UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from .............. to ...........
COMMISSION FILE NUMBER 1-9498
ALLEGHENY LUDLUM CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1364894
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Six PPG Place, Pittsburgh,PA 15222-5479
--------------------------------- ----------
(Address of principal executive offices) (Zip Code)
412-394-2800
------------
(Registrant's telephone number, including area code)
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
--- ---
Number of shares of Common Stock outstanding as of May 2, 1996
65,991,891
<PAGE>
ALLEGHENY LUDLUM CORPORATION
SEC FORM 10-Q
FISCAL QUARTER ENDED MARCH 31, 1996
INDEX
Page No.
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statement of Cash Flows 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands of dollars except per share amounts)
Fiscal Fiscal
Quarter Quarter
Ended Ended
March 31,1996 April 2,1995
------------- -------------
NET SALES $353,102 $395,332
Costs and Expenses:
Cost of products sold 286,107 313,742
Research, development and technology 10,892 11,217
Commercial and administrative 12,579 14,033
Depreciation and amortization 11,463 9,866
------- -------
321,041 348,858
------- -------
INCOME FROM STEEL OPERATIONS 32,061 46,474
Operating earnings from assets
held for sale 1,176 3,014
Other income (expense):
Interest expense -- net (1,333) (757)
Other -- net 596 293
------- -------
(737) (464)
------- -------
Income before income taxes 32,500 49,024
Income taxes 13,401 20,170
------- -------
NET INCOME $ 19,099 $ 28,854
======= =======
Per common share:
Primary $.29 $.41
======= =======
Fully diluted $.39
=======
Dividends declared per common share $.13 $.12
======= =======
See notes to condensed consolidated financial statements
3
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands of dollars)
March 31, December 31
1996 1995
---------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 99,533 $ 70,913
Trade receivables--net 142,848 137,016
Inventories (Note 2) 217,318 236,459
Prepaid expenses and other current
assets 13,177 9,886
--------- ---------
TOTAL CURRENT ASSETS 472,876 454,274
Properties, plants and equipment--net 446,872 451,623
Cost in excess of net assets
acquired 129,243 130,103
Deferred income taxes 42,557 44,670
Assets held for sale 22,438 46,477
Other assets 19,951 17,125
--------- ---------
TOTAL ASSETS $1,133,937 $1,144,272
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 1,978 $ 1,941
Accounts payable 75,422 93,464
Accrued compensation and benefits 59,604 60,892
Income taxes payable and deferred 20,842 12,897
Other accrued expenses 30,412 14,293
--------- ---------
TOTAL CURRENT LIABILITIES 188,258 183,487
Long-term debt, less current portion 180,049 181,157
Pensions 102,346 105,699
Postretirement benefit liability 270,146 265,559
Other 28,447 32,922
--------- ---------
TOTAL LIABILITIES 769,246 768,824
4
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SHAREHOLDERS' EQUITY:
Preferred stock, par value $1:
authorized--50,000,000 shares;
issued--none
Common stock, par value $ .10:
authorized--250,000,000 shares;
issued--72,878,242 shares 7,288 7,288
Additional capital 271,485 271,473
Retained earnings 224,934 214,128
Equity adjustment related to
minimum liability for pension plans (14,727) (14,727)
Common stock in treasury at cost--
6,886,351 and 5,771,371 shares (124,289) (102,714)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 364,691 375,448
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,133,937 $1,144,272
========= =========
See notes to condensed consolidated financial statements
5
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(in thousands of dollars)
Fiscal Fiscal
Quarter Quarter
Ended Ended
March 31,1996 April 2,1995
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 19,099 $28,854
Adjustment to reconcile net income
to cash flow from operating activities:
Depreciation and amortization 11,463 9,866
Earnings from assets held for sale (563) (1,489)
Deferred taxes 1,334 (1,798)
Change in operating assets and liabilities:
Long-term retirement liabilities (285) (2,385)
Trade receivables (5,832) (29,556)
Inventories 19,141 37,091
Trade payables (18,042) (4,707)
Net change in other current assets
and current liabilities 11,350 32,067
Other changes (1,548) (1,891)
------- -------
CASH FROM OPERATING ACTIVITIES 36,117 66,052
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of properties, plants and equipment--net (5,852) (4,363)
Proceeds from assets held for sale 24,602 -
Long-term investments (1,542) 346
Increase in notes receivable (233) (4)
------- -------
CASH FROM (USED BY) INVESTING ACTIVITIES 16,975 (4,021)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and capital leases (1,071) (1,038)
Purchases of treasury stock (23,710) (10,073)
Employee stock plans 309 26
------- -------
CASH USED BY FINANCING ACTIVITIES (24,472) (11,085)
INCREASE IN CASH AND CASH EQUIVALENTS 28,620 50,946
Balance of cash and cash equivalents at
beginning of period 70,913 11,185
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 99,533 $62,131
======= =======
See notes to condensed consolidated financial statements
6
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--FINANCIAL STATEMENTS
This financial information should be read in conjunction with the
financial statements and notes thereto for the fiscal year ended
December 31, 1995. The accompanying unaudited condensed
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions for Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting only of normal accruals) considered necessary for a
fair presentation have been included. Operating results for the
fiscal quarter ended March 31, 1996 are not necessarily
indicative of results of operations that may be expected for the
fiscal year ending December 29, 1996.
