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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
---------------------
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 1-7573
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PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 73-0618660
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Parker Building, Eight East Third Street, Tulsa, Oklahoma 74103
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (918) 585-8221
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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 September 30, 1999, 77,272,602 common shares were outstanding.
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<TABLE>
PARKER DRILLING COMPANY
INDEX
<CAPTION>
<S>
<C>
Part I. Financial Information Page No.
Consolidated Condensed Balance Sheets (Unaudited) -
September 30, 1999 and December 31, 1998 2
Consolidated Condensed Statements of Operations (Unaudited) -
Three and Nine Months Ended September 30, 1999 and 1998 3
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Nine Months Ended September 30, 1999 and 1998 4
Notes to Unaudited Consolidated Condensed
Financial Statements 5 - 10
Report of Independent Accountants 11
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 18
Part II. Other Information
Item 6, Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibit 3, By-Laws as amended July 27, 1999
Exhibit 15, Letter Re Unaudited Interim
Financial Information
Exhibit 27, Financial Data Schedule [Edgar Version Only]
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<CAPTION> September 30, December 31,
1999 1998
-------------- ------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,532 $ 24,314
Other short-term investments 300 -
Accounts and notes receivable 89,778 105,810
Rig materials and supplies 12,425 18,755
Other current assets 11,512 13,224
---------- ----------
Total current assets 134,547 162,103
Property, plant and equipment less accumulated
depreciation and amortization of $404,917 at
September 30, 1999 and $445,464 at December 31, 1998 679,958 729,873
Goodwill, net of accumulated amortization
of $21,296 at September 30, 1999 and $13,025
at December 31, 1998 205,961 214,232
Other noncurrent assets 71,148 53,118
---------- ----------
Total assets $1,091,614 $1,159,326
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 1,179 $ 31,404
Accounts payable and accrued liabilities 69,216 72,437
Accrued income taxes 7,596 7,576
---------- ----------
Total current liabilities 77,991 111,417
---------- ----------
Long-term debt 628,912 630,479
Deferred income tax 32,310 41,253
Other long-term liabilities 11,614 12,227
Stockholders' equity:
Common stock, $.16 2/3 par value 12,879 12,815
Capital in excess of par value 343,016 341,699
Retained earnings (accumulated deficit) (15,108) 9,436
---------- ----------
Total stockholders' equity 340,787 363,950
---------- ----------
Total liabilities and stockholders' equity $1,091,614 $1,159,326
---------- ----------
---------- ----------
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts) (Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
-------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Domestic drilling $ 27,206 $ 46,424 $ 84,494 $157,337
International drilling 45,868 61,880 143,620 182,787
Rental tools 6,978 7,695 20,533 24,243
Other 28 592 273 1,590
-------- -------- -------- --------
Total revenues 80,080 116,591 248,920 365,957
-------- -------- -------- --------
Operating expenses:
Domestic drilling 26,047 32,979 77,478 103,655
International drilling 31,719 45,102 98,417 126,870
Rental tools 2,801 3,695 8,176 10,774
Other 836 947 944 1,974
Depreciation and
amortization 20,944 19,435 61,246 55,457
General and administrative 4,106 3,830 12,301 13,191
Restructuring charges (Note 6) - - 3,000 -
Provision for reduction in
carrying value of certain
assets (Note 5) 5,357 - 10,607 -
-------- -------- -------- --------
Total operating expenses 91,810 105,988 272,169 311,921
-------- -------- -------- --------
Operating income (loss) (11,730) 10,603 (23,249) 54,036
-------- -------- -------- --------
Other income (expense):
Interest expense (15,048) (12,620) (41,695) (37,896)
Interest income 373 887 1,042 2,266
Gain on disposition of assets 34,330 102 37,279 981
Other income - net (590) (923) 1,681 (2,682)
-------- -------- -------- --------
Total other income (expense) 19,065 (12,554) (1,693) (37,331)
-------- -------- -------- --------
Income (loss) before
income taxes 7,335 (1,951) (24,942) 16,705
-------- -------- -------- --------
Income tax expense (benefit):
Current tax expense-foreign 3,402 1,373 8,521 8,526
Deferred tax expense (benefit) 2,608 400 (8,919) 2,500
-------- -------- -------- --------
6,010 1,773 (398) 11,026
-------- -------- -------- --------
Net income (loss) $ 1,325 $ (3,724) $(24,544) $ 5,679
-------- -------- -------- --------
-------- -------- -------- --------
Earnings (loss) per share,
Basic $ .02 $ (.05) $ (.32) $ .07
-------- -------- -------- --------
Diluted $ .02 $ (.05) $ (.32) $ .07
-------- -------- -------- --------
Number of common shares used
in computing earnings per share:
Basic 77,227,118 76,761,952 77,102,742 76,732,664
---------- ---------- ---------- ----------
Diluted 77,782,921 76,761,952 77,102,742 77,021,254
---------- ---------- ---------- ----------
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
---------------------
1999 1998
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (24,544) $ 5,679
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 61,246 55,457
Loss (gain) on disposition of property,
plant and equipment (37,279) (981)
Expenses not requiring cash 2,746 3,219
Deferred income taxes (8,919) 2,500
Provision for reduction in carrying
value of certain assets 10,607 -
Change in operating assets and liabilities 17,909 59,900
--------- ----------
Net cash provided by operating
activities 21,766 125,774
--------- ---------
Cash flows from investing activities:
Capital expenditures (46,000) (169,447)
Acquisition of Hercules - (1,147)
Acquisition of Bolifor - (2,189)
Proceeds from the sale of equipment 51,862 4,061
Purchase of short-term investments (300) (9,999)
Other-net 463 (802)
--------- ---------
Net cash provided by (used in) investing activities 6,025 (179,523)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt 10,252 172,692
Principal payments under debt obligations (41,763) (119,473)
Other (62) (282)
--------- ---------
Net cash provided by (used in)
financing activities (31,573) 52,937
--------- ---------
Net change in cash and cash equivalents (3,782) (812)
Cash and cash equivalents at
beginning of period 24,314 32,444
--------- ---------
Cash and cash equivalents at
end of period $ 20,532 $ 31,632
--------- ---------
--------- ---------
Supplemental cash flow information:
Interest paid $ 34,362 $ 29,563
Taxes paid $ 8,501 $ 10,144
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The Company has changed its fiscal year end from August 31 to December 31,
effective for the fiscal year beginning January 1, 1999. The consolidated
condensed financial statements included in this Form 10-Q represent the
period from January 1, 1999 through September 30, 1999, the first nine
months reported under the Company's new fiscal year, and the comparable
period in the prior year.
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements reflect all adjustments (of a normally
recurring nature) which are necessary for a fair presentation of (1) the
financial position as of September 30, 1999 and December 31, 1998, (2) the
results of operations for the three and nine months ended September 30,
1999 and 1998, and (3) cash flows for the nine months ended September 30,
1999 and 1998. Results for the nine months ended September 30, 1999 are
not necessarily indicative of the results which will be realized for the
year ending December 31, 1999. The financial statements should be read in
conjunction with the Company's Form 10-K for the year ended August 31,
1998. Our independent accountants have performed a review of these
interim financial statements in accordance with standards established by
the American Institute of Certified Public Accountants. Pursuant to Rule
436(c) under the Securities Act of 1933, their report of that review
should not be considered a part of any registration statements prepared or
certified by them within the meaning of Sections 7 and 11 of that Act.
2. Statement of Financial Accounting Standards No. 128, "Earnings per Share,"
requires a presentation of basic earnings per share (EPS) that excludes
dilutive securities from the computation as well as a presentation of
diluted EPS that includes the effect of any dilutive securities in the
computation. The requirements of this statement have been followed for
all earnings per share figures included in this Form 10-Q.
