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, 1996
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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
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(Exact name of registrant as specified in its charter)
Virginia 13-1872319
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 Merritt 7, Norwalk, CT 06856
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(Address of principal executive offices) (Zip Code)
(203) 750-3000
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(Registrant's telephone number, including area code)
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(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
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As of April 30, 1996 there were outstanding 24,893,459 shares of the
registrant's common stock.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements.
<TABLE>
<CAPTION>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions)
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
- ------
Cash $ 5.5 $ 7.5
Accounts receivable, net 591.6 554.9
Inventories 428.6 409.7
Other current assets 78.4 79.7
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Total current assets 1,104.1 1,051.8
Investments and advances 78.8 79.8
Property, plant and equipment
(less accumulated depreciation
of $1,723.4 and $1,706.8) 932.4 955.7
Goodwill 119.3 120.6
Other assets 73.5 63.9
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Total assets $2,308.1 $2,271.8
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Short-term borrowings and current
installments of long-term debt $ 160.5 $ 122.1
Accounts payable 270.4 352.1
Other current liabilities 329.8 281.2
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Total current liabilities 760.7 755.4
Long-term senior debt 286.3 286.2
Long-term subordinated debt 125.0 125.0
Other liabilities 261.1 263.9
Shareholders' equity:
Preferred stock, par value $1 per share:
Authorized 10.0 shares.
ESOP Preferred Stock
Issued 1.0 shares 75.7 77.3
Guaranteed ESOP obligations (22.0) (22.0)
Common stock, par value $1 per share:
Authorized 60.0 shares.
Issued 24.9 shares (24.7 in 1995) 24.9 24.7
Additional paid-in capital 429.6 422.5
Cumulative translation adjustment (4.9) (4.3)
Retained earnings 371.7 343.1
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Total shareholders' equity 875.0 841.3
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Total liabilities and
shareholders' equity $2,308.1 $2,271.8
======== ========
<FN>
- --------------------
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Income
(In millions, except per share amounts)
<CAPTION>
Three Months
Ended March 31,
---------------
1996 1995
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<S> <C> <C>
Sales $789.4 $766.1
Operating expenses:
Cost of goods sold 608.8 613.0
Selling and administration 100.6 79.4
Research and development 11.1 7.3
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Operating income 68.9 66.4
Interest expense 10.2 10.3
Interest and other income 11.1 3.4
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Income before taxes 69.8 59.5
Income taxes 24.8 21.1
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Net income 45.0 38.4
Preferred dividends 1.5 1.6
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Net income available to
common shareholders $ 43.5 $ 36.8
====== ======
Per share of common stock:
Primary $1.75 $1.52
Fully diluted $1.70 $1.46
Dividends $0.60 $0.60
===== =====
Average common shares and
common equivalents outstanding 24.8 24.3
==== ====
<FN>
- ----------------------
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows
(In millions)
<CAPTION>
Three Months
Ended March 31,
---------------
1996 1995
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<S> <C> <C>
Operating activities
- --------------------
Net income $45.0 $38.4
Earnings of non-consolidated affiliates (2.3) (1.0)
Depreciation and amortization 38.4 34.8
Deferred taxes 2.4 4.4
Changes in assets and liabilities
net of sale of business:
Receivables (39.6) (90.2)
Inventories (21.5) (19.5)
Other current assets 1.3 0.9
Current liabilities (45.3) (15.5)
Noncurrent liabilities (0.5) 1.7
Other operating activities (10.6) 0.4
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Net operating activities (32.7) (45.6)
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Investing activities
- --------------------
Capital expenditures (22.2) (36.8)
Disposition of property, plant and equipment 20.8 -
Proceeds from sale of business 5.5 -
Other investments 0.5 0.2
Other investing activities - 0.6
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Net investing activities 4.6 (36.0)
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Financing activities
- --------------------
Long-term debt repayments - (0.1)
Short-term borrowings 38.4 97.2
Stock options exercised 4.0 0.1
Dividends paid (16.4) (17.1)
Other financing activities 0.1 (0.1)
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Net financing activities 26.1 80.0
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Net decrease in cash (2.0) (1.6)
Cash, beginning of period 7.5 7.0
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Cash, end of period $ 5.5 $ 5.4
===== =====
<FN>
- --------------------
The accompanying Notes to Condensed Financial Statements are an
integral part of the condensed financial statements.