Net income per common share was computed based on the weighted
average number of shares of common stock outstanding during the
periods: 66,592,371 shares for the fiscal quarter ended March 31,
1996 and 70,567,973 shares for the fiscal quarter ended April 2,
1995.
The Company's fiscal year and fiscal quarters end on the Sunday
closest to the last day of the calendar month.
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 presentation.
NOTE 2--INVENTORIES
Inventories consisted of the following:
March 31, December 31,
1996 1995
--------- ------------
(in thousands of dollars)
Raw materials $ 54,601 $ 63,994
Work-in-process and finished products 236,213 249,139
Supplies 16,744 16,515
------- -------
Total inventories at current cost 307,558 329,648
Less allowances to reduce current
cost values to LIFO basis 90,240 93,189
------- -------
$217,318 $236,459
======= =======
Substantially all of the Company's inventories are determined by
the LIFO method.
7
<PAGE>
NOTE 3--LITIGATION
In August 1995, a jury verdict in favor the Company was entered
in a case brought by Allegheny International, Inc. (AI) to
recover a $5.5 million refund plus interest. The refund was
received by the Company in 1989 with respect to a federal income
tax overpayment. The case, which was brought in the United
States District Court for the Western District of Pennsylvania,
arose out of the 1980 management-led buyout of the Company from
AI and was pursued by Sunbeam Corporation, the successor to AI
following AI's bankruptcy reorganization. Sunbeam has appealed
the jury verdict. The Company intends to vigorously defend the
favorable decision.
On June 28, 1995, the U.S. Department of Justice commenced an
action against the Company in the United States District Court
for the Western District of Pennsylvania, asserting, in 64
claims, multiple violations of the federal Clean Water Act
occurring at various times since 1987. The complaint seeks
injunctive relief and assessment of penalties of up to $25,000
per day of violation. While it is too early to predict the
outcome of the case, the Company believes that any costs or
penalties should not be material to the financial condition of
the Company or its results of operations.
NOTE 4--COMBINATION
As previously announced, on April 1, 1996, Allegheny Ludlum and
Teledyne, Inc. entered into an Agreement and Plan of Merger and
Combination. Pursuant to this Agreement, Allegheny Ludlum and
Teledyne would each become a subsidiary of a new corporation
named Allegheny Teledyne Incorporated, each share of Allegheny
Ludlum common stock would be converted into one share of
Allegheny Teledyne common stock and each share of Teledyne common
stock would be converted into 1.925 shares of Allegheny Teledyne
common stock. The transaction is subject to approval by the
shareholders of Allegheny Ludlum and Teledyne as well as
regulatory approval and other customary closing conditions.
NOTE 5--ACCOUNTING PRONOUNCEMENTS
In the first quarter of 1996, the Company adopted FAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" and FAS No. 123 "Accounting for
Stock-Based Compensation". The adoption of these statements did
not have a material impact on the Company. The Company will
continue to account for stock-based compensation under Accounting
Principles Board Opinion No. 25 as allowed by FAS No. 123 and
provide the year-end disclosures required by FAS No. 123.
8
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the information in
the Condensed Consolidated Financial Statements and Notes to the Condensed
Consolidated Financial Statements.
On April 1, 1996, the Company and Teledyne, Inc. announced that they
had entered into an Agreement and Plan of Merger and Combination. See NOTE
4 of the Notes to Condensed Consolidated Financial Statements (Unaudited).
During the first quarter of 1996, two unplanned equipment outages
occurred resulting in additional operating expenses of approximately $.03
per share. The impact of the outages on finishing operations and customer
shipments was not significant. However, operating and utilization rates
were adversely affected and higher cost equipment was used to meet some
customer commitments.
RESULTS OF OPERATIONS
Net sales by product line were as follows:
Fiscal Quarter Ended
------------------------------
March 31, 1996 April 2, 1995
-------------- -------------
(millions)
Stainless steel $282.0 $321.9
Silicon electrical steel 37.2 35.7
Other specialty alloy 33.9 37.7
----- -----
Total net sales $353.1 $395.3
===== =====
Net sales and shipments decreased 11% and 19%, respectively, in the
1996 first quarter compared to the record levels of the 1995 first quarter.
Shipments were 134,525 tons in the 1996 period compared to 165,383 tons in
the 1995 period. The sales decline reflected a carryover of the slow-down
in business that continued from the fourth quarter of 1995. Sales in the
second quarter have improved from first quarter levels and orders continue
to be strong as the quarter is progressing. The decline in selling price
surcharges in the 1996 first quarter has continued into the second quarter.
Stainless steel sales decreased 12% in the first quarter of 1996
compared to the first quarter of 1995. The decrease was due to lower
shipments which were only partially offset by improved pricing and sales
mix.
Silicon electrical steel sales were up slightly in the 1996 first
quarter reflecting a shift to a more favorable product mix which was offset
by lower shipments and somewhat lower prices.
