F O R M 1 0 - Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
( ) 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 1-6948
SPX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 38-1016240
(State of Incorporation) (I.R.S. Employer Identification No.)
700 Terrace Point Drive, Muskegon, Michigan 49443
(Address of Principal Executive Office)
Registrant's Telephone Number including Area Code (616) 724-5000
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
Common shares outstanding October 27, 1995 -- 14,172,731
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000s omitted)
<TABLE>
<CAPTION>
(Unaudited)
September 30 December 31
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary investments $ 20,845 $ 9,859
Receivables 143,770 128,529
Inventories 162,283 151,821
Deferred income tax asset and refunds 38,479 55,843
Prepaid and other current assets 16,034 25,148
Total current assets $ 381,411 $ 371,200
Net assets of discontinued operation
- 79,596
Investments 18,436 16,363
Property, plant and equipment, at cost 428,603 408,236
Accumulated depreciation $(214,346) $(193,450)
Net property, plant and equipment
$ 214,257 $ 214,786
Costs in excess of net assets of
businesses acquired 193,932 199,145
Other assets 42,870 47,954
Total assets $ 850,906 $ 929,044
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities
of long-term debt
$ 2,397 $ 1,133
Accounts payable 77,029 82,947
Accrued liabilities 138,675 132,073
Income taxes payable 6,584 3,100
Total current liabilities $ 224,685 $ 219,253
Long-term liabilities 116,615 120,641
Deferred income taxes 23,478 16,376
Long-term debt 319,126 414,082
Shareholders' equity:
Common stock $ 158,051 $ 156,478
Paid in capital 56,602 58,072
Retained earnings 30,485 29,411
$ 245,138 $ 243,961
Common stock held in treasury (50,000) (50,000)
Unearned compensation (26,410) (31,073)
Minority interest (4,767) (3,278)
Cumulative translation adjustments 3,041 (918)
Total shareholders' equity $ 167,002 $ 158,692
Total liabilities and shareholders' $ 850,906 $ 929,044
</TABLE>
<PAGE> 3
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of dollars except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $268,790 $249,805 $837,935 $809,696
Costs and expenses
Cost of products sold 205,038 187,147 647,137 612,276
Selling, general and admin 47,054 48,024 150,062 149,076
Goodwill/Intangible amort. 2,252 2,296 6,761 5,688
Minority interest (income) (240) (750) (1,489) (1,200)
Earnings from equity
interests (972) (652) (3,303) (1,703)
Operating income from
continuing operations $ 15,658 $ 13,740 $ 38,767 $45,559
Other expense (income),net (311) (809) (1,939) (1,236)
Interest expense, net 8,892 9,129 27,245 26,099
Income before income taxes $ 7,077 $ 5,420 $ 13,461 $20,696
Provision for income taxes 2,873 2,388 5,484 8,338
Income from continuing
operations $ 4,204 $ 3,032 $ 7,977 $12,358
Discontinued operation:
Income (loss) from discontinued
operation, net of tax $ (44) $ 168 $ 140 $ 842
Loss on sale, net of tax $ (2,987) $ (2,987)
Income (loss)from
discontinued operation $ (3,031) $ 168 $ (2,847) $ 842
Income before
extraordinary loss $ 1,173 $ 3,200 $ 5,130 $13,200
Extraordinary loss,
net of tax (471) 0 (749) 0
Net income $ 702 $ 3,200 $ 4,381 $13,200
Income (loss) per share:
From continuing operations $ 0.32 $ 0.24 $ 0.61 $ 0.97
From discontinued
operation (0.23) 0.01 (0.22) 0.06
Extraordinary loss,
net of tax (0.04) (0.06)
Net income $ 0.05 $ 0.25 $ 0.33 $ 1.03
Dividends per share $ 0.10 $ 0.10 $ 0.30 $ 0.30
Weighted average number of
common shares outstanding 13,203 12,828 13,125 12,775
</TABLE>
<PAGE> 4
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(000s omitted)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,381 $ 13,200
Adjustments to reconcile net income to net
cash from operating activities -
Depreciation and amortization 33,483 29,057
(Earnings) from equity interests (3,303) (1,703)
Decrease (increase) in net deferred income tax
assets, refunds and liabilities 24,972 (1,493)
(Increase) in receivables (10,104) (13,754)
(Increase) in inventories (10,462) (4,273)
Decrease in prepaid and other current assets 9,114 10,445
Decrease in net assets of discontinued operation 1,276 1,863
Increase (decrease) in accounts payable (5,918) 6,678
Increase (decrease) in accrued liabilities 6,602 (11,341)
Increase (decrease) in income taxes payable 3,484 (8,226)
(Increase) decrease in other assets 2,750 (4,324)
Increase (decrease) in long-term liabilities (4,026) 458
Other, net 8,748 5,740
Net cash provided by operating activities $ 60,997 $ 22,327
Cash flows provided (used) by investing
activities:
Capital expenditures $(24,319) $(28,478)
Proceeds from sale of SPX Credit Corporation 73,183 -
Payments for purchase of business - (39,000)
Net cash provided (used) by investing activities $ 48,864 $(67,478)
Cash flows used by financing activities:
Net payments under debt agreements $(69,012) $(12,391)
Purchase of senior subordinated notes (24,680) -
Payment of fees related to debt restructuring (1,255) (34,008)
Dividends paid (3,928) (3,826)
Net cash used by financing activities $(98,875) $(50,225)
Net increase (decrease) in cash and temporary
investments $ 10,986 $(95,376)
Cash and temporary investments, beg. of period 9,859 117,843
Cash and temporary investments, end of period $ 20,845 $ 22,467
</TABLE>
<PAGE> 5
SPX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 (Unaudited)
1. The interim financial statements reflect all
adjustments which are, in the opinion of management,
necessary to a fair statement of the results of the
interim periods presented. All adjustments are of a
normal recurring nature.
Certain amounts in the 1994 consolidated financial
statements have been reclassified to conform with the
1995 presentation. This reclassification had no effect
on net income for any period.
2. Information regarding the company's segments was as
follows:
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30 September 30
1995 1994 1995 1994
(in millions)
<S> <C> <C> <C> <C>
Revenues:
Specialty Service Tools $147.7 $126.2 $436.6 $412.8
Original Equipment
Components 121.1 123.6 401.3 396.9
Total $268.8 $249.8 $837.9 $809.7
Operating income (loss):
Specialty Service Tools $ 11.7 $ 7.6 $ 25.6 $ 23.7
Original Equipment
Components 8.4 11.7 28.4 36.8
General Corporate (4.4) (5.6) (15.2) (14.9)
Total $ 15.7 $ 13.7 $ 38.8 $ 45.6
Capital Expenditures:
Specialty Service Tools $ 1.1 $ 2.1 $ 5.0 $ 6.3
Original Equipment
Components 4.2 5.8 18.9 20.4
General Corporate 0.0 0.1 0.4 1.8
Total $ 5.3 $ 8.0 $ 24.3 $ 28.5
Depreciation and
Amortization:
Specialty Service Tools $ 3.7 $ 3.8 $ 11.4 $ 11.5
Original Equipment
Components 6.8 5.6 20.3 17.1
General Corporate 0.8 0.0 1.8 0.5
Total $ 11.3 $ 9.4 $ 33.5 $ 29.1
</TABLE>
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
<S> <C> <C>
Identifiable Assets:
Specialty Service Tools $ 408.8 $ 397.9
Original Equipment
Components 379.8 367.9
General Corporate 62.3 163.2
Total $ 850.9 $ 929.0
</TABLE>
<PAGE> 6
SPX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 (Unaudited)
3. On September 29, 1995, the company ceased operations of
SPX Credit Corporation and sold the majority of its
lease financing receivables to Textron Financial
Corporation ("TFC"), a subsidiary of Textron Inc. The
leases were sold for approximately $73 million. The
company recorded a $3.0 million aftertax loss ($4.8
million pretax) on the sale of the lease receivables
and on costs associated with closing the leasing
operation. Proceeds from the sale of the lease
receivables were used to reduce a portion of the
company's debt.
