was financed by the company through a long-term credit facility which is
classified on the March 31, 1995 balance sheet as long-term debt.
At March 31, 1995 there were 1.1 million shares of ESOP preferred stock
outstanding at a value of $75.00 per share. The quarterly fixed dividend
rate is $1.4925 per share. The ESOP preferred stock is convertible by the
holder into the company's common stock on a one-for-one basis, subject to
anti-dilutive adjustments and may be redeemed at the option of the company,
or at the option of the plan under certain circumstances (including upon
payment of withdrawing plan participant accounts or if required to meet the
plan's debt payments). The company reserves the right to satisfy the
redemption in cash, marketable obligations or common stock. The ESOP
preferred stock is included in shareholders' equity because the company
intends to redeem the outstanding ESOP preferred stock solely with shares of
the company's common stock, and has the ability to do so.
4. Primary earnings per share are computed by dividing net income less the ESOP
preferred dividend requirement by the weighted average number of common
shares outstanding, plus an equivalent number (one-for-one) of
<PAGE>
common shares, assuming the conversion of the Series A Stock in 1994. Fully
diluted earnings per share reflect the dilutive effect of stock options and
assume the conversion of outstanding ESOP preferred stock into an equivalent
number of common shares. Net income was reduced by an additional ESOP
contribution (differential between the common and the ESOP preferred dividend
rates under an assumed conversion) necessary to satisfy the debt service
requirement.
5. On March 1, 1995, 2.76 million shares of the company's $1 par value Series
A Conversion Preferred Stock were converted into shares of common stock on a
one-for-one basis. The last dividend on these preferred shares was paid in
March 1995.
6. Effective January 1, 1995, the company acquired the remaining 51% interest in
a previously nonconsolidated Latin American venture. The purchase price is
contingent upon the future earnings of this entity. This acquisition was
accounted for as a purchase and accordingly, its results of operations,
which were not material, are included in the consolidated financial
statements from the date of acquisition.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
----------------------
First quarter sales and net income data by industry segment are presented below:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
(in millions) 1995 1994
---- ----
<S> <C> <C>
Sales:
Chemicals $350.9 $285.2
Metals 239.6 179.5
Defense and Ammunition 175.6 140.2
------ ------
Total $766.1 $604.9
====== ======
Net Income:
Chemicals $ 22.3 $ 7.8
Metals 15.0 8.9
Defense and Ammunition 7.2 4.2
Corporate and Other (6.1) (5.6)
------ ------
Total $ 38.4 $ 15.3
====== ======
</TABLE>
Chemicals segment sales and net income increased 23% and 186%, respectively,
from 1994's first quarter due to higher demand for most products and improved
pricing. Chlor-Alkali's financial performance improved as a result of higher
chlorine volumes and improved caustic pricing. Increased shipments contributed
to pool chemicals and biocides improved 1995 financial performance. In the
urethanes business, additional volumes and increased pricing for certain
products more than offset raw materials cost increases and the impact of the TDI
plant maintenance turnaround. Electronic Materials' sales and profits were ahead
of last year due to continuing strong demand for its products and services.
Metals segment sales and net income increased 33% and 69%, respectively from
1994's first quarter. Higher volumes due to increased demand from the
automotive, coinage and ammunition markets, along with favorable product mix in
most major product lines contributed to the strong profit improvement over
1994's level. These additional volumes, along with higher metal values
contributed to the 1995 sales increase.
Defense and Ammunition's segment sales and net income increased 25% and 71%,
respectively, from 1994's first quarter. Winchester's financial performance was
ahead of 1994s levels as improved operating results in Australia and higher Lake
City management fee income more than offset the reduction in the domestic
commercial ammunition business. After the exceptionally high consumer demand in
1994, commercial ammunition volumes are expected to return to more normal levels
in 1995. Aerospace's financial performance was comparable to last year's levels.
Additional shipments of Ball Powder(R) propellant and the operating results from
the medium caliber ammunition business acquired in April 1994, more than offset
production delays of certain medium caliber
<PAGE>
ammunition and were the main contributors to Ordnance Division's improved 1995
financial performance.
Changes in the strategic direction of defense spending, the timing of defense
procurements and specific defense program appropriation decisions may adversely
affect the performance of the Defense and Ammunition segment and the company in
future years, including its income, liquidity, capital resources and financial
position. The precise impact of these decisions will depend upon the timing and
size of changes and decisions, and the company's ability to mitigate their
impact with new business, business consolidations or cost reductions. The
company currently provides services to the U.S. government in facilities
management and ordnance demilitarization and continues to pursue other business
areas. In view of the continuing uncertainty regarding the strategy and
priorities of the Department of Defense, the historical financial information of
the Defense and Ammunition segment, and to a lesser extent, of the company, may
not be indicative of future performance.
The inclusion of the medium caliber acquisition in 1995's operating results
accounted primarily for the 1995 increase in selling and administration
expenses. Interest expense in 1995 increased from last year's amount due
primarily to higher short-term interest rates in effect during 1995. The average
interest rate on domestic short-term debt increased to 6.1% in 1995's first
quarter from 3.4% in the prior year's quarter. The improved operating results of
nonconsolidated affiliates was the primary reason for the 1995 increase in
interest and other income. The 1995 first quarter effective tax rate of 35.5%
was comparable to the 1994 rate.
Cash used for operating activities amounted to $47.6 million and $5.1 million
for the first quarter of 1995 and 1994, respectively. In 1995, cash flow from
operations and the use of credit facilities financed the company's seasonal
working capital requirements, capital expenditures and dividends. At March 31,
1995, the company maintained committed credit facilities with banks of $303
million of which $206 million was available. The company believes that these
credit facilities are adequate to satisfy its liquidity needs for the near
future. In 1995, cash flow from operations decreased significantly from 1994's
level. The decrease in 1995 was primarily attributable to higher receivables and
inventory levels and was partially offset by higher operating income. Increased
volumes as a result of a stronger economy and higher metal values accounted for
the increase in receivables while additional funds were invested in inventories
to support higher level of business activity.
Cash used for investing activities amounted to $34.0 million and $7.7 million
for the first quarter of 1995 and 1994, respectively. Capital spending of $36.8
million in 1995 was ahead of 1994. Total year capital spending, including
environmental capital spending of $15 million, is estimated to increase 20% from
1994 mainly to provide additional capacity and product quality for selected
product lines. Historically, the company has funded its environmental capital
spending through cash flow from operations and expects to do so in the future.
On March 1, 1995, the outstanding Series A Conversion Preferred stock converted
automatically into shares of common stock on a one-for-one
<PAGE>
basis. The last dividend on these preferred shares was paid in March 1995.
