<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
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FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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For the 13 and 26 week periods Commission file number 1-777
ended July 30, 1994
J. C. PENNEY COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-5583779
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6501 Legacy Drive, Plano, Texas 75024 - 3698
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 431-1000
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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 .
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
233,413,040 shares of Common Stock of $0.50 par value, as of July 30, 1994.
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The following interim financial information is unaudited but, in the opinion of
the Company, includes all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation. The financial information should
be read in conjunction with the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the 52 weeks ended
January 29, 1994.
Statements of Income
(Amounts in millions except per share data)
<TABLE>
<CAPTION>
13 weeks ended 26 weeks ended
------------------ ------------------
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Retail sales $4,242 $3,963 $8,592 $7,927
Other revenue 170 143 339 285
------ ------ ------ ------
Total revenue 4,412 4,106 8,931 8,212
------ ------ ------ ------
Costs and expenses
Cost of goods sold, occupancy, buying,
and warehousing costs 2,960 2,772 5,915 5,456
Selling, general, and administrative
expenses 1,079 1,021 2,171 2,046
Costs and expenses of other businesses 132 104 258 211
Net interest expense and credit
operations 26 28 9 42
------ ------ ------ ------
Total costs and expenses 4,197 3,925 8,353 7,755
------ ------ ------ ------
Income before income taxes, extraordinary
charge, and cumulative effect of
accounting change 215 181 578 457
Income taxes 83 69 223 173
------ ------ ------ ------
Income before extraordinary charge and
cumulative effect of accounting change 132 112 355 284
Extraordinary charge on debt redemption,
net of income taxes of $10 -- -- -- (17)
Cumulative effect of accounting change
for income taxes -- -- -- 51
------ ------ ------ ------
Net income $ 132 $ 112 $ 355 $ 318
====== ====== ====== ======
Net income per common share
Primary
Income before extraordinary charge and
cumulative effect of accounting change $ .52 $ .43 $ 1.40 $ 1.11
Extraordinary charge on debt redemption -- -- -- (.07)
Cumulative effect of accounting change
for income taxes -- -- -- .21
------ ------ ------ ------
Net income $ .52 $ .43 $ 1.40 $ 1.25
====== ====== ====== ======
Fully diluted
Income before extraordinary charge and
cumulative effect of accounting change $ .51 $ .42 $ 1.35 $ 1.07
Extraordinary charge on debt redemption -- -- -- (.06)
Cumulative effect of accounting change
for income taxes -- -- -- .19
------ ------ ------ ------
Net income $ .51 $ .42 $ 1.35 $ 1.20
====== ====== ====== ======
</TABLE>
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Balance Sheets
(Amounts in millions)
<TABLE>
<CAPTION>
July 30, July 31, Jan. 29,
1994 1993 1994
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<S> <C> <C> <C>
ASSETS
Current assets
Cash and short term investments
of $382, $200, and $156 $ 492 $ 284 $ 173
Receivables, net 4,063 3,394 4,679
Merchandise inventories 4,163 3,649 3,545
Prepaid expenses 175 190 168
------- ------- -------
Total current assets 8,893 7,517 8,565
Properties, net of accumulated
depreciation of $1,994, $1,954,
and $2,001 3,804 3,739 3,818
Investments 1,373 1,052 1,182
Deferred insurance policy acquisition costs 458 401 426
Other assets 906 792 797
------- ------- -------
$15,434 $13,501 $14,788
======= ======= =======
</TABLE>
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Balance Sheets
(Amounts in millions)
<TABLE>
<CAPTION>
July 30, July 31, Jan. 29,
1994 1993 1994
-------- -------- --------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 1,960 $ 1,825 $ 2,139
Short term debt 1,937 1,391 1,284
Current maturities of long term debt -- 325 348
Deferred taxes 111 85 112
------- ------- -------
Total current liabilities 4,008 3,626 3,883
Long term debt 3,384 2,477 2,929
Deferred taxes 1,019 882 1,013
Bank deposits 594 540 581
Insurance policy and claims reserves 581 514 540
Other liabilities 467 585 477
------- ------- -------
Total liabilities 10,053 8,624 9,423
Stockholders' equity
Preferred stock, without par value:
Authorized, 25 million shares -
issued, 1 million shares of
Series B ESOP convertible preferred 639 657 648
Guaranteed ESOP obligation (343) (414) (379)
Common stock, par value $0.50:
Authorized, 1,250 million shares -
issued, 233, 236, and 236 million
shares 1,022 976 1,003
------- ------- -------
Total capital stock 1,318 1,219 1,272
------- ------- -------
Reinvested earnings at beginning
of year 4,093 3,531 3,531
Net income 355 318 940
Net unrealized change in debt
and equity securities 5 (2) 1
Retirement of common stock (173) -- --
Common stock dividends declared (197) (169) (339)
Preferred stock dividends
declared, net of taxes (20) (20) (40)
------- ------- -------
Reinvested earnings at end of
period 4,063 3,658 4,093
------- ------- -------
Total stockholders' equity 5,381 4,877 5,365
------- ------- -------
$15,434 $13,501 $14,788
======= ======= =======
</TABLE>
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Statements of Cash Flows
(Amounts in millions)
<TABLE>
<CAPTION>
26 weeks ended
------------------
July 30, July 31,
1994 1993
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<S> <C> <C>
Operating activities
Net income $ 355 $ 318
Extraordinary charge, net of income taxes -- 17
Cumulative effect of accounting change -- (51)
Depreciation and amortization 138 144
Amortization of original issue discount 3 23
Deferred taxes 5 (58)
Change in cash from:
Customer receivables 545 638
Securitized customer receivables amortized -- (259)
Inventories, net of trade payables (552) (346)
Other assets and liabilities, net (232) (274)
----- -----
262 152
----- -----
Investing activities
Capital expenditures (211) (199)
Purchases of investment securities (362) (179)
Proceeds from sales of investment securities 200 120
----- -----
(373) (258)
----- -----
Financing activities
Increase in short term debt 653 484
Issuance of long term debt 500 --
Payments of long term debt (350) (352)
Common stock issued, net 26 21
Retirement of common stock (188) --
Preferred stock retired (9) (9)
Dividends paid, preferred and common (202) (180)
----- -----
430 (36)
----- -----
Net increase (decrease) in cash and short term
investments 319 (142)
Cash and short term investments at beginning
of year 173 426
----- -----
Cash and short term investments at end of
second quarter $ 492 $ 284
===== =====
</TABLE>
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Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition
- -------------------
Customer receivables at the end of the 1994 second quarter were $3,081 million,
$611 million or 24.7 per cent higher than the prior year. Customer receivables
increased due to the higher sales volume, greater usage of the JCPenney credit
card by customers, new accounts added in 1994, and a lower repayment rate in the
first half of 1994. Also, receivables increased due to the amortization of the
$425 million Series D Trust Certificates during 1993. Total customer
receivables serviced by the Company, including those sold through a Trust, were
$3,806 million, $445 million or 13.2 per cent higher than the prior year.
Merchandise inventories, on a FIFO basis, were $4,409 million at the end of the
second quarter, an increase of 12.2 per cent from the level in the prior year.
Inventories in JCPenney stores are on plan for the Fall season. Catalog
inventories are higher than the comparatively low level at this time last year
to support the increased sales demand. The current cost of inventories exceeded
the amount carried on the balance sheet (valued substantially at LIFO) by
approximately $246 million at July 30, 1994, $246 million at January 29, 1994,
and $282 million at July 31, 1993.
Capital expenditures were $211 million in the first half of 1994, as compared
with $199 million in the comparable period last year.
Investments were $1,373 million at July 30, 1994, an increase of $321 million
from the prior year. The increase reflects the Company's investment of excess
cash in fixed income securities totalling $121 million, and from the growth in
JCPenney Insurance investments, which were $87 million higher than the prior
year's level.