TFC will provide SPX customers with financing
previously provided by SPX Credit Corporation. SPX's
agreement with TFC includes provisions for the company
to repurchase equipment resulting from future lease
defaults. The company has accrued for the cost and
losses that are anticipated in connection with expected
repurchases. Such losses are mitigated by the company
reselling this repurchased equipment. Prospectively,
losses incurred on these repurchases are not expected
to have a significant impact on the company's results
of operations.
The results of operations, net of taxes, and the net
assets of SPX Credit Corporation are presented in the
accompanying consolidated financial statements as a
discontinued operation through the end of the third
quarter of 1995. Consolidated interest expense has
been allocated based upon the ratio of the net assets
of the discontinued operation to the consolidated
capitalization of the company. Income taxes have been
allocated to the discontinued operation at
approximately 41% of pretax income. No general
corporate expenses have been allocated to the
discontinued operation. The results of the
discontinued operation are not necessarily indicative
of the results of operations which may have been
obtained had continuing and discontinued operations
been operating independently.
The following summarizes the results of operations and
net assets of SPX Credit Corporation for the periods
indicated:
<TABLE>
<CAPTION>
Three Nine
months ended months ended
Sept. 30 Sept. 30
1995 1994 1995 1994
(in millions)
<S> <C> <C> <C> <C>
Revenues $ 3.1 $ 3.2 $ 9.2 $ 9.8
Operating income 1.5 1.7 4.6 5.6
Interest expense 1.5 1.4 4.4 4.2
Pretax income $ - $ 0.3 $ 0.2 $ 1.4
Provision for income
taxes - 0.1 0.1 0.6
Net income $ - $ 0.2 $ 0.1 $ 0.8
</TABLE>
<TABLE>
<CAPTION>
Dec. 31
1994
<S> <C>
Lease finance receivables-current $ 35.0
Other current assets 0.1
Lease finance receivables-long term 47.0
Other noncurrent assets 0.1
Current liabilities (2.6)
Net assets $ 79.6
</TABLE>
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following unaudited information should be read in
conjunction with the company's unaudited consolidated
financial statements and the related footnotes.
CONSOLIDATED - Results of Operations:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
(in millions)
<S> <C> <C> <C> <C>
Revenues:
Specialty Service Tools............$ 147.7 $ 126.2 $ 436.6 $ 412.8
Original Equipment Components...... 121.1 123.6 401.3 396.9
Total............................$ 268.8 $ 249.8 $ 837.9 $ 809.7
Operating income (loss):
Specialty Service Tools............$ 11.7 $ 7.6 $ 25.6 $ 23.7
Original Equipment Components...... 8.4 11.7 28.4 36.8
General corporate expense.......... (4.4) (5.6) (15.2) (14.9)
Total............................$ 15.7 $ 13.7 $ 38.8 $ 45.6
Other expense (income), net........ (0.3) (0.8) (1.9) (1.2)
Interest expense, net.............. 8.9 9.1 27.2 26.1
Income before income taxes.........$ 7.1 $ 5.4 $ 13.5 $ 20.7
Provision for income taxes......... 2.9 2.4 5.5 8.3
Income from continuing operations..$ 4.2 $ 3.0 $ 8.0 $ 12.4
Income (loss) from discontinued
operation........................ (3.0) $ .2 (2.9) .8
Extraordinary loss, net of taxes... (0.5) $ - (0.7) -
Net income.........................$ .7 $ 3.2 $ 4.4 $ 13.2
Capital expenditures............... $ 24.3 $ 28.5
Depreciation and amortization...... 33.5 29.1
</TABLE>
On the following pages, revenues, operating income and
related items are discussed by segment. The following
provides explanation of general corporate expenses and other
consolidated items that are not allocated to the segments.
Third Quarter 1995 vs. Third Quarter 1994
General Corporate expense
These expenses represent general unallocated expenses.
The reduction in the third quarter of 1995 from 1994 was
attributable to cost reductions and lower provisions related
to incentive compensation programs.
Other expense (income), net
Represents expenses not included in the determination
of operating results, including gains or losses on currency
exchange, translation gains or losses due to translation of
financial statements in highly inflationary countries, the
fees incurred on the sale of accounts receivable under the
company's accounts receivable securitization program, gains
or losses on the sale of fixed assets and unusual non-
operational gains or losses.
Interest Expense, net
The third quarter 1995 interest expense, net reflects
the debt structure in place after the 1994 refinancing. The
level of interest expense, $8.9 million, was comparable with
interest expense of the third and fourth quarters of 1994.
The refinancing was completed during the second quarter of
1994 and included obtaining the $225 million revolving
credit facility and issuance of $260 million of senior
subordinated notes. As interest expense has been allocated
to the discontinued operation, the effect of the reduction
in debt from the proceeds of the sale of SPX Credit
Corporation will not reduce interest expense in the future.
<PAGE> 8
Provision for Income Taxes
The third quarter 1995 effective income tax rate was
approximately 41%, which reflects the company's current
estimated rate for the year.
Income (loss) from discontinued operations
During the second quarter of 1995, the company
announced its intention to sell SPX Credit Corporation.
This action was completed as of September 29, 1995 as a
majority of the lease receivables were sold to a third party
leasing company and operations of SPX Credit Corporation
were terminated. The company's loss on the sale of these
lease receivables and costs to close the operation have been
recorded as a $3.0 million loss, net of the related tax
benefit of 38%. In the future, the buyer of the lease
receivables will provide lease financing as an option for
certain company customers.
The results of operations of SPX Credit Corporation,
net of allocated interest and income taxes, are presented as
a discontinued operation. The third quarter of 1995 results
are lower than 1994 due to higher costs associated with
repossessed leases.
Extraordinary loss, net of taxes
Late in the first quarter of 1995, the company began to
repurchase some of its 11 3/4% senior subordinated notes.
These notes have been purchased in the market at a premium
and this premium, net of income taxes, is included as the
extraordinary loss. During the third quarter of 1995, $15.2
million of notes were purchased at a pretax premium of
$799,000.
First Nine Months of 1995 vs. First Nine Months of 1994
General Corporate expense
The first nine months of 1995 includes a $1.8 million
charge related to early retirement of three officers and
severance costs associated with six employees at the
corporate office. Offsetting this charge was the impact of
cost reductions and lower provisions related to incentive
compensation programs.
Other expense (income), net
In the first quarter of 1995, a $1.5 million gain was
recorded on the sale of the company's aftermarket export
distribution business. 1994 annual revenues of this
business were approximately $14 million. Prospectively, the
company will sell the products previously sold through this
business to the buyer rather than directly to the
aftermarket.