Commencing with first quarter of 1995, the quarterly common stock dividend
increased to $.60 per share.
In 1987, a Federal Trade Commission (FTC) judge ruled that the company must
divest the chlorinated isocyanurates business acquired in 1985, which included
an isocyanurates manufacturing facility in South Charleston, WV, a packaging
facility in Livonia, MI and the SUN(R) brand trademark. Over the years, the
company has been unsuccessful in overturning this ruling. The company executed
an agreement in 1994 to sell the SUN(R) brand of isocyanurates. In February
1995, the company executed an agreement to sell its South Charleston and Livonia
facilities to subsidiaries of Israel Chemicals Ltd. Both sales are pending and
subject to FTC approval. These transaction are not expected to have a material
adverse effect on the results of operations in 1995.
At March 31, 1995, the percent of total debt to total capitalization (excluding
the reduction in equity for the Contributing Employee Ownership Plan) was 40.8%,
up from 36.5% at year-end 1994 and down from 48.3% at March 31, 1994. The
increase from year-end 1994 is attributable to higher short-term borrowings to
finance seasonal working capital requirements.
In the 1995 first quarter, the company spent approximately $4 million for
investigatory and clean-up activities associated with former waste sites and
past operations. Spending for environmental investigatory and remedial efforts
for the full year 1995 is estimated to be $40 million. These amounts were not
charged to income but instead were charged to reserves established for such
costs identified and expensed to income in prior years. Associated costs of
investigatory and remedial activities are provided for in accordance with
generally accepted accounting principles governing probability and the ability
to reasonably estimate future costs. Charges to income for investigatory and
remedial efforts were material to operating results in 1994 and are expected to
be material to net income in 1995 and future years.
Annual environmental-related cash outlays for capital projects, site
investigation and remediation, and normal plant operations are expected to range
between $90-$105 million over the next several years. While the company does not
anticipate a material increase in the projected annual level of its
environmental-related costs, there is always the possibility that such increases
may occur in the future in view of the uncertainties associated with
environmental exposures. Environmental exposures are difficult to assess for
numerous reasons, including the identification of new sites, developments at
sites resulting from investigatory studies, advances in technology, changes in
environmental laws and regulations and their application, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and the financial capability of other potentially responsible
parties and the company's ability to obtain contributions from other parties and
the time periods (sometimes lengthy) over which site remediation occurs. It is
possible that some of these matters (the outcomes of which are subject to
various uncertainties) may be resolved unfavorably against the company.
The company's consolidated balance sheets include reserves for future
environmental expenditures to investigate and remediate known sites
<PAGE>
amounting to $111 million at March 31, 1995 and December 31, 1994, of which $71
million was classified as other noncurrent liabilities. Included in the reserve
at March 31, 1995 and 1994, were liabilities anticipated to be shared with a
third party, with whom the company is currently in litigation. Those reserves
did not take into account any discounting of future expenditures or any
consideration of insurance recoveries or advances in technology. Those
liabilities are reassessed periodically to determine if environmental
circumstances have changed and/or remediation efforts and their costs can be
better estimated. As a result of these reassessments, future charges to income
may be made for additional liabilities.
There are a variety of legal proceedings pending or threatened against the
company. It is possible that some of these matters (the outcomes of which are
subject to various uncertainties) may be decided unfavorably against the
company. Certain of these matters are discussed in Item 3, Legal Proceedings of
the 1994 Form 10-K Annual Report and in other filings of the company with the
Securities and Exchange Commission, which filings are available on request from
the company.
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
----------------------------------
(a) Exhibits
--------
3. By-laws as amended effective April 27, 1995.
10. Olin Senior Management Incentive Compensation Plan as amended April
27, 1995.
11. Computation of Per Share Earnings (Unaudited).
12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited).
12(b). Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (Unaudited).
27. Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended March
31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLIN CORPORATION
(Registrant)
By: J. A. Riggs
-----------
J. A. Riggs
Senior Vice President
and Chief Financial Officer
(Duly authorized signatory and
Chief Financial Officer)
Date: May 12, 1995
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- --------- -----------
3. By-laws as amended effective April 27, 1995.
10. Olin Senior Management Incentive Compensation Plan as amended
April 27, 1995.
11. Computation of Per Share Earnings (Unaudited).
12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited).
12(b). Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (Unaudited).
27. Financial Data Schedule.
<PAGE>
EXHIBIT 3
BY-LAWS
OF
OLIN CORPORATION
----------------
ARTICLE I.
MEETINGS OF SHAREHOLDERS.
SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of Olin
------------------
Corporation (hereinafter called the "Corporation") shall be held at such place,
either within or without the Commonwealth of Virginia, as may from time to time
be fixed by the Board of Directors of the Corporation (hereinafter called the
"Board").
SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders of
----------------
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held on the last
Thursday in April in each year (or, if that day shall be a legal holiday, then
on the next succeeding business day), or on such other day and/or in such other
month as may be fixed by the Board, at such hour as may be specified in the
notice thereof.
SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders for
-----------------
any purpose or purposes, unless otherwise provided by law or in the Articles of
Incorporation of the Corporation as from time to time amended (hereinafter
called the "Articles"), may be held at any time upon the call of the Board, the
Chairman of the Board, the President or the holders of a majority of the shares
of the issued and outstanding stock of the Corporation entitled to vote at the
meeting.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or
-------------------
the Articles, not less than ten nor more than sixty days notice in writing of
the place, day, hour and purpose or purposes of each meeting of the
shareholders, whether annual or special, shall be given to each shareholder of
record of the Corporation entitled to vote at such meeting, either by the
delivery thereof to such shareholder personally or by the mailing thereof to
such shareholder in a postage prepaid envelope addressed to such shareholder at
his address as it appears on the stock transfer books of the Corporation;
provided, however, that in the case of a special meeting of shareholders called
by the shareholders, such notice shall be given at least fifty days before the
date of the meeting. Notice of any meeting of shareholders shall not be required
to be given to any shareholder who shall attend the meeting in person or by
proxy, unless attendance is for the express purpose of objecting to the
transaction of any business because the meeting was not lawfully called or
convened, or who shall waive notice thereof in writing signed by the shareholder
before, at or after such meeting. Notice of any adjourned meeting need not be
given, except when expressly required by law.