<TABLE>
RECONCILIATION OF INCOME AND NUMBER OF SHARES USED
TO CALCULATE BASIC AND DILUTED EARNINGS PER SHARE (EPS)
<CAPTION>
For the Three Months Ended
September 30, 1999
-----------------------------------------
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income available to
common stockholders $ 1,325,000 77,227,118 $ .02
Effect of Dilutive Securities:
Stock options and grants 555,803
Diluted EPS:
Income available to common
stockholders $ 1,325,000 77,782,921 $ .02
------------ ----------- -----
------------ ----------- -----
</TABLE>
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
<TABLE>
RECONCILIATION OF INCOME AND NUMBER OF SHARES USED
TO CALCULATE BASIC AND DILUTED EARNINGS PER SHARE (EPS)
<CAPTION>
For the Nine Months Ended
September 30, 1999
-----------------------------------------
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income available to
common stockholders $(24,544,000) 77,102,742 $(.32)
Effect of Dilutive Securities:
Stock options and grants -
Diluted EPS:
Income available to common
stockholders $(24,544,000) 77,102,742 $(.32)
------------ ----------- -----
------------ ----------- -----
For the Three Months Ended
September 30, 1998
-----------------------------------------
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income available to
common stockholders $ (3,724,000) 76,761,952 $(.05)
Effect of Dilutive Securities:
Stock options and grants -
Diluted EPS:
Income available to common
stockholders $ (3,724,000) 76,761,952 $(.05)
------------ ------------ -----
------------ ------------ -----
</TABLE>
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
RECONCILIATION OF INCOME AND NUMBER OF SHARES USED
TO CALCULATE BASIC AND DILUTED EARNINGS PER SHARE (EPS)
<TABLE>
For the Nine Months Ended
September 30, 1998
-----------------------------------------
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income available to
common stockholders $ 5,679,000 76,732,664 $ .07
Effect of Dilutive Securities:
Stock options and grants 288,590
Diluted EPS:
Income available to common
stockholders $ 5,679,000 77,021,254 $ .07
------------ ------------ -----
------------ ------------ -----
</TABLE>
The Company has outstanding $175,000,000 of Convertible Subordinated Notes
which are convertible into 11,371,020 shares of common stock at $15.39 per
share. The notes were outstanding during the periods ended September 30,
1999 and 1998, but were not included in the computation of diluted EPS
because the assumed conversion of the notes would have had an anti-
dilutive effect on EPS. For the three months ended September 30, 1999
options to purchase 5,319,500 shares at prices ranging from $4.500 to
$2.1875 were outstanding but not included in the computation of diluted
EPS because the options' exercise price was greater than the average
market price of common shares for the quarter. In addition, for the nine
months ended September 30, 1999, options to purchase 7,231,000 shares of
common stock at prices ranging from $2.25 to $12.1875, were outstanding
but not included in the computation of diluted EPS because the assumed
exercise of the options would have had an anti-dilutive effect on EPS due
to the net loss in the current period. For the three months ended
September 30, 1998, options to purchase 5,626,000 shares at prices ranging
from $2.25 to $12.1875 were not included due to the net loss for the
period. For the nine months ended September 30, 1998, options to purchase
4,900,500 shares at prices ranging from $8.875 to $12.1875 were
outstanding but not included in the computation of diluted EPS because the
options' exercise price was greater than the average market price of
common shares during the periods. During July 1999, the Company issued
options on 1,884,000 shares of common stock at a share price of $3.1875.
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
3. During the nine months ended September 30, 1999 the Company has
restructured its worldwide drilling operations into two primary business
units, "Domestic Operations" and "International Operations." The Company
makes operating decisions and assesses performance based on these
geographic segments and based on services provided: land drilling,
offshore drilling and rental tools. Information regarding the Company's
operations by industry segment for the three and nine months ended
September 30, 1999 and 1998 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Domestic drilling
Land $ 6,000 $ 12,948 $ 17,635 $ 37,624
Offshore 21,206 33,476 66,859 119,713
International drilling
Land 30,694 52,146 103,265 155,944
Offshore 15,174 9,734 40,355 26,843
Rental tools 6,978 7,695 20,533 24,243
Other 28 592 273 1,590
-------- -------- -------- --------
Net revenues $ 80,080 $116,591 $248,920 $365,957
-------- -------- -------- --------
Operating income (loss):
Domestic drilling
Land (156) 2,516 (131) 7,716
Offshore (9,759) 1,068 (24,510) 18,240
International drilling
Land 2,546 6,390 12,632 26,045
Offshore 4,872 2,942 11,297 8,404
Rental tools 1,901 1,947 5,742 8,019
Other (1,671) (430) (2,371) (1,197)
-------- -------- ------- --------
Total operating income
by segment <1> (2,267) 14,433 2,659 67,227
-------- -------- ------- --------
Provision for reduction in
carrying value of certain
assets (5,357) - (10,607) -
Restructuring charges - - (3,000) -
General and administrative (4,106) (3,830) (12,301) (13,191)
-------- -------- ------- --------
Total operating income (loss) (11,730) 10,603 (23,249) 54,036
Interest expense (15,048) (12,620) (41,695) (37,896)
Gain on disposition of assets 34,330 102 37,279 981
Other income (expense)-net (217) (36) 2,723 (416)
-------- -------- ------- --------
Income (loss) before
income taxes $ 7,335 $ (1,951) $(24,942) $ 16,705
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
<FN1>
<1> Total operating income (loss) by segment is calculated by
excluding General and administrative expense, Restructuring charges
and Provision for reduction in carrying value of certain assets from
Operating income (loss), as reported in the Consolidated Condensed
Statements of Operations.
4. In the third quarter of fiscal year 1998, the Company reviewed the
estimated useful life of its land drilling fleet used for financial
depreciation purposes. As a result, the estimated life was extended from
10 to 15 years with a 5% salvage value for most of the major rig
components, resulting in a reduction in depreciation expense of
approximately $1.3 million for the nine months ended September 30, 1999.
The Company's historical experience and a comparison with other firms in
the industry indicates that its land drilling equipment has a useful life
of at least 15 years. The depreciable lives for other equipment,
including drill pipe, were not extended.
5. In December 1998, the Company determined that its operations in Argentina
did not meet its strategic objectives and that such assets would be
actively marketed for disposition. The assets to be disposed of consisted
of thirteen drilling rigs and inventories related to these rigs. Due to
depressed industry conditions impairment losses of $4.1 million and $2.1
million were recognized in December 1998 and in June 1999, respectively.
Subsequent to September 30 the Argentina drilling rigs and inventories
(previously classified as held for sale) plus one additional drilling rig
were sold in two separate transactions for total consideration of
approximately $9.5 million. As of October 31, 1999 $7.1 million has been
received. The remainder will be collected during the fourth quarter.
In the third quarter it was decided that barge Rig No. 80 would be
actively marketed for disposition. The Company reduced the carrying value
by $2.5 million to record the rig at net realizable value. The net
realizable value of the rig is included in non-current assets.
During the second quarter the Company restructured its drilling operations
into two primary business units. As part of this plan, the Company
combined two office facilities in Louisiana into one location. The
carrying value of the vacated office building was reduced by $1.4 million.
The net realizable value of the building is included in non-current
assets.
In calendar 1999, the Company increased its allowance for doubtful
accounts by $3.2 million. Certain of the Company's customers have
encountered financial difficulties, including the filing of bankruptcy,
which has resulted in their reduced ability to pay the Company for
previously provided services.
6. During the second quarter the Company restructured its worldwide drilling
operations into two primary business units, "Domestic Operations" and
"International Operations". In connection with this restructuring,
certain duplicative administrative and operating functions were
eliminated, resulting in $3.0 million in severance costs. It is
anticipated that substantially all incurred but unpaid amounts ($.3
million at September 30, 1999) will be paid in the current calendar year.
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
7. The Company has received and anticipates receiving additional prepayments
from the operator to offset a substantial portion of the expenditures
required to modify barge Rig 257 for a contract in the Caspian Sea. These
prepayments, $69.3 million as of September 30, 1999, are being accounted
for similar to mobilization fees for a newly constructed drilling rig and,
accordingly, have been reflected as a reduction of capital expenditures in
the Statements of Cash Flows and as a reduction of property, plant and
equipment in the Consolidated Condensed Balance Sheets. Prepayments
received as of December 31, 1998 were $20.3 million.
8. On September 30, 1999 the Company completed the sale of its thirteen
lower-48 land rigs to Unit Corporation for $40 million cash plus one
million shares of Unit common stock. The value of such common stock,
based on the closing price for Unit's common stock on September 30,
approximated $7.6 million. The Company recognized a pre-tax gain of $35.8
million during the third quarter. The sale of these land rigs resulted in
a 59.6% decrease of domestic land net property, plant and equipment.
9. On September 30, 1999 the Company terminated its $75.0 million revolving
credit facility. The outstanding balance of $40.0 million was repaid in
full with the proceeds received from the sale of the Company's thirteen
lower-48 land rigs (see note 8). On October 22, 1999 the Company entered
into a new $50 million revolving loan facility with a group of banks, led
by Bank of America, as agent bank. The new facility is available for
working capital requirements, general corporate purposes and to support
letters of credit. The revolver is collateralized by accounts receivable,
inventory and certain barge rigs located in the Gulf of Mexico. The
facility contains customary affirmative and negative covenants. The
facility will terminate on October 22, 2003.
On October 7, 1999 a wholly owned subsidiary of the Company entered into a
loan agreement with Boeing Capital Corporation for the refinancing of a
portion of the capital cost of barge Rig 75. The loan principal of
approximately $24.8 million plus interest is to be repaid in 60 monthly
payments of approximately $.5 million. The loan is collateralized by
barge Rig 75 and is guaranteed by the Parent.
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders
Parker Drilling Company
We have reviewed the consolidated condensed balance sheets of Parker
Drilling Company and subsidiaries as of September 30, 1999 and December 31,
1998, and the related consolidated condensed statement of operations for the
three and nine month periods ended September 30, 1999 and consolidated
condensed statement of cash flows for the nine month period ended September
30, 1999. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
By: /s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
October 29, 1999
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains certain statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934. These
statements may be made directly in this document, referring to the Company, or
in other documents filed by the Company with the Securities and Exchange
Commission, and referred to in this Form 10-Q. All statements included in
this document, other than statements of historical facts, that address
activities, events or developments that the Company expects, projects,
believes or anticipates will or may occur in the future, including future
operating results, future capital expenditures and investments in the
acquisition and refurbishment of rigs and equipment, restructuring of credit
facility, borrowings or repayment of debt, expansion and growth of operations,
anticipated cost savings, Year 2000 issues, and other such matters, are
forward-looking statements.