</FN>
</TABLE>
<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, 1995.
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, 1996, reflect
certain estimates relating to inventory quantities and costs at
December 31, 1996.
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 (of which $22 million is
outstanding at March 31, 1996), and $40 million of borrowings from
the company.
At March 31, 1996, there were approximately 1.0 million shares of
ESOP preferred stock outstanding at a value of $88.75 per share.
The quarterly fixed dividend rate is $1.4925 per share. The ESOP
preferred stock is convertible by the ESOP Trustee 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. 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 at the date of issuance. 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. In January 1996, the company sold its corporate headquarters. This
transaction generated a gain of approximately $7 million, which was
reported in Interest and Other Income. In March 1996, the company
sold its Electrostatics business. This transaction did not have a
material impact on the company's results of operations.
6. Effective January 1, 1996, the company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of." The adoption of this standard did not have a
material impact on the company's financial position and its
operating results.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
(in millions, except per share data)
<TABLE>
<CAPTION>
CONSOLIDATED Three Months
Ended March 31,
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1996 1995
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<S> <C> <C>
Sales $789.4 $766.1
Gross Margin 180.6 153.1
Selling and Administration 100.6 79.4
Research and Development 11.1 7.3
Operating Income 68.9 66.4
Net Income 45.0 38.4
Net Income per Share
Primary 1.75 1.52
Fully Diluted 1.70 1.46
</TABLE>
Sales increased 3% as higher selling prices and the inclusion of sales of the
OCG acquisition more than offset the impact of lower volumes in the Defense
and Ammunition segment and lower metal values and volumes in the Metals
segment.
Gross margin percentage increased to 23% from 20%, as higher selling prices
and an improved product mix more than offset increased raw material and
manufacturing costs.
Selling and administration expenses as a percentage of sales increased from
10.4% to 12.7%. The increase was primarily attributable to charges to provide
for claims and certain legal matters in the Defense and Ammunition segment,
the inclusion of the OCG's operating expenses and additional advertising and
promotional activities in pool products.
Research and development expenses increased as a result of the OCG acquisition.
During the quarter the company completed the sale of its corporate headquarters.
The gain of approximately $7 million, which was reported in Interest and Other
Income, was offset by charges to provide for claims and certain legal matters,
mentioned above.
<TABLE>
<CAPTION>
CHEMICALS Three Months
Ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Sales $414.5 $350.9
Operating Income 61.9 31.9
</TABLE>
Sales and operating income increased 18% and 94%, respectively, due primarily
to higher demand and pricing for most products. Chlor-Alkali's improved
performance was driven by higher sales volume and pricing for caustic.
Toluene diisocyanate (TDI) was the main contributor to urethanes' improved
performance due to higher sales volumes and pricing and the absence of costs
associated with a scheduled maintenance outage last year. Pool products
results were favorably impacted by higher prices and an improved product mix
which more than offset the impact of lower sales volumes due to the divestment
of the chlorinated isocyanurates business and additional promotional activities.
In the ethylene oxide and propylene oxide derivatives businesses, increased
demand and pricing for most products along with lower raw material costs
contributed to its favorable performance. Higher sales volumes contributed to
the improved performance of the specialty urethanes coating business. Micro-
electronic Materials sales and operating income increased substantially over the
prior year. This improvement reflects the impact of the OCG acquisition and
higher demand for electronic chemical products and services. In addition, sales
of MQUAD[R], the company's proprietary electronic package, were substantially
ahead of last year. In February 1996, Microelectronic Materials opened a new
semiconductor chemicals manufacturing plant in Mesa, AZ. This $30 million
state-of-the-art facility will expand the company's capacity by more than 50%
for its existing high-purity semiconductor chemicals and its new lines of
next-generation, parts-per-trillion chemicals.