<PAGE>
SECTION 5. QUORUM. Shares representing a majority of the votes entitled to
-------
be cast on a mattter by all classes or series which are entitled to vote thereon
and be counted together collectively, represented in person or by proxy at any
meeting of the shareholders, shall constitute a quorum for the transaction of
business thereat with respect to such matter, unless otherwise provided by law
or the Articles. In the absence of a quorum at any such meeting or any
adjournment or adjournments thereof, shares representing a majority of the votes
cast on the matter of adjournment, either in person or by proxy, may adjourn
such meeting from time to time until a quorum is obtained. At any such
adjourned meeting at which a quorum has been obtained, any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 6. VOTING. Unless otherwise provided by law or the Articles, at
-------
each meeting of the shareholders each shareholder entitled to vote at such
meeting shall be entitled to one vote for each share of stock standing in his
name on the books of the Corporation upon any date fixed as hereinafter
provided, and may vote either in person or by proxy in writing. Unless demanded
by a shareholder present in person or represented by proxy at any meeting of the
shareholders and entitled to vote thereon or so directed by the chairman of the
meeting, the vote on any matter need not be by ballot. On a vote by ballot,
each ballot shall be signed by the shareholder voting or his proxy, and it shall
show the number of shares voted.
SECTION 7. JUDGES. One or more judges or inspectors of election for any
-------
meeting of shareholders may be appointed by the chairman of such meeting, for
the purpose of receiving and taking charge of proxies and ballots and deciding
all questions as to the qualification of voters, the validity of proxies and
ballots and the number of votes properly cast.
SECTION 8. CONDUCT OF MEETING. The chairman of the meeting at each meeting
-------------------
of shareholders shall have all the powers and authority vested in presiding
officers by law or practice, without restriction, as well as the authority to
conduct an orderly meeting and to impose reasonable limits on the amount of time
taken up in remarks by any one shareholder.
ARTICLE II.
BOARD OF DIRECTORS.
SECTION 1. NUMBER. CLASSIFICATION. TERM. ELECTION. The property, business
---------------------------------------
and affairs of the Corporation shall be managed under the direction of the Board
as from time to time constituted. The Board shall consist of twelve directors,
but the number of directors may be increased to any number, not more than
eighteen directors, or decreased to any number, not less than three directors,
by amendment of these By-laws, provided that any increase or decrease by more
than thirty percent of the number of directors last elected by the shareholders
may only be effected by the shareholders. No director need be a shareholder.
The Board shall be divided into three classes, Class I, Class II and Class III,
as nearly equal in number as possible, with the members of each class to serve
for the respective terms of
-2-
<PAGE>
office provided in the Articles, and until their respective successors shall
have been duly elected or until death or resignation or until removal in the
manner hereinafter provided. In case the number of directors shall be increased,
the additional directors to fill the vacancies caused by such increase shall be
elected in accordance with the provisions of Section 4 of Article VI of these
By-laws. Any increase or decrease in the number of directors shall be so
apportioned among the classes by the Board as to make all classes as nearly
equal in number as possible.
Subject to the rights of holders of any Preferred Stock outstanding,
nominations for the election of directors may be made by the Board or a
committee appointed by the Board or by any shareholder entitled to vote in the
election of directors generally. However, any shareholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as directors at a meeting only if it is a meeting of shareholders for
the purposes of electing directors and written notice of such shareholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (i) with respect to an election to be held at an
annual meeting of shareholders, 90 days in advance of such meeting and (ii) with
respect to an election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day following the
date on which notice of such meeting is first given to shareholders. Each such
notice shall set forth: (a) the name and address of the shareholder who intends
to make the nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of shares of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (e)
the consent of each nominee to serve as a director of the Corporation if so
elected.
SECTION 2. Compensation. Each director, in consideration of his serving as
------------
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at Board and Committee meetings, or both, in cash or
other property, including securities of the Corporation, as the Board shall from
time to time determine, together with reimbursements for the reasonable expenses
incurred by him in connection with the performance of his duties. Nothing
contained herein shall preclude any director from serving the Corporation, or
any subsidiary or affiliated corporation, in any other capacity and receiving
proper compensation therefor. If the Board adopts a resolution to that effect,
any director may elect to defer all or any part of the annual and other fees
hereinabove referred to for such period and on such terms and conditions as
shall be permitted by such resolution.
SECTION 3. Place of Meetings. The Board may hold its meetings at such place
-----------------
or places within or without the Commonwealth of Virginia as it may from time to
time by resolution determine or as shall be specified or fixed in the respective
notices or waivers of notice thereof.
-3-
<PAGE>
SECTION 4. Organization Meeting. After each annual election of directors,
--------------------
as soon as conveniently may be, the newly constituted Board shall meet for the
purposes of organization. At such organization meeting, the newly constituted
Board shall elect officers of the Corporation and transact such other business
as shall come before the meeting. Notice of organization meetings of the Board
need not be given. Any organization meeting may be held at any other time or
place which shall be specified in a notice given as hereinafter provided for
special meetings of the Board, or in a waiver of notice thereof signed by all
the directors.
SECTION 5. Regular Meetings. Regular meetings of the Board may be held at
----------------
such time and place as may from time to time be specified in a resolution
adopted by the Board then in effect; and, unless otherwise required by such
resolution, or by law, notice of any such regular meeting need not be given.
SECTION 6. Special Meetings. Special meetings of the Board shall be held
----------------
whenever called by the Chief Executive Officer, or by the Secretary at the
request of any three directors. Notice of a special meeting shall be mailed to
each director, addressed to him at his residence or usual place of business, not
later than the second day before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph, cable or wireless, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board need be
specified in the notice of such meeting, unless required by the Articles.
SECTION 7. Quorum. At each meeting of the Board the presence of a majority
------
of the number of directors fixed by these By-laws shall be necessary to
constitute a quorum. The act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board, except
as may be otherwise provided by law or by these By-laws. Any meeting of the
Board may be adjourned by a majority vote of the directors present at such
meeting. Notice of any adjourned meeting need not be given.
SECTION 8. Waivers of Notice of Meetings. Anything in these By-laws or in
-----------------------------
any resolution adopted by the Board to the contrary notwithstanding, notice of
any meeting of the Board need not be given to any director if such notice shall
be waived in writing signed by such director before, at or after the meeting, or
if such director shall be present at the meeting. Any meeting of the Board shall
be a legal meeting without any notice having been given or regardless of the
giving of any notice or the adoption of any resolution in reference thereto, if
every member of the Board shall be present thereat. Except as otherwise
provided by law or these By-laws, waivers of notice of any meeting of the Board
need not contain any statement of the purpose of the meeting.
SECTION 9. Telephone Meetings. Members of the Board or any committee may
------------------
participate in a meeting of the Board or such committee by means of a conference
telephone or other means of communications whereby all directors participating
may simultaneously hear each other during the meeting, and participation by such
means shall constitute presence in person at such meeting.