Forward-looking statements are based on certain assumptions and analyses
made by the management of the Company in light of their experience and
perception of historical trends, current conditions, expected future
developments and other factors they believe are relevant. Although management
of the Company believes that their assumptions are reasonable based on current
information available, they are subject to certain risks and uncertainties,
many of which are outside the control of the Company. These risks include
worldwide economic and business conditions, oil and gas market prices,
industry conditions, international trade restrictions and political
instability, operating hazards and uninsured risks, governmental regulations
and environmental matters, substantial leverage, seasonality and adverse
weather conditions, concentration of customer and supplier relationships,
upgrade and refurbishment projects, competition, integration of operations,
acquisition strategy, and other similar factors (some of which are discussed
in documents referred to in this Form 10-Q.) Because the forward-looking
statements are subject to risks and uncertainties, the actual results of
operations and actions taken by the Company may differ materially from those
expressed or implied by such forward-looking statements.
OUTLOOK AND OVERVIEW
- --------------------
The loss recognized for the nine months ended September 30, 1999 reflects
the continued weakness in most of the Company's drilling markets which has
resulted in a significant decrease in rig utilization and in dayrates since
mid 1998. Lower crude oil prices throughout 1998 and into early 1999
negatively impacted the revenue and profits of oil operators, who responded by
reducing exploration and development expenditures. This decline in spending
has adversely affected the level of oilfield activity, and in turn, the
revenue of most companies in the oilfield service industry. Although crude
oil and natural gas prices have increased recently, management is unable to
predict when and to what extent spending by operators and rig dayrates and
utilization will be positively affected.
Management anticipates that the Company will continue to incur losses
until there is a significant increase in the level of oil field activity.
Management believes, however, that cash on hand, cash provided by operations
and funds available under the Company's new revolving credit facility will be
adequate to meet working capital needs.
<PAGE>
<PAGE>
RESULTS OF OPERATIONS (continued)
- ---------------------
In order to conserve cash, management has taken steps to reduce certain
discretionary capital expenditures and has reorganized its worldwide drilling
operations to reduce operating and overhead costs. Management's current
estimate of the annual cost savings to be realized as a result of the recent
restructuring is $10.5 million. To raise cash in addition to that provided by
operating activities, the Company has sold certain of its non-strategic assets
and is considering the sale of additional non-strategic assets. On September
30, 1999 the Company sold its thirteen lower-48 land drilling rigs to Unit
Corporation for which it received $40 million cash plus 1.0 million shares of
Unit common stock. (See Note 8 in the Notes to Unaudited Consolidated
Condensed Financial Statements.) Subsequent to September 30, 1999 the Company
sold its Argentina land rigs and inventories (previously classified as held
for sale) plus one additional land rig for approximately $9.5 million. As of
October 31, 1999 the Company had received approximately $7.1 million and the
remainder is expected during the fourth quarter.
In addition to selling non-strategic assets, the Company raised
additional cash by finalizing the financing agreement on newly built barge Rig
75 of $24.8 million, on October 7, 1999. The Company finalized a new
revolving credit facility in the amount of $50 million after terminating the
$75.0 million revolving credit facility. For additional information on new
financing arrangements, see Note 9 in the Notes to Unaudited Consolidated
Condensed Financial Statements.
Three Months Ended Sept. 30, 1999 compared with Three Months
Ended Sept. 30, 1998
- ------------------------------------------------------------
The Company changed its fiscal year end from August 31 to December 31,
effective for the year beginning January 1, 1999. The consolidated condensed
financial statements included in this Form 10-Q represent the period from
January 1, 1999 through September 30, 1999, the first periods reported under
the Company's new fiscal year, and the comparable period in the prior year.
The Company recorded net income of $1.3 million, or $.02 per share in the
three months ended September 30, 1999 compared to a net loss of $3.7 million
or $.05 per share in the same period of the prior year. The current quarter
was positively impacted by a pre-tax gain on the sale of the lower-48 land
rigs of approximately $35.8 million. This gain was offset by a $5.4 million
provision for reduction in the carrying value of certain assets, including
$2.5 million related to barge Rig 80, $1.4 million related to the vacated
Louisiana office building and $1.5 million related to various provisions for
doubtful accounts and inventories. Contract drilling operations continued to
exhibit the weakness which began in mid 1998. Revenues and profit margins
(revenue less direct operating expense) decreased significantly in the
Company's domestic drilling segment and to a lesser degree in its
international drilling and rental tool segments, when comparing the three
months ended September 30 of 1999 and 1998, respectively.
Revenue decreased $36.5 million, or 31%, to $80.1 million, from the
$116.6 million recorded for the three months ended September 30, 1998.
Domestic drilling revenue decreased $19.2 million due to lower utilization and
dayrates earned on the Company's land and offshore rigs. Certain markets,
including the U. S. Gulf Coast land and shallow water jackup rig markets,
experienced a greater decrease in revenue than other regions, such as the
Rocky Mountain land region, where the Company has experienced greater demand
for its rigs. (See Note 8 to the Notes to the consolidated Condensed
Financial Statements.)
<PAGE>
<PAGE>
RESULTS OF OPERATIONS (continued)
- ---------------------
International drilling revenue decreased $16.0 million in the current
quarter due to a $21.4 million decrease in international land drilling revenue
offset by a $5.4 million increase in international offshore revenue. Lower
utilization was the primary reason revenues decreased in the international
land markets of Colombia, Peru, Argentina, Bolivia, Pakistan, New Guinea, New
Zealand and Indonesia. The Company did record revenue increases in the
independent states of the former Soviet Union due primarily to increased labor
contract revenues. International offshore barge revenues increased $5.4
million in the third quarter in 1999 as compared to 1998. This increase is
attributable to barge Rig 76 in Venezuela in the amount of $2.7 million and
barge Rig 257 in the Caspian Sea which contributed $3.5 million in revenues.
Barge Rig 76 completed its contract during the third quarter and has been
relocated to the Gulf Coast barge market. Barge Rig 257 began drilling
operations during the third quarter of 1999. These increases were partially
offset by slightly lower revenues in the Company's Nigerian barge operations.
The decrease in rental tool revenue of $.7 million, from $7.7 million to
$7.0 million, was due primarily to reduced drilling activity in the Gulf of
Mexico, the primary market for the Company's rental tools.
The Company's overall profit margin declined to $18.7 million or 23% of
revenue from $33.9 million or 29% of revenue when comparing the third quarter
of 1999 and 1998. Domestic land drilling profit margins decreased due
primarily to lower utilization in the Gulf Coast region and due to completion
of operations on Rig 245 in Alaska in the first quarter of calendar 1999.
Domestic offshore margins decreased due to weakness in demand for both the
Company's shallow water jackup and shallow water barge rigs.
Depreciation and amortization expense increased $1.5 million to $20.9
million in the current year quarter due to depreciation expense recorded on
the Company's 1998 capital expenditures which were at historically high
levels. As noted previously, the Company recognized a $5.4 million provision
for reduction in carrying value of certain assets in the current quarter. The
current quarter provision for reduction in the carrying value of certain
assets included a $2.5 million charge related to barge Rig 80, $1.4 million
related to the vacated Louisiana office building and $1.5 million related to
various provisions for doubtful accounts and inventories.
Interest expense increased $2.4 million due to higher average debt levels
outstanding during the current quarter. Gain on disposition of assets
increased $34.2 million due to the $35.8 million gain recognized on the sale
of the thirteen lower-48 land rigs. Income tax expense consists of foreign
tax expense and deferred tax expense. The deferred tax expense recorded in
the current quarter is due to the pre-tax income recorded during the three
months ended September 30, 1999.
Nine Months Ended Sept. 30, 1999 compared with Nine Months Ended Sept. 30, 1998
- -------------------------------------------------------------------------------
The Company recorded a net loss of $24.5 million and $.32 per share in
the nine months ended September 30, 1999 compared to net income of $5.7
million and $.07 per share in the same period of the prior year. Weakness in
worldwide drilling markets which has resulted in lower revenue and profit
margins, restructuring charges of $3.0 million and a $10.6 million provision
for the reduction in carrying value of certain assets contributed to the net
loss in the current year. Partially offsetting the impact of the weak
drilling market and the noted charges was the $35.8 million pre-tax gain on
the sale of the thirteen lower-48 land rigs sold September 30, 1999 to Unit
Corporation. The sales price consisted of cash proceeds of $40.0 million plus
one million of common shares of Unit Stock (valued at approximately $7.6
million).
<PAGE>
RESULTS OF OPERATIONS (continued)
- ---------------------
Revenues and profit margins decreased $117.0 million and $58.8 million,
respectively, when comparing the nine months ended September 30, 1999 and
1998. Domestic revenues decreased $72.8 million to $84.5 million due to
decreased utilization and dayrates in each of the drilling markets in which
the Company participates. Certain markets, including the U. S. Gulf Coast
land region, have been negatively impacted during the drilling downturn to a
greater extent than others, such as the Rocky Mountain land market. Domestic
offshore operations, including barge, jackup and platform rigs, have all
experienced lower utilization and dayrates, resulting in lower revenues earned
in the current fiscal year when compared to 1998. Rental tool revenue of
$20.5 million in the current year reflects a decrease of $3.7 million, or 15%,
reflective of decreased drilling in the Gulf of Mexico.
International drilling revenue decreased $39.2 million due primarily to
decreased utilization in the Company's Latin American and Asia Pacific
markets. Revenues increased in the independent states of the former Soviet
Union due to increased labor contract revenue and rig utilization.
International offshore revenue increased in the current year period due to the
operations of the Company's Rig 76 in Venezuela in the current year and the
commencement of drilling operations in the Caspian Sea by barge Rig 257 during
the third quarter. Barge Rig 76 has been relocated to the Gulf Coast market.