Effective January 30, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". This Statement requires that securities be classified
as trading, held-to-maturity, or available-for-sale securities. The Company's
marketable investment securities, primarily held by JCPenney Insurance, are
classified as available-for-sale. Securities classified as available-for-sale
are required to be carried at market value, with changes in unrealized gains and
losses recorded directly to stockholders' equity, net of applicable income
taxes. Adoption of this Statement had no impact on net income.
Other assets were $906 million at the end of the 1994 second quarter, an
increase of $114 million from the prior year. The Company made a $99 million
contribution to its pension plan in the 1994 first quarter, which increased the
prepaid pension asset.
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Accounts payable and accrued expenses were $1,960 million on July 30, 1994, $135
million higher than the prior year. Trade payables were $1,101 million, $112
million above last year's level due to higher merchandise inventories.
Dividends payable were $100 million, $14 million higher than last year
reflecting the increase in the quarterly dividend rate.
Total debt on July 30, 1994 was $5,321 million as compared with $4,193 million
at July 31, 1993, an increase of $1,128 million. Short term debt was $546
million higher than last year due to the growth in customer receivables and the
increased investment in merchandise inventories. On June 15, 1994, the Company
issued $500 million of debt securities with maturities of five and ten years.
The securities include $225 million of 6.875 per cent Notes due June 15, 1999,
priced to yield 6.96 per cent and $275 million of 7.375 per cent Notes due June
15, 2004, priced to yield 7.45 per cent. These debt securities may not be
redeemed by the Company prior to maturity.
Total debt, net of short term investments and including off-balance-sheet debt
related to operating leases and the securitization of a portion of the Company's
customer receivables, was $5,976 million on July 30, 1994, as compared with
$5,415 million at July 31, 1993, an increase of $561 million. The Company's
debt to capital ratio was 52.6 per cent, the same as the prior year.
On July 1, 1994, the Company established a Series A, Medium-Term Note program of
up to $1 billion. Issuance and sale of the notes may be made from time to time
in various amounts. This Medium-Term Note program is a component of the
Company's overall debt securities program implemented pursuant to a shelf
registration statement filed by the Company in April 1994. The Company
anticipates using the net proceeds from Medium-Term Note sales for general
corporate purposes. As of July 30, 1994, no Medium-Term Notes had been issued.
On March 9, 1994, the Board of Directors declared a 16.7 per cent increase in
the regular quarterly dividend to 42 cents per share, or an indicated annual
rate of $1.68 per share, as compared with $1.44 per share in 1993. The Board
also approved on March 9, 1994, the purchase of up to 10 million shares of the
Company's common stock to offset dilution caused by the issuance of common
shares under the Company's equity compensation and benefit plans. During the
first half of 1994, the Company purchased approximately 3.6 million shares of
common stock at a cost of $188 million. All shares were retired and returned to
the status of authorized but unissued shares of common stock.
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Results of Operations
- ---------------------
Ratios useful in analyzing the results of operations are as follows:
<TABLE>
<CAPTION>
13 weeks ended 26 weeks ended
------------------ ------------------
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Retail sales, per cent increase 7.1 4.6 8.4 4.6
JCPenney stores sales, per cent
increase 6.3 3.2 6.9 4.3
Gross margin, per cent of retail
sales
FIFO 30.2 30.1 31.2 31.2
LIFO 30.2 30.1 31.2 31.2
Selling, general, and adminis-
trative expenses, per cent of
retail sales 25.5 25.8 25.3 25.8
Effective income tax rate 38.6 37.8 38.6 37.8
</TABLE>
For the 13 weeks ended July 30, 1994, net income was a Company record for the
second quarter, increasing 17.4 per cent to $132 million from $112 million in
last year's period. Earnings per share increased 21.4 per cent to 51 cents, as
compared with 42 cents in the same 1993 period, when there were more shares
outstanding. For the first half ended July 30, 1994, net income totalled $355
million, or $1.35 per share, as compared with $318 million, or $1.20 per share
in the comparable 1993 period. Net income in the first half of 1993 included an
extraordinary charge related to debt redemption, and the cumulative effect of an
accounting change from adopting SFAS No. 109, "Accounting for Income Taxes."
Excluding these items, income in the 1993 first half was $284 million, or $1.07
per share. The improvement in earnings in the 1994 second quarter and first
half reflected the increased sales performance of both JCPenney stores and
catalog and well managed expenses.
Second quarter total retail sales increased 7.1 per cent to $4,242 million from
$3,963 million in last year's comparable period. Second quarter sales from
JCPenney stores increased 6.3 per cent from the prior year's period. Sales from
the Company's catalog operation increased 8.2 per cent in the second quarter
while sales of the Thrift Drug store operation improved by 10.9 per cent over
the comparable 1993 period. For the six months ended July 30, 1994, total
retail sales increased 8.4 per cent to $8,592 million from $7,927 million in the
comparable 1993 period.
Gross margin dollars improved $91 million or 7.7 per cent in the second quarter
compared with the same 1993 period, due to increased sales volume from both
stores and catalog. As a per cent of retail sales, gross margin improved 10
basis points from last year's level to 30.2 per cent. For the first half of
1994, gross margin, as a per cent of retail sales, was 31.2 per cent, the same
as the comparable 1993 period.
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Selling, general, and administrative (SG&A) expenses, as a per cent of retail
sales, declined to 25.5 per cent in the 1994 second quarter from 25.8 per cent
in the 1993 comparable period. SG&A expense levels increased 5.9 per cent over
last year's second quarter due to planned increases in store and catalog
advertising and greater sales incentive compensation in stores. For the first
half of 1994, SG&A, as a per cent of retail sales, declined 50 basis points to
25.3 per cent.
Net interest expense and credit operations, which consists of finance charge
revenue from the Company's proprietary credit card, net interest expense, and
credit operating costs, was $26 million in the second quarter compared with $28
million in the comparable period last year. Finance charge revenue was $147
million, up $27 million over the same period last year due to higher customer
receivables. Net interest expense was $64 million, up $5 million compared with
last year's second quarter, due to higher short term borrowing levels and
interest rates. Credit operating costs were $109 million in the second quarter,
$20 million higher than the comparable period last year, primarily due to higher
bad debt expense.
Total revenue from the Company's life and health insurance business was $138
million in the 1994 second quarter, an increase of $23 million or 21.1 per cent
over the comparable period in the prior year. Operating income was higher than
the comparable period in 1993. Total pre-tax income of $31 million was slightly
less than the prior year's second quarter due to lower gains from the investment
portfolio.
The effective income tax rate was 38.6 per cent in both the 1994 second quarter
and first half compared with 37.8 per cent in the same periods last year,
reflecting the one per cent increase in the statutory Federal corporate tax rate
enacted in August 1993.
The Company's business depends to a great extent on the last quarter of the
year. Historically, sales for that period have averaged approximately one third
of annual sales. Accordingly, the results of operations for the 26 weeks ended
July 30, 1994 are not necessarily indicative of the results for the entire year.
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PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company has no material legal proceedings pending against it.
Item 4 - Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders of the Company was held on May 20, 1994, at
which five matters described below were submitted to a vote of security
holders with the voting results indicated.
(1) Election of directors for a three-year term expiring at the 1997
Annual Meeting of the Company's stockholders:
NOMINEE FOR AUTHORITY WITHHELD
------- --- ------------------
[S] [C] [C]
Vernon E. Jordan, Jr. 223,054,170 3,678,702
Jane C. Pfeiffer 223,771,550 2,961,322
A. Kenneth Pye 223,766,349 2,966,523
(2) The Board of Directors' proposal regarding a proposed amendment to
the Company's Restated Certificate of Incorporation, as amended, which
would increase the authorized number of shares of common stock of the
Company and the total authorized number of shares of Company stock
(including preferred stock):
FOR AGAINST ABSTAIN
--- ------- -------
172,986,282 51,653,488 2,093,099
(3) The Board of Directors' proposal concerning the employment of KPMG
Peat Marwick as auditors for the fiscal year ending January 28, 1995:
FOR AGAINST ABSTAIN
--- ------- -------
222,348,605 3,305,585 1,078,680
(4) A stockholder resolution concerning the elimination of the
classification of the Board of Directors:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
89,402,993 123,354,546 3,270,372 10,704,961
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(5) A stockholder resolution concerning submission to a
stockholder vote of the Company's stockholder rights plan:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
92,987,032 119,526,347 3,519,932 10,699,561
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
The following documents are filed as exhibits to this report:
3(a) By-Laws of Company as amended to July 13, 1994.