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SECTION 10. Actions Without Meetings. Any action that may be taken at a
------------------------
meeting of the Board or of a committee may be taken without a meeting if a
consent in writing, setting forth the action, shall be signed, either before or
after such action, by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote.
ARTICLE III. *
INDEMNIFICATION. AND LIMIT ON LIABILITY
(a) Every person who is or was a director, officer or employee of the
Corporation, or who, at the request of the Corporation, serves or has served in
any such capacity with another corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise shall be indemnified by the
Corporation against any and all liability and reasonable expense that may be
incurred by him in connection with or resulting from any claim, action or
proceeding (whether brought in the right of the Corporation or any such other
corporation, entity, plan or otherwise), civil or criminal, in which he may
become involved, as a party or otherwise, by reason of his being or having been
a director, officer or employee of the Corporation, or such other corporation,
entity or plan while serving at the request of the Corporation, whether or not
he continues to be such at the time such liability or expense shall have been
incurred, unless such person engaged in willful misconduct or a knowing
violation of the criminal law.
As used in this Article III: (i) the terms "liability" and "expense" shall
include, but shall not be limited to, counsel fees and disbursements and amounts
of judgments, fines or penalties against, and amounts paid in settlement by, a
director, officer or employee; (ii) the terms "director", "officer" and
"employee," unless the context otherwise requires, include the estate or
personal representative of any such person; (iii) a person is considered to be
serving an employee benefit plan as a director, officer or employee of the plan
at the Corporation's request if his duties to the Corporation also impose duties
on, or otherwise involve services by, him to the plan or, in connection with the
plan, to participants in or beneficiaries of the plan; (iv) the term
"occurrence" means any act or
* [Compilers Note: This Article III was adopted by the shareholders at the
Annual Meeting of Shareholders, April 28, 1994.]
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failure to act, actual or alleged, giving rise to a claim, action or proceeding;
and (v) service as a trustee or as a member of a management or similar committee
of a partnership or joint venture shall be considered service as a director,
officer or employee of the trust, partnership or joint venture.
The termination of any claim, action or proceeding, civil or criminal, by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that a director, officer or employee
did not meet the standards of conduct set forth in this paragraph (a). The
burden of proof shall be on the Corporation to establish, by a preponderance of
the evidence, that the relevant standards of conduct set forth in this paragraph
(a) have not been met.
(b) Any indemnification under paragraph (a) of this Article shall be made
unless (i) the Board, acting by a majority vote of those directors who were
directors at the time of the occurrence giving rise to the claim, action or
proceeding involved and who are not at the time parties to such claim, action or
proceeding (provided there are at least five such directors), finds that the
director, officer or employee has not met the relevant standards of conduct set
forth in such paragraph (a), or (ii) if there are not at least five such
directors, the Corporation's principal Virginia legal counsel, as last
designated by the Board as such prior to the time of the occurrence giving rise
to the claim, action or proceeding involved, or in the event for any reason such
Virginia counsel is unwilling to so serve, then Virginia legal counsel mutually
acceptable to the Corporation and the person seeking indemnification, deliver to
the Corporation their written advice that, in their opinion, such standards have
not been met.
(c) Expenses incurred with respect to any claim, action or proceeding of
the character described in paragraph (a) shall, except as otherwise set forth in
this paragraph (c), be advanced by the Corporation prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Article III. No security shall be
required for such undertaking and such undertaking shall be accepted without
reference to the recipient's financial ability to make repayment.
Notwithstanding the foregoing, the Corporation may refrain from, or suspend,
payment of expenses in advance if at any time before delivery of the final
finding described in paragraph (b), the Board or Virginia legal counsel, as the
case may be, acting in accordance with the procedures set forth in paragraph
(b), find by a preponderance of the evidence then available that the officer,
director or employee has not met the relevant standards of conduct set forth in
paragraph (a).
(d) No amendment or repeal of this Article III shall adversely affect or
deny to any director, officer or employee the rights of indemnification provided
in this Article III with respect to any liability or expense arising out of a
claim, action or proceeding based in whole or substantial part on an occurrence
the inception of which takes place before or while this Article III, as adopted
by the shareholders of the Corporation at the 1986 Annual Meeting of the
Corporation, is in effect. The provisions of this paragraph (d) shall apply to
any such claim, action or proceeding whenever commenced, including any such
claim, action or proceeding commenced after any amendment or repeal to this
Article III.
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(e) The rights of indemnification provided in this Article III shall be in
addition to any rights to which any such director, officer or employee may
otherwise be entitled by contraction or as a matter of law.
(f) In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction, occurrence or
course of conduct, whether prior or subsequent to the effective date of this
Article lll, except for liability resulting from such person's having engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law.
(g) An amendment to this Article iii shall be approved only by a majority of
the votes entitled to be cast by each voting group entitled to vote thereon.
ARTICLE IV.
COMMITTEES.
SECTION 1. Executive and Finance Committee. The Board may, by resolution or
--------------------------------
resolutions adopted by a majority of the number of directors fixed by these By-
laws, appoint two or more directors to constitute an Executive and Finance
Committee, each member of which shall serve as such during the pleasure of the
Board, and may designate for such Committee a Chairman, who shall continue as
such during the pleasure of the Board.
All completed action by the Executive and Finance Committee shall be
reported to the Board at its meeting next succeeding such action or at its
meeting held in the month following the taking of such action, and shall be
subject to revision or alteration by the Board; provided, that no acts or rights
of third parties shall be affected by any such revision or alteration.
The Executive and Finance Committee shall fix its own rules of procedure and
shall meet where and as provided by such rules or by resolution of the Board. At
all meetings of the Executive and Finance Committee, a majority of the full
number of members of such Committee shall constitute a quorum, and in every case
the affirmative vote of a majority of members present at any meeting of the
Executive and Finance Committee at which a quorum is present shall be necessary
for the adoption of any resolution.
During the intervals between the meetings of the Board, the Executive and
Finance Committee shall possess and may exercise all the power and authority of
the Board (including, without limitation, all the power and authority of the
Board in the management, control and direction of the financial affairs of the
Corporation) except with respect to those matters reserved to the Board by
Virginia law, in such manner as the Executive and Finance Committee shall deem
best for the interests of the Corporation, in all cases in which specific
directions shall not have been given by the Board.
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<PAGE>
SECTION 2. Other Committees. To the extent permitted by law, the Board may
----------------
from time to time by resolution adopted by a majority of the number of directors
fixed by these By-laws create such other committees of directors, officers,
employees or other persons designated by it as the Board shall deem advisable
and with such limited authority, functions and duties as the Board shall by
resolution prescribe. The Board shall have the power to change the members of
any such committee at any time, to fill vacancies, and to discharge any such
committee, either with or without cause, at any time.