Profit margins have decreased in the domestic and international drilling
segments in which the Company operates and also in the rental tool segment.
Profit margins as a percent of revenue have remained relatively constant in
the international drilling and rental tool segments as dayrates and rental
rates have not been negatively impacted to the same degree as domestic
dayrates. In particular, dayrates and margins earned by the Company's jackup
rigs operating in the Gulf of Mexico have declined materially, when compared
to the 1998 period.
Depreciation and amortization expense increased $5.8 million to $61.2
million in the 1999 period due to depreciation expense recorded on the
Company's 1998 capital expenditures, offset to some degree by a reduction of
approximately $1.3 million due to the extension of the depreciable lives of
the Company's land drilling fleet from 10 to 15 years in the third quarter of
fiscal 1998. General and administrative expense decreased $.9 million due in
part to the Company's current year restructuring of its worldwide drilling
operations, which has resulted in the current year restructuring charge of
$3.0 million.
The Company has recorded $10.6 million in charges for the provision for
reduction in the carrying value of certain assets in the current year. During
the first quarter the Company reduced its estimate of proceeds to be received
on the sale of the Company's Southern Argentina land rig assets which resulted
in a $2.1 million charge. Subsequent to September 30, 1999 the Company sold
its Argentina land rig assets (previously classified as held for sale) plus
one additional land rig for $9.5 million. The sales price approximated the
net carrying value of the assets. In addition, the net carrying value of
barge Rig 80 was reduced by $2.5 million and the net carrying value of the
vacated office building in Louisiana has been reduced by $1.4 million. Rig 80
and the office building are being actively marketed. An increase in the
Company's provision for doubtful accounts and inventory has resulted in an
additional $4.6 million charge during the current year.
<PAGE>
RESULTS OF OPERATIONS (continued)
- ---------------------
Interest expense increased $3.8 million due to the Company's higher
average debt levels in the current year. Interest capitalized to construction
projects during the current year approximated $3.0 million as compared to
approximately $3.5 million for the nine months ended September 30, 1998. Gain
on disposition of assets increased $36.3 million due primarily to the gain
recognized on the sale of the thirteen lower-48 land rigs. Other income - net
increased $4.4 million due primarily to a $2.1 million payment received in
January 1999 from Superior Energy Services, Inc. ("Superior") as part of the
agreement to terminate the Agreement and Plan of Merger with Superior.
Income tax expense consists of foreign tax expense and deferred tax
benefit. The deferred tax benefit is due to the net loss incurred during the
nine months ended September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company had cash, cash equivalents and other short-term investments of
$20.8 million at September 30, 1999, a decrease of $3.5 million from the
December 31, 1998 balance. The primary sources of cash during the nine month
period were $21.7 million provided by operating activities, as reflected on
the Consolidated Statements of Cash Flows, prepayments approximating $49
million from the operator to offset a portion of the expenditures to modify
Rig 257 for service in the Caspian Sea and $51.9 million from the disposition
of equipment. The disposition of assets includes the sale of the thirteen
lower-48 land rigs for cash proceeds of $40 million and the sale of two
additional rigs in the current year, one domestic land rig and one offshore
platform rig.
Net capital expenditures were the Company's primary use of cash during
the nine months ended September 30, 1999. Major capital projects on-going
during the period included the modification of barge Rig 257, which is being
modified for a contract in the Caspian Sea and the construction of new barge
Rig 75 for a contract in Nigeria. Payments received from the operator to
offset a portion of the expenditures to modify Rig 257 are reflected as a
reduction in capital expenditures in the Consolidated Statements of Cash
Flows. Both rigs have commenced drilling at their respective drilling
locations. Other major expenditures included the modification of two barge
rigs for a contract with Texaco in the transition zones of the Gulf Coast and
the completion of a new support facility in New Iberia, Louisiana.
To finance the Company's 1996 and 1997 acquisitions and the significant
capital expenditures made in fiscal year 1998 and during the four months ended
December 31, 1998, the Company has issued various debt instruments. The
Company has total long-term debt, including the current portion, of $630.1
million at September 30, 1999. The outstanding $40.0 million balance of the
$75.0 million ING revolving credit facility was repaid in full with the
proceeds from the sale of the lower-48 land rigs on September 30, 1999. After
the outstanding letters of credit under the ING facility were cash
collateralized, the ING facility was terminated. Subsequently, the Company
entered into a new $50.0 million revolving loan facility with a group of banks
agented by Bank of America, National Association on October 22, 1999. This
new facility is available for working capital requirements, general corporate
purposes and to support letters of credit. The revolver is collateralized by
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (continued)
- -------------------------------
accounts receivable, inventory and certain barge rigs located in the Gulf of
Mexico. The facility contains customary affirmative and negative covenants.
Availability under the revolving credit facility is subject to certain
borrowing base limitations based on 80 percent of eligible receivables plus 50
percent of supplies in inventory. At the signing of the agreement
approximately $40.0 million was available. The revolver terminates on October
22, 2003. On October 7, 1999 a subsidiary of the Company entered into a loan
agreement with Boeing Capital Corporation for the financing of Rig 75. The
loan of $24.8 million plus interest is to be repaid in 60 monthly payments of
$.5 million. The loan is collateralized by Rig 75 and is guaranteed by the
Parent.
The Company anticipates cash requirements for capital spending will be
substantially less in calendar year 1999 (approximately $40.0 million
projected, net of anticipated receipts to offset capital expenditures) than in
fiscal year 1998 ($180.0 million, net of receipts to offset capital
expenditures). The Company's two most significant construction projects, the
modification of barge Rig 257 for service in the Caspian Sea and the
construction of barge Rig 75 for service in Nigeria, commenced drilling
operations during the third quarter and fourth quarter, respectively.
Until operators respond to the increase in crude oil and natural gas
prices and increase spending, the Company anticipates that it will continue to
incur losses. Management believes that cash on hand, cash provided by
operations, proceeds from asset sales and funds available under the Company's
revolving credit facility will be adequate to meet working capital needs.
Additionally in order to conserve cash, management has taken steps to reduce
certain discretionary capital expenditures and has reorganized its worldwide
drilling operations to reduce operating and overhead costs. Although crude
oil and natural gas prices have increased recently, management is unable to
predict when and to what extent spending by operators and rig dayrates and
utilization will be affected.
<PAGE>
<PAGE>
OTHER MATTERS
- -------------
Indonesian Operations
- ---------------------
The current economic conditions in Indonesia have created uncertainty
regarding the Company's Indonesian operations. The Company provides
management, technical and training support to an Indonesian-owned drilling
contractor, whose services include the drilling of geothermal wells related to
power plant projects. Due to the uncertain economic conditions in Indonesia,
certain of these power plant projects, and the drilling of wells in support
thereof, have been postponed or delayed. As a result, payments from a
significant customer for services provided by the Indonesian contractor have
been delayed. The Indonesian contractor has initiated an arbitration against
its customer for payment of outstanding receivables. The Company believes
that resolution of this matter will not have a material adverse effect on the
Company's results of operations or financial position.
Year 2000
- ---------
The Company plans to achieve and maintain Year 2000 compliance with a
project consisting of seven phases. The phases include awareness, inventory,
assessment, detailed analysis, compliance testing, remediation and monitoring
compliance. Prior to establishing the Year 2000 project, the Company made a
decision to replace most of its outdated systems with commercial off the shelf
systems and standardized desktop systems. The Company spent much of 1997
replacing critical financial, human resources and payroll systems with new
purchased software that is Year 2000 certified by the Information Technology
Association of America. The Year 2000 problem was not the main reason for
upgrading the information technology platform, however it will be beneficial
in achieving Year 2000 compliance.
The Company has completed the awareness, inventory, assessment, detailed
analysis and substantially completed its compliance testing on the company's
critical business and information technology systems as part of its seven
phase Year 2000 compliance project. Remediation has also been completed on
critical in-house developed systems. Selected non-critical systems were also
included in the process. For the remainder of 1999, the Company will continue
to monitor systems for compliance, evaluate its vendor supply chain and
evaluate implementing vendor-supplied updates required to maintain compliance.
Before establishing the Year 2000 project, the Company made a decision to
replace most of its outdated systems with commercial off-the-shelf systems and
standardized desktop systems, substantially reducing its technology
remediation requirements. The Company spent much of 1997 replacing critical
financial, human resources and payroll systems. The inventory and assessment
of drilling rig components containing embedded chips indicated that most do
not have date related logic. Testing conducted on components with date
sensitive chips has verified that a date related problem is unlikely to occur.
At this time no system replacement dates were accelerated because of the
Year 2000 problem. The cost to date for the project has been in internal
salaries and purchasing some testing software. The software costs to date are
not deemed material. Approximately $400,000 has been budgeted for the Year
2000 project in calendar year 1999.
The Company believes that its worst-case scenario would be a disruption
of international communications or its supply chain. It is impossible for the
Company to predict the likelihood of such an occurrence or the extent of the
impact on our operations. As part of the contingency planning process to help
mitigate these risks the Company is looking at alternative suppliers and
communication options. Contingency plans will be customized as required for
international locations to cover personnel safety, rigs, division offices,
crew rotations and rig supplies.