Other specialty alloy sales decreased 10% in the 1996 first quarter as
compared to the comparable 1995 period. The decrease was due to lower
shipments of tool steel and high alloy flat-rolled products which were only
partially offset by higher shipments of high temperature flat-rolled and
high alloy plate products.
9
<PAGE>
The 5% price increase on stainless steel commodity sheet that was to
take effect on May 6, 1996 was negated by increased imports that resulted
from weakened foreign economies and prices. The Company believes that
sheet prices have stabilized. Price increases for strip and plate are
still anticipated in the second quarter.
Cost of products sold as a percentage of net sales increased 1.6
percentage points in the first quarter of 1996 compared to the first
quarter of 1995. The increase was primarily due to higher chromium prices,
which were partially offset by lower nickel and molybdenum prices, the
effects of the unplanned equipment outages and contractual wage increases.
Continuing efforts to control costs and the utilization of newer, more
efficient equipment partially offset the increased costs. Raw material
costs have continued to decline into the second quarter of 1996.
Research, development and technology costs decreased in the 1996 first
quarter compared to the 1995 first quarter primarily due to lower expense
for profit-related compensation plans.
Commercial and administrative costs decreased in the 1996 first
quarter compared to the 1995 first quarter primarily due to lower expense
for profit-related compensation plans and lower costs for the Washington
plant due to realized synergies.
Reynolds Fasteners, Inc. was sold during the first quarter of 1996 for
$24.6 million in cash and the assumption of liabilities. The Company's
results were not affected by the transaction. Earnings from assets held
for sale relate to the remaining non-specialty steel company that was
acquired in 1993.
10
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
Working capital increased to $284.6 million in the first quarter of
1996 from $270.8 at the end of 1995. The current ratio was 2.5 in both
periods. The increase in working capital was primarily due to higher
balances of cash and trade receivables and lower accounts payable which
were partially offset by lower inventories and increased liabilities for
taxes and other accrued expenses.
In the first three months of 1996, cash on hand and cash from
operations of $36.1 million were used to purchase $23.7 million in treasury
stock, invest $5.9 million in capital equipment and pay down $1.1 million
of debt as scheduled. The Company also received cash of $24.6 million from
the proceeds of assets held for sale. The Company terminated its stock
repurchase program effective April 1, 1996.
The Company anticipates that capital expenditures for 1996 will be
approximately $35 million.
The Company believes that internally generated funds, current cash on
hand and borrowing from existing credit lines will be adequate to meet
foreseeable needs.
11
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information concerning certain litigation filed by the Department of
Justice against the Company set forth in NOTE 3 of the Notes to Condensed
Consolidated Financial Statements (Unaudited), PART I., Item 1. of this
filing is incorporated therein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) Bylaws, as amended
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K
dated April 2, 1996, regarding the
proposed combination with Teledyne, Inc.
12
<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.
ALLEGHENY LUDLUM CORPORATION
By /s/ J.L. Murdy
----------------------------
J. L. Murdy
Senior Vice President - Finance
and Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
May 14, 1996
13
<PAGE>
EXHIBIT INDEX
Exhibit Number Sequential Page Number
-------------- ----------------------
(3) Bylaws, as amended 15
(27) Financial Data Schedule
14
<PAGE>
Exhibit (3)
BY-LAWS
OF
ALLEGHENY LUDLUM CORPORATION
Revised: 3/29/96
<PAGE>
BY-LAWS
OF
ALLEGHENY LUDLUM CORPORATION
TABLE OF CONTENTS
ARTICLE I MEETING OF SHAREHOLDERS PAGE
Section 1 Place of Meetings 1
Section 2 Annual Meetings 1
Section 3 Special Meetings 1
Section 4 Notice of Meetings 1
Section 5 Quorum 1
Section 6 Voting 2
Section 7 Informal Action 2
Section 8 Presence at Meetings 2
ARTICLE II DIRECTORS
Section 1 Number, Qualifications, Election
and Term of Office 2
Section 2 Vacancies 3
Section 3 Meetings of Directors 3
Section 4 Powers of Directors 4
Section 5 Informal Action 4
Section 6 Telephone Participation in Meetings 4
Section 7 Compensation of Directors 4
ARTICLE III COMMITTEES OF DIRECTORS
Section 1 Appointment and Powers 4
Section 2 Appointment by Committees of
Substitute Members 5
Section 3 Procedure 5
Section 4 Telephone Participation in Meetings 5
ARTICLE IV OFFICERS
Section 1 Enumeration 5
Section 2 Chairman of the Board 6
Section 3 Chief Executive Officer 6
Section 4 President 6
Section 5 Vice-President 6
Section 6 Secretary 6
Section 7 Treasurer 6
Section 8 Other Officers 7
Section 9 Compensation 7
Section 10 Additional Duties of Officers 7
<PAGE>
TABLE OF CONTENTS (CONT'D)
ARTICLE V STOCK PAGE
Section 1 Issuance of Stock 7
Section 2 Certificate of Stock 7
Section 3 Transfer of Stock 7
Section 4 Lost, Stolen, Destroyed or
Mutilated Certificates 8
Section 5 Regulations 8
Section 6 Holders of Record 8