Interest Expense, net
The first nine months of 1995 interest expense, net
reflects the debt structure in place after the 1994
refinancing. The level of interest expense, $27.2 million,
was comparable with 1994 interest expense.
Provision for Income Taxes
The first nine months 1995 effective income tax rate
was approximately 41%, which reflects the company's current
estimated rate for the year.
<PAGE> 9
Income (loss) from Discontinued Operation
The results of operations of SPX Credit Corporation,
net of allocated interest and income taxes, are presented as
a discontinued operation. The first nine months of 1995
results are lower than 1994 due to higher costs associated
with repossessed leases.
Extraordinary loss, net of taxes
During the first nine months of 1995, approximately $25
million of 11 3/4% senior subordinated notes were purchased
at a pretax premium of $1,255,000.
SPECIALTY SERVICE TOOLS - Results of Operations:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
(in millions)
<S> <C> <C> <C> <C>
Revenues............................$ 147.7 $ 126.2 $ 436.6 $ 412.8
Gross Profit........................ 48.9 43.8 142.1 138.7
% of revenues...................... 33.1% 34.7% 32.5% 33.6%
Selling, general & administrative... 36.0 35.0 112.9 111.1
% of revenues...................... 24.4% 27.7% 25.9% 26.9%
Goodwill/intangible amortization.... 1.3 1.3 4.0 3.9
(Earnings) from equity interests.... (0.1) (0.1) (0.4) 0.0
Operating income....................$ 11.7 $ 7.6 $ 25.6 $ 23.7
Capital expenditures................ $ 5.0 $ 6.3
Depreciation and amortization....... 11.4 11.5
</TABLE>
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
(in millions)
<S> <C> <C>
Identifiable assets.............$ 408.8 $ 397.9
</TABLE>
Third Quarter 1995 vs. Third Quarter 1994
Revenues
Third quarter 1995 revenues increased $21.5 million, or
17.0%, from the third quarter of 1994. The primary reasons
for the increase were continued strength in the base
specialty service tool sales, including electronic and
mechanical program tools, and dealer equipment.
Additionally, sales of hydraulic tools continue to be strong
and are up significantly over last year.
While sales of engine diagnostic and wheel service
equipment were up slightly over 1994, the effect of market
uncertainties associated with delays in state vehicle
emission testing programs has reduced expected sales of
engine diagnostic and gas emission testing equipment.
Gross Profit
Third quarter 1995 gross profit as a percentage of
revenues ("gross margin") of 33.1% was lower than the 34.7%
gross margin in 1994. The decrease in the gross margin was
primarily a result of product sales mix towards purchased
products and underabsorbed costs resulting from lower
production levels to reduce inventory.
Selling, General and Administrative ("SG&A")
Third quarter 1995 SG&A expense was $36.0 million, or
24.4% of revenues, compared to $35.0 million, or 27.7% of
revenues, in 1994. Third quarter 1995 SG&A compares
favorably to last year as a percentage of revenues as
benefits of cost reduction programs are being realized.
Some additional administrative costs are being incurred to
facilitate further cost reductions.
<PAGE> 10
Goodwill/Intangible Amortization
Noncash goodwill and intangible amortization results
primarily from excess purchase price over fair value of
assets in acquisitions.
(Earnings) from equity interests
Represents the equity earnings of JATEK, a 50% owned
joint venture in Japan. JATEK's business was very slow in
the first half of 1994 reflecting economic conditions in
Japan. The third quarter of 1995 reflects the continued
improvement in results that began in the last half of 1994.
Operating Income
1995 third quarter operating income of $11.7 million
was higher than second quarter 1994 operating income of $7.6
million. This increase was due to the increased revenue
level mitigated by the lower gross margins that were due,
principally, to product mix.
First Nine Months of 1995 vs. First Nine Months of 1994
Revenues
First nine months 1995 revenues increased $23.8
million, or 5.8%, from the first nine months of 1994. The
primary reasons for the increase were continued strength in
the base specialty service tool sales including electronic
and mechanical program tools and dealer equipment.
Additionally, sales of hydraulic tools continue to be strong
and are up significantly over last year.
The above reasons for the increased revenue levels were
mitigated by lower European revenues, particularly gas
emission equipment in Germany. Also negatively impacting
sales of engine diagnostic equipment in the first nine
months of 1995 was the effect of market uncertainties
associated with delays in state emission testing programs.
Sales of engine diagnostic and gas emission testing
equipment are closely related.
Gross Profit
First nine months of 1995 gross profit as a percentage
of revenues ("gross margin") of 32.5% was lower than the
33.6% gross margin in 1994. The decrease in the gross
margin was primarily a result of product mix. First nine
months of 1995 sales consisted of a greater percentage of
purchased product which carry a lower gross margin than
manufactured product.
Selling, General and Administrative ("SG&A")
First nine months of 1995 SG&A expense was $112.9
million, or 25.9% of revenues, compared to $111.1 million,
or 26.9% of revenues, in 1994. 1995 SG&A compares favorably
to 1994 after noting that 1995 product development costs in
1995 exceeded 1994 by $1.0 million and that 1995 SG&A
included a $1.1 million charge for downsizing severance
costs at the Automotive Diagnostics division during the
first quarter. The additional $1.0 million in product
development spending was attributable to development of the
newer gas emissions testing products and hand-held
diagnostic equipment which are planned to be sold over the
balance of the year and into the following several years.
The downsizing at Automotive Diagnostics involved
approximately 140 people and addressed delays in the state
vehicle emissions testing programs as well as additional
cost reductions to improve future profitability at the unit.
<PAGE> 11
(Earnings) from equity interests
JATEK's business was very slow in the first half of
1994 reflecting economic conditions in Japan. The first
nine months of 1995 reflects the continued improvement in
results that began in the last half of 1994.
Operating Income
1995 first nine months operating income of $25.6
million was higher than first nine months of 1994 operating
income of $23.7 million due primarily to the increased
revenue. Offsetting the effect of the increased revenues
was the severance at the Automotive Diagnostics division and
the additional product development spending.
Capital Expenditures
First nine months of 1995 capital expenditures were
comparable to the first nine months of 1994 capital
expenditures. The company continues to invest in
manufacturing capability and systems to better support
customers. Full year 1995 capital expenditures are expected
to approximate $8 million.
Identifiable Assets
Identifiable assets at September 30, 1995 increased
approximately $9 million from year-end 1994. The increase
was predominately accounts receivable and inventories. The
increase in accounts receivable was a result of higher
revenues in the latter portion of the third quarter 1995
compared to the latter portion of the fourth quarter of
1994. Days sales outstanding in accounts receivable are
approximately 65 to 70 days for the segment. The increase
in inventories was a result of delays in state emissions
testing programs and the seasonal buildup of inventory to
support fourth quarter business activity.