<PAGE>
PART II. OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
Item 6. Exhibits and Reports on Form 8-K
Page
(a) Exhibits:
Exhibit 3 By-Laws as amended July 27, 1999
Exhibit 15 Letter re Unaudited Interim Financial Information 22
Exhibit 27 Financial Data Schedule [Edgar Version Only]
(b) Reports on Form 8-K - There were no reports on Form 8-K
filed during the three months ended September 30, 1999.
</TABLE>
<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.
Parker Drilling Company
-----------------------
Registrant
Date: November 12, 1999
By: /s/ James J. Davis
-----------------------------------------
James J. Davis
Senior Vice President-Finance and
Chief Financial Officer
By: /s/ W. Kirk Brassfield
-----------------------------------------
W. Kirk Brassfield
Controller and
Chief Accounting Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
3 By-Laws as Amended July 27, 1999
15 Letter re Unaudited Interim Financial Information
27 Financial Data Schedule [Edgar Version Only]
<PAGE>
Exhibit 15
November 12, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 10549
Re: Parker Drilling Company
Registration on Form S-8
We are aware that our report dated October 29, 1999, on our review of the
interim financial information of Parker Drilling Company for the period ended
September 30, 1999 and included in this Form 10-Q is incorporated by reference
in the Company's registration statements on Form S-8 (File No. 2-87944, 33-
24155, 33-56698, 33-57345 and 333-84069).
By:/s/PricewaterhouseCoopers LLP
--------------------------------
PricewaterhouseCoopers LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET AS OF SEPTEMBER 30, 1999 AND THE
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 20532
<SECURITIES> 300
<RECEIVABLES> 96002
<ALLOWANCES> 6224
<INVENTORY> 0
<CURRENT-ASSETS> 134547
<PP&E> 1084875
<DEPRECIATION> 404917
<TOTAL-ASSETS> 1091614
<CURRENT-LIABILITIES> 77991
<BONDS> 628912
0
0
<COMMON> 12879
<OTHER-SE> 327908
<TOTAL-LIABILITY-AND-EQUITY> 1091614
<SALES> 0
<TOTAL-REVENUES> 248920
<CGS> 0
<TOTAL-COSTS> 185015
<OTHER-EXPENSES> 3000
<LOSS-PROVISION> 10607
<INTEREST-EXPENSE> 41695
<INCOME-PRETAX> (24942)
<INCOME-TAX> 398
<INCOME-CONTINUING> (24544)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24544)
<EPS-BASIC> (.32)
<EPS-DILUTED> (.32)
</TABLE>
<PAGE>
<PAGE>
PARKER DRILLING COMPANY
-----------------------
BY-LAWS
AS AMENDED JULY 27, 1999
ARTICLE I
Name and Location
-----------------
Section 1.1 The name of this corporation shall be
PARKER DRILLING COMPANY
Section 1.2 Its registered office shall be located in the City of
Wilmington, New Castle County, Delaware.
Section 1.3 Other offices for the transaction of business shall be
located at such places as the Board of Directors may from time to time
determine.
ARTICLE II
Meetings of Stockholders
------------------------
Section 2.1 Annual Meetings. The annual meeting of the stockholders for
---------------
the election of directors and for the transaction of such other business as
properly may come before such meeting shall be held on such date, and at such
time and place within or without the State of Delaware as may be designated by
the Board of Directors.
Section 2.2 Special Meetings. Special meetings of the stockholders for
----------------
any proper purpose or purposes may be called at any time by the Board of
Directors, the Chairman, the President or any Vice President, to be held on
such date, and at such time and place within or without the State of Delaware
as the Board of Directors, the Chairman, the President or a Vice President,
whichever has called the meeting, shall direct. A special meeting of the
stockholders shall be called by the Chairman, the President or any Vice
President whenever stockholders owning 75% of the shares of the Corporation
then issued and outstanding and entitled to vote on matters to be submitted to
stockholders of the Corporation shall make application therefor in writing.
Any such written request shall state a proper purpose or purposes of the
meeting and shall be delivered to the Chairman, the President or any Vice
President. The Board of Directors may, at its discretion, delay the date of
any special meeting called pursuant to a request by stockholders for a period
of up to ninety (90) days in order to adequately prepare for the meeting. The
matters that may be addressed at the special meeting shall be limited to those
matters that are contained in the notice of the meeting.
Section 2.3 Notice of Meeting. Written notice, signed by the Chairman,
-----------------
the President, any Vice President, the Secretary or an Assistant Secretary of
every meeting of stockholders stating the purpose or purposes for which the
meeting is called, and the date and time when, and the place where, it is to
be held shall be delivered either personally or by mail to each stockholder
<PAGE>
<PAGE>
entitled to vote at such meeting not less than ten nor more than fifty days
before the meeting, except as otherwise provided by statute. If mailed, such
notice shall be directed to a stockholder at his address as it shall appear on
the stock books of the Corporation, unless he shall have filed with the
Secretary a written request that notices intended for him be mailed to some
other address, in which case it shall be mailed to the address designated in
such request. Notice of any meeting of stockholders shall not be required to
be given to any stockholder who shall attend such meeting in person or by
proxy and shall not, at the beginning of such meeting, object to the
transaction of any business because the meeting is not lawfully called or
convened, or who shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy. Unless the Board of Directors shall
fix, after the adjournment, a new record date for an adjourned meeting, notice
of such adjourned meeting need not be given if the time and place to which the
meeting shall be adjourned were announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Corporation may transact
any business which might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 2.4 Quorum. The presence at any meeting, in person
------
or by proxy, of the holders of record of a majority of the shares then issued
and outstanding and entitled to vote shall be necessary and sufficient to
constitute a quorum for the transaction of business except where otherwise
provided by statute.
Section 2.5 Adjournments. In the absence of a quorum, a
------------
majority in interest of the stockholders entitled to vote, present in person
or by proxy, or, if no stockholder entitled to vote is present in person or by
proxy, any officer entitled to preside at or act as secretary of such meeting,
may adjourn the meeting from time to time until a quorum shall be present. At
any such adjourned meeting at which a quorum may be present, any business may
be transacted which might have been transacted at the meeting as originally
called.
Section 2.6 Voting. Directors shall be chosen by a
------
plurality of the votes cast at the election, and, except where otherwise
provided by statute, all other questions shall be determined by a majority of
the votes cast on such question.
Section 2.7 Proxies. Any stockholders entitled to vote may
-------
vote by proxy, provided that the instrument authorizing such proxy to act
shall have been executed in writing (which shall include telegraphing or
cabling) by the stockholder himself or by his duly authorized attorney.
<PAGE>
<PAGE>
Section 2.8. Inspectors. The Board of Directors may, in
----------
advance of any meeting of stockholders, appoint one or more inspectors to act
at such meeting or any adjournment thereof. If the inspectors shall not be so
appointed or if any of them fail to appear or act, the chairman of the meeting
may, and on the request of any stockholder entitled to vote thereat shall
appoint inspectors. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best
of his ability. The inspectors shall determine, in number of shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots or consents, determine the result, and
do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the chairman of the meeting of any
stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as inspector of an election of directors.
Inspectors need not be stockholders.
Section 2.9. Organization. At each meeting of the
------------
stockholders, the Chairman, or in his absence or inability to act, the
President, or in his absence or inability to act, any person chosen by the
Board of Directors, shall act as chairman of the meeting. The Secretary, or
in his absence or inability to act, any person appointed by the chairman of
the meeting, shall act as secretary of the meeting and keep the minutes
thereof. The order of business at all meetings of the stockholders shall be
as determined by the chairman of the meeting.
Section 2.10. List of Stockholders. The officer who has
--------------------
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or at the place where
the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 2.11. Action by Written Consent.
-------------------------
(a) Written Consent. Subject to the terms of this
---------------
Section 2.11, any action which is required to be or may be taken at any
annual or special meeting of stockholders of the Corporation may be taken
without a meeting, without prior notice to stockholders and without a vote if
<PAGE>
<PAGE>
consents in writing, setting forth the action so taken, shall have been signed
by the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or to take such action at a meeting
at which all shares entitled to vote thereon were present and voted. The
Corporation shall give prompt notice to the stockholders of the results of any
consent solicitation or the taking of the corporate action without a meeting
and by less than unanimous written consent.
(b) Duration and Revocation of Consents. In order
------------------------------------
that the Corporation's stockholders shall have an opportunity to receive and
consider the information germane to an informed judgment as to whether to give
a written consent and in accordance with the procedures contained in the New
York Stock Exchange policies and rules, any corporate action to be taken by
written consent shall not be effective until, and the stockholders of the
Corporation shall be able to give or revoke written consents for, at least
twenty (20) days from the date of the commencement of a solicitation (as such
term is defined in Rule 14a-1(k) promulgated under the Securities Exchange Act
of 1934, as amended) of consents, other than corporate action by written
consent taken pursuant to solicitations of not more than ten (10) persons.
For purposes of this Section, a consent solicitation shall be deemed to have
commenced when a proxy statement or information statement containing the
information required by law is first furnished to the Corporation's
stockholders.
Consents to corporate action shall be valid for a maximum of sixty
(60) days after the date of the earliest dated consent delivered to the
Corporation in the manner provided in Section 228(c) of the Delaware General
Corporation Law. Consents may be revoked by written notice (i) to the
Corporation, (ii) to the stockholder or stockholders soliciting consents or
soliciting revocations in opposition to action by consent proposed by the
Corporation (the "Soliciting Stockholders"), or (iii) to a proxy solicitor or
other agent designated by the Corporation or the Soliciting Stockholders.