Section 7 Record Date 8
ARTICLE VI LIABILITY OF DIRECTORS
Section 1 Directors' Personal Liability 9
Section 2 Preservation of Rights 9
ARTICLE VIA INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1 Mandatory Indemnification of
Directors and Officers 9
Section 2 Mandatory Advancement of Expenses
to Directors and Officers 9
Section 3 Permissive Indemnification and
Advancement of Expenses 10
Section 4 Scope of Indemnification 10
Section 5 Insurance 10
Section 6 Funding to Meet Indemnification
Obligations 11
Section 7 Miscellaneous 11
Section 8 Definition of Corporation 11
Section 9 Definition of Authorized
Representative 12
ARTICLE VII GENERAL PROVISIONS
Section 1 Corporate Seal 12
Section 2 Fiscal Year 12
Section 3 Authorization 12
Section 4 Inapplicability of Subchapter 25E 12
Section 5 Inapplicability of Subchapter 25F 12
Section 6 Inapplicability of Subchapter 25G 13
Section 7 Inapplicability of Subchapter 25H 13
ARTICLE VIII AMENDMENTS
<PAGE>
BY-LAWS
OF
ALLEGHENY LUDLUM CORPORATION
ARTICLE I
MEETING OF SHAREHOLDERS
Section 1. Place of Meetings. Meetings of the
shareholders shall be held at the registered office of the
Corporation, or at such other place within or without the
Commonwealth of Pennsylvania as shall be fixed by the Board of
Directors or the person or persons calling the meeting.
Section 2. Annual Meetings. The annual meetings of
the shareholders for the election of directors and the
transaction of such other business as may properly come before
the same shall be held within one hundred fifty (150) days
following the close of the Corporation's fiscal year at such date
and time as shall be designated by the Board of Directors.
Section 3. Special Meetings. Special meetings may be
called at any time by the Chairman of the Board, the Chief
Executive Officer, or the Board of Directors, or the holders of
not less than one-fifth (1/5) of all the outstanding shares
entitled to vote at such meeting.
Section 4. Notice of Meetings. A written notice
stating the place, day and hour of any meeting and, in the case
of a special meeting, the purpose or purposes for which the
meeting is called shall be delivered or mailed by the Secretary,
or by the officer or person calling the meeting, to each
shareholder of record entitled to vote at such meeting, at such
address as appears upon the records of the Corporation, at least
ten (10) days and not more than ninety (90) days before the date
of the meeting. When a meeting is adjourned, it shall not be
necessary to give any notice of the adjourned meeting or of the
business to be transacted at an adjourned meeting other than the
announcement at the meeting at which such adjournment is taken.
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
shareholder of record entitled to vote at the meeting.
Section 5. Quorum. The presence, in person or by
proxy, of the majority of the outstanding shares entitled to vote
shall constitute a quorum. The shareholders present at a duly
authorized meeting can continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave
less than a quorum. If a meeting cannot be organized because a
quorum has not attended, those present may, except as otherwise
<PAGE>
provided by statute, adjourn the meeting to such time and place
as they may determine; but in the case of any meeting called for
the election of directors, those who attend the second of such
adjourned meetings, although less than quorum, shall nevertheless
constitute a quorum for the purpose of electing the directors.
Section 6. Voting. Except as otherwise provided by
law or the Articles of Incorporation, every shareholder of record
shall have the right at every shareholders' meeting to one (1)
vote for every share standing in his name on the books of the
Corporation. In each election of directors, every shareholder
entitled to vote shall have the right, in person or by proxy, to
multiply the number of votes to which he may be entitled by the
total number of directors to be elected in the same election by
the holders of the class or classes of shares of which his shares
are a part; and he may cast the whole number of such votes for
one (1) candidate or he may distribute them among any two (2) or
more candidates. A majority of the votes cast shall decide every
question or matter submitted to the shareholders unless otherwise
provided by law or the Articles of Incorporation. The vote upon
any matter submitted to the shareholders may be taken viva voce;
provided, however, that the vote upon any question shall be by
ballot if demand for the same is made by any shareholder or is
directed by the chairman of the meeting.
Section 7. Informal Action. Whenever the vote of the
shareholders at a meeting thereof is required or permitted to be
taken in connection with any corporate action by any provision of
law or of the Corporation's Articles of Incorporation, the
meeting, notice and vote of shareholders may be dispensed with,
if a consent in writing, setting forth the action so taken, shall
be signed by the holders of all the outstanding shares.
Section 8. Presence at Meetings. A shareholder may
participate in a meeting of the shareholders only if the
shareholder or the shareholder's duly authorized proxy is
physically present in person at the meeting. A shareholder or a
proxy may not participate in a meeting of the shareholders by
means of conference telephone or similar communications
equipment.