<TABLE>
<CAPTION>
METALS Three Months
Ended March 31,
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1996 1995
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<S> <C> <C>
Sales $225.7 $239.6
Operating Income 17.1 23.6
</TABLE>
Sales and operating income decreased 6% and 28%, respectively. Sales decreased
due to lower metal values and shipments as the industry returned to more normal
demand levels for strip products after two years of record demand. In addition
to the impact of lower demand for strip, operating income was also impacted by
the lower demand for tubing and fabricated products. Year-to-year improvements
were recorded by the Somers operation, which had strong CopperBond[R] foil and
alloy shipments. At the Indianapolis plant, the modernization of the seamless
copper alloy tube facility is expected to be on-stream in the second half of
the year and should increase capacity and improve quality.
<TABLE>
<CAPTION>
DEFENSE AND AMMUNITION Three Months
Ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Sales $149.2 $175.6
Operating Income (Loss) (10.1) 10.9
</TABLE>
Sales decreased 15% from 1995, principally attributable to lower sales of
domestic sporting ammunition and medium caliber ammunition, and reduced
commercial Ball Powder[R] shipments. The operating loss of $10.1 million
resulted from the sales decrease and approximately $7 million of charges to
provide for claims and certain legal matters. Winchester's financial
performance was significantly behind 1995 levels due to higher raw material
costs and lower sales as major customers have delayed purchases due to an
industry-wide price increase. Ordnance operating results were behind last
year due to lower shipments of commercial Ball Powder[R] propellant and
certain medium caliber ammunition. Aerospace's financial performance
improved primarily due to lower operating expenses.
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
condition. 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. In view
of the continuing uncertainty regarding the size, content and priorities of the
annual Department of Defense budget, 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.
ENVIRONMENTAL
In the 1996 first quarter, the company spent approximately $6 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 1996 is estimated to be $35 million. Cash outlays for
remedial and investigatory activities associated with former waste sites and
past operations were not charged to income but instead were charged to reserves
established for such costs identified and expensed to income in prior periods;
$4 million was charged to income in 1996. 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 1995 and may be material to net
income in 1996 and future years.
The company's consolidated balance sheets included liabilities for future
environmental expenditures to investigate and remediate known sites amounting
to $109 million and $111 million at March 31, 1996 and December 31, 1995, of
which $74 million and $76 million was classified as other noncurrent
liabilities, respectively. Those amounts 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.
Annual environmental-related cash outlays for site investigation and
remediation, capital projects and normal plant operations are expected to range
between $85-$100 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.
LITIGATION
There is 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 1995 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.
LIQUIDITY, INVESTMENT ACTIVITY and OTHER FINANCIAL DATA
<TABLE>
<CAPTION>
Cash Flow Data Three Months
Provided by(used for)(in millions) Ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Net Operating Activities $(32.7) $(45.6)
Capital Expenditures (22.2) (36.8)
Net Investing Activities 4.6 (36.0)
Net Financing Activities 26.1 80.0
</TABLE>
Cash flow from operations, proceeds from the sales of assets and the use of
credit facilities financed the company's seasonal working capital requirements,
capital expenditures and dividends. At March 31, 1996, the company maintained
committed credit facilities with banks of $351 million of which $257 million
was available. The company believes that these credit facilities are adequate
to satisfy its liquidity needs for the near future. Cash flow from operations
improved due to higher operating income and improved working capital
management.
Capital spending of $22.2 million in 1996 was 40% lower than last year's
comparable period as funds were spent in 1995 on the TDI plant maintenance
turnaround. Total year capital spending, including environmental capital
spending of $17 million, is estimated to decrease 10-20% from 1995 due to a
planned reduction to control capital costs. Historically, the company has
funded its environmental capital spending through cash flow from operations
and expects to do so in the future. Proceeds from the sale of the corporate
headquarters and the divestment of the Electrostatics business approximated
$26 million.
At March 31, 1996, the percent of total debt to total capitalization
(excluding the reduction in equity for the Contributing Employee Ownership
Plan) was 38.9%, up from 38.2% at year-end 1995 and down from 40.8% at
March 31, 1995. The increase from year-end 1995 is attributable to higher
short-term borrowings to finance seasonal working capital requirements.