(c) Inspectors of Election; Procedures for Counting
-----------------------------------------------
Consents. Within three (3) business days after receipt of the
- --------
earliest dated consent delivered to the Corporation in the manner provided in
Section 228(c) of the Delaware General Corporation Law or the determination by
the Board of Directors of the Corporation that the Corporation should seek
corporate action by written consent, as the case may be, the Secretary shall
engage nationally recognized independent inspectors of elections for the
purpose of performing a ministerial review of the validity of the consents and
revocations. The cost of retaining inspectors of election shall be borne by
the Corporation.
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<PAGE>
Consents and revocations shall be delivered to the inspectors upon
receipt by the Corporation, the Soliciting Stockholders or their proxy
solicitors or other designated agents. As soon as consents and revocations
are received, the inspectors shall review the consents and revocations and
shall maintain a count of the number of valid and unrevoked consents. The
inspectors shall keep such count confidential and shall not reveal the count
to the Corporation, the Soliciting Stockholders or their representatives or
any other entity. As soon as practicable after the earlier of (i) sixty (60)
days after the date of the earliest dated consent delivered to the Corporation
in the manner provided in Section 228(c) of the Delaware General Corporation
Law or (ii) a written request therefor by the Corporation or the Soliciting
Stockholders (whichever is soliciting consents) (which request may be made no
earlier than twenty (20) days after the commencement of the applicable
solicitation of consents, except in the case of corporate action by written
consent taken pursuant to solicitations of not more than ten (10) persons),
notice of which request shall be given to the party opposing the solicitation
of consents, if any, which request shall state that the Corporation or the
Soliciting Stockholders, as the case may be, have a good faith belief that the
requisite number of valid and unrevoked consents to authorize or take the
action specified in the consents has been received in accordance with these
By-laws, the inspectors shall issue a preliminary report to the Corporation
and the Soliciting Stockholders stating: (i) the number of valid consents;
(ii) the number of valid revocations; (iii) the number of valid and unrevoked
consents; (iv) the number of invalid consents; (v) the number of invalid
revocations; and (vi) whether, based on their preliminary count, the requisite
number of valid and unrevoked consents has been obtained to authorize or take
the action specified in the consents.
Unless the Corporation and the Soliciting Stockholders shall agree
to a shorter or longer period, the Corporation and the Soliciting Stockholders
shall have 48 hours to review the consents and revocations and to advise the
inspectors and the opposing party in writing as to whether they intend to
challenge the preliminary report of the inspectors. If no written notice of
an intention to challenge the preliminary report is received within 48 hours
after the inspectors' issuance of the preliminary report, the inspectors shall
issue to the Corporation and the Soliciting Stockholders their final report
containing the information from the inspectors' determination with respect to
whether the requisite number of valid and unrevoked consents was obtained to
authorize and take the action specified in the consents. If the Corporation
or the Soliciting Stockholders issue written notice of an intention to
challenge the inspectors' preliminary report within 48 hours after the
issuance of that report, a challenge session shall be scheduled by the
inspectors as promptly as practicable. A transcript of the challenge session
shall be recorded by a certified court reporter. Following completion of the
challenge session, the inspectors shall as promptly as practicable issue their
final report to the Soliciting Stockholders and the Corporation, which report
shall contain the information included in the preliminary report, plus all
changes in the vote totals as a result of the challenge and a certification of
whether the requisite number of valid and unrevoked consents was obtained to
authorize or take the action specified in the consents. A copy of the final
report of the inspectors shall be included in the book in which the
proceedings of meetings of stockholders are recorded.
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<PAGE>
Section 2.12. Advance Notice of Stockholder Proposals.
---------------------------------------
Nominations by stockholders of persons for election to the Board of Directors
of the Corporation may be made at an annual meeting in compliance with Section
3.2 hereof. At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before an annual meeting, business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (b) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than ninety (90) nor more than one hundred twenty (120) days prior to the
meeting; provided, however, that in the event that less than one hundred (100)
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the 10th day following the
day on which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the Corporation's books,
of the stockholder proposing such business, (c) the class and number of shares
of the Corporation which are beneficially owned by the stockholder, and
(d) any material interest of the stockholder in such business.
Notwithstanding anything in the By-laws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this Section 2.12. The chairman of the annual meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the
provisions of this Section 2.12, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
ARTICLE III
Board of Directors
------------------
Section 3.1 Number. Subject to the Company's Certificate of
------
Incorporation, the number of directors which shall constitute the whole Board
of Directors shall be fixed from time to time by resolution of the Board of
Directors.
Section 3.2 Election and Term of Office. (a) The Board of
---------------------------
Directors shall be divided into three (3) classes and each class shall be
elected at the annual meeting of the stockholders held at the expiration of
their classified term. Each director (whether elected at an annual meeting or
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to fill a vacancy or otherwise) shall continue in office until his successor
shall have been elected or until his earlier death, resignation or removal in
the manner hereinafter provided.
(b) Notice of Stockholder Nominees. Only persons who are
------------------------------
nominated in accordance with the procedures set forth in this Section 3.2(b)
shall be eligible for election as Directors. Nominations of persons for
election to the Board of Directors of the Corporation may be made at a meeting
of stockholders by or at the direction of the Board of Directors or by any
stockholder of the Corporation entitled to vote for the election of Directors
at the meeting who complies with the notice procedures set forth in this
Section 3.2(b). Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than ninety (90) days nor more than one
hundred twenty (120) days prior to the meeting: provided, however, that in
the event that less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close
of business on the 10th day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a Director,
(i) the name, age, business address and residence address of such person,
(ii) the principal occupation or employment of such person, (iii) the class
and number of shares of the Corporation which are beneficially owned by such
person and (iv) any other information relating to such person that is required
to be disclosed in solicitations of proxies for election of Directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including, without limitation,
such persons' written consent to being named in the proxy statement as a
nominee and to serving as a Director if elected); and (b) as to the
stockholder giving the notice, (i) the name and address, as they appear on the
Corporation's books, if such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder.
At the request of the Board of Directors, any person nominated by the Board of
Directors for election as a Director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be
eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth in this Section 3.2(b). The Chairman
of the meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the procedures
prescribed by the By-laws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
Section 3.3 Vacancies and Additional Directorships. If any
--------------------------------------
vacancy shall occur among the directors by reason of death, resignation, or
removal, or as the result of an increase in the number of directorships, the
directors then in office shall continue to act and shall have sole power to
fill any such vacancy by a vote of the directors then in office, though less
than a quorum.
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Section 3.4 Meetings. The Board of Directors by resolution
--------
may provide for the holding of regular meetings and may fix the times and
places at which such meetings shall be held. Notice of regular meetings shall
not be required to be given, provided that whenever the time or place of
regular meetings shall be fixed or changed, notice of such action shall be
mailed promptly to each director who shall not have been present at the
meeting at which such action was taken, addressed to him at his residence or
usual place of business.
Special meetings of the Board of Directors may be called by the
Chairman, the President, any Vice President or any three directors. Except as
otherwise required by statute, notice of each special meeting shall be mailed
to each director, addressed to him at his residence or usual place of
business, or shall be sent to him at such place by fax, telegram, radio or
cable, or telephoned or delivered to him personally not later than two days
before the day on which the meeting is to be held. Such notice shall state
the time and place of such meeting, but need not state the purposes thereof,
unless otherwise required by statute, the Certificate of Incorporation of the
Corporation or these By-laws.
Notice of any meeting need not be given to any director who shall attend
such meeting in person or who shall waive notice thereof before or after such
meeting, in writing or by telegram, radio or cable.
Section 3.5 Quorum. A majority of the total number of
------
members of the Board of Directors as constituted from time to time, but not
less than two, shall be necessary and sufficient to constitute a quorum for
the transaction of business, except that when the Board consists of one
director pursuant to Section 3.1, then the one director shall constitute a
quorum. In the absence of a quorum, a majority of those present at the time
and place of any meeting may adjourn the meeting from time to time until a
quorum shall be present and the meeting may be held as adjourned without
further notice or waiver. A majority of those present at any meeting at which
a quorum is present may decide any question brought before such meeting,
except as otherwise provided by law, the Certificate of Incorporation or these
By-laws. In the event a deadlock occurs in any vote being taken by the Board,
the Chairman of the Board shall be empowered with a second vote to settle the
deadlock.
Section 3.6 Resignation of Directors. Any director may
------------------------
resign at any time by giving written notice of such resignation to the Board
of Directors, the Chairman, the President, any Vice President or the
Secretary. Any such resignation shall take effect at the time specified
therein or, if no time be specified, upon receipt thereof by the Board of
Directors or one of the above named officers; and, unless specified therein,
the acceptance of such resignation shall not be necessary to make it
effective.
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Section 3.7 Compensation of Directors. Directors shall
-------------------------
receive such reasonable compensation for their services as such, whether in
the form of salary or a fixed fee for attendance at meetings, with expenses,
if any, as the Board of Directors may from time to time determine. Nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 3.8. Action Without Meeting. Any action required
----------------------
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
ARTICLE IV
Committees of the Board
-----------------------
Section 4.1 Designation, Power, Alternate Members and Term of Office.