ARTICLE II
DIRECTORS
Section 1. Number, Qualifications, Election and Term
of Office. The number of directors to manage and control the
affairs of the Corporation shall be as determined by the Board of
Directors from time to time, but shall not be less than
three (3). Directors need not be shareholders of the Corporation
or residents of the Commonwealth of Pennsylvania. No person may
serve as a director of the Company after such person becomes
-2-
<PAGE>
seventy-one years of age provided, however, that a person who
becomes seventy-one years of age may complete the term for which
such person was elected before such person became seventy-one
years of age. Directors shall be elected by the shareholders at
the annual meeting or any special meeting called for such
purpose. Each director shall be elected to serve until the next
annual meeting of the shareholders and until his successor is
duly elected and qualified.
The directors of the Corporation shall be divided into
three classes: Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the
whole number of the Board of Directors. The Class I directors
shall be elected to hold office for a term to expire at the first
annual meeting of the shareholders thereafter; the Class II
directors shall be elected to hold office for a term to expire at
the second annual meeting of the shareholders thereafter; and the
Class III directors shall be elected to hold office for a term to
expire at the third annual meeting of the shareholders
thereafter, and in the case of each class, until their respective
successors are duly elected and qualified. At each annual
election the directors elected to succeed those whose terms
expire shall be identified as being of the same class as the
directors they succeed and shall be elected to hold office for a
term to expire at the third annual meeting of the shareholders
after their election, and until their respective successors are
duly elected and qualified. If the number of directors is
changed, any increase or decrease in directors shall be
apportioned among the classes so as to maintain all classes as
equal in number as possible, and any additional director elected
to any class shall hold office for a term which shall coincide
with the terms of the other directors in such class and until his
successor is duly elected and qualified.
Subject to the rights of holders of any series of
Preferred Stock then outstanding, in the case of any increase in
the number of directors of the Corporation the additional
director or directors shall be elected by the Board of Directors.
No decrease in the number of directors of the Corporation shall
shorten the term of any incumbent director.
Section 2. Vacancies. Vacancies in the Board of
Directors caused by death, resignation, increase in the number of
directors or otherwise shall be filled by a majority vote of the
remaining member or members of the Board; and each director so
elected shall hold office for the unexpired portion of the term
of the director whose place shall be vacant and until his
successor is duly elected and qualified.
Section 3. Meetings of Directors. Regular meetings of
the Board of Directors shall be held at such times and places as
the Board of Directors may from time to time by resolution
-3-
<PAGE>
appoint; and no notice shall be required to be given of any such
regular meeting. A special meeting of the Board of Directors may
be called by the Chairman of the Board, the Chief Executive
Officer or any three (3) directors (or, if less, a majority of
the directors in office), by giving twenty-four (24) hours'
notice to each director by letter, telegram, or facsimile; but
the presence of all directors at any special meeting shall ipso
facto constitute a waiver of notice to be given of such meeting.
No minimum number of special meetings and no more than one
regular meeting of the Board of Directors need be called in any
year. A majority of the directors in office shall constitute a
quorum for the transaction of business, and actions may be taken
by a majority of the members present at any meeting at which a
quorum is present.
Section 4. Powers of Directors. The directors shall
manage the business and affairs of the Corporation.
Section 5. Informal Action. Any action which may be
taken at a meeting of the directors may be taken without a
meeting, if a consent or consents in writing setting forth the
action so taken shall be signed by all of the directors and shall
be filed with the minutes of proceedings of the Board.
Section 6. Telephone Participation in Meetings. Any
one or more directors may participate in a meeting of the Board
of Directors by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other.
Section 7. Compensation of Directors. Each director
of the Corporation who is not a salaried officer or employee of
the Corporation or of a subsidiary of the Corporation, shall
receive such allowances for serving as a director and such fees
for attendance at meetings of the Board of Directors or any
committee appointed by the Board as the Board may from time to
time determine.
ARTICLE III
COMMITTEES OF DIRECTORS
Section 1. Appointment and Powers. The Board of
Directors may, by resolution adopted by a majority of the
directors in office, establish one or more committees, each of
which shall consist of one or more of the directors of the
Corporation. To the extent provided in the resolution
establishing any committee, such committee shall have and may
exercise all of the powers and authority of the Board of
Directors; provided, however, that no such committee shall have
any power or authority as to the following:
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(i) The submission to the shareholders of the Company
of any action requiring approval of the shareholders under the
Pennsylvania Business Corporation Law of 1988;
(ii) The creation or filling of vacancies in the Board
of Directors;
(iii) The adoption, amendment or repeal of the
By-laws;
(iv) The amendment or repeal of any resolution of the
Board that by its terms is amendable or repealable only by the
Board; or
(v) Action on matters committed by the By-laws or
resolution of the Board of Directors to another committee of the
Board.
Section 2. Appointment by Committees of Substitute
Members. In the absence or disqualification of any member of any
such committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may by unanimous action appoint another
director to act at the meeting in the place of any such absent or
disqualified member.
Section 3. Procedure. The Board of Directors may
establish reasonable rules and regulations for the conduct of the
proceedings of any such committee and may appoint a chairman of
the committee who shall be a member thereof and a secretary of
the committee who need not be a member thereof. To the extent
that the Board of Directors shall not exercise such powers, they
may be exercised by the Committee.