ORIGINAL EQUIPMENT COMPONENTS - Results of Operations:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
(in millions)
<S> <C> <C> <C> <C>
Revenues...........................$ 121.1 $ 123.6 $ 401.3 $ 396.9
Gross Profit....................... 14.9 18.6 48.7 58.3
% of revenues.................... 12.3% 15.0% 12.1% 14.7%
Selling, general & administrative.. 6.7 7.3 21.9 22.6
% of revenues.................... 5.5% 5.9% 5.5% 5.7%
Goodwill/intangible amortization... 1.0 1.0 2.8 1.8
Minority interest (income)......... (0.3) (0.8) (1.5) (1.2)
(Earnings) from equity interests... (0.9) (0.6) (2.9) (1.7)
Operating income...................$ 8.4 $ 11.7 $ 28.4 $ 36.8
Capital expenditures............... $ 18.9 $ 20.4
Depreciation and amortization...... 20.3 17.1
</TABLE>
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
(in millions)
<S> <C> <C>
Identifiable assets............ $ 379.8 $ 367.9
</TABLE>
<PAGE> 12
Third Quarter 1995 vs. Third Quarter 1994
Revenues
Third quarter 1995 revenues were down $2.5 million, or
2.0%, over third quarter 1994 revenues. The decrease was
primarily attributable to the loss of hydraulic valve train
business with a major customer and by the loss of sales
associated with the January sale of the company's export
aftermarket distribution business. This decrease was offset
by higher European revenues principally resulting from the
translation effect of the weaker U.S. dollar.
Gross Profit
Third quarter 1995 gross margin of 12.3% compares to
the third quarter 1994 gross margin of 15.0%. Factors that
contributed to this decrease are as follows:
The valve train business has incurred lost production
and downsizing costs due to the loss of hydraulic valve
train business with a major customer. Although the company
has obtained new orders to replace this lost volume, demand
has been slower than originally anticipated, resulting in
unabsorbed manufacturing costs.
Additional manufacturing costs were incurred at the
segment's die casting and piston ring operations associated
with productivity improvement projects.
In general, production volumes were down from last year
and resulted in lower absorbtion of manufacturing costs.
Selling, General and Administrative ("SG&A")
SG&A was $6.7 million, or 5.5% of revenues, in the
third quarter of 1995 compared to $7.3 million, or 5.9% of
revenues, in 1994. This reflects the segment's continuing
cost containment efforts as the dollar amounts of SG&A in
the comparative quarters are essentially the same.
Goodwill/Intangible Amortization
Goodwill and intangible amortization was a result of
the excess purchase price over the fair value of assets
recorded upon the acquisition of 51% of SPT at the end of
1993.
Minority interest (income)
This reflects the 30% partner's minority interest in
the results of SP Europe. SP Europe continued to incur
losses in the third quarter of 1995.
(Earnings) from equity interests
Earnings from equity interests include the company's
share of earnings or losses in RSV, Promec, IBS Filtran and
Allied Ring Corporation ("ARC"). The increase in third
quarter 1995 earnings from equity interests over the third
quarter of 1994 was due to continued profitability at Promec
and improved profitability at IBS Filtran and ARC. RSV's
losses were comparable to the third quarter of 1994.
Operating Income
Third quarter 1995 operating income was $8.4 million
compared to $11.7 million in the third quarter of 1994. The
$3.3 million decrease was attributable to the loss of
hydraulic valve train business with a major customer,
increased manufacturing spending and reduced manufacturing
volume.
<PAGE> 13
First Nine Months of 1995 vs. First Nine Months of 1994
Revenues
First nine months of 1995 revenues were up $4.4
million, or 1.1%, over first nine months of 1994 revenues.
The increase was attributable to continued increases in
solenoid valve sales, higher European revenues principally
resulting from the translation effect of the weaker U.S.
dollar, and increased die-casting metal costs passed on to
customers. The increased die-casting metal prices are tied
to the market prices for the metal and do not effect
profitability as the company's cost rises by the same
amount. The first nine months of 1995 revenues were reduced
by the loss of hydraulic valve train business with a major
customer and by the loss of sales associated with the
January sale of the company's export aftermarket
distribution business.
Gross Profit
First nine months of 1995 gross margin of 12.1%
compares to the first nine months of 1994 gross margin of
14.7%. Several factors contributed to this decrease as
follows:
The previously mentioned metal cost and pricing pass
through to customers reduced gross margins as the increase
in revenues equals the increase in costs.
During the first quarter, the company purchased
approximately $6 million of inventory from an aftermarket
customer and began to package this inventory for the
customer. The inventory is anticipated to be resold over the
next twelve months at normal margins. A $1.2 million charge
was taken to purchase this inventory.
The valve train business has incurred lost production
and downsizing costs due to the loss of hydraulic valve
train business with a major customer.
SP Europe recorded approximately $1.0 million in
severance charges during the first nine months and incurred
additional costs associated with the ongoing process to
achieve profitability.
The die-casting facilities incurred incremental costs
associated with product changeovers at one its manufacturing
facilities.
Selling, General and Administrative ("SG&A")
SG&A was $21.9 million, or 5.5% of revenues, in the
first nine months of 1995 compared to $22.6 million, or 5.7%
of revenues, in 1994. This reflects the segment's
continuing cost containment efforts as the dollar amounts of
SG&A in the comparative quarters are essentially the same.
Goodwill/Intangible Amortization
First nine months of 1994 goodwill and intangible
amortization was lower than the first nine months of 1995 as
the company was recording income related to negative
goodwill associated with SP Europe. This recognition of
negative goodwill amortization was completed at the end of
the second quarter of 1994.
Minority interest (income)
SP Europe continued to incur significant losses in the
first nine months of 1995. SP Europe's first nine months of
1995 included a $1.0 million severance charge and additional
costs necessary to change manufacturing processes to improve
operating results.
<PAGE> 14
(Earnings) from equity interests
The increase in first nine months of 1995 earnings from
equity interests over the first nine months of 1994 was due
to continued profitability at Promec and improved
profitability at IBS Filtran and ARC. RSV's losses were
comparable to the first nine months of 1994.
Operating Income
First nine months 1995 operating income was $28.4
million compared to $36.8 million in the first nine months
of 1994. The $8.4 million decrease includes the $1.2
million charge associated with the inventory purchase from
the aftermarket customer and the $1.0 million of severance
costs recorded at SP Europe. The balance of the reduction in
operating profit was primarily attributable to the die-
casting product changeovers and the impact of the loss of
hydraulic valve train business with a major customer.
Capital Expenditures
Capital expenditures in the first nine months of 1995
were $18.9 million and were $20.4 million in the first nine
months of 1994. Significant capital improvements were in
process during late 1994 and carried over into the first
nine months of 1995. These projects include an additional
solenoid valve assembly line, additional die-casting
capacity for high strength heat treated aluminum die-
castings for air bag steering columns and additional
automated cylinder sleeve casting and machining capacity to
meet the demand for aluminum block engine liners. Capital
expenditures for 1995 are expected to approximate $22
million.
Identifiable Assets
Identifiable assets increased approximately $12 million
from year-end 1994. The increase was attributable to higher
inventory ($8 million) and higher accounts receivable ($4
million). The higher inventory was attributable to
anticipated fourth quarter demand as well as the purchase of
inventory from an aftermarket customer for packaging to be
performed by the company in the future. The higher accounts
receivable are due to higher revenue activity in the later
portion of the third quarter compared to the later portion
of the fourth quarter of 1994. Days sales outstanding in
accounts receivable are approximately 45 to 50 days.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Specialty Service Tools Restructuring - On October 31, 1995,
the company announced its decision to restructure the
Specialty Service Tools segment. The restructuring plan
will combine five operating divisions into two new business
units. The plan involves consolidation of administrative
and manufacturing functions in both the U.S. and Europe and
includes closing of at least three major facilities. As a
result, the company expects a net job reduction of about 175
people.