ARTICLE V.
OFFICERS.
SECTION 1. Number. Term. Election. The officers of the Corporation shall be
----------------------
a Chief Executive Officer, a Chairman of the Board, a President, one or more
Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may
appoint such other officers and such assistant officers and agents with such
powers and duties as the Board may find necessary or convenient to carry on the
business of the Corporation. Such officers and assistant officers shall serve
until their successors shall be chosen, or as otherwise provided in these By-
laws. Any two or more offices may be held by the same person.
SECTION 2. Chief Executive Officer. The Chief Executive Officer shall,
-----------------------
subject to the control of the Board and the Executive and Finance Committee,
have full authority and responsibility for directing the conduct of the
business, affairs and operations of the Corporation. In addition to acting as
Chief Executive Officer of the Corporation, he shall perform such other duties
and exercise such other powers as may from time to time be prescribed by the
Board and shall see that all orders and resolutions of the Board and the
Executive and Finance Committee are carried into effect. In the event of the
inability of the Chief Executive Officer to act, the Board will designate an
officer of the Corporation to perform the duties of that office.
SECTION 3. Chairman of the Board. The Chairman of the Board shall preside
---------------------
at all meetings of the Board and of the shareholders and, in the absence of the
Chairman of the Executive and Finance Committee, at all meetings of the
Executive and Finance Committee. He shall perform such other duties and exercise
such other powers as may from time to time be prescribed by the Board or, if he
shall not be the Chief Executive Officer, by the Chief Executive Officer.
SECTION 4. President. The President shall have such powers and perform such
---------
duties as may from time to time be prescribed by the Board or, if he shall not
be the Chief Executive Officer, by the Chief Executive Officer.
SECTION 5. Vice Presidents. Each Vice President shall have such powers and
---------------
perform such duties as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority.
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<PAGE>
SECTION 6. Treasurer. The Treasurer shall have the general care and custody
---------
of the funds and securities of the Corporation. He shall perform such other
duties and exercise such other powers as may from time to time be prescribed by
the Board, the Chief Executive Officer or any officer to whom the Chief
Executive Officer may have delegated such authority. If the Board shall so
determine, he shall give a bond for the faithful performance of his duties, in
such sum as the Board may determine to be proper, the expense of which shall be
borne by the Corporation. To such extent as the Board shall deem proper, the
duties of the Treasurer may be performed by one or more assistants, to be
appointed by the Board.
SECTION 7. Controller. The Controller shall be the accounting officer of the
----------
Corporation. He shall keep full and accurate accounts of all assets,
liabilities, receipts and disbursements and other transactions of the
Corporation and cause regular audits of the books and records of the Corporation
to be made. He shall also perform such other duties and exercise such other
powers as may from time to time be prescribed by the Board, the Chief Executive
Officer or any officer to whom the Chief Executive Officer may have delegated
such authority. If the Board shall so determine, he shall give a bond for the
faithful performance of his duties, in such sum as the Board may determine to be
proper, the expense of which shall be borne by the Corporation. To such extent
as the Board shall deem proper, the duties of the Controller may be performed by
one or more assistants, to be appointed by the Board.
SECTION 8. Secretary. The Secretary shall keep the minutes of meetings of
---------
shareholders, of the Board, and, when requested, of Committees of the Board; and
he shall attend to the giving and serving of notices of all meetings thereof.
He shall keep or cause to be kept such stock and other books, showing the names
of the shareholders of the Corporation, and all other particulars regarding
them, as may be required by law. He shall also perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board,
the Chief Executive Officer or any officer to whom the Chief Executive Officer
may have delegated such authority. To such extent as the Board shall deem
proper, the duties of the Secretary may be performed by one or more assistants,
to be appointed by the Board.
ARTICLE VI.
REMOVALS, RESIGNATIONS AND VACANCIES
SECTION 1. Removal of Directors. Any director may be removed at any time but
--------------------
only with cause, by the affirmative vote of the holders of record of a majority
of the shares of the Corporation entitled to vote on the election of directors,
given at a special meeting of the shareholders called expressly for the purpose.
SECTION 2. Removal of Officers. Any officer, assistant officer or agent of
-------------------
the Corporation may be removed at any time, either with or without cause, by the
Board in its absolute discretion. Any such removal shall be without prejudice to
the recovery of damages for breach of the contract rights, if any, of the
officer, assistant officer or agent removed. Election or appointment of an
officer, assistant officer or agent shall not of itself create contract rights.
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<PAGE>
SECTION 3. Resignation. Any director, officer or assistant officer of the
-----------
Corporation may resign as such at any time by giving written notice of his
resignation to the Board, the Chief Executive Officer or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, at the time of delivery thereof, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 4. Vacancies. Any vacancy in the Board caused by death, resignation,
---------
disqualification, removal, an increase in the number of directors, or any other
cause, may be filled (a) by the holders of shares of the Corporation entitled to
vote on the election of directors, but only at an annual meeting of
shareholders, or (b) by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board at any regular or special
meeting thereof. Each director so elected by the Board shall hold office until
the next annual election of directors, and each director so elected by the
shareholders shall hold office for a term expiring at the annual meeting of
shareholders at which the term of the class to which he has been elected
expires, and, in each case, until his successor shall be elected, or until his
death, or until he shall resign, or until he shall have been removed in the
manner hereinabove provided. Any vacancy in the office of any officer or
assistant officer caused by death, resignation, removal or any other cause, may
be filled by the Board for the unexpired portion of the term.
ARTICLE VII.
CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC.
SECTION 1. Execution of Contracts. Except as otherwise provided by law or by
----------------------
these By-laws, the Board (i) may authorize any officer, employee or agent of the
Corporation to execute and deliver any contract, agreement or other instrument
in writing in the name and on behalf of the Corporation, and (ii) may authorize
any officer, employee or agent of the Corporation so authorized by the Board to
delegate such authority by written instrument to other officers, employees or
agents of the Corporation. Any such authorization by the Board may be general or
specific and shall be subject to such limitations and restrictions as may be
imposed by the Board. Any such delegation of authority by an officer, employee
or agent may be general or specific, may authorize re-delegation, and shall be
subject to such limitations and restrictions as may be imposed in the written
instrument of delegation by the person making such delegation.
SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation
-----
and no negotiable paper shall be issued in its name unless authorized by the
Board. When authorized by the Board, any officer, employee or agent of the
Corporation may effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation or
individual, and for such loans and advances may make, execute and deliver
promissory notes, bonds or other certificates or evidences of indebtedness of
the Corporation and when so authorized may pledge, hypothecate or transfer any
securities or other property of the Corporation as security for any such loans
or advances. Such authority may be general or confined to specific instances.