Section 4. Telephone Participation in Meetings. Any
one or more committee members may participate in a meeting of a
committee of the Board of Directors by means of a conference
telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other.
ARTICLE IV
OFFICERS
Section 1. Enumeration. The officers of the
Corporation shall consist of a Chairman of the Board, a Chief
Executive Officer, a President, one or more Vice-Presidents, a
Secretary, a Treasurer and, in the discretion of the Board of
Directors, such other officers as shall from time to time be
chosen and appointed by the Board of Directors. Any two (2) or
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more offices may be held by one (1) person. Every officer of the
Corporation shall hold his position at the will of the Board of
Directors.
Section 2. Chairman of the Board. The Chairman of the
Board shall preside at meetings of the Board of Directors and
meetings of the shareholders, and he shall perform such other
duties as shall be from time to time specified by the Board of
Directors.
Section 3. Chief Executive Officer. The Chief
Executive Officer shall have general charge and control over the
affairs of the Corporation, subject to the Board of Directors.
The Chief Executive Officer shall sign certificates for shares of
the capital stock of the Corporation and may, together with the
Secretary, execute on behalf of the Corporation any contract
which has been authorized by the Board of Directors. In the
absence of the Chairman of the Board, the Chief Executive Officer
shall preside at meetings of the shareholders.
Section 4. President. The President shall be the
Chief Executive Officer of the Corporation and shall report to
the Board of Directors. The President shall, in the absence or
disability of the Chairman of the Board, perform the duties and
exercise the powers of the Chairman of the Board.
Section 5. Vice President. The Vice President, or, if
there shall be more than one, the Vice Presidents, in the order
determined by the Board of Directors, shall, in the absence or
disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties and
have such other powers as the Board of Directors may from time to
time prescribe.
Section 6. Secretary. The Secretary shall keep a
record of the minutes of the proceedings of meetings of
shareholders and directors and shall give notice as required by
statute or these By-laws of all such meetings. The Secretary
shall have custody of the seal of the Corporation and of all the
books, records and papers of the Corporation, except such as
shall be in the charge of the Treasurer or of some other person
authorized to have custody and be in possession thereof by
resolution of the Board of Directors. The Secretary shall sign
certificates for shares of the capital stock of the Corporation.
The Secretary may, together with the Chief Executive Officer,
execute on behalf of the Corporation any contract which has been
authorized by the Board of Directors.
Section 7. Treasurer. The Treasurer shall keep
accounts of all moneys of the Corporation received and disbursed,
and shall deposit all moneys and valuables of this Corporation in
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its name and to its credit in such banks and depositories as the
Board of Directors shall designate.
Section 8. Other Officers. The duties and powers of
other officers who may from time to time be chosen by the Board
of Directors shall be as specified by the Board of Directors at
the time of the appointment of such other officers.
Section 9. Compensation. The salaries of all officers
listed in Sections 2 through 8 of this Article shall be fixed by
the Board of Directors.
Section 10. Additional Duties of Officers. The Board
of Directors may from time to time by resolution increase or add
to the duties of the Chairman of the Board, the Chief Executive
Officer, President, one or more Vice-Presidents, Secretary,
Treasurer or any other officer chosen and appointed under the
provisions of Section 8 of this Article IV.
ARTICLE V
STOCK
Section 1. Issuance of Stock. Shares of capital stock
of any class now or hereafter authorized, securities convertible
into such shares or options or other rights to purchase such
shares or securities may be issued or granted only in accordance
with the authority granted by the Board of Directors.
Section 2. Certificate of Stock. Certificates for
shares of the capital stock of the Corporation shall be in the
form adopted by the Board of Directors, shall be signed by the
Chief Executive Officer or the President or a Vice President and
the Secretary or an Assistant Secretary, and shall be sealed with
the seal of the Corporation. Where any such certificate is
signed by a registrar other than the Corporation or its employee,
the signatures thereon of any officer of the Corporation and,
where authorized by the Board of Directors, any transfer agent,
may be facsimiles. All such certificates shall be numbered
consecutively; and the name of the person owning the shares and
the date of issue shall be entered on the books of the
Corporation. In case any officer, transfer agent or registrar
who has executed, by facsimile or otherwise, any share
certificate shall have ceased to be such officer, transfer agent
or registrar by reason of death, resignation or otherwise, before
the certificate is issued, it may be issued by the Corporation
with the same effect as if the officer, transfer agent or
registrar had not ceased to be such at the date of its issue.
Section 3. Transfer of Stock. Shares of capital stock
of the Corporation shall be transferred only on the books of the
Corporation by the holder thereof in person or by his duly
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authorized attorney. All stock certificates transferred by
endorsement thereon shall be surrendered for cancellation and new
certificates issued to the transferee.
Section 4. Lost, Stolen, Destroyed or Mutilated
Certificates. New certificates of stock may be issued to replace
certificates of stock lost, stolen, destroyed or mutilated, upon
such terms and conditions, including proof of loss or
destruction, and the giving of a satisfactory bond of indemnity,
as the Board of Directors from time to time may determine.