11 Computation of net income per common share.
12(a) Computation of ratios of available income to combined fixed
charges and preferred stock dividend requirement.
12(b) Computation of ratios of available income to fixed charges.
27 Financial Data Schedule for the six months ended July 30, 1994.
(b) Reports on Form 8-K
-------------------
The Registrant filed three Current Reports on Form 8-K with the
Securities and Exchange Commission, the first dated May 26, 1994 and
filed June 2, 1994, the second dated June 7, 1994 and filed June 22,
1994, and the third dated July 1, 1994 and filed July 11, 1994. The
items reported on each Form 8-K were: Item 5 - Other Events,
and Item 7 - Financial Statements and Exhibits.
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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.
J. C. PENNEY COMPANY, INC.
By /s/L. A. Gispanski
------------------------------
L. A. Gispanski
Vice President and Controller
(Principal Accounting Officer)
Date: September 2, 1994
<PAGE>
EXHIBIT 3(a)
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J. C. PENNEY COMPANY, INC.
(A Delaware Corporation)
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BY-LAWS
As amended to July 13, 1994
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================================================================================
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Article Title Pages
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<S> <C> <C>
I Offices 1
II Meetings of Stockholders 2-11
III Board of Directors 11-19
IV Committees 19-23
V Officers 23-28
VI Contracts, Loans, Checks,
Drafts, Bank Accounts, Etc. 29-30
VII Books and Records 31-32
VIII Shares of Stock and Their
Transfer 32-33
IX Dividends and Reserves 33
X Indemnification of Directors,
Officers, Employees, and Agents 34
XI Ratification 34-35
XII Seal 35
XIII Fiscal Year 35
XIV Waiver of Notice 36
XV Emergency By-laws 36-39
XVI Amendments 39-40
</TABLE>
<PAGE>
J. C. PENNEY COMPANY, INC.
(A Delaware Corporation)
BY-LAWS
--------------------------
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of J. C. Penney
Company, Inc. (hereinafter called the Company) in the State of Delaware shall be
at 1209 Orange Street, City of Wilmington, County of New Castle. The name of
the registered agent in charge thereof is The Corporation Trust Company.
SECTION 2. Other Offices. The Company may also have an office or
offices at such other place or places either within or without the State of
Delaware as from time to time the Board of Directors may determine or the
business of the Company may require.
<PAGE>
2
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may come
before the meeting shall be held at such place and time as shall be fixed by the
Board of Directors and specified in the notice of the meeting, on the third
Tuesday in May in each year, or on such other day as shall be fixed by the Board
of Directors and specified in the notice of the meeting. If the election of
directors shall not be held on the day designated herein or the day fixed by the
Board, as the case may be, for any annual meeting, or on the day of any
adjourned session thereof, the Board of Directors shall cause the election to be
held at a special meeting as soon thereafter as convenient. At such special
meeting, the stockholders may elect the directors and transact other business
with the same force and effect as at an annual meeting duly called and held.
SECTION 2. Special Meetings. Any action required or permitted to be
taken by the holders of the Common Stock of the Company must be effected at a
duly called annual or special meeting of such holders and may not be effected by
any consent in writing by such holders. A special meeting of stockholders for
any purpose or purposes, unless otherwise prescribed by the laws of the State of
Delaware or by the certificate of incorporation, may be called at
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3
any time only by the Board of Directors pursuant to a resolution approved by a
majority of the Board of Directors. Special meetings of stockholders may be
held at such place, on such date, and at such time as shall be designated by
resolution of the Board of Directors.
SECTION 3. Notice of Meetings. Except as otherwise required by the laws
of the State of Delaware or the certificate of incorporation, notice of each
annual or special meeting of stockholders shall be given not less than 10 nor
more than 60 days before the day on which the meeting is to be held to each
stockholder of record entitled to vote at the meeting by delivering a written
notice thereof to him or her personally, or by depositing a copy of the notice
in the United States mail, postage prepaid, directed to him or her at his or her
address as it appears on the records of the Company, or by transmitting the
notice thereof to him or her at such address by telegram, cable, radiogram,
telephone facsimile, or other appropriate written communication. Except when
expressly required by the laws of the State of Delaware, no publication of any
notice of a meeting of stockholders shall be required. Every such notice shall
state the place, date, and time of the meeting, and in the case of a special
meeting, the purpose or purposes thereof. Notice of any adjourned session of a
meeting of stockholders shall not be required to be given if the place, date,
and time thereof are announced at the meeting at which the
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4
adjournment is taken. If, however, the adjournment is for more than 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 4. List of Stockholders. It shall be the duty of the officer
who shall have charge of the stock ledger of the Company to prepare and make, at
least 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 10 days prior to the meeting, either at
a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, 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, for any purpose germane to the meeting, by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine such list or to vote in person or by proxy at
the meeting.
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5
SECTION 5. Quorum. At each meeting of stockholders, the holders of a
majority of the issued and outstanding shares of stock of the Company entitled
to vote at the meeting, present in person or represented by proxy, shall
constitute a quorum for the transaction of business. In the absence of a quorum
at any meeting, or any adjourned session thereof, the stockholders of the
Company present in person or represented by proxy and entitled to vote, by
majority vote, or in the absence of all the stockholders, any officer entitled
to preside or act as secretary at the meeting, may adjourn the meeting from time
to time until a quorum shall be present. At any such adjourned meeting at which
a quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally called.
SECTION 6. Organization and Conduct of Meeting. At each meeting of
stockholders, the Chairman of the Board or in his or her absence a Vice Chairman
of the Board or in his or her absence a chairman chosen by the vote of a
majority in interest of the stockholders present in person or represented by
proxy and entitled to vote thereat, shall act as chairman. The Secretary or in
his or her absence an Assistant Secretary or in the absence of the Secretary and
all Assistant Secretaries a person whom the chairman of the meeting shall
appoint shall act as secretary of the meeting and keep a record of the
proceedings thereof. The date and time of the opening and the closing of the
polls for each matter upon which the
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6
stockholders will vote at a meeting shall be announced at the meeting by the
person presiding over the meeting. The Board of Directors may adopt by
resolution such rules and regulations for the conduct of the meeting of
stockholders as it shall deem necessary, appropriate, or convenient. Except to
the extent inconsistent with such rules and regulations as adopted by the Board
of Directors, the chairman of any meeting of stockholders shall have the right
and authority to prescribe such rules, regulations, and procedures and to do all
such acts as, in the judgment of such chairman, are necessary, appropriate, or
convenient for the proper conduct of the meeting. Such rules, regulations, or
procedures, whether adopted by the Board of Directors or prescribed by the
chairman of the meeting, may include, without limitation, the following: (i) the
establishment of an agenda or order of business for the meeting, (ii) rules and
procedures for maintaining order at the meeting and the safety of those present,
(iii) limitations on attendance at or participation in the meeting to
stockholders of record of the Company, their duly authorized and constituted
proxies, or such other persons as the chairman of the meeting shall determine,
(iv) restrictions on entry to the meeting after the time fixed for the
commencement thereof, and (v) limitations on the time allotted to questions or
comments by participants. Unless, and to the extent determined by the Board of
Directors or the chairman of the meeting, meetings of
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7
stockholders shall not be required to be held in accordance with the rules of
parliamentary procedure.