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SECTION 3. Checks. Drafts. etc. All checks, drafts and other orders for the
-------------------
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by the
Board.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by the Treasurer or any other officer, employee or agent of the
Corporation to whom such power may from time to time be delegated by the Board.
SECTION 5. Voting of Securities. Unless otherwise provided by the Board, the
--------------------
Chief Executive Officer may from time to time appoint an attorney or attorneys,
or agent or agents of the Corporation, in the name and on behalf of the
Corporation, to cast the votes which the Corporation may be entitled to cast as
the holder of stock or other securities in any other corporation, any of whose
stock or other securities may be held by the Corporation, at meetings of the
holders of the stock or other securities of such other corporation, or to
consent in writing, in the name of the Corporation as such holder, to any action
by such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed in the name and on behalf of the Corporation and under
its corporate seal, or otherwise, all such written proxies or other instruments
as such officer may deem necessary or proper in the premises.
ARTICLE VIII.
CAPITAL STOCK.
SECTION 1. Certificates. Every shareholder shall be entitled to a
------------
certificate, or certificates, in such form as shall be approved by the Board,
signed by the Chairman of the Board, the President or a Vice President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
or any other officer authorized by these By-laws or a resolution of the Board,
certifying the number of shares owned by him in the Corporation. Any such
certificate may, but need not, bear the seal of the Corporation or a facsimile
thereof. If any such certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation or an employee of the
Corporation, the signatures of any of the officers above specified upon such
certificate may be facsimiles. In case any such officer who shall have signed or
whose facsimile signature shall have been placed upon such certificate shall
have ceased to be such before such certificate is issued, it may be issued by
the Corporation with the same effect as if such officer had not ceased to be
such at the date of its issue.
SECTION 2. Transfers. Shares of stock of the Corporation shall be
---------
transferable on the stock books of the Corporation by the holder in person or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or the transfer
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agent, but, except as hereinafter provided in the case of loss, destruction or
mutilation of certificates, no transfer of stock shall be entered until the
previous certificate, if any, given for the same shall have been surrendered and
cancelled. Except as otherwise provided by law, no transfer of shares shall be
valid as against the Corporation, its shareholders or creditors, for any
purpose, until it shall have been entered in the stock records of the
Corporation by an entry showing from and to whom transferred. The Board may also
make such additional rules and regulations as it may deem expedient concerning
the issue and transfer of certificates representing shares of the capital stock
of the Corporation.
SECTION 3. Record Date. For the purpose of determining shareholders entitled
-----------
to notice of or to vote at any meeting of shareholders or any adjournment
thereof, or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than seventy days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken. When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof unless the Board fixes a new record date,
which it shall do if the meeting is adjourned to a date more than 120 days after
the date fixed for the original meeting.
SECTION 4. Lost. Destroyed or Mutilated Certificates. In case of loss,
-----------------------------------------
destruction or mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, destruction or mutilation and upon the giving
of a bond of indemnity to the Corporation in such form and in such sum as the
Board may direct; provided that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is proper so to do.
SECTION 5. Restrictions on Transfer. To the extent that the Rights Agreement
------------------------
dated as of February 27, 1986, between the Corporation and Manufacturers Hanover
Trust Company may be deemed to impose restrictions on the transfer of securities
of the Corporation, such restrictions are hereby authorized.
ARTICLE IX.
INSPECTION OF RECORDS.
The Board from time to time shall determine whether, to what extent, at what
times and places, and under what conditions and regulations the accounts and
books and papers of the Corporation, or any of them, shall be open for the
inspection of the shareholders, and no shareholder shall have any right to
inspect any account or book or paper of the Corporation except as expressly
conferred by statute or by these By-laws or authorized by the Board.
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ARTICLE X.
AUDITOR.
The Board shall annually appoint an independent accountant who shall
carefully examine the books of the Corporation. One such examination shall be
made immediately after the close of the fiscal year and be ready for
presentation at the annual meeting of shareholders of the Corporation, and such
other examinations shall be made as the Board may direct.
ARTICLE XI.
SEAL.
The seal of the Corporation shall be circular in form and shall bear the
name of the Corporation and the year "1892."
ARTICLE XII.
FISCAL YEAR.
The fiscal year of the Corporation shall end on the 3lst day of December in
each year.
ARTICLE XIII.
AMENDMENTS.
The By-laws of the Corporation may be altered, amended or repealed and new
By-laws may be adopted by the Board (except as Section 1 of Article II may
otherwise require), or by the holders of the outstanding shares of the
Corporation entitled to vote generally at any annual or special meeting of the
shareholders when notice thereof shall have been given in the notice of the
meeting of shareholders.
EMERGENCY BY-LAWS.
SECTION 1. Definitions. As used in these Emergency By-laws,
(a) the term "period of emergency" shall mean any period during which a
quorum of the Board cannot readily be assembled because of some catastrophic
event.
(b) the term "incapacitated" shall mean that the individual to whom such
term is applied shall not have been determined to be dead but shall be missing
or unable to discharge the responsibilities of his office; and
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(c) the term "senior officer" shall mean the Chairman of the Board, the
President, any corporate Vice President, the Treasurer, the Controller and the
Secretary, and any other person who may have been so designated by the Board
before the emergency.
SECTION 2. Applicability. These Emergency By-laws, as from time to time
-------------
amended, shall be operative only during any period of emergency. To the extent
not inconsistent with these Emergency By-laws, all provisions of the regular By-
laws of the Corporation shall remain in effect during any period of emergency.
No officer, director or employee shall be liable for actions taken in good
faith in accordance with these Emergency By-laws.
SECTION 3. Board of Directors. (a) A meeting of the Board may be called by
------------------
any director or senior officer of the Corporation. Notice of any meeting of the
Board need be given only to such of the directors as it may be feasible to reach
at the time and by such means as may be feasible at the time, including
publication or radio, and at a time less than twenty-four hours before the
meeting if deemed necessary by the person giving notice.
(b) At any meeting of the Board, three directors in attendance shall
constitute a quorum. Any act of a majority of the directors present at a meeting
at which a quorum shall be present shall be the act of the Board. If less than
three directors should be present at a meeting of the Board, any senior officer
of the Corporation in attendance at such meeting shall serve as a director for
such meeting, selected in order of rank and within the same rank in order of
seniority.
(c) In addition to the Board's powers under the regular By-laws of the
Corporation to fill vacancies on the Board, the Board may elect any individual
as a director to replace any director who may be incapacitated and to serve
until the latter ceases to be incapacitated or until the termination of the
period of emergency, whichever first occurs. In considering officers of the
Corporation for election to the Board, the rank and seniority of individual
officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change the
principal office or designate several alternative offices or authorize the
officers to do so.