Section 5. Regulations. The Board of Directors shall
have power and authority to make all such rules and regulations
not inconsistent with the By-laws as it may deem expedient
concerning the issue, transfer and registration of certificates
of stock of the Corporation. The Board of Directors may appoint
one or more transfer agents or assistant transfer agents and one
or more registrars of transfers, and may require all stock
certificates to bear the signature of a transfer agent or
assistant transfer agent and a registrar of transfers. The Board
of Directors may at any time terminate the appointment of any
transfer agent or any assistant transfer agent or any registrar
of transfers.
Section 6. Holders of Record. The Corporation shall
be entitled to treat the holder of record of any stock of the
Corporation as the holder and owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or
other claim to, or right, title or interest in, such stock on the
part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of
Pennsylvania.
Section 7. Record Date. The Board of Directors may
fix a time prior to the date of any meeting of shareholders a
record date for the determination of the shareholders entitled to
notice of, or to vote at, the meeting, which time, except in the
case of an adjourned meeting, shall be not more than 90 days
prior to the date of the meeting of shareholders. Only
shareholders of record on the date fixed shall be so entitled
notwithstanding any transfer of shares on the books of the
Company after any record date fixed as provided herein. The
Board of Directors may similarly fix a record date for the
determination of shareholders of record for any other purpose.
When a determination of shareholders of record has been made as
provided herein for purposes of a meeting, the determination
shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting.
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<PAGE>
ARTICLE VI
LIABILITY OF DIRECTORS
Section 1. Directors' Personal Liability. A director
of the Corporation shall not be personally liable for monetary
damages for any action taken, or any failure to take any action,
provided however, that this provision shall not eliminate or
limit the liability of a director to the extent that such
elimination or limitation of liability is expressly prohibited by
the act of November 28, 1986 (P.L._____ No. 145) known as the
Directors' Liability Act as in effect at the time of the alleged
action or failure to take action by such director.
Section 2. Preservation of Rights. Any repeal or
modification of this Article by the shareholders of the
Corporation shall not adversely affect any right or protection
existing at the time of such repeal or modification to which any
director or former director may be entitled under this Article.
The rights conferred by this Article shall continue as to any
person who has ceased to be a director of the Corporation and
shall inure to the benefit of the heirs, executors and
administrators of such person.
ARTICLE VIA
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Mandatory Indemnification of Directors and
Officers. The Corporation shall indemnify, to the fullest extent
now or hereafter permitted by law (including but not limited to
the indemnification provided by Section 8365 of the act of
November 28, 1986 (P.L.______No. 145) known as the Directors'
Liability Act), each director or officer (including each former
director or officer) of the Corporation who was or is made a
party to or a witness in or is threatened to be made a party to
or a witness in 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 an
authorized representative of the Corporation, against all
expenses (including attorneys' fees and disbursements),
judgments, fines (including excise taxes and penalties) and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding.
Section 2. Mandatory Advancement of Expenses to
Directors and Officers. The Corporation shall pay expenses
(including attorneys' fees and disbursements) incurred by a
director or officer of the Corporation referred to in Section 1
hereof in defending or appearing as a witness in any civil or
criminal action, suit or proceeding described in Section 1 hereof
in advance of the final disposition of such action, suit or
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<PAGE>
proceeding. The expenses incurred by such director or officer
shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding only upon receipt
of an undertaking by or on behalf of such director or officer to
repay all amounts advanced if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as
provided in Section 4 hereof.
Section 3. Permissive Indemnification and Advancement
of Expenses. The Corporation may, as determined by the Board of
Directors from time to time, indemnify to the fullest extent now
or hereafter permitted by law, any person who was or is a party
to or a witness in or is threatened to be made party to or a
witness in, or is otherwise involved in, 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 an authorized representative of the Corporation, both as
to action in his official capacity and as to action in another
capacity while holding such office or position, against all
expenses (including attorneys' fees and disbursements),
judgments, fines (including excise taxes and penalties), and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding. The
Corporation may, as determined by the Board of Directors from
time to time, pay expenses incurred by any such person by reason
of his participation in an action, suit or proceeding referred to
in this Section 3 in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or
on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Corporation as provided in Section 4 hereof.
Section 4. Scope of Indemnification. Indemnification
under this Article shall not be made by the Corporation in any
case where a court determines that the alleged act or failure to
act giving rise to the claim for indemnification is expressly
prohibited by the act of November 28, 1986 (P.L._____ No. 145)
known as the Directors' Liability Act or any successor statute as
in effect at the time of such alleged action or failure to take
action.
Section 5. Insurance. The Corporation shall purchase
and maintain insurance on behalf of each director and officer
against any liability asserted against or incurred by such
director or officer in any capacity, or arising out of such
director's or officer's status as such, whether or not the
Corporation would have the power to indemnify such director or
officer against such liability under the provisions of this
Article. The Corporation shall not be required to maintain such
insurance if it is not available on terms satisfactory to the
Board of Directors, or if, in the business judgment of the Board
of Directors, either (i) the premium cost for such insurance is
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<PAGE>
substantially disproportionate to the amount of coverage, or
(ii) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such
insurance. The Corporation may purchase and maintain insurance
on behalf of any person referred to in Section 3 hereof against
any liability asserted against or incurred by such person in any
capacity, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions
of this Article.