Implementation of the plan begins during the fourth
quarter of 1995 and is expected to be fully completed by the
third quarter of 1997. By that time, annualized savings are
expected to approximate $18 million. Overall costs to
implement this plan are estimated at approximately $15
million. The company currently estimates the size of the
1995 fourth quarter restructuring charge to be approximately
$8 to $9 million. The remaining $6 to $7 million of
estimated costs will be expensed as operating costs as
incurred. These incremental operating costs relate to
operational improvements that will benefit future operating
results.
<PAGE> 15
Impact of the Clean Air Act and Other Environmental
Regulations - During the first half of 1995, many delays by
states in implementing Federally mandated emissions testing
programs occurred. These delays or modifications in the
state programs reduced the company's expected revenues from
vehicle emissions testing equipment in the first nine months
of 1995. While uncertainties still exist as to when the
states will proceed with these emissions testing programs,
the company believes that the states will begin
implementation within the next few quarters. For example,
California is currently scheduled to begin its program in
mid-1996. The company should share in a significant portion
of this substantial market when the various states begin
their programs.
Equity Offering - During April of 1995, the company
announced its intention to file a Shelf Registration
Statement with the U.S. Securities and Exchange Commission
to offer additional equity when the company believes that
market conditions are appropriate. At this time, due to the
current market valuation, the company has delayed this
filing. Should the equity offering occur, it is intended
that the proceeds from the offering would initially be used
to reduce the company's debt. At this time, no date, number
of shares, or targeted share price has been established for
such action.
SP Europe - The company's 30% partner in SP Europe is
currently studying its future participation in the business
and its decision on this participation should occur in the
fourth quarter of 1995. Should the partner choose to limit
its participation, the company could be required to
recognize a portion of losses previously attributed to the
partner. These losses are currently included as "Minority
Interest" in the equity section of the consolidated balance
sheets.
The company is also studying alternatives to address
the continuing operating problems at SP Europe. The
alternatives include many options, from a continued presence
to closing the German operation and transferring production
to other facilities. A decision is expected in the fourth
quarter and could result in additional charges.
LIQUIDITY AND FINANCIAL CONDITION
The company's liquidity needs arise primarily from
capital investment in new equipment, funding working capital
requirements and to meet interest costs.
As a result of the company's acquisition activity in
1993, the company is highly leveraged. This financial
leverage requires management to focus on cash flows to meet
higher interest costs and to maintain dividends. Management
believes that operations and the borrowing arrangements
established in 1994 will be sufficient to supply the near
term funds needed by the company.
Cash Flow
<TABLE>
<CAPTION>
Nine months ended September 30,
1995 1994
(in millions)
<S> <C> <C>
Cash flow from:
Operating activities...... $ 61.0 $ 22.3
Investing activities...... 48.9 (67.5)
Financing activities...... (98.9) (50.2)
Net Cash Flow............ $ 11.0 $ (95.4)
</TABLE>
Cash flow from operating activities in the first nine
months of 1995, $61.0 million, compares favorably with the
first nine months of 1994 of $22.3 million. The first nine
months 1995 cash flow from operating activities reflects
$26.9 million of tax refunds received.
<PAGE> 16
Cash flow from investing activities during the first
nine months of 1995 represent $73.2 million received from
the sale of SPX Credit Corporation offset by capital
expenditures of $24.3 million. The capital expenditures
were to expand production capacity, particularly within the
Original Equipment Components segment. Capital expenditures
will be lower during the remaining quarter of 1995 and
should approximate $30 million for the year. In 1994, the
company paid Riken Corporation $39 million for the 1993
acquisition of 49% of SPT.
Cash flow used by financing activities during the first
nine months of 1995 reflects the company's quarterly
dividend payment and a $93.7 million reduction in borrowings
under debt agreements. The sale of the lease receivables
provided a majority of the proceeds for this debt reduction.
The company continued to retire outstanding 11_% senior
subordinated notes by repurchasing approximately $25 million
on a year-to-date basis. During the first nine months of
1994, cash flow from financing activities included the
payment of approximately $34 million of fees related to the
1994 debt refinancing.
Capitalization
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(in millions)
<S> <C> <C>
Notes payable and current maturities
of long-term debt..................... $ 2.4 $ 1.1
Long-term debt......................... 319.1 414.1
Total debt........................... $ 321.5 $ 415.2
Shareholders' equity................... 167.0 158.7
Total capitalization................... $ 488.5 $ 573.9
Total debt to capitalization ratio..... 65.8% 72.3%
</TABLE>
At September 30, 1995, the following summarizes the
debt outstanding and unused credit availability:
<TABLE>
<CAPTION>
Total Amount Unused Credit
Commitment Outstanding Availability
(in millions)
<S> <C> <C> <C>
Revolving credit............ $ 225.0 $ 55.0 $ 153.6(a)
Swingline loan facility..... 5.0 - 5.0
Senior subordinated notes... 235.3 235.3 -
Industrial revenues bonds... 15.1 15.1 -
Other....................... 19.1 16.1 3.0
Total debt................ $ 499.5 $ 321.5 $ 161.6
</TABLE>
(a) Decreased by $16.4 million of facility letters of
credit outstanding at September 30, 1995 which reduce
the unused credit availability.
The company is required to maintain compliance with
restrictive covenants contained in the revolving credit
agreement, as amended, and the senior subordinated note
indenture. Under the most restrictive of these covenants,
the company is required to:
Maintain a leverage ratio, as defined, of 78% or less.
The leverage ratio at September 30, 1995 was 69%.
Maintain an interest expense coverage ratio, as
defined, of 2.25:1 or greater. The interest expense coverage
ratio as of September 30, 1995 was 2.67:1.
Maintain a fixed charge coverage ratio, as defined, of
1.75:1 or greater. The company's fixed charge coverage ratio
as of September 30, 1995 was 1.92:1.
<PAGE> 17
Starting with the second quarter of 1995, limit
dividends paid during the preceding twelve months to 10% of
operating income plus depreciation and amortization (EBITDA)
for the twelve month period. Dividends paid for the twelve
month period ended September 30, 1995 were $5.2 million and
10% of EBITDA for the period was $9.7 million.
At March 31, 1995, the company obtained an amendment to
the revolving credit agreement to adjust the interest
expense coverage ratio covenant from 2.5:1 to 2.25:1 at June
30, 1995 and September 30, 1995. The interest expense
coverage ratio covenant requirement at December 31, 1995 is
2.5:1.
As a result of the announced fourth quarter
restructuring of the company's Specialty Service Tool group
and the related charges, it is probable that the company may
not be in compliance with the above covenants. Preliminary
discussions with the lenders indicate their willingness to
waive these charges or to amend the agreement so that the
company would be in compliance with the covenants. As a
result, the company continues to classify borrowings under
the revolving credit agreement and the senior subordinated
notes as long term.
Management believes that the unused credit availability
on the revolving credit facility is sufficient to meet
operational cash requirements, working capital requirements
and capital expenditures for 1995. Aggregate future
maturities of total debt are not material for 1995 through
1998. In 1999, the revolving credit agreement expires and
borrowings on the revolver would become due, however,
management believes that the revolving credit agreement
would likely be extended or that alternate financing will be
available to the company.