SECTION 7. Notification of Stockholder Business. At a meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a meeting, business
must be (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (ii) otherwise properly
brought before the meeting by or at the direction of the Board of Directors, or
(iii) in the case of an annual meeting of stockholders, otherwise properly
requested to be brought before the meeting by a stockholder of record entitled
to vote at the meeting and otherwise a proper subject to be brought before such
meeting. For business to be properly requested to be brought before an annual
meeting of stockholders, any stockholder who desires to bring any matter (other
than the election of directors, which is provided for in Section 15 of Article
III of these By-laws) before such meeting and who is entitled to vote on such
matter must give timely written notice of such stockholder's desire to bring
such matter before the meeting, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Company not later than 90 days in
advance of such meeting. A stockholder's notice to the Secretary in this regard
shall set forth: (1) the name and address of the stockholder proposing such
business, (2) a
<PAGE>
8
representation that such stockholder is a record owner of stock of the Company
entitled to vote at the meeting and intends to appear in person at the meeting
to present the described business, (3) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting, and (4) any material interest of the stockholder in
such business. Notwithstanding anything in these By-laws to the contrary, no
business may be conducted at a meeting except in accordance with the procedures
set forth in this Article II of these By-laws. The chairman of a meeting may,
if the facts warrant, or if not in accordance with applicable law, determine and
declare to the meeting that business proposed to be brought before a meeting was
not a proper subject therefor or was not properly brought before the meeting in
accordance with the provisions of this Section 7, and if he should so determine,
he may so declare to the meeting, and any such business not a proper subject
matter or not properly brought before the meeting shall not be transacted.
SECTION 8. Voting; Proxies; Ballots. Except as otherwise provided in the
laws of the State of Delaware or the certificate of incorporation, at every
meeting of stockholders, each stockholder of the Company shall be entitled to
one vote at the meeting in person or by proxy for each share of stock having
voting rights registered in his or her name on the books of the Company on the
date fixed pursuant to Section 3 of Article VII of these By-laws as
<PAGE>
9
the record date for the determination of stockholders entitled to vote at the
meeting. Shares of its own stock belonging to the Company shall not be voted
directly or indirectly (except for shares of stock held by the Company in a
fiduciary capacity). The vote of any stockholder entitled thereto may be cast
in person or by his or her proxy appointed by an instrument in writing, or by a
telegram, cablegram, or other means of electronic transmission, to the full
extent permitted by the laws of the State of Delaware; provided, however, that
no proxy shall be voted after three years from its date, unless the proxy
provides for a longer period. At all meetings of stockholders, each question
(except where other provision is made in the laws of the State of Delaware, in
the certificate of incorporation, or in these By-laws) shall be decided by the
vote of the holders of shares of stock having a majority of the votes which
could be cast by the holders of all shares of stock outstanding and entitled to
vote thereon. All elections of directors and all votes on matters set forth in
the notice of meeting shall be by written ballot stating the number of shares
voted, but except as otherwise provided in the laws of the State of Delaware,
the vote on any other matter need not be by ballot unless directed by the
chairman of the meeting. On a vote by ballot, each ballot shall be signed by
the stockholder voting, or by his or her proxy, if there be such proxy, and
shall state the number of shares voted.
<PAGE>
10
SECTION 9. Inspectors of Election. The Company shall, in advance of any
meeting of stockholders, appoint one or more inspectors of election, who may be
employees of the Company, to act at the meeting or any adjournment thereof and
to make a written report thereof. The Company may designate one or more persons
as alternate inspectors to replace any inspector who fails to act. In the event
that no inspector so appointed or designated is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath to execute
faithfully the duties of inspector with strict impartiality and according to the
best of his or her ability.
The inspector or inspectors so appointed or designated shall (i) ascertain the
number of shares of stock of the Company outstanding and the voting power of
each such share, (ii) determine the shares of stock of the Company represented
at the meeting and the validity of proxies and ballots, (iii) count all votes
and ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares of stock of the Company
represented at the meeting and such inspectors' count of all votes and ballots.
Such certification and
<PAGE>
11
report shall specify such other information as may be required by law. In
determining the validity and counting of proxies and ballots cast at any meeting
of stockholders of the Company, the inspectors may consider such information as
is permitted by applicable law. No person who is a candidate for an office at
an election may serve as an inspector at such election.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business, property, and affairs of the
Company shall be managed by or under the direction of the Board of Directors.
In addition to the powers and authorities expressly conferred upon the Board of
Directors by the certificate of incorporation and these By-laws, the Board of
Directors may exercise all such powers of the Company and do all such lawful
acts and things as are not by the laws of the State of Delaware, the certificate
of incorporation, or these By-laws directed or required to be exercised or done
by the stockholders.
SECTION 2. Eligibility. No person may serve as a director unless he or she
is a stockholder of the Company. A person shall not be eligible for
re-election as a director after attaining age 70.
SECTION 3. Number and Classification of Directors. Except as otherwise
provided for or fixed by or pursuant to the provisions of
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12
Article Fourth of the certificate of incorporation relating to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional directors under
specified circumstances, the number of directors of the Company which shall
constitute the whole Board of Directors shall be such number, not less than
three, as from time to time shall be fixed by the Board of Directors. The
directors, other than those who may be elected pursuant to the aforesaid
provisions of said Article Fourth, shall be classified by the Board of
Directors, with respect to the duration of the term for which they severally
hold office, into three classes as nearly equal in number as possible. Such
classes shall originally consist of a first class of four directors who shall be
elected at the annual meeting of stockholders held in 1985 for a term expiring
at the annual meeting of stockholders to be held in 1986, and election and
qualification of their respective successors; a second class of five directors
who shall be elected at the annual meeting of stockholders held in 1985 for a
term expiring at the annual meeting of stockholders to be held in 1987, and
election and qualification of their respective successors; and a third class of
five directors who shall be elected at the annual meeting of stockholders held
in 1985 for a term expiring at the annual meeting of stockholders to be held in
1988, and election and qualification of their respective successors. At each
annual
<PAGE>
13
meeting of stockholders beginning in 1986, the successors of the class of
directors whose term expires at that meeting shall be elected for a term
expiring at the annual meeting of stockholders held in the third year following
the year of election of such directors and election and qualification of their
respective successors. The Board of Directors shall increase or decrease the
number of directors in one or more classes as may be appropriate whenever it
increases or decreases the number of directors pursuant to this Section 3, in
order to ensure that the three classes shall be as nearly equal in number as
possible. Each director of the Company shall hold office as provided above and
until his or her successor shall have been duly elected and qualified.
SECTION 4. Quorum and Manner of Acting. A majority of the directors at the
time in office shall constitute a quorum for the transaction of business at any
meeting, which in no case shall be less than one third of the total number of
directors. Except as otherwise provided in the laws of the State of Delaware,
the certificate of incorporation, or these By-laws, the affirmative vote of a
majority of the directors present at any meeting at which a quorum is present
shall be required for the taking of any action by the Board of Directors. In
the absence of a quorum at any meeting of the Board, the meeting need not be
held, or a majority of the directors present thereat or if no director be
present, the Secretary, may adjourn the meeting from time to time until a quorum
<PAGE>
14
shall be present. Notice of any adjourned meeting need not be given. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally called.
Members of the Board of Directors may participate in a meeting of the Board by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in the meeting by such means shall constitute presence in person
at the meeting.
SECTION 5. Offices; Places of Meetings. The Board of Directors may hold
meetings and have an office or offices at such place or places within or without
the State of Delaware as the Board may from time to time determine, and in the
case of meetings, as shall be specified or fixed in the respective notices or
waivers of notice thereof, except where other provision is made in the laws of
the State of Delaware, the certificate of incorporation, or these By-laws.
SECTION 6. Annual Meeting. The Board of Directors shall meet for the
purpose of organization, the election of officers, and the transaction of other
business, at the time of each annual election of directors. Such meeting may be
held prior to the stockholders' meeting, if deemed necessary and appropriate,
and if so held, would be held subject to the election of directors at the
upcoming stockholders' meeting; provided, however, that no individual not
<PAGE>
15
then a director may act as a director prior to his or her election at the
upcoming stockholders' meeting. Such meeting shall be called and held at the
place and time specified in the notice or waiver and held at the place and time
specified in the notice or waiver of notice thereof as in the case of a special
meeting of the Board of Directors.