SECTION 4. Appointment of Officers. In addition to the Board's powers under
-----------------------
the regular By-laws of the Corporation with respect to the election of officers,
the Board may elect any individual as an officer to replace any officer who may
be incapacitated and to serve until the latter ceases to be incapacitated.
SECTION 5. Amendments. These Emergency By-laws shall be subject to repeal or
----------
change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the second paragraph of Section 2 with regard to action or inaction prior to
the time of such repeal or change. Any such amendment of these Emergency By-laws
may make any further or different provision that may be practical and necessary
for the circumstances of the emergency.
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EXHIBIT 10
OLIN SENIOR MANAGEMENT INCENTIVE COMPENSATION PLAN
(As Amended through April 27, 1995)
Section 1. Purpose. The purposes of the Olin Senior Management
Incentive Compensation Plan (the "Plan") are (i) to compensate certain members
of senior management of Olin Corporation (the "Company") on an individual basis
for significant contributions to the Company and its subsidiaries and (ii) to
stimulate the efforts of such members by giving them a direct financial interest
in the performance of the Company.
Section 2. Definitions. The following terms utilized in this Plan
shall have the following meanings:
"Cash Flow" shall mean consolidated net income of the Company, before
the after-tax effect of any special charge or gain or cumulative effect of
any change in accounting, plus depreciation and amortization, less capital
and investment spending and plus or minus changes in working capital.
"Committee" shall mean the Compensation and Stock Option Committee of
the Board of Directors of the Company or such other committee of such Board
as such Board may from time to time designate.
"Consolidated Net Assets" shall mean consolidated total assets of the
Company less total non-interest bearing liabilities.
"Earnings Per Share" shall mean for a fiscal year consolidated net
income of the Company before the after-tax effect of any special charge or
gain or cumulative effect of a change in accounting, less ESOP preferred
dividends, divided by the weighted average number of shares of common stock
outstanding plus an equivalent number (one for one) of shares of Common
Stock assuming the conversion of the Series A Preferred Stock.
"Economic Value Added" means the Company's consolidated sales less its
operating costs (including tax) less a capital charge based on the
Company's cost of capital on assets employed in the business.
"Participant" shall mean for a fiscal year each salaried employee who
is designated as a Participant by the Committee prior to the commencement
of such fiscal year (or such later date, if any, as permitted by Section
162(m)); provided for 1994, the Committee shall designate the Participants
prior to April 1, 1994.
"Performance Measures" shall mean for a fiscal year Pre-Tax Profit and
Earnings Per Share; provided that the Committee may in lieu of, or in
addition to, Pre-Tax Profit
<PAGE>
and/or Earnings Per Share designate one or more of the following as
additional, alternative or substitute Performance Measures: Cash Flow,
Economic Value Added, ROE, Return on Capital and RONA provided such
designation would not subject any Incentive Award to Section 162(m).
"Pre-Tax Profit" shall mean for a fiscal year the consolidated income
before taxes of the Company, before any special charges or gains.
"Return on Capital" shall mean consolidated net income of the Company
plus after-tax interest expense and the after-tax effect of any special
charge or gain and any cumulative effect of a change in accounting, divided
by average Consolidated Net Assets.
"ROE" shall mean consolidated net income of the Company before the
after-tax effect of any special charge or gain and any cumulative effect of
any change in accounting, divided by average shareholders' equity.
"RONA" shall mean Pre-tax Profit before interest expense divided by
average Consolidated Net Assets.
"Section 162(m)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, and the regulations promulgated thereunder, all as amended
from time to time.
Section 3. Term. The Plan shall be effective as of January 1, 1994 (the
"Effective Date"), and shall be applicable for all future fiscal years of the
Company unless amended or terminated by the Company pursuant to Section 7.
Section 4. Incentive Award.
4.1 For each fiscal year of the Company, each Participant may be entitled
to receive an award payable in cash ("Incentive Award") in an amount determined
by the Committee as provided in this Plan. Prior to the commencement of a fiscal
year (or such later date, if any, as permitted by Section 162(m)) (but in the
case of the 1994 fiscal year, prior to April 1, 1994), for the Incentive Awards
for such fiscal year, the Committee will designate or approve (i) the
individuals who will be Participants in the Plan, if any, (ii) the Performance
Measures, (iii) if there is more than one Performance Measure, the weighting of
the Performance Measures in determining the Incentive Award, (iv) the
performance goals and payout matrix or formula for each Performance Measure and
(v) the target Incentive Award for each Participant. Following the end of a
fiscal year, the Committee shall determine the Incentive Award for each
Participant by:
(i) comparing actual performance for each measure against the payout
matrix approved for such fiscal year,
(ii) multiplying the payout percentage from the payout matrix for each
Performance Measure by the appropriate weighting factor, and
(iii) summing the weighted payout percentages and multiplying their
overall payout percentage by the Participant's target Incentive Award.
<PAGE>
Notwithstanding anything contained in this Plan to the contrary, the
Committee in its sole discretion may reduce any Incentive Award to any
Participant to any amount, including zero, prior to the certification by
resolution of the Committee of the amount of such Incentive Award.
As a condition to the right of a Participant to receive an Incentive Award,
the Committee shall first certify, by resolution of the Committee, that the
Incentive Award has been determined in accordance with the provisions of this
Plan.
Incentive Awards for a fiscal year shall be determined as soon as
practicable after such fiscal year and shall be paid no later than 75 days
following such fiscal year unless deferred as provided in Section 4.4 hereof.
The maximum Incentive Award paid a Participant under this Plan with respect to a
fiscal year may not exceed 100% of such Participant's annual base salary in
effect on December 31 of the immediately preceding fiscal year.
4.2 A Participant whose employment terminates with cause or without the
Committee's written consent during a fiscal year shall forfeit such
Participant's Incentive Award for such fiscal year.
4.3 Incentive Awards shall be payable in a single, lump sum. However, the
Committee may in its discretion elect to defer payment of any Incentive Award
until such date before or after retirement as a Participant may request upon
such terms and conditions as may be approved or established by the Committee in
its sole judgment; provided that deferrals in the form of phantom stock shall be
paid only in the form of cash and on a fixed date or dates at least six months
after the grant of the Incentive Award or incident to death, retirement,
disability or termination of employment. Such terms may include the payment of
interest or dividend equivalents on deferred amounts.
4.4 The Company shall withhold from any Incentive Award or payments made
or to be made under this Plan any amount of withholding taxes due in respect of
an Incentive Award, its deferral or payment.