<PAGE> 18
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(2) None.
(3)iii By-Laws as amended through October 25, 1995.
(4) None.
(10) None.
(11) Statement regarding computation of
earnings per share.
See Consolidated Condensed Statements of Income.
(15) None.
(18) None.
(19) None.
(20) None.
(22) None.
(23) None.
(24) None.
(27) Financial data schedule.
(99) None.
(b) Reports on Form 8-K
The company, on October 11, 1995, filed Form 8-K
which provided information regarding the disposition of
substantially all of SPX Credit Corporation's assets.
<PAGE> 19
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.
SPX CORPORATION
(Registrant)
Date: November 2, 1995 By /s/ Charles E. Johnson II
Chairman and Chief Executive Officer
Date: November 2, 1995 By /s/ William L. Trubeck
Senior Vice President, Finance,
and Chief Financial and Accounting
Officer
BY-LAWS
OF
SPX CORPORATION
(A Delaware Corporation)
ADOPTED February 27, 1985
EFFECTIVE April 24, 1985
AS AMENDED THROUGH
October 25, 1995
BY-LAWS
OF
SPX CORPORATION
(A Delaware Corporation)
ARTICLE I
Offices
Section 1. The registered office of the corporation
shall be in Wilmington, New Castle County, Delaware.
Section 2. The corporation shall have its principal
office at 100 Terrace Plaza, Muskegon, Michigan, and it may
also have offices at such other places as the board of
directors may from time to time determine.
ARTICLE II
Stockholders
Section 1. Annual Meeting. The annual meeting of
stockholders for the election of directors and for the
transaction of such other business as may properly come
before the meeting shall be held on such date as the board
of directors shall fix each year. At an annual meeting of
stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be
(a) specified in the notice of meeting, or any supplement
thereto, given by or at the direction of the board of
directors, (b) otherwise properly brought before the meeting
by or at the direction of the board of directors, or (c)
otherwise properly brought before an annual meeting by a
stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the secretary of
the corporation not less than one hundred and twenty (120)
days nor more than one hundred and fifty (150) days prior to
the anniversary date of the immediately preceding annual
meeting. A stockholder's notice to the secretary of the
corporation shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a)
a brief description of the business desired to be brought
before the annual meeting, (b) the name and address, as they
appear on the corporation's stockholder records, of the
stockholder proposing such business, (c) the class and
number of shares of the corporation which are beneficially
owned by the stockholder, and (d) any material interest of
the stockholder in such business. Irrespective of anything
in these by-laws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the
procedures set forth in this Section 1. The presiding
officer of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
provisions of this Section 1, and if it is so determined,
shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 2. Special Meetings. Special meetings of the
stockholders may be called only by the chairman, the
president or the board of directors pursuant to a resolution
approved by a majority of the entire board of directors.
Section 3. Stockholder Action; How Taken. Any action
required or permitted to be taken by the stockholders of the
corporation 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.
Section 4. Place of Meeting. The board of directors
may designate any place, either within or without Delaware,
as the place of meeting for any annual or special meeting.
The place of meeting shall be the principal office of the
corporation designated in Section 2 of Article I of these by-
laws.
Section 5. Notice of Meetings. Written or printed
notice stating the place, day and hour of the meeting and,
in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less
than ten nor more than sixty days before the date of the
meeting, or in the case of a merger or consolidation, not
less than twenty nor more than fifty days before the date of
the meeting, either personally or by mail, by or at the
direction of the chairman or the president, or the
secretary, or the officer or persons calling the meeting, to
each stockholder of record entitled to vote at such meeting.
If mailed,
such notice shall be deemed to be delivered when deposited
in the United States mails in a sealed envelope addressed to
the stockholder at his address as it appears on the records
of the corporation with postage thereon prepaid.
Section 6. Record Date. For the purpose of
determining (a) stockholders entitled to notice of or to
vote at any meeting of stockholders, or (b) stockholders
entitled to receive payment of any dividend, or
(c) stockholders for any other purpose, the board of
directors may fix in advance a date as the record date for
any such determination of stockholders, such date in any
case to be not more than sixty days and not less than ten
days, or in the case of a merger or consolidation not less
than twenty days prior to the date on which the particular
action, requiring such determination of stockholders is to
be taken.
Section 7. Quorum. The holders of not less than one-
third of the stock issued and outstanding and entitled to
vote thereat, present in person or represented by proxy,
shall be requisite and shall constitute a quorum at all
meetings of the stockholders for the transaction of business
except as otherwise provided by statute, by the certificate
of incorporation or by these by-laws. If, however, such
quorum shall not be present or represented at any meeting of
the stockholders, the chairman of the meeting shall have the
power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented,
any business may be transacted which might have been
transacted at the meeting as originally notified.
When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is
one upon which by express provision of the statutes or of
the certificate of incorporation or of these by-laws, a
different vote is required in which case such express
provision shall govern and control the decision of such
question.
Section 8. Qualifications of Voters. The board of
directors may fix a day and hour not more than sixty nor
less than ten days prior to the day of holding any meeting
of stockholders as the time as of which the stockholders
entitled to notice of and to vote at such a meeting shall be
determined. Only those persons who were holders of record
of voting stock at such time shall b entitled to notice of
and to vote at such meeting.
Section 9. Procedure. The order of business and all
other matters of procedure at every meeting of stockholders
shall be determined by the chairman of the meeting. The
board of directors shall appoint two or more inspectors of
election to serve at every meeting of stockholders at which
directors are to be elected.
ARTICLE III
Directors
Section 1. Number, Election and Terms. Except as
otherwise fixed pursuant to the provisions of 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 shall be fixed from
time to time by the board of directors but shall not be less
than three. The directors, other than those who may be
elected by the holders of any class or series of stock
having a preference over the common stock as to dividends or
upon liquidation, shall be classified, with respect to the
time for which they severally hold office, into three
classes, as near equal in number as possible, as determined
by the board of directors, one class to hold office
initially for a term expiring at the annual meeting of
stockholders to be held in 1986, another class to hold
office initially for a term expiring at the annual meeting
of stockholders to be held in 1987 and another class to hold
office initially for a term expiring at the annual meeting
of stockholders to be held in 1988, with the members of each
class to hold office until their successors are elected and
qualified. At each annual meeting of stockholders, the
successors of the class of directors whose term expires at
that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the
third year following the year of their election.
The term the "entire board" as used in these by-laws
means the total number of directors which the corporation
would have if there were no vacancies.
Subject to the rights of holders of any class or series
of stock having a preference over the common stock as to
dividends or upon liquidation, nominations for the election
of directors may be made by the board of directors or a
committee appointed by the board of directors or by any
stockholder entitled to vote in the election of directors
generally. However, any stockholder entitled to vote in the
election of directors generally may nominate one or more
persons for election as directors at a meeting only if
written notice of such stockholder's intent to make such
nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the
secretary of the corporation not later than (a) with respect
to an election to be held at an annual meeting of
stockholders, one hundred and twenty (120) days prior to the
anniversary date of the immediately preceding annual
meeting, and (b) 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 tenth 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 the stockholder is a holder of record
of stock of the corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings
between the 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 the
stockholder; (d) such other information regarding each
nominee proposed by such stockholder as would be required to
be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission; and (e) the
consent of each nominee to serve as a director of the
corporation if so elected. The chairman of the meeting may
refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
Section 2. Newly Created Directorships and Vacancies.