SECTION 7. Regular Meetings. Regular meetings of the Board of Directors
shall be held as the Board of Directors shall determine, at such times and
places as shall from time to time be determined by the Board, except that in
May, the regular meeting shall be held immediately following the adjournment of
the annual meeting of the Board. Notice of regular meetings need not be given.
SECTION 8. Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board or a Vice
Chairman of the Board or by any two of the directors. Notice of each such
meeting shall be mailed to each director, addressed to such director at his or
her 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 to such director at his or her
residence or such place of business by telegram, cable, radiogram, telephone
facsimile, or other appropriate written communication, or delivered personally
or by telephone, not later than the day before the day on which the meeting is
to be held. Each such notice shall state the time and place of the meeting but
<PAGE>
16
need not state the purposes thereof except as otherwise herein expressly
provided.
SECTION 9. Organization. At each meeting of the Board of Directors, the
Chairman of the Board or in his or her absence, a Vice Chairman of the Board or
in his or her absence, a director chosen by a majority of the directors present,
shall act as chairman. The Secretary or in his or her absence, an Assistant
Secretary or in the absence of the Secretary and all Assistant Secretaries, a
person whom the chairman of the meeting shall appoint, shall act as secretary of
the meeting and keep a record of the proceedings thereof.
SECTION 10. Order of Business. At all meetings of the Board of Directors,
business shall be transacted in the order determined by the Board.
SECTION 11. Resignation. Any director may resign at any time by giving
written notice of his or her resignation to the Board of Directors or to the
Chairman of the Board, a Vice Chairman of the Board, or the Secretary. Such
resignation shall take effect at the date of receipt of the notice or at any
later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 12. Removal of Directors. Any director may be removed, either with
or without cause, at any time, by the affirmative vote of at least 80% of the
combined voting power of the
<PAGE>
17
then-outstanding shares of all classes and series of stock of the Company
entitled to vote generally in the election of directors, voting together as a
single class, at a special meeting of stockholders duly called and held for the
purpose or at an annual meeting of stockholders.
SECTION 13. Vacancies. Any vacancy in the Board of Directors caused by
death, resignation, removal, disqualification, increase in the number of
directors, or any other cause, shall be filled by a majority vote of the
remaining directors, even though less than a quorum, or by the stockholders at
a special meeting duly called and held for the purpose or at an annual meeting,
and each director so elected shall hold office for the remainder of the full
term of the class in which the new directorship was created or the vacancy
occurred.
SECTION 14. Remuneration. Directors and members of any committee may
receive such fixed sum per meeting attended, or such annual sum or sums, and
such reimbursement for expenses of attendance at meetings, as may be determined
from time to time by resolution of the Board of Directors. Nothing herein
contained shall be construed to preclude any director from serving the Company
in any other capacity and receiving proper compensation therefor.
SECTION 15. Notification of Nominations. Nominations for the election of
directors may be made by the Board of Directors or by
<PAGE>
18
any stockholder entitled to vote for the election of directors. Any stockholder
entitled to vote for the election of directors at a meeting may nominate
persons for election as directors only if written notice of such stockholder's
intent to make such nomination is given, either by personal delivery or by
United States mail, postage prepaid, to the Secretary of the Company, not later
than (i) with respect to an election to be held at an annual meeting of
stockholders, 90 days in advance of such meeting, and (ii) with respect to an
election to be held at a special meeting of stockholders for the election of
directors, the close of business on the seventh day following the date on which
notice of such meeting is first given to stockholders. Each such notice shall
set forth: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated, (b) a representation
that such stockholder is a holder of record of stock of the Company entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice, (c) a description of
all arrangements or understandings between such stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by such stockholder, (d) such other
information regarding each nominee proposed by such stockholder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules
<PAGE>
19
of the Securities and Exchange Commission had each nominee been nominated, or
intended to be nominated by the Board of Directors, and (e) the consent of each
nominee to serve as a director of the Company if so elected. The chairman of
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures.
SECTION 16. Action of the Board of Directors by Consent. 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
or of such 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 or
such committee.
ARTICLE IV
COMMITTEES
SECTION 1. Executive Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate directors of the Company, in
such number as the Board shall see fit, but not less than two, as an Executive
Committee which shall have and may exercise, during intervals between meetings
of the Board, the powers and authority of the Board of Directors in the
management of the business and affairs of the Company, and may authorize the
seal of the Company to be affixed to all papers which
<PAGE>
20
may require it; but the Executive Committee shall not have the power or
authority in reference to filling vacancies in its membership, amending the
certificate of incorporation (except that the Executive Committee (or any
committee designated pursuant to Section 6 of this Article IV) may, to the full
extent permitted by the laws of the State of Delaware, make determinations with
respect to the issuance of stock of the Company), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease, or
exchange of all or substantially all the Company's property and assets,
recommending to the stockholders a dissolution of the Company or a revocation of
a dissolution, amending these By-laws, or declaring a dividend. The Executive
Committee (or any committee designated pursuant to Section 6 of this Article IV)
shall have the power or authority to authorize the issuance of stock of the
Company. The Board of Directors shall designate one of the members of the
Executive Committee to be the Chairman of the Committee. Each member of the
Executive Committee shall continue to act as such only so long as he or she
shall be a director of the Company and only during the pleasure of a majority of
the whole Board of Directors.
SECTION 2. Meetings. Regular meetings of the Executive Committee, of which
no notice shall be necessary, shall be held on such days and at such places,
within or without the State of Delaware, as shall be fixed by resolution
adopted by a majority of,
<PAGE>
21
and communicated to all, the members of the Executive Committee. Special
meetings of the Committee may be called at the request of any member. Notice of
each special meeting of the Committee shall be mailed to each member thereof,
addressed to such member at his or her 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 to such member at his or her residence or such place of business by
telegram, cable, radiogram, telephone facsimile, or other appropriate written
communication, or delivered personally or by telephone, not later than the day
before the day on which the meeting is to be held. Each such notice shall state
the time and place of the meeting but need not state the purposes thereof except
as otherwise herein expressly provided. Subject to the provisions of this
Article IV, the Executive Committee, by resolution of a majority of all its
members, shall fix its own rules of procedure. The Executive Committee shall
keep a record of its proceedings and report them to the Board of Directors at
the next regular meeting thereof after such proceedings shall have been taken.
SECTION 3. Quorum and Manner of Acting. Not less than a majority of the
members of the Executive Committee then in office shall constitute a quorum for
the transaction of business, and the act of a majority of those present at a
meeting thereof at which a quorum is present shall be the act of the Executive
Committee. The directors comprising the Committee shall act only as a
committee,
<PAGE>
22
and such directors, individually, shall have no power as such. Members of the
Executive Committee, or any committee designated by the Board of Directors, may
participate in a meeting of such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in the meeting by such means
shall constitute presence in person at the meeting.
SECTION 4. Vacancies. The Board of Directors, by vote of a majority of the
whole Board, shall have power to fill any vacancy in the Executive Committee
due to death, resignation, removal, disqualification, or any other cause.
SECTION 5. Resignation. Any director may resign from the Executive
Committee at any time by giving written notice of his or her resignation to the
Board of Directors or to the Chairman of the Board, the Chairman of the
Executive Committee, a Vice Chairman of the Board, or the Secretary. Such
resignation shall take effect at the date of receipt of the notice or at any
later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 6. Other Committees. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or more
other committees, each such committee to consist of one or more directors of the
Company, which shall have
<PAGE>
23
and may exercise such powers and authority (subject to the limitations specified
in Section 1 of this Article IV) as the Board of Directors may determine and
specify in such resolution or resolutions, such committee or committees to have
such name or names as may be determined from time to time by the Board of
Directors. A majority of all the members of any such committee may fix its
rules of procedure, determine its actions, and fix the time and place (whether
within or without the State of Delaware) of its meetings and specify what notice
thereof, if any, shall be given, unless the Board of Directors shall otherwise
by resolution provide. The Board of Directors shall have the power, either with
or without cause, at any time, to change the members of any such committee, to
fill vacancies, and to discharge any such committee.