4.5 Participation in this Plan does not exclude Participants from
participation in any other benefit or compensation plans or arrangements of the
Company, including other bonus or incentive plans.
Section 5. Administration and Interpretation. The Plan shall be
administered by the Committee, which shall have the sole authority to make rules
and regulations for the administration of the Plan. The interpretations and
decisions of the Committee with regard to the Plan shall be final and
conclusive. The Committee may request advice or assistance or employ such
persons (including, without limitation, legal counsel and accountants) as it
deems necessary for the proper administration of the Plan.
Section 6. Administrative Expenses. Any expense incurred in the
administration of the Plan shall be borne by the Company out of its general
funds.
<PAGE>
Section 7. Amendment or Termination. The Committee of the Company may
from time to time amend the Plan in any respect or terminate the Plan in whole
or in part, provided that no such action shall increase the amount of any
Incentive Award for which performance goals have been established but which has
not yet been earned or paid: provided further that such action will not cause an
Incentive Award to become subject to the deduction limitations contained in
Section 162(m).
Section 8. No Assignment. The rights hereunder, including without
limitation rights to receive an Incentive Award, shall not be pledged, assigned,
transferred, encumbered or hypothecated by an employee of the Company, and
during the lifetime of any Participant any payment of an Incentive Award shall
be payable only to such Participant. A Participant, however, may designate in
writing at any time and from time to time one or more beneficiaries to receive
the payment of any deferred Incentive Award in the event of the Participant's
death; provided such designation is received by the Company prior to such death.
Section 9. The Company. For purposes of this Plan, the "Company" shall
include the successors and assigns of the Company, and this Plan shall be
binding on any corporation or other person with which the Company is merged or
consolidated.
Section 10. Stockholder Approval. This Plan shall be subject to approval
by a vote of the stockholders of the Company at the 1994 Annual Meeting, and
such stockholder approval shall be a condition to the right of a Participant to
receive any benefits hereunder.
Section 11. No Right to Employment. The designation of an employee as a
Participant or grant of an Incentive Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any
affiliate or subsidiary.
Section 12. Governing Law. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Connecticut and applicable federal law.
Section 13. No Trust. Neither the Plan nor any Incentive Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Participant. To the extent
any Participant acquires a right to receive payments from the Company in respect
to any Incentive Award, such right shall be no greater than the right of any
unsecured general creditor of the Company.
Section 14. Section 162(m). It is the intention of the Company that all
payments made under the Plan be excluded from the deduction limitations
contained in Section 162(m). Therefore, if any Plan provision is found not to
be in compliance with the "performance-based" compensation exception contained
in Section 162(m), that provision shall be deemed amended so that the Plan does
so comply to the extent permitted by law and deemed advisable by the Committee,
and in all events the Plan shall be construed in favor of its meeting the
"performance-based" compensation exception contained in Section 162(m).
<PAGE>
Exhibit 11
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Per Share Earnings (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Three Months
Primary earnings per share Ended March 31,
- -------------------------- ----------------
1995 1994
---- ----
<S> <C> <C>
Primary earnings:
Net income $38.4 $15.3
Less ESOP preferred dividend, net of (1.5) (1.7)
tax benefit ----- -----
Net income $36.9 $13.6
===== =====
Primary shares:
Weighted average shares outstanding 24.3 19.2
Weighted average common share equivalents
assuming the conversion of Series A
Conversion Preferred Stock at the date of
issuance - 2.7
----- -----
Primary shares 24.3 21.9
===== =====
Primary net income per common share $1.52 $0.62
===== =====
Fully diluted earnings per share
- --------------------------------
Fully diluted earnings:
Net income $38.4 $15.3
Less additional ESOP contribution (0.7) (0.7)
----- -----
Net income $37.7 $14.6
===== =====
Fully diluted shares:
Weighted average number of common shares
outstanding and common stock equivalents 24.3 21.9
Dilutive effect of ESOP preferred stock 1.5 1.6
----- -----
Fully diluted shares 25.8 23.5
===== =====
Fully diluted net income per common share $1.46 $0.62
===== =====
</TABLE>
<PAGE>
Exhibit 12(a)
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------
1995 1994
---- ----
<S> <C> <C>
Earnings:
Income before taxes $59.5 $23.9
Add (deduct):
Income taxes of 50% owned affiliates 1.2 0.9
Equity in losses of less than 50%
owned affiliates 0.9 1.3
Dividends received from less
than 50% owned affiliates - 0.1
Interest capitalized, net of amortization 0.1 0.4
Fixed charges as described below 15.5 13.4
----- -----
Total $77.2 $40.0
===== =====
Fixed Charges:
Interest expense $10.8 $9.4
Estimated interest factor in rent expense 4.7 4.0
----- -----
Total $15.5 $13.4
===== =====
Ratio of earnings to fixed charges 5.0 3.0
===== =====
</TABLE>
<PAGE>
Exhibit 12(b)
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------
1995 1994
---- ----
<S> <C> <C>
Earnings:
Income before taxes $59.5 $23.9
Add (deduct):
Income taxes of 50% owned affiliates 1.2 0.9
Equity in losses of less than 50%
owned affiliates 0.9 1.3
Dividends received from less
than 50% owned affiliates - 0.1
Interest capitalized, net of amortization 0.1 0.4
Fixed charges as described below 15.5 13.4
---- ----
Total $77.2 $40.0
===== =====
Fixed Charges:
Interest expense $10.8 $9.4
Estimated interest factor in rent expense 4.7 4.0
Preferred stock dividend requirement 6.8 7.1
--- ---
Total $22.3 $20.5
===== =====
Ratio of earnings to combined fixed charges
and preferred stock dividends 3.5 2.0
=== ===
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements contained in Item 1 of Form 10-Q for the period ended March
31, 1995 and is qualified in its entirety by reference to such financial
statements. Figures are rounded to the nearest 100,000 (except EPS).
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,400
<SECURITIES> 0
<RECEIVABLES> 508,700
<ALLOWANCES> 0
<INVENTORY> 412,400
<CURRENT-ASSETS> 998,000
<PP&E> 2,539,200
<DEPRECIATION> (1,658,200)
<TOTAL-ASSETS> 2,143,100
<CURRENT-LIABILITIES> 705,600
<BONDS> 422,700
<COMMON> 24,300
0
84,300
<OTHER-SE> 661,300
<TOTAL-LIABILITY-AND-EQUITY> 2,143,100
<SALES> 766,100
<TOTAL-REVENUES> 766,100
<CGS> 613,000
<TOTAL-COSTS> 613,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,300
<INCOME-PRETAX> 59,500
<INCOME-TAX> 21,100
<INCOME-CONTINUING> 38,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,400
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.46
</TABLE>