--------------------------------------------------------
The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of two or
more of the directors of the Corporation. Any such committee, to the extent
provided in such resolution, shall have and may exercise the power of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to
all papers which may require it. The Board may designate one or more
directors as alternate members of any committee who, in the order specified by
the Board, may replace any absent or disqualified member at any meeting of the
committee. If at a meeting of any committee one or more of the members
thereof should be absent or disqualified, and if either the Board of Directors
has not so designated any alternate member or members, or the number of absent
or disqualified members exceeds the number of alternate members who are
present at such meeting, then the member or members of such committee
(including alternates) present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another director to act at the meeting in the place of any such absent or
disqualified member. The term of office of the members of each committee
shall be as fixed from time to time by the Board, subject to these By-laws;
provided, however, that any committee member who ceases to be a member of the
- --------
Board shall ipso facto cease to be a committee member. Each committee shall
appoint a secretary, who may be the Secretary of the Corporation or an
Assistant Secretary thereof.
Section 4.2 Meetings Notices and Records. Each committee may provide for
----------------------------
the holding of regular meetings, with or without notice, and may fix the time
and place at which such meetings shall be held. Special meetings of each
<PAGE>
<PAGE>
committee shall be held upon call by or at the direction of its chairman, or,
if there be no chairman, by or at the direction of any two of its members, at
the time and place specified in the respective notices or waivers of notice
thereof. Notice of each special meeting of a committee shall be mailed to
each member of such committee, addressed to him at his residence or usual
place of business, at least two days before the day on which the meeting is to
be held, or shall be sent by telegram, radio or cable, addressed to him at
such place, or telephoned or delivered to him personally, not later than the
day before the day on which the meeting is to be held. Notice of any meeting
of a committee need not be given to any member thereof, who shall attend the
meeting in person or who shall waive notice thereof by telegram, radio, cable
or other writing. Notice of any adjourned meeting need not be given. Each
committee shall keep a record of its proceedings.
Section 4.3 Quorum and Manner of Acting. At each meeting of any
---------------------------
committee the presence of a majority but not less than two of its members then
in office shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the members present at
any meeting at which a quorum is present shall be the act of such committee;
in the absence of a quorum a majority of the members present at the time and
place of any meeting may adjourn the meeting from time to time until a quorum
shall be present. Subject to the foregoing and other provisions of these
By-laws and except as otherwise determined by the Board of Directors, each
committee may make rules for the conduct of its business. Any determination
made in writing and signed by all the members of such committee shall be as
effective as if made by such committee at a meeting.
Section 4.4 Resignations. Any member of a committee may resign at any
------------
time by giving written notice of such resignation to the Board of Directors,
the Chairman, the President or the Secretary of the Corporation. Unless
otherwise specified in such notice, such resignation shall take effect upon
receipt thereof by the Board or any such officer.
Section 4.5 Removal. Any member of any committee may be removed at
-------
anytime by the Board of Directors with or without cause.
Section 4.6 Vacancies. If any vacancy shall occur in
---------
any committee by reason of death, resignation, disqualification, removal, or
otherwise, the remaining members of such committee, though less than a quorum,
shall continue to act until such vacancy is filled by the Board of Directors.
Section 4.7 Compensation. Committee members shall receive such
------------
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as
the Board of Directors may from time to time determine. Nothing herein
contained shall be construed to preclude any committee member from serving the
Corporation in any other capacity and receiving compensation therefor.
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ARTICLE V
Officers
--------
Section 5.1 Officers. The officers of the Corporation shall be a
--------
Chairman, a President, one or more Vice Presidents including therein an
Executive Vice President, a Secretary, a Treasurer, and such other officers as
may be appointed in accordance with the provisions of Section 5.3.
Section 5.2 Election, Term of Office and Qualifications. Each officer
-------------------------------------------
(except such officers as may be appointed in accordance with the provisions of
Section 5.3) shall be elected by the Board of Directors. Each such officer
(whether elected at the first meeting of the Board of Directors after the
annual meeting of stockholders or to fill a vacancy or otherwise) shall hold
his office until the first meeting of the Board of Directors after the next
annual meeting of stockholders and until his successor shall have been
elected, or until his death, or until he shall have resigned in the manner
provided in Section 5.4 or shall have been removed in the manner provided in
Section 5.5.
Section 5.3 Subordinate Officers and Agents. The Board of Directors from
-------------------------------
time to time may appoint other officers or agents including one or more
Assistant Vice Presidents, one or more Assistant Secretaries and one or more
Assistant Treasurers, to hold office for such period, have such authority and
perform such duties as are provided in these By-laws or as may be provided in
the resolutions appointing them. The Board of Directors may delegate to any
officer or agent the power to appoint any such subordinate officers or agents
and to prescribe their respective terms of office, authorities and duties.
Section 5.4 Resignations. Any officer may resign at any time by giving
------------
written notice of such resignation to the Board of Directors, the Chairman,
the President, a Vice President or the Secretary. Unless otherwise specified
in such written notice, such resignation shall take effect upon receipt
thereof by the Board of Directors or any such officer.
Section 5.5 Removal. Any officer specifically designated in Section 5.1
-------
may be removed at any time, either with or without cause, at any meeting of
the Board of Directors by the vote of a majority of all the directors then in
office. Any officer or agent appointed in accordance with the provisions of
Section 5.3 may be removed, either with or without cause, by the Board of
Directors at any meeting, by the vote of a majority of the directors present
at such meeting, or by any superior officer or agent upon whom such power of
removal shall have been conferred by the Board of Directors.
Section 5.6 Vacancies. A vacancy in any office by reason of death,
---------
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these By-laws
for regular election or appointment to such office.
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Section 5.7 The Chairman. The Chairman or the President shall be the
------------
chief executive officer of the Corporation. The Chairman shall preside at all
meetings of the stockholders and the directors, shall be ex officio a member
of all standing committees, and shall see that all orders and resolutions of
the Board of Directors are carried into effect.
Section 5.8 The President.
-------------
(a) The President or an Executive Vice President shall be the chief
operating officer of the Corporation, as designated by the Board of
Directors. Subject to the direction of the Board of Directors, the
Chief Operating Officer shall have general charge of the business
affairs of the Corporation.
(b) Subject to the direction of the Board of Directors, the President
shall have general and active management of the Corporation and general
supervision over the Corporation's officers and agents. In the absence
of the Chairman, if present, he shall preside at all meetings of
stockholders and he shall see that all orders and resolutions of the
Board of Directors are carried into effect. He may sign, with any other
officer thereunto duly authorized, certificates of stock of the
Corporation the issuance of which shall have been duly authorized (the
signature to which may be a facsimile signature), and may sign and
execute in the name of the Corporation, deeds, mortgages, bonds,
contracts, agreements or other instruments duly authorized by the Board
of Directors except in cases where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other
officer or agent. From time to time he shall report to the Board of
Directors all matters within his knowledge which the interests of the
Corporation may require to be brought to their attention. He shall also
perform such other duties as are given to him by these By-laws or as
from time to time may be assigned to him by the Board of Directors.
Section 5.9 The Vice Presidents. At the request of the President or in
-------------------
his absence or disability, the Executive Vice President or in his absence or
disability the Vice President designated by the President (or in the absence
of such designation, the Vice President designated by the Board of Directors)
shall perform all the duties of the President and, when so acting, shall have
all the powers of and be subject to all restrictions upon the President. Any
vice President may also sign, with any other officer thereunto duly
authorized, certificates of stock of the Corporation the issuance of which
shall have been duly authorized (the signature to which may be a facsimile
signature), and may sign and execute in the name of the Corporation deeds,
mortgages, bonds and other instruments duly authorized by the Board of
Directors, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent.
Each Vice President shall perform such other duties as are given to him by
these By-laws or as from time to time may be assigned to him by the Board of
Directors, the Chairman or the President.
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Section 5.10 The Secretary. The Secretary shall
-------------
(a) record all the proceedings of the meetings of the stockholders,
the Board of Directors, and any committees in a book or books to be kept
for that purpose;
(b) cause all notices to be duly given in accordance with the
provisions of these By-laws and as required by statute;
(c) whenever any committee shall be appointed in pursuance of a
resolution of the Board of Directors, furnish the Chairman of such
committee with a copy of such resolution;
(d) be custodian of the records and of the seal of the Corporation,
and cause such seal to be affixed to all certificates representing stock
of the Corporation prior to the issuance thereof and to all instruments
the execution of which on behalf of the Corporation under its seal shall
have been duly authorized;
(e) see that the lists, books, reports, statements, certificates and
other documents and records required by statute are properly kept and
filed;
(f) subject to the rights and duties of the duly appointed transfer
agents and registrars for securities of the Corporation have charge of
the stock and transfer books of the Corporation, and exhibit such stock
book at all reasonable times to such persons as are entitled by statute
to have access thereto;
(g) sign (unless the Treasurer or an Assistant Secretary or an
Assistant Treasurer shall sign) certificates representing stock of the
Corporation the issuance of which shall have been duly authorized (the
signature to which may be a facsimile signature) and
(h) in general, perform all duties incident to the office of
Secretary and such other duties as are given to him by these By-laws or
as from time to time may be assigned to him by the Board of Directors,
the Chairman or the President.
Section 5.11 Assistant Secretaries. At the request of the Secretary or
---------------------
in his absence or disability, the Assistant Secretary designated by him (or in
the absence of such designation, the Assistant Secretary designated by the
Board of Directors, the Chairman or the President) shall perform all the
duties of the Secretary, and, when so acting, shall have all the powers of and
be subject to all restrictions upon the Secretary. The Assistant Secretaries
shall perform such other duties as from time to time may be assigned to them
by the Board of Directors, the Chairman, the President or the Secretary.