ARTICLE V
OFFICERS
SECTION 1. Principal Officers. The principal officers of the Company shall
be a Chairman of the Board and one or more Vice Chairmen of the Board, each of
whom shall be members of the Board of Directors, one or more Presidents of
divisions, regions, or other units, functions, or activities, one or more Vice
Presidents (the number thereof to be determined by the Board of Directors), a
Treasurer, a Secretary, and a Controller. In addition, there may be such
subordinate officers, agents, and employees as may be
<PAGE>
24
appointed in accordance with the provisions of Section 3 of this Article V. Any
two or more offices may be held by the same person.
SECTION 2. Election and Term of Office. The officers of the Company, except
such officers as may be appointed in accordance with the provisions of Section
3 of this Article V, shall be elected annually by the Board of Directors. Each
officer, except such officers as may be appointed in accordance with the
provisions of Section 3 of this Article V, shall hold office until his or her
successor shall have been duly elected and qualified, or until his or her
earlier death, resignation, removal, or disqualification.
SECTION 3. Subordinate Officers. In addition to the principal officers
enumerated in Section 1 of this Article V, the Company may have such other
officers, agents, and employees as the Board of Directors may deem necessary,
including one or more Assistant Treasurers, one or more Assistant Secretaries,
and one or more Assistant Controllers, each of whom shall hold office for such
period, have such authority, and perform such duties as the Board of Directors,
the Chairman of the Board, or a Vice Chairman of the Board may from time to time
determine. The Board of Directors may delegate to any principal officer the
power to appoint or remove any such subordinate officers, agents, or employees.
SECTION 4. Removal. Any officer may be removed, either with or without
cause, by the vote of a majority of the whole Board of Directors at a special
meeting called for the purpose or except in
<PAGE>
25
case of any officer elected by the Board of Directors, by any officer upon whom
the power of removal may be conferred by the Board of Directors.
SECTION 5. Resignation. Any officer may resign at any time by giving
written notice of his or her resignation to the Board of Directors or to the
Chairman of the Board, a Vice Chairman of the Board, or the Secretary. Such
resignation shall take effect at the date of receipt of the notice or at any
later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 6. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these By-laws for
regular election or appointment to such office.
SECTION 7. Chairman of the Board. The Chairman of the Board may be the
chief executive officer of the Company. The Chairman of the Board shall preside
at all meetings of the Board of Directors and of the stockholders at which he or
she is present. The Chairman of the Board shall have the general supervision of
the affairs of the Company, and perform all such duties as are incident to the
office or as are properly required of him or her by the Board of Directors. The
Chairman of the Board shall have authority to enter into any contract or execute
and deliver any instrument in
<PAGE>
26
the name and on behalf of the Company, when authorized by the Board of
Directors, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or these By-laws to some other
officer, agent, or employee of the Company.
SECTION 8. Vice Chairmen of the Board. The Board of Directors may
establish the office of Vice Chairman of the Board. In the absence or
disability of the Chairman of the Board, a Vice Chairman of the Board shall
perform the duties and exercise the powers of the Chairman of the Board. A Vice
Chairman of the Board shall have authority to enter into any contract or execute
and deliver any instrument in the name and on behalf of the Company, when
authorized by the Board of Directors, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or
these By-laws to some other officer, agent, or employee of the Company. In
addition, a Vice Chairman of the Board shall have such further powers and
perform such further duties as may, from time to time, be assigned to him or her
by the Board of Directors or the Chairman of the Board or as may be prescribed
by these By-laws.
SECTION 9. Presidents. The Board of Directors may establish the office of
President of a division, region, or other unit, function, or activity of the
Company. A President shall have such powers and perform such duties as may,
from time to time, be
<PAGE>
27
assigned to him or her by the Board of Directors, the Chairman of the Board, or
a Vice Chairman of the Board.
SECTION 10. Vice Presidents. The Board of Directors may establish several
classifications of Vice Presidents, such as Executive Vice Presidents, Senior
Vice Presidents, Regional Vice Presidents, and Divisional Vice Presidents.
Each Vice President shall have such powers and perform such duties as shall,
from time to time, be assigned to him or her by the Board of Directors, the
Chairman of the Board, or a Vice Chairman of the Board.
SECTION 11. The Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Company, and shall
deposit or cause to be deposited all such funds in the name of the Company in
such banks, trust companies, and other depositories as shall be selected in
accordance with the provisions of these By-laws; shall render to the Board of
Directors, whenever the Board may require him or her so to do, a report of all
his or her transactions as Treasurer; and in general, shall perform all duties
as may, from time to time, be assigned to him or her by the Board of Directors,
the Chairman of the Board, or a Vice Chairman of the Board.
SECTION 12. The Secretary. The Secretary shall record or cause to be
recorded in books kept for the purpose the proceedings of the meetings of the
stockholders, the Board of Directors, and all committees, if any; shall see that
all notices are duly given in
<PAGE>
accordance with the provisions of these By-laws and as required by law; shall be
custodian of the seal of the Company; and in general, shall perform all duties
incident to the office of Secretary and such other duties as may, from time to
time, be assigned to him or her by the Board of Directors, the Chairman of the
Board, or a Vice Chairman of the Board.
SECTION 13. The Controller. The Controller shall have charge of the
books and records of account of the Company; shall keep or cause to be kept, and
shall be responsible for the keeping of, correct and adequate records of the
assets, liabilities, business, and transactions of the Company; shall at all
reasonable times exhibit his or her books and records of account to any director
of the Company upon application at the office of the Company where such books
and records are kept; shall be responsible for the preparation and filing of all
reports and returns relating to or based upon the books and records of the
Company kept by him or her or under his or her direction; and in general, shall
perform all duties incident to the office of Controller and such other duties as
may, from time to time, be assigned to him or her by the Board of Directors, the
Chairman of the Board, or a Vice Chairman of the Board.
<PAGE>
29
ARTICLE VI
CONTRACTS, LOANS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Execution of Contracts. The Board of Directors, except as
otherwise provided in these By-laws, may authorize any officer or officers or
other person or persons to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Company, and such authority may be
general or confined to specific instances, and unless so authorized by the Board
of Directors or by the provisions of these By-laws, no officer or other person
shall have any power or authority to bind the Company by any contract or
engagement or to pledge its credit or to render it liable pecuniarily for any
purpose or to any amount.
SECTION 2. Loans. No loan shall be contracted on behalf of the Company,
and no negotiable papers shall be issued in its name, except by such officer or
officers or other person or persons as may be designated by the Board of
Directors from time to time. If and to the extent authorized by the Board of
Directors, the power to contract loans or issue negotiable papers may be
delegated by any such officer or officers or other person or persons.
SECTION 3. Checks, Drafts, etc. All checks, drafts, bills of exchange,
and other orders for the payment of money, letters of credit, acceptances,
obligations, notes, and other evidences of indebtedness, bills of lading,
warehouse receipts, and insurance
<PAGE>
30
certificates of the Company shall be signed or endorsed by such officer or
officers or other person or persons as may be designated by the Board of
Directors from time to time. If and to the extent authorized by the Board of
Directors, the power to sign or endorse any such instrument may be delegated by
any such officer or officers or other person or persons.
SECTION 4. Bank Accounts. The Board of Directors may from time to time
authorize the opening and maintenance of general and special bank and custodial
accounts with such banks, trust companies, and other depositories as it may
select. Rules, regulations, and agreements applicable to such accounts may be
made, and changed from time to time, by the Board of Directors, including, but
without limitation, rules, regulations, and agreements with respect to the use
of facsimile and printed signatures. Any of such powers of the Board of
Directors with respect to bank and custodial accounts may be delegated by the
Board of Directors to any officer or officers or other person or persons as may
be designated by the Board of Directors, and if and to the extent authorized by
the Board of Directors, any such power may be further delegated by any such
officer or officers or other person or persons.