Except as otherwise fixed pursuant to the provisions of
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 directors under specified circum
stances, newly created directorships resulting from any
increase in the number of directors and any vacancies on the
board of directors resulting from death, resignation,
disqualification, removal or other cause shall be filled
solely by the affirmative vote of a majority of the
remaining directors then in office, even though less than a
quorum of the board of directors. Any director elected in
accordance with the preceding sentence shall hold office for
the remainder of the full term of the class of directors in
which the new directorship was created or the vacancy
occurred and until such director's successor shall have been
elected and qualified. No decrease in the number of
directors constituting the board of directors shall shorten
the term of any incumbent director.
Section 3. Removal. Subject to the rights of any
class or series of stock having a preference over the common
stock as to dividends or upon liquidation to elect directors
under specified circumstances, any director may be removed
from office, for cause, only by the affirmative vote of the
holders of 80% of the combined voting power of the then
outstanding shares of stock entitled to vote generally in
the election of directors, voting together as a single
class.
Section 4. Regular Meetings. Regular meetings of the
board of directors shall be held at such times and place as
the board of directors may from time to time determine.
Section 5. Special Meetings. Special meetings of the
board of directors may be called by or at the request of the
chairman or the president or by any officer of the
corporation upon the request of a majority of the entire
board. The person or persons authorized to call special
meetings of the board of directors may fix any place, either
within or without Delaware, as the place for holding any
special meeting of the board of directors called by them.
Section 6. Notice. Notice of regular meetings of the
board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to
each director at his usual place of business, or at such
other address as shall have been furnished by him for the
purpose. Such notice shall be given at least twenty-four
hours before the meeting by telephone or by being personally
delivered, mailed or telegraphed. Such notice need not
include a statement of the business to be transacted at, or
the purpose of, any such meeting.
Section 7. Quorum. A majority of the entire Board
shall constitute a quorum for the transaction of business at
any meeting of the board of directors, provided, that if
less than a majority of the entire board is present at said
meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act
of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the board of
directors unless the act of a greater number is required by
the certificate of incorporation or the by-laws of
the corporation.
Section 8. Compensation. Directors who are also full
time employees of the corporation shall not receive any
compensation for their services as directors but they may be
reimbursed for reasonable expenses of attendance. By
resolution of the board of directors, all other directors
may receive either an annual fee or a fee for each meeting
attended, or both, and expenses of attendance, if any, at
each regular or special meeting of the board of directors;
provided, that nothing herein contained shall be construed
to preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
Section 9. Committees. The board of directors may, by
resolution passed by a majority of the whole board,
designate one or more committees, each committee to consist
of two or more of the directors of the corporation, which,
to the extent provided in the resolution, shall have and may
exercise the powers of the board of directors in the manage
ment of the business and affairs of the corporation and may
authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees
shall have such name or names as may be determined form time
to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
Section 10. Director Emeritus. The board of directors
may by resolution appoint any former director who has
retired from the board of directors as a Director Emeritus.
Directors Emeritus may, but are not required to attend all
meetings (regular and special) of the board of directors and
will receive notice of such meetings; however, they shall
not have the right to vote and they shall be excluded from
the number of directors for quorum and other purposes.
Directors Emeritus shall be appointed for one year terms and
may be reappointed for up to two additional one year terms.
ARTICLE IV
Emergency Executive Committee
Section 1. National Emergency-defined. For purposes
of this Article, "national emergency" is any period
following an attack on the United States or during any
nuclear or atomic disaster or during the existence of any
catastrophe or similar emergency condition as the results of
which communication and travel are disrupted or made unsafe.
Section 2. National Emergency Committee. Whenever,
during the existence of a national emergency a quorum of the
board of directors cannot readily be convened for action,
the business and affairs of the corporation shall be managed
by an Executive Committee (the "Committee").
Section 3. Establishment of the Committee, Number of
Members. When it is determined in good faith by any two or
more directors (including directors appointed pursuant to
Section 6 herein) that (1) a national emergency exists, and
(2) they are in a position to carry on the management of the
business and affairs of the corporation, then they shall
constitute themselves, and by these by-laws they are hereby
appointed, members of the Committee. The number of members
shall be not less than two. An established committee shall
increase its membership to include additional directors who
are able to serve. Directors (including officers designated
"directors" pursuant to Section 6 herein) who have been
appointed to the Committee shall remain members until
removed due to death, disappearance, or refusal or inability
to act. When a quorum of the board of directors (not
including officers designated "directors" pursuant to
Section 6 herein) becomes available to manage the business
and affairs of the corporation, the Committee shall dissolve
and re-form as the board of directors pursuant to other
sections of these by-laws.
Section 4. Meetings, Notice, Quorum. Unless the
Committee establishes rules to the contrary, meetings may be
held at any time at the request of any member, with notice
given only to such members as it may be feasible to reach at
the time and by such means as may be feasible at the time.
Members who receive notice shall make a reasonable effort to
notify other members of the Committee, but inability to
notify other members shall not effect the validity of any
decision made at a meeting at which a quorum was present.
Any two members constitute a quorum.
Section 5. Powers. The Committee shall have and may
exercise the powers of the board of directors in the
management of the business and affairs of the corporation,
including, but not by way of limitation, power to call
special meetings of stockholders, to change the principal
office or declare alternative principal offices, to elect or
appoint officers, to declare and fill vacancies on the
Committee as circumstances may require, to establish
emergency rules, and to authorize the seal of the
corporation to be affixed to all papers which may require
it.
Section 6. Officers Designated Directors. If no two
directors are available to establish the Committee, one or
two (depending on the number needed) of the officers of the
corporation hereinafter designated are appointed directors
and empowered to act as such under this Article. The
officers so appointed shall be those available and able to
act as members of the committee in the order of rank
designated as follows: chairman of the board, vice
chairman, president, executive vice president, treasurer,
vice presidents (in order of seniority), secretary,
assistant treasurers and assistant secretaries (in order of
seniority). Seniority of officers shall be determined by,
and be the same as, the annual order in which their names
are presented to, and acted upon, by the board of directors.
Section 7. Liability of Committee Members to the
Corporation and to Third Persons. No director or officer
acting in accordance with the provisions of this Article IV
shall be liable to the corporation except for willful
misconduct.
Section 8. Reliance by Third Persons. Any person may
conclusively rely on a determination by the directors or
officers of this corporation that a national emergency
exists when the reliance is made in good faith. If two or
more groups of directors or officers should separately and
in good faith establish National Emergency Committees, the
decisions of each Committee may be similarly relied on.
Section 9. Re-establishment of Board. The Committee
shall make every effort to re-establish the normal existence
of the corporation and return management responsibilities to
the board of directors. Further, every effort shall be made
to combine separately organized Committees or delineate such
Committees' authority on a geographical or other basis.
Section 10. Validity of Other Articles of the By-Laws
During a National Emergency. The provisions contained in
the other Articles of these by-laws shall remain operative
during a national emergency unless directly in conflict with
this Article IV or action taken pursuant hereto.