Section 6. Funding to Meet Indemnification
Obligations. The Board of Directors, without approval of the
shareholders, shall have the power to borrow money on behalf of
the Corporation, including the power to pledge the assets of the
Corporation, from time to time discharge the Corporation's
obligations with respect to indemnification, the advancement and
reimbursement of expenses, and the purchase and maintenance of
insurance referred to in this Article. The Corporation may, in
lieu of or in addition to the purchase and maintenance of
insurance referred to in Section 5 hereof, establish and maintain
a fund of any nature or otherwise secure or insure in any manner
its indemnification obligations, whether arising under or
pursuant to this Article or otherwise.
Section 7. Miscellaneous. Each director and officer
of the Corporation shall be deemed to act in such capacity in
reliance upon such rights of indemnification and advancement of
expenses as are provided in this Article. The rights of
indemnification and advancement of expenses provided by this
Article shall not be deemed exclusive of any other rights to
which any person seeking indemnification or advancement of
expenses may be entitled under any agreement, vote of
shareholders or disinterested directors, statute or otherwise,
both as to action in such person's official capacity and as to
action in another capacity while holding such office or position,
and shall continue as to a person who has ceased to be an
authorized representative of the Corporation and shall inure to
the benefit of the heirs, executors and administrators of such
person. Indemnification and advancement of expenses under this
Article shall be provided whether or not the indemnified
liability arises or arose from any threatened, pending or
completed action by or in the right of the Corporation. Any
repeal or modification of this Article by the shareholders or the
Board of Directors of the Corporation shall not adversely affect
any right or protection existing at the time of such repeal or
modification to which any person may be entitled under this
Article.
Section 8. Definition of Corporation. For purposes of
this Article, references to "the Corporation" shall include, in
addition to the resulting Corporation, any constituent
Corporation (including any constituent of a constituent) absorbed
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in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its
authorized representatives so that any person who is or was an
authorized representative of such constituent Corporation shall
stand in the same position under this Article with respect to the
resulting or surviving Corporation as he would have with respect
to such constituent Corporation if its separate existence had
continued.
Section 9. Definition of Authorized Representative.
For the purposes of this Article, the term "authorized
representative" shall mean a director, officer, employee or agent
of the Corporation or of any subsidiary of the Corporation, or a
trustee, custodian, administrator, committeeman or fiduciary of
any employee benefit plan established and maintained by the
Corporation or by any subsidiary of the Corporation, or a person
serving another corporation, partnership, joint venture, trust or
other enterprise in any of the foregoing capacities at the
request of the Corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Corporate Seal. The Corporate seal of the
Corporation shall be a circular seal with the name of the
Corporation and state of incorporation around the border or a
seal in such form as the Board of Directors shall from time to
time determine.
Section 2. Fiscal Year. The fiscal year of the
Corporation shall be as designated by the Board of Directors.
Section 3. Authorization. All checks, notes,
vouchers, warrants, drafts, acceptances and other orders for the
payment of moneys of the Corporation shall be signed by such
officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
Section 4. Inapplicability of Subchapter 25E.
Subchapter E of Chapter 25 of the Pennsylvania Business
Corporation Law of 1988, as amended (former Section 910 of the
Pennsylvania Business Corporation Law of 1933, as amended), shall
not be applicable to the Corporation.
Section 5. Inapplicability of Subchapter 25F.
Subchapter F of Chapter 25 of the Pennsylvania Business
Corporation Law of 1988, as amended (former Section 911 of the
Pennsylvania Business Corporation Law of 1933, as amended), shall
not be applicable to the Corporation.
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<PAGE>
Section 6. Inapplicability of Subchapter 25G.
Subchapter G of Chapter 25 of the Pennsylvania Business
Corporation Law of 1988, as amended, shall not be applicable to
the Corporation.
Section 7. Inapplicability of Subchapter 25H.
Subchapter H of Chapter 25 of the Pennsylvania Business
Corporation Law of 1988, as amended, shall not be applicable to
the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws may be amended by the affirmative vote of
the holders of a majority of the shares of common stock of the
Corporation or by the affirmative vote of a majority of the Board
of Directors at any regular or special meeting of the directors,
provided that notice of the proposed amendment shall have been
included in the notice of the meeting of the shareholders or
directors, as the case may be.
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<PAGE>
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<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
registrant's consolidated statement of income for the fiscal three months ended
March 31, 1996 and consolidated balance sheet as of March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
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<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
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<ALLOWANCES> 3,893
<INVENTORY> 217,318
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<PP&E> 692,024
<DEPRECIATION> 245,152
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<CURRENT-LIABILITIES> 188,258
<BONDS> 180,049
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 1,133,937
<SALES> 353,102
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<CGS> 286,107
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<OTHER-EXPENSES> 33,162
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,333
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<INCOME-TAX> 13,401
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