<PAGE>
31
ARTICLE VII
BOOKS AND RECORDS
SECTION 1. Location. The books and records of the Company may be kept
at such place or places within or without the State of Delaware as the Board of
Directors or the respective officers in charge thereof may from time to time
determine. The stock record books shall be kept by such officer or agent as
shall be designated by the Board of Directors.
SECTION 2. Addresses of Stockholders. Notices of meetings and all other
corporate notices may be delivered personally or mailed to each stockholder at
his or her address as it appears on the records of the Company.
SECTION 3. Fixing Date for Determination of Stockholders of Record. In
order that the Company may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any other change,
conversion, or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to
<PAGE>
32
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
ARTICLE VIII
SHARES OF STOCK AND THEIR TRANSFER
SECTION 1. Certificates of Stock. Every holder of stock of the Company
shall be entitled to have a certificate in such form as the Board of Directors
shall prescribe certifying the number of shares owned by him or her in the
Company. Each such certificate shall be signed by, or in the name of the
Company by, the Chairman of the Board, a Vice Chairman of the Board, a
President, or a Vice President and the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company. Any or all of the
signatures on the certificate may be facsimile. In case any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been placed
upon, a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, the certificate may, nevertheless,
be issued by the Company with the same effect as if such person were such
officer, transfer agent, or registrar at the date of issue.
SECTION 2. Record, etc. A record shall be kept of the name of the
person, firm, or corporation owning the stock represented by each certificate of
stock of the Company issued, the number of shares represented by each such
certificate, and the date thereof,
<PAGE>
33
and in the case of cancellation, the date of cancellation. The person in whose
name shares of stock stand on the books of the Company shall be deemed the owner
of record thereof for all purposes as regards the Company.
SECTION 3. Transfer of Stock. Transfers of shares of the stock of the
Company shall be made only on the books of the Company by the owner of record
thereof, or by his or her attorney thereunto authorized by power of attorney
duly executed and filed with such officer or agent as shall be designated by the
Board of Directors or with the transfer agent of the Company, and on the
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon.
ARTICLE IX
DIVIDENDS AND RESERVES
The Board of Directors may, from time to time, determine whether any, and if
any, what part, of the net profits of the Company or of its surplus, available
therefor pursuant to law and to the certificate of incorporation, shall be
declared as dividends on the stock of the Company. The Board of Directors may,
in its discretion, set apart out of any of such net profits or surplus a reserve
or reserves for any proper purpose and may abolish any such reserve.
<PAGE>
34
ARTICLE X
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS
The Company may indemnify, in accordance with and to the full extent permitted
by the laws of the State of Delaware as in effect at the time of the adoption of
this Article X or as such laws may be amended from time to time, and shall so
indemnify to the full extent required by such laws, any person (and the heirs
and legal representatives of such person) made or 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
such person is or was a director, officer, employee, or agent of the Company or
any constituent corporation absorbed in a consolidation or merger, or serves or
served as such with another corporation, partnership, joint venture, trust, or
other enterprise at the request of the Company or any such constituent
corporation.
ARTICLE XI
RATIFICATION
Any transaction, questioned in any stockholders' derivative suit on the ground
of lack of authority, defective or irregular execution, adverse interest of
director, officer, or stockholder, non-disclosure, miscomputation, or the
application of improper principles or practices of accounting, may be ratified,
before or
<PAGE>
35
after judgment, by the Board of Directors or by the stockholders in case less
than a quorum of directors are qualified, and if so ratified, shall have the
same force and effect as if the questioned transaction had been originally duly
authorized. Such ratification shall be binding upon the Company and its
stockholders and shall constitute a bar to any claim or execution of any
judgment in respect of such questioned transaction.
ARTICLE XII
SEAL
The Board of Directors shall provide a corporate seal, which shall be in the
form of a circle and shall bear the name of the Company and the words and
figures "Corporate Seal 1924 Delaware".
ARTICLE XIII
FISCAL YEAR
The fiscal year of the Company shall end at the close of business on the last
Saturday in January and shall, in each case, begin at the opening of business on
the day next succeeding the last day of the preceding fiscal year.
<PAGE>
36
ARTICLE XIV
WAIVER OF NOTICE
Whenever notice is required to be given under any provision of these By-laws,
the certificate of incorporation, or the laws of the State of Delaware, a
written waiver thereof, whether in the form of a writing signed by, or a
telegram, cable, radiogram, telephone facsimile, or other appropriate written
communication from, the person entitled to notice and whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of the meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any meeting of the stockholders or directors or a committee
of directors need be specified in any written waiver of notice.
ARTICLE XV
EMERGENCY BY-LAWS
SECTION 1. General. Notwithstanding any other provisions of the
certificate of incorporation and these By-laws, the emergency by-laws
(hereinafter called Emergency By-laws) provided in this Article XV shall be
operative during any emergency resulting from
<PAGE>
37
an attack on the United States or on any locality in which the Company conducts
its business or customarily holds meetings of its Board of Directors or its
stockholders, or during any nuclear or atomic disaster, or during the existence
of any catastrophe, or other similar emergency condition (any such condition
being hereinafter called an Emergency), as a result of which a quorum of the
Board of Directors or the Executive Committee cannot readily be convened for
action. To the extent not inconsistent with these Emergency By-laws, the By-
laws of the Company shall remain in effect during any Emergency. Upon
termination of the Emergency, these Emergency By-laws shall cease to be
operative unless and until another Emergency shall occur.
SECTION 2. Meetings and Notice of Meetings. During any Emergency any
meeting of the Board of Directors or of the Executive Committee may be called by
any director or officer of the Company. Notice of the meeting shall be given by
the person calling the meeting, shall state the time and place of the meeting,
and shall be required to be given only to such of the directors or members of
the Executive Committee, as the case may be, and the persons referred to in
Section 3 of this Article XV as it may be feasible to reach at the time and by
any means as may then be feasible at the time.
SECTION 3. Quorum, Emergency Directors, and Manner of Acting. The
directors and members of the Executive Committee, as the case
<PAGE>
38
may be, in attendance at a meeting pursuant to Section 2 of this Article XV,
which in no case shall be less than two, shall constitute a quorum of the Board
of Directors or the Executive Committee, as the case may be, and they may take
any action at the meeting, by majority vote, as they shall, in their sole
discretion, deem to be in the best interests of the Company. Notwithstanding
the foregoing, if the number of directors or members of the Executive Committee,
as the case may be, available to constitute a quorum at any such meeting, shall
be less than two, additional directors, or additional members of the Executive
Committee, as the case may be, in whatever number shall be necessary to
constitute a Board or Executive Committee, as the case may be, of at least two
members, shall be deemed selected automatically from the officers or other
persons designated on a list approved by the Board of Directors before the
Emergency, all in such order of priority and subject to such conditions and for
such period or periods as may be provided in the resolution approving the list.
The Board of Directors or Executive Committee, as the case may be, as so
constituted shall continue until the termination of the Emergency. The Board of
Directors, either before or during any Emergency, may provide, and from time to
time modify, lines of succession in the event that during such Emergency any or
all officers of the Company shall for any reason be rendered incapable of
discharging their duties. Any additional director or additional member of the
<PAGE>
39
Executive Committee, as the case may be, may be removed, either with or without
cause, by a majority vote of the remaining directors or members of the Executive
Committee, as the case may be, then in office.
SECTION 4. Offices; Places of Meeting. The Board of Directors, either
before or during any Emergency, may, effective during the Emergency, change the
head office of the Company or designate several alternative head offices or
regional offices of the Company or authorize the officers to do so.
SECTION 5. Liability during an Emergency. No officer, director, or
employee shall be personally liable for acting in accordance with these
Emergency By-laws, except for wilful misconduct.