1996 OUTLOOK
Cautionary Statement under Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995: Reference is made to "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained in
Item 7 of Olin's 1995 Form 10-K. The information contained in the "1996
Outlook" sections of such Item 7 is forward looking and involves risks and
uncertainties that could significantly affect expected results. Factors that
could cause actual results to differ materially from those discussed in the
"1996 Outlook" sections include but are not limited to: competitive pricing
pressures, including Olin's ability to maintain recent chemical and Winchester
price increases; higher than expected raw material and commodity costs; the
supply/demand balance for the company's products, including the impact of
excess industry capacity; any recession in the U.S. economy; failure to
complete capital projects as scheduled; changes in scheduled maintenance at
certain chemical plants; higher than expected legal expenses and cost
overruns; and failure to achieve targeted cost reduction programs.
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
3. Bylaws, as amended, effective April 25, 1996.
10(a). Retirement Plan for Non-Employee Directors of Olin Corporation (As
Amended through April 25, 1996).
(b). 1996 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries (Incorporated by reference to Exhibit A to Olin's Proxy
Statement, dated March 12, 1996, relating to the 1996 Annual Meeting
of Shareholders (SEC File No. 1-1070)).
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
Except for a Current Report on Form 8-K, dated February 21, 1996, with
respect to Item 5 thereof which was filed on February 21, 1996, no reports
on Form 8-K were filed during the quarter ended March 31, 1996.
<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: A.W. Ruggiero
-----------------
A.W. Ruggiero
Senior Vice President and
Chief Financial Officer
(Authorized Officer)
Date: May 13, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
3. Bylaws, as amended, effective April 25, 1996.
10(a). Retirement Plan for Non-Employee Directors of Olin Corporation (As
Amended through April 25, 1996).
(b). 1996 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries (Incorporated by reference to Exhibit A to Olin's Proxy
Statement, dated March 12, 1996, relating to the 1996 Annual Meeting
of Shareholders (SEC File No. 1-1070)).
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
As Amended Effective April 25, 1996
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 matter 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 ten 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,
<PAGE>
as nearly equal in number as possible, with the members of each class to serve
for the respective terms of 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.
<PAGE>
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.
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.
<PAGE>
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.
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
* [Compiler's Note: This Article III was adopted by the shareholders at the
Annual Meeting of Shareholders, April 28, 1994.]
<PAGE>
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
<PAGE>
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.
(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 III, 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
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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.
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 depositories 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.
<PAGE>
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 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 canceled. 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.
<PAGE>
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. Control Share Acquisitions. Article 14.1 of Chapter 9 of Title
13.1 of the Code of Virginia shall not apply to acquisitions of shares of the
Corporation.
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.
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."
<PAGE>
ARTICLE XII.
FISCAL YEAR.
The fiscal year of the Corporation shall end on the 31st 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
(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
<PAGE>
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.
<PAGE>
Exhibit 10(A)
Retirement Plan
For Non-employee Directors
of Olin Corporation
(As Amended Through April 25, 1996)
Article I. The Plan
1.1 Establishment of Plan. Olin Corporation (the "Company") hereby
establishes the Retirement Plan for Non-employee Directors of Olin Corporation
(the "Plan"), effective July 1, 1987.
1.2 Purpose. The purpose of this Plan is to provide eligible members of
the Company's Board of Directors ("Board") with retirement income in
consideration of their valued service on the Board. The Board has determined
that the establishment of such a benefit will be useful in its efforts to
retain and attract highly qualified individuals to serve as Directors of the
Company.
Article II. Eligibility
2.1 Eligibility. An individual shall be entitled to a benefit under the
Plan if he or she has served as a Director of the Company after July 1, 1987
and has at least five (5) Years of Service as a non-employee Director;
PROVIDED, HOWEVER, that if an individual is eligible for any other pension
benefits from the Company, including, but not limited to, benefits from the
NonBargaining Employees Pension Plan ("NonBargaining Plan"), the Olin Senior
Executive Pension Plan or another pension plan of the Company (collectively,
"Other Olin Plans") the maximum annual benefit to such individual hereunder
shall not exceed 50% of his or her Average Compensation (as defined in the
NonBargaining Plan) less (a) the amount of annual retirement allowance from all
Other Olin Plans and all pension plans of the individual's previous employers
and (b) 50% of the individual's Primary Social Security Benefit (as defined in
the NonBargaining Plan).