<PAGE>
<PAGE>
Section 5.12 The Treasurer. The Treasurer shall
-------------
(a) have charge of and supervision over and be responsible for the
funds, securities, receipts and disbursements of the Corporation;
(b) cause the moneys and other valuable effects of the Corporation to
be deposited in the name and to the credit of the Corporation in such
banks or trust companies or with such bankers or other depositaries as
shall be selected in accordance with Section 6.3 of these By-laws or to
be otherwise dealt with in such manner as the Board of Directors may
direct;
(c) cause the funds of the Corporation to be disbursed by checks or
drafts upon the authorized depositories of the Corporation, and cause to
be taken and preserved proper vouchers for all moneys disbursed;
(d) render to the Board of Directors, the Chairman or the President,
whenever requested, a statement of the financial condition of the
Corporation and of all his transactions as Treasurer;
(e) cause to be kept at the Corporation's principal office correct
books of account of all its business and transactions and such duplicate
books of account as he shall determine and upon application cause such
books or duplicates thereof to be exhibited to any director;
(f) be empowered, from time to time, to require from the officers or
agents of the Corporation reports or statements giving such information
as he may desire with respect to any and all financial transactions of
the Corporation;
(g) sign (unless the Secretary or an Assistant Secretary or an
Assistant Treasurer shall sign) certificates representing stock of the
Corporation the issuance of which shall have been duly authorized (the
signature to which may be a facsimile signature) and
(h) in general, perform all duties incident to the office of
Treasurer and such other duties as are given to him by these By-laws or
as from time to time may be assigned to him by the Board of Directors,
the Chairman or the President.
Section 5.13 Assistant Treasurers. At the request of the Treasurer or in
--------------------
his absence or disability, the Assistant Treasurer designated by him (or in
the absence of such designation, the Assistant Treasurer designated by the
Board of Directors, the Chairman or the President) shall perform all the
duties of the Treasurer, and, when so acting, shall have all the powers of and
be subject to all restrictions upon the Treasurer. The Assistant Treasurers
shall perform such other duties as from time to time may be assigned to them
by the Board of Directors, the Chairman, the President or the Treasurer.
<PAGE>
<PAGE>
Section 5.14 Salaries. The salaries of the officers of the Corporation
--------
shall be fixed from time to time by the Board of Directors except that the
Board of Directors may delegate to any person the power to fix the salaries or
other compensation of any officers or agents appointed in accordance with the
provisions of Section 5.3. No officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the Corporation.
ARTICLE VI
Execution of Instruments and Deposit of Corporate Funds
-------------------------------------------------------
Section 6.1 Execution of Instruments Generally. The Chairman, President,
----------------------------------
any Vice President, the Secretary or the Treasurer, subject to the approval of
the Board of Directors, may enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. The Board of
Directors may authorize any officer or officers, or agent or agents, to enter
into any contract or execute and deliver any instrument in the name and on
behalf of the Corporation, and such authorization may be general or confined
to specific instances.
Section 6.2 Borrowing. No loans or advances shall be obtained or
---------
contracted for, by or on behalf of the Corporation and no negotiable paper
shall be issued in its name, unless and except as authorized or ratified and
confirmed by the Board of Directors. Such authorization or ratification and
confirmation may be general or confined to specific instances. Any officer or
agent of the Corporation thereunto so authorized may obtain loans and advances
for the Corporation, and for such loans and advances may make, execute and
deliver promissory notes, bonds, or other evidences of indebtedness of the
Corporation. Any officer or agent of the Corporation thereunto so authorized
may pledge, hypothecate or transfer as security for the payment of any and all
loans, advances, indebtedness and liabilities of the Corporation, any and all
stocks, bonds, other securities and other personal property at any time held
by the Corporation, and to that end may endorse, assign and deliver the same
and do every act and thing necessary or proper in connection therewith.
Section 6.3 Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to its credit in such banks or
trust companies or with such bankers or other depositories as the Board of
Directors may select, or as may be selected by any officer or officers or
agent or agents authorized so to do by the Board of Directors. Endorsements
for deposit to the credit of the Corporation in any of its duly authorized
depositories shall be made in such manner as the Board of Directors from time
to time may determine.
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<PAGE>
Section 6.4 Checks, Drafts, etc. All checks, drafts or other orders for
-------------------
the payment of money, and all notes or other evidences of indebtedness issued
in the name of the Corporation, shall be signed by such officer or officers or
agent or agents of the Corporation, and in such manner, as from time to time
shall be determined by the Board of Directors.
Section 6.5 Proxies. Proxies to vote with respect to shares of stock of
-------
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
Chairman, the President or a Vice President or by any other person or persons
thereunto authorized by the Board of Directors.
ARTICLE VII
Section 7.1. Stockholder Matters.
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(a) Meetings of Stockholders. In order that the Corporation may
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determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty (60) nor less than (10) days
before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting unless the Board of Directors fixes a new record
date for the adjourned meeting.
(b) Consent of Stockholders. In order that the Corporation may
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determine the stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted by the Board of Directors, and which date shall not be more
than ten (10) days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. Any stockholder of record seeking
to have the stockholders authorize or take corporate action by written consent
shall, by written notice to the Secretary, request the Board of Directors to
fix a record date. The Board of Directors shall promptly, but in all events
within ten (10) days after the date on which such a request is received, adopt
a resolution fixing the record date. If no record date has been fixed by the
Board of Directors within ten (10) days of the date on which such a request is
received, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by applicable law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to
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be taken is delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or any officer or
agent of the Corporation having custody of the book in which proceedings of
stockholders' meetings are recorded, to the attention of the Secretary of the
Corporation. Delivery shall be by hand or by certified or registered mail,
return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by applicable
law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of
business on the date on which the Board of Directors adopts the resolution
taking such prior action.
(c) Dividends. In order that the Corporation may determine the
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stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted, and which record date shall be not more than sixty
(60) days prior to such action. If no record date is fixed, the record date
for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopted the resolution
relating thereto.
ARTICLE VIII
Corporate Seal
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Section 8.1 The corporate seal shall be circular in form and
shall bear the name of the Corporation and words denoting its
organization under the laws of the State of Delaware and
otherwise shall be in such form as shall be approved from time to
time by the Board of Directors.
ARTICLE IX
Fiscal Year
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Section 9.1 The fiscal year of the Corporation shall begin
on the first day of January in each year and end on the
thirty-first day of December in each year.
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ARTICLE X
Dividends and Finance
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Section 10.1 Dividends are to be paid in cash or in stock
and are to be paid out of the surplus earnings of the
Corporation, evidenced by cash or assets on hand, but no
dividends shall be paid that will impair the capital of the
Corporation.
Section 10.2 The funds of the Corporation shall be deposited
in such bank or trust company as the directors shall designate,
and shall be withdrawn only upon such authorization as is
provided for by the Board of Directors.
ARTICLE XI
Indemnification
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To the fullest extent permitted by law, the Corporation
shall indemnify any director or officer of the Corporation
(including former officers and directors) who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is
or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
agent or employee of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
attorneys' fees), liability, loss, judgment, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in
good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceedings, had no reasonable
cause to believe his conduct was unlawful. The termination of
any action, upon a plea of nolo contendere or equivalent, shall
not, of itself, create a presumption that the person did not act
in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
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Such indemnity shall inure to the benefit of the heirs,
executors and administrators of any director or officer so
indemnified pursuant to this Article. The right to
indemnification under this Article shall be a contract right and
shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of
its disposition; provided, however, that if the Delaware General
Corporation Law requires, the payment of such expenses incurred
in advance of the final disposition of a proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Article
or otherwise. Such indemnification and advancement of expenses
shall be in addition to any other rights to which those directors
and officers seeking indemnification and advancement of expenses
may be entitled under any law, agreement, vote of stockholders or
otherwise.
Any repeal or amendment of this Article by the stockholders
of the Corporation or by changes in applicable law shall, to the
extent permitted by applicable law, be prospective only, and
shall not adversely affect any right to indemnification or
advancement of expenses of a director or officer of the
Corporation existing at the time of such repeal or amendment. In
addition to the foregoing, the right to indemnification and
advancement of expenses shall be to the fullest extent permitted
by the General Corporation Law of the State of Delaware or any
other applicable law and all amendments to such laws as hereafter
enacted from time to time.
Article XII
Amendments; Enforceability
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These By-laws may be amended or repealed, or new By-laws may
be adopted, (1) by action of the Board of Directors; or (2) at
any annual or special meeting of the stockholders, by the
affirmative vote of 80% of the outstanding stock entitled to vote
on such action.
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Notwithstanding any other provision contained in these by-
laws, if independent counsel to the Corporation delivers to the
Corporation a written opinion stating, or a court of competent
jurisdiction determines, that any section of these by-laws, or
any portion thereof, is invalid, enforceable or void with respect
to any corporate action to be taken then such section, or such
portion thereof, as the case may be, shall after the date of such
delivery of such opinion or such determination shall be replaced
and amended by the Board with provisions that are enforceable and
achieve substantially the same intent, or come as nearly as
permissible to the same intent, as the previous provisions. If
such invalid, unenforceable or void provision cannot be replaced
in accordance with this provision, such provision shall be null
and void and of no effect, but the invalidity, unenforceability
or voiding of such provision shall not in any way affect or
impair the validity or enforceability of any other provision of
these by-laws.