ARTICLE XVI
AMENDMENTS
Subject to the provisions of the certificate of incorporation, all By-laws of
the Company shall be subject to alteration, amendment, or repeal, in whole or in
part, and new by-laws not inconsistent with the laws of the State of Delaware or
any provision of the certificate of incorporation may be made, either by the
affirmative vote of a majority of the whole Board of Directors at any regular or
special meeting of the Board, or by the affirmative vote of the holders of
record of a majority of the
<PAGE>
40
issued and outstanding stock of the Company entitled to vote in respect thereof,
given at an annual meeting or at any special meeting at which a quorum shall be
present, provided that in each case notice of the proposed alteration,
amendment, or repeal of the proposed new by-laws be included in the notice of
the meeting of the Board or the stockholders, or the form of consent thereof, as
the case may be.
<PAGE>
41
<TABLE>
<CAPTION>
INDEX
-----
Article Pages
------- -----
<S> <C> <C>
Amendments . . . . . . . . . . . . . . . . . . . . . . . XVI 39-40
Board of Directors . . . . . . . . . . . . . . . . . . . III 11-19
Books and Records . . . . . . . . . . . . . . . . . . . . VII 31-32
Committees . . . . . . . . . . . . . . . . . . . . . . . IV 19-23
Contracts, Loans, Checks, Drafts,
Bank Accounts, etc. . . . . . . . . . . . . . . . . . . VI 29-30
Dividends and Reserves . . . . . . . . . . . . . . . . . IX 33
Emergency By-laws . . . . . . . . . . . . . . . . . . . . XV 36-39
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . .XIII 35
Indemnification of Directors,
Officers, Employees, and Agents . . . . . . . . . . . . X 34
Meetings of Stockholders . . . . . . . . . . . . . . . . II 2-11
Officers . . . . . . . . . . . . . . . . . . . . . . . . V 23-28
Offices . . . . . . . . . . . . . . . . . . . . . . . . . I 1
Ratification . . . . . . . . . . . . . . . . . . . . . . XI 34-35
Seal . . . . . . . . . . . . . . . . . . . . . . . . . . XII 35
Shares of Stock and Their Transfer . . . . . . . . . . .VIII 32-33
Waiver of Notice . . . . . . . . . . . . . . . . . . . . XIV 36
</TABLE>
<PAGE>
Exhibit 11
J. C. PENNEY COMPANY, INC.
and Consolidated Subsidiaries
Computation of Net Income Per Common Share
-------------------------------------------
(Amounts in millions except per common share data)
<TABLE>
<CAPTION>
26 weeks ended
----------------------------------------------------------------
July 30, 1994 July 31, 1993
----------------------------- -----------------------------
Shares Income Shares Income
------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Primary:
- -------
Income before extraordinary charge and
cumulative effect of accounting change $ 355 $ 284
Dividend on Series B ESOP convertible
preferred stock (after-tax) (20) (20)
------ -----
Adjusted income before extraordinary
charge and cumulative effect of
accounting change 335 264
Weighted average number of shares
outstanding 236.1 235.4
Common stock equivalents:
Stock options and other dilutive effects 2.9 3.1
----- ------ ----- -----
239.0 335 238.5 264
Income per common share before
extraordinary charge and cumulative
effect of accounting change $1.40 $1.11
Extraordinary charge on debt redemption,
net of income taxes -- -- (0.07) (17)
Cumulative effect of accounting change -- -- 0.21 51
----- ----- ----- ----- ----- -----
239.0 238.5
===== =====
Net income $ 335 $ 298
===== =====
Net income per common share $1.40 $1.25
===== =====
Fully diluted:
- -------------
Income before extraordinary charge and
cumulative effect of accounting change $ 355 $ 284
Tax benefit differential on ESOP dividend
assuming stock is fully converted (1) (1)
Assumed additional contribution to ESOP
if preferred stock is fully converted (3) (4)
------ -----
Adjusted income before extraordinary
charge and cumulative effect of
accounting change 351 279
Weighted average number of shares
outstanding (primary) 239.0 238.5
Maximum dilution 0.0 0.3
Convertible preferred stock 21.5 22.0
----- ------ ----- -----
260.5 351 260.8 279
Income per common share before
extraordinary charge and cumulative
effect of accounting change $1.35 $1.07
Extraordinary charge on debt redemption,
net of income taxes -- -- (0.06) (17)
Cumulative effect of accounting change -- -- 0.19 51
----- ----- ----- ----- ----- -----
260.5 260.8
====== =====
Net income $ 351 $ 313
===== =====
Net income per common share $1.35 $1.20
===== =====
</TABLE>
<PAGE>
Exhibit 12(a)
J. C. Penney Company, Inc.
(the Company and all subsidiaries)
Computation of Ratios of Available Income to Combined Fixed Charges
and Preferred Stock Dividend Requirement
<TABLE>
<CAPTION>
52 weeks 53 weeks
ended ended
-------- --------
July 30, July 31,
1994 1993
-------- --------
<S> <C> <C>
($ Millions)
Income from continuing operations
(before income taxes,
before capitalized interest,
but after preferred stock dividend) $1,620 $1,308
------ ------
Fixed charges
Interest (including capitalized
interest)
On operating leases 97 96
On short term debt 62 38
On long term debt 225 269
On capital leases 9 9
Other, net 0 12
------ ------
Total fixed charges 393 424
Preferred stock dividend, before taxes 51 52
------ ------
Combined fixed charges and preferred stock
dividend requirement 444 476
------ ------
Total available income $2,064 $1,784
====== ======
Ratio of available income to combined
fixed charges and preferred stock
dividend requirement 4.6 3.8
====== ======
</TABLE>
The interest cost of the LESOP notes guaranteed by the Company is not included
in fixed charges above.
The Company believes that, due to the seasonal nature of its business, ratios
for a period other than a 52 or 53 week period are inappropriate.
<PAGE>
Exhibit 12(b)
J. C. Penney Company, Inc.
(the Company and all subsidiaries)
Computation of Ratios of Available Income to Fixed Charges
<TABLE>
<CAPTION>
52 weeks 53 weeks
ended ended
-------- --------
July 30, July 31,
1994 1993
-------- --------
<S> <C> <C>
($ Millions)
Income from continuing operations
(before income taxes and
before capitalized interest) $1,671 $1,308
------ ------
Fixed charges
Interest (including capitalized
interest)
On operating leases 97 96
On short term debt 62 38
On long term debt 225 269
On capital leases 9 9
Other, net 0 12
------ ------
Total fixed charges 393 424
------ ------
Total available income $2,064 $1,784
====== ======
Ratio of available income to fixed charges 5.2 4.2
====== ======
</TABLE>
The interest cost of the LESOP notes guaranteed by the Company is not included
in fixed charges above.
The Company believes that, due to the seasonal nature of its business, ratios
for a period other than a 52 or 53 week period are inappropriate.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
EXHIBIT 27
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENT OF INCOME
OF J. C. PENNEY COMPANY, INC. AND SUBSIDIARIES AS OF JULY 30, 1994, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JUL-30-1994
<CASH> 492
<SECURITIES> 0
<RECEIVABLES> 4,127
<ALLOWANCES> (64)
<INVENTORY> 4,163
<CURRENT-ASSETS> 8,893
<PP&E> 5,798
<DEPRECIATION> (1,994)
<TOTAL-ASSETS> 15,434
<CURRENT-LIABILITIES> 4,008
<BONDS> 3,384
<COMMON> 1,022
0
639
<OTHER-SE> 3,720
<TOTAL-LIABILITY-AND-EQUITY> 15,434
<SALES> 8,592
<TOTAL-REVENUES> 8,931
<CGS> 5,915
<TOTAL-COSTS> 8,086
<OTHER-EXPENSES> 130
<LOSS-PROVISION> 73
<INTEREST-EXPENSE> 64
<INCOME-PRETAX> 578
<INCOME-TAX> 223
<INCOME-CONTINUING> 355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 355
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.35
</TABLE>