<PAGE>
2.2 Years of Service. A twelve consecutive month period during which an
individual served as a Director of the Company shall constitute a Year of
Service under the Plan.
Article III. Benefits
3.1A Application of Sections 3.1, 3.2 and 3.3. Each Director eligible to
participate in the Plan on the date of adoption of this Section 3.1A and each
eligible Director thereafter elected for the first time, may, at least 12
months prior to the date he or she ceases to be a Director, elect to have the
provisions of Sections 3.1, 3.2 and 3.3 below apply. In the absence of such an
election, which shall be in writing and filed with the Secretary of the
Company, Sections 3.1, 3.2 and 3.3 shall be of no force or effect with respect
to such Director or his spouse and Section 3.4 shall apply.
3.1 Amount of Benefit. The benefit payable under the Plan shall be an
annual benefit equal to a percentage, determined in accordance with the
following schedule, of the annual retainer for service on the Board in effect
immediately prior to the individual's retirement from the Board:
Percentage of
Whole Years of Service Annual Retainer
5 Years 50%
6 Years 60%
7 Years 70%
8 Years 80%
9 Years 90%
10 Years 100%
3.2 Payment of Benefits. The annual benefit provided for in Section 3.1
shall be payable in quarterly installments on March 31, June 30, September 30
and December 31, in an amount equal to one-fourth of the annual benefit,
commencing as of March 31 of the calendar year following the year in which
occurs the later of (i) the Director's 65th birthday or (ii) the Director's
retirement from the Board. Payments will continue for the life of the
<PAGE>
Director with the last payment being made on the payment date next preceding
the Director's date of death, subject to the provisions for a surviving
spouse's death benefit contained in Section 3.3.
3.3 Surviving Spouse Benefit.
(a) The surviving spouse of a non-employee Director who was eligible
for a benefit under the Plan and who dies while serving on the Board shall
receive a surviving spouse benefit equal to 50% of the benefit that would have
been paid to the non-employee Director had he retired from the Board on the
date he died.
(b) The surviving spouse of a former non-employee Director who dies
while receiving payments from the Plan, shall receive a survivors benefit equal
to 50% of the payments which were being paid to the decedent under the Plan.
(c) Notwithstanding (a) or (b) above, if the surviving spouse is
more than four years younger than the non-employee Director, the surviving
spouse benefit shall be reduced so that the present value of the spouse's
lifetime benefit, as determined by the Company, is the same as it would have
been if he or she was four years younger than the non-employee Director.
(d) Payments to the surviving spouse will commence on the first
payment date following the date of the non-employee Director's death and
continue for the life of the surviving spouse, with the last payment due on the
payment date next preceding the surviving spouse's date of death.
3.4 Payment of Lump Sum Benefit. Except in the case of a Director who
has filed an election to receive installment benefits in accordance with
Section 3.1A, when a Director entitled to benefits under the Plan retires, dies
or otherwise ceases to be a Director of the Company (the "Termination Date"),
the Director, or in the case of his or her death, the surviving spouse of the
Director, shall automatically be paid a lump sum amount in cash in full
satisfaction of any benefit payable under this Plan. Such lump sum shall be
calculated as an amount equal to the actuarial present value of the annual
benefit which would otherwise had been paid to the Director under Section 3.1
and such surviving spouse under Section 3.3,
<PAGE>
discounted to the present value using the settlement rate under the Financial
Accounting Standard No. 87 (or any successor standard then in effect) applied
by the Company to determine its annual pension expense as of the January 1
immediately preceding the Director's Termination Date. If a Director is under
age 65 at his or her Termination Date, the above calculation shall assume a
Termination Date at age 65. Such actuarial present value shall be determined
by the actuary then providing actuarial services to the Olin Corporation
Employees Pension Plan. Such lump sum payment shall be made as of the January
1 following the end of the calendar year in which occurs the Director's
Termination Date and shall be in lieu of any benefits under the Plan.