ARTICLE V
Officers
Section 1. Number. The officers of the corporation
shall be a chairman, a vice-chairman (if elected by the
board of directors), a president, an executive vice
president (if elected by the board of directors), one or
more vice-presidents (the number thereof to be determined by
the board of directors), a treasurer, a secretary and such
other officers as may be elected in accordance with the
provisions of this Article.
Section 2. Election and Term of Office. The officers
of the corporation shall be elected annually by the board of
directors at the first meeting of the board of directors
held after each annual meeting of stockholders. If the
election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as convenient.
Vacancies may be filled or new offices created and filled at
any meeting of the board of directors. Each officer shall
hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he
shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or
appointed by the board of directors may be removed by the
board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because
of death, resignation, removal, disqualification or
otherwise, may be filled by the board of directors for the
unexpired portion of the term.
Section 5. Chairman. The chairman shall preside at
all meetings of the stockholders and the board of directors.
If so appointed by the board of directors he shall be the
chief executive officer of the corporation and shall have
those duties and responsibilities described in Section 8 of
this Article. He shall perform such other duties as may be
prescribed by the board of directors.
Section 6. Vice-Chairman. The vice-chairman (if
elected by the board of directors) shall, in the absence of
the chairman, preside at all meetings of the stockholders
and the board of directors. If so appointed by the board of
directors, he shall be either the chief executive officer or
the chief operating officer, or both, and shall have those
duties and responsibilities described in Sections 8 and 9 of
this Article, as the case may be. He shall perform such
other duties as may be prescribed by the board of directors
and by the chief executive officer if he does not have that
position.
Section 7. President. The president shall be either
the chief executive officer or the chief operating officer,
or both, as determined by the board of directors, and shall
have the duties and responsibilities described in Sections 8
and 9 of this Article, as the case may be. In the absence
of the chairman and vice-chairman, he shall preside at all
meetings of the stockholders and board of directors. He
shall perform such other duties as may be prescribed by the
board of directors and chief executive officer if he does
not have that position.
Section 8. Chief Executive Officer. The chief
executive officer of the corporation shall be either the
chairman, the vice-chairman or the president as determined
by the board of directors. The chief executive officer
shall provide overall direction and administration of the
business of the corporation, he shall interpret and apply
the policies of the board of directors, establish basic
policies within which the various corporate activities are
carried out, guide and develop long range planning and
evaluate activities in terms of objectives. He may sign,
with the secretary or any other proper officer of the
corporation thereunto authorized by the board of directors,
stock certificates of the corporation, any deeds, mortgages,
bonds, contracts, or other instruments except in cases where
the signing and execution thereof shall be required by law
to be otherwise signed or executed, and he may execute
proxies on behalf of the corporation with respect to the
voting of any shares of stock owned by the corporation. He
shall have the power to (1) designate management committees
of employees deemed essential in the operations of the
corporation, its divisions or subsidiaries, and appoint
members thereof, subject to the approval of the board of
directors; (2) appoint certain employees of the corporation
as vice presidents of one or several divisions or operations
of the corporation, subject to the approval of the board of
directors, provided however, that any vice president so
appointed shall not be an officer of the corporation for any
other purpose; and (3) appoint such other
agents and employees as in his judgment may be necessary or
proper for the transaction of the business of the
corporation and in general shall perform all duties incident
to the office of the chief executive.
Section 9. Chief Operating Officer. The chief
operating officer (if elected by the board of directors)
shall be either the vice-chairman or the president as
determined by the board of directors. The chief operating
officer shall in general be in charge of all operations of
the corporation and shall direct and administer the
activities of the corporation in accordance with the
policies, goals and objectives established by the chief
executive officer and the board of directors. In the
absence of the chief executive officer, the chief operating
officer shall assume his duties and responsibilities.
Section 10. Executive Vice President. The executive
vice president (if elected by the board of directors) shall
report to either the chief executive officer or the chief
operating officer as determined in the corporate
organization plan established by the board of directors. He
shall direct and coordinate such major activities as shall
be delegated to him by his superior officer in accordance
with policies established and instructions issued by his
superior officer, the chief executive officer, or the board
of directors.
Section 11. Vice Presidents. The board of directors
may elect one or several vice presidents. Each vice
president shall report to either the chief executive
officer, the chief operating officer or the executive vice
president as determined in the corporate organization plan
established by the board of directors. Each vice president
shall perform such duties as may be delegated to him by his
superior officers and in accordance with the policies
established and instructions issued by his superior officer,
the chief executive officer or the board of directors. The
board of directors may designate any vice president as a
senior vice president and a senior vice president shall be
senior to all other vice presidents and junior to the
executive vice president. In the event there be more than
one senior vice president, then seniority shall be
determined by and be the same as the annual order in which
their names are presented to and acted on by the board of
directors.
Section 12. The Treasurer. If required by the board of
directors, the treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the board of directors shall determine. He shall (a)
have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for
moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories
as shall be selected in accordance with the provisions of Article
VI of these by-laws; (b) in general perform all the duties
incident to the office of treasurer and such other duties as from
time to time may be assigned to him by the chief executive
officer, chief operating officer or by the board of directors.
Section 13. The Secretary. The secretary shall: (a) keep
the minutes of the stockholders' and the board of directors'
meetings in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions
of these by-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all stock certifi
cates prior to the issue thereof and to all documents, the
execution of which on behalf of the corporation under its seal is
duly authorized in accordance with the provisions of these by-
laws or as required by law; (d) keep a register of the post
office address of each stockholder which shall be furnished to
the secretary by such stockholder; (e) sign with the chairman,
president, or a vice president, stock certificates of the
corporation, the issue of which shall have been authorized by
resolution of the board of directors; (f) have general charge of
the stock transfer books of the corporation; (g) in general
perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the
chief executive officer, chief operating officer or by the board
of directors.
ARTICLE VI
Fiscal Year
The fiscal year of the corporation shall begin on the first
day of January in each year and end on the thirty-first day of
December in each year.
ARTICLE VII
Seal
The board of directors shall provide a corporate seal which
shall be in the form of a circle and shall have inscribed thereon
the name of the corporation the words "Corporate Seal, Delaware".
ARTICLE VIII
Waiver of Notice
Whenever any notice whatever is required to be given under
the provisions of these by-laws or under the provisions of the
certificate of incorporation or under the provisions of the laws
of the state of Delaware, waiver thereof in writing, signed by
the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE IX
Amendments
Subject to the provisions of the certificate of
incorporation, these by-laws may be altered, amended or repealed
at any regular meeting of the stockholders, or at any special
meeting of stockholders duly called for that purpose, by a
majority vote of the shares represented and entitled to vote at
such meeting; provided that in the notice of such special meeting
notice of such purpose shall be given. Subject to the laws of
the State of Delaware, the certificate of incorporation and these
by-laws, the board of directors may by a majority vote of those
present at any meeting at which a quorum is present amend these
by-laws, or enact such other by-laws as in their judgment may
be advisable for the regulation of the conduct of the affairs of
the corporation.
Secretary's Certificate
I, JAMES M. SHERIDAN, do hereby certify that I am the
Secretary of SPX Corporation, a Delaware corporation, and that
the foregoing is a true and correct copy of the by-laws of said
corporation now in effect.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said corporation this 2nd day of November, 1995.
By /s/ James M. Sheridan
Secretary
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