Article IV. Change In Control
4.1A Application of Sections 4.1 and 4.2. Section 4.1 and Section 4.2
shall be applicable only to a Director who has elected, as provided in Section
3.1A, to have the provisions of Sections 3.1, 3.2 and 3.3 apply or to a former
Director or spouse who is receiving quarterly installment payments under the
Plan.
4.1 Change in Control. A "Change in Control" for purposes of the Plan
shall be deemed to have occurred if (i) the Company ceases to be publicly owned
with at least 1,000 stockholders; (ii) a person, partnership, joint venture,
corporation or other entity, or two or more of any of the foregoing acting as a
group (or a "person" within the meaning of Sections 13(d)(3) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Act"), other than the
Company, a majority-owned subsidiary of the Company or an employee benefit plan
of the Company or such subsidiary, become(s) the "beneficial owner" (as defined
in Rule 13d-3 under the Act) of 20% or more of the then outstanding voting
stock of the Company; (iii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Company's Board
of Directors (together with any new Director whose election by the Company's
Board of Directors or whose nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds of the Directors
then
<PAGE>
still in office who either were Directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Directors then in office; or (iv)
the Company's Board of Directors determines that a tender offer for the
Company's shares indicates a serious intention by the offeror to acquire
control of the Company.
4.2 Lump Sum Payment. Upon a Change in Control, each individual then
entitled to benefits under the Plan, including for this purpose, each non-
employee Director who has met the service requirements for such benefits but is
not yet receiving payments, shall automatically be paid a lump sum amount in
cash by the Company equal to the actuarial present value of such benefits
discounted to present value using the settlement rate under Financial
Accounting Standard No. 87 (or any successor standard then in effect) applied
by the Company on the January 1 next preceding or coinciding with the date of
the Change in Control applied to each future payment from the time it
ordinarily would have become payable to the date of the Change in Control.
Such actuarial present value shall be determined by the actuary then providing
actuarial services to the Company's Salaried Pension Plan. Such lump sum
payment shall be made immediately upon a Change in Control regardless of the
age of the individual at the time and shall be in lieu of any benefits under
the Plan which might otherwise become due thereafter. If a Director is less
than age 65 on the date of a Change in Control, the above calculation shall
assume the Change in Control occurred at age 65. In the event such lump sum
payment shall be subject to tax under Section 4999 of the Internal Revenue Code
or a successor provision ("4999"), such payment shall be increased so that
after paying the tax imposed by 4999 and the income tax on the amount of the
increase provided by this sentence, the payee will have received a net payment
equal to that which he or she would have received if 4999 did not apply.
<PAGE>
Article V. General
5.1 Administration. The Plan will be administered by the Vice President
- - Human Resources of the Company or other Officer of the Company having
substantially similar responsibilities. All decisions by such executive with
respect to interpretation of the terms of the Plan or questions or disputes
arising under the Plan shall be final and binding.
5.2 Removal from the Plan; Non-Payment of Benefits. Any Director may be
removed from the Plan by the Directors Committee of the Board at any time for
cause, whether or not the Director has begun to receive payments under the
Plan, provided that the Director and his or her spouse shall not be required to
return any payments made prior to removal. Cause for purposes of this Section
5.2 means the willful engaging by a Director in misconduct significantly and
demonstrably injurious to the Company or in conduct constituting a felony or
fraud. Neither the Director nor his or her spouse shall be entitled to receive
any payments from the Plan from and after the date of the removal of the
director nor shall any such individual have any cause of action as a result of
such removal.
5.3 Liability for Payment. The obligations of the Company hereunder
shall not be funded in any manner. The rights of any person to receive
benefits under the Plan are limited to those of a general creditor of the
Company.
5.4 Amendment and Termination. The Plan may be amended or terminated at
any time or from time to time by the Board without adversely affecting rights,
if any, of non-employee Directors accrued prior to the date of such amendment
or termination.
5.5 Assignability. No right to payment or any other interest under the
Plan shall be assignable or subject to attachment, execution or levy of any
kind.
<PAGE>
5.6 Consulting. Each individual receiving benefits under the Plan, and
in consideration therefor, shall be expected to be available for a one-year
period following his retirement from the Board, to consult, upon reasonable
request, with the Chief Executive Officer of the Company and with the Board,
provided that such consulting shall be on a basis which is consistent with the
individual's retirement, age and health, and his other business affiliations.
<PAGE>
Exhibit 11
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Per Share Earnings (Unaudited)
(In millions)
<CAPTION>
Three Months
Ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Primary earnings per share
- --------------------------
Primary earnings:
Net income $ 45.0 $ 38.4
Less ESOP preferred dividend, net of tax benefit (1.6) (1.5)
------ ------
Net income $ 43.4 $ 36.9
====== ======
Primary shares 24.8 24.3
==== ====
Primary net income per common share $ 1.75 $ 1.52
====== ======
Fully diluted earnings per share
- --------------------------------
Fully diluted earnings:
Net income $ 45.0 $ 38.4
Less additional ESOP contribution (0.8) (0.7)
------ ------
Net income $ 44.2 $ 37.7
====== ======
Fully diluted shares:
Weighted average number of common shares
outstanding and common stock equivalents 24.8 24.3
Dilutive effect of:
Stock options 0.2 -
ESOP preferred stock 1.0 1.5
------ ------
Fully diluted shares 26.0 25.8
====== ======
Fully diluted net income per common share $ 1.70 $ 1.46
====== ======
</TABLE>
<PAGE>
Exhibit 12(a)
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges (Unaudited)
(In millions)
<CAPTION>
Three Months
Ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Earnings:
Income before taxes $ 69.8 $ 59.5
Add (deduct):
Income taxes of 50% owned affiliates 0.6 1.2
Equity in (income) losses of less than 50%
owned affiliates (0.5) 0.9
Interest capitalized, net of amortization - 0.1
Fixed charges as described below 15.6 15.5
------ ------
Total $ 85.5 $ 77.2
====== ======
Fixed Charges:
Interest expense $ 10.4 $ 10.8
Estimated interest factor in rent expense 5.2 4.7
------ ------
Total $ 15.6 $ 15.5
====== ======
Ratio of earnings to fixed charges 5.5 5.0
=== ===
</TABLE>
<PAGE>
Exhibit 12(b)
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends (Unaudited)
(In millions)
<CAPTION>
Three Months
Ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Earnings:
Income before taxes $ 69.8 $ 59.5
Add (deduct):
Income taxes of 50% owned affiliates 0.6 1.2
Equity in (income) losses of less than 50%
owned affiliates (0.5) 0.9
Interest capitalized, net of amortization - 0.1
Fixed charges as described below 15.6 15.5
------ ------
Total $ 85.5 $ 77.2
====== ======
Fixed Charges:
Interest expense $ 10.4 $ 10.8
Estimated interest factor in rent expense 5.2 4.7
Preferred stock dividend requirement 2.4 6.8
------ ------
Total $ 18.0 $ 22.3
====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends 4.8 3.5
=== ===
</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, 1996 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-END> MAR-31-1996
<CASH> 5,500
<SECURITIES> 0
<RECEIVABLES> 591,600
<ALLOWANCES> 0
<INVENTORY> 428,600
<CURRENT-ASSETS> 1,104,100
<PP&E> 2,655,800
<DEPRECIATION> (1,723,400)
<TOTAL-ASSETS> 2,308,100
<CURRENT-LIABILITIES> 760,700
<BONDS> 411,300
0
75,700
<COMMON> 24,900
<OTHER-SE> 774,400
<TOTAL-LIABILITY-AND-EQUITY> 2,308,100
<SALES> 789,400
<TOTAL-REVENUES> 789,400
<CGS> 608,800
<TOTAL-COSTS> 608,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,200
<INCOME-PRETAX> 69,800
<INCOME-TAX> 24,800
<INCOME-CONTINUING> 45,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,000
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.70
</TABLE>
