Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1997
OR
[ ] 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: 1-12754
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1659062
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1900 Gulf Street, Lamar, Missouri 64759-1899
(Address of principal executive offices) (ZIP Code)
(417) 682-3322
(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 [ ]
As of May 12, 1997, 16,802,700 shares of Common Stock of
O'Sullivan Industries Holdings, Inc., par value $1.00 per share,
and associated preferred stock purchase rights were outstanding.
<PAGE>
PART I
Item 1. Financial Statements
O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
March 31, June 30,
Assets: 1997 1996
------ --------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,260 $ 506
Trade receivables, net of allowance for
doubtful accounts of $1,850 and $1,225,
respectively 56,394 53,570
Inventories:
Finished merchandise 25,839 26,031
Work in process 4,864 5,116
Raw materials 9,407 10,334
------- -------
40,110 41,481
Prepaid expenses and other current assets 2,950 2,347
------- -------
Total current assets 109,714 97,904
------- -------
Property, plant and equipment, at cost 118,512 112,828
Less accumulated depreciation and amortization (46,823) (44,838)
------- -------
71,689 67,990
Goodwill, net of accumulated amortization 45,173 46,423
------- --------
$226,576 $212,317
======= =======
Liabilities and Stockholders' Equity:
------------------------------------
Current liabilities:
Accounts payable $ 6,785 $ 11,046
Accrued liabilities 18,502 14,955
Income taxes payable 4,269 767
------- -------
Total current liabilities 29,556 26,768
------- -------
Long-term debt, less current maturities 30,000 30,000
Deferred income taxes 13,934 13,934
Stockholders' equity:
Preferred stock; $1.00 par value, 20,000,000
shares authorized, none issued - -
Common stock; $1.00 par value, 100,000,000
shares authorized, 16,819,950 issued 16,820 16,820
Additional paid-in capital 87,889 87,775
Retained earnings 48,965 37,020
------- -------
153,674 141,615
Less common stock in treasury at cost,
47,017 shares in 1997; none in 1996 (588) -
------- -------
Total stockholders' equity 153,086 141,615
------- -------
Commitments and Contingencies ------- -------
$226,576 $212,317
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Three months Nine months
ended March 31, ended March 31,
--------------- ---------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $77,505 $67,430 $241,224 $221,778
Costs and expenses:
Cost of sales 55,183 52,723 172,724 176,043
Selling, marketing and administrative 15,520 13,438 47,336 39,408
Restructuring Charge - 5,212 - 5,212
Interest, net 519 816 1,834 2,962
------ ------ ------- -------
71,222 72,189 221,894 223,625
------ ------ ------- -------
Income (loss) before income tax provision 6,283 (4,759) 19,330 (1,847)
Income tax provision (benefit) 2,388 (1,817) 7,385 (711)
------ ------- ------ -------
Net income (loss) $ 3,895 $ (2,942) $ 11,945 $(1,136)
====== ======= ====== ======
Earnings (loss) per common share $ 0.23 $ (0.17) $ 0.71 $ (0.07)
====== ====== ====== ======
Weighted average common shares outstanding 16,778 16,820 16,790 16,820
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
March 31,
1997 1996
-------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 11,945 $ (1,136)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization 7,291 7,085
Restructuring charge - 5,212
Changes in current assets and liabilities:
Trade receivables (2,824) 1,927
Inventories 1,371 7,138
Other assets (620) 117
Accounts payable, accrued liabilities
and income taxes payable 2,788 1,335
------- -------
Net cash provided by
operating activities 19,951 21,678
------- -------
Cash flows used for investing activities:
Capital expenditures (9,740) (2,809)
-------- -------
Cash flows used for financing activities:
Repayment of long-term debt - (19,000)
Purchase of common stock (2,100) -
Transfer of common stock to
employee benefit plans 1,643 -
------- -------
Net cash flows provided
(used) for financing
activities (457) (19,000)
------- -------
Net increase in cash and cash equivalents 9,754 (131)
Cash and cash equivalents, beginning of period 506 564
------- -------
Cash and cash equivalents, end of period $ 10,260 $ 433
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Preferred stock Common stock
------------------- ----------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Balance, June 30, 1996 - $ - 16,820 $16,820
Net income
Translation adjustment
Purchase of common stock
Sale of common stock
------ ------ ------ ------
Balance, March 31, 1997 - $ - 16,820 $16,820
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Additional Treasury stock Total
paid-in Retained -------------- stockholders'
capital earnings Shares Dollars equity
--------- -------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1996 $87,775 $37,020 - $ - $141,615
Net income 11,945 11,945
Translation adjustment (17) (17)
Purchase of common stock (202) (2,100) (2,100)
Sale of common stock 131 155 1,512 1,643
------- ------- ----- ------ -------
Balance, March 31, 1997 $87,889 $48,965 (47) $ (588) $153,086
====== ====== ===== ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1997
Note 1 - Basis of Presentation
The unaudited consolidated financial statements included
herein have been prepared by O'Sullivan Industries Holdings, Inc.
and subsidiaries (the "Company") in accordance with generally
accepted accounting principles for interim financial information
and with instructions to Form 10-Q and Article 10 of Regulation
S-X. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The financial
statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended June 30, 1996. The
interim results are not necessarily indicative of the results
which may be expected for a full year.
Note 2 - Summary of Significant Accounting Policies
Accounting for Stock-Based Compensation: In October 1995,
the FASB issued FAS No. 123, Accounting for Stock-Based
Compensation ("FAS 123"), which is effective for fiscal years
beginning after December 15, 1995. Effective July 1, 1996, the
Company adopted FAS 123 establishing financial accounting and
reporting standards for stock-based employee compensation plans.
The pronouncement defines a fair value based method of accounting
for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for
all of their employee stock option compensation plans. However,
it also allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of
accounting as prescribed by Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees ("APB 25").
Entities electing to remain with the intrinsic method of
accounting pursuant to APB 25 must make pro forma disclosures of
net income and earnings per share as if the fair value based
method of accounting defined in FAS 123 had been applied. The
Company will account for stock-based employee compensation plans
under the intrinsic method pursuant to APB 25 and will make the
disclosures in its footnotes as required by FAS 123.
Impairment of Long-Lived Assets: In March 1995, the FASB
issued FAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of ("FAS 121"),
which is effective for fiscal years beginning after December 15,
1995. Effective July 1, 1996, the Company adopted FAS 121, which
requires that long-lived assets (i.e., property, plant and
equipment and goodwill) held and used by an entity be reviewed
for impairment whenever events or changes in circumstances
indicate that the net book value of the asset may not be
recoverable. An impairment loss will be recognized if the sum of
the expected future cash flows (undiscounted and before interest)
from the use of the asset is less than the net book value of the
asset. Generally, the amount of the impairment loss is measured
as the difference between the net book value of the assets and
the estimated fair value of the related assets. The adoption of
this statement had no impact on the Company's results of
operations nor its financial position.
Earnings per Share: In February 1997, the FASB issued FAS
No. 128, Earnings per Share ("FAS 128"), which is effective for
financial statements issued for periods ending after December 15,
1997, including interim periods. Effective December 15, 1997,
the Company will adopt FAS 128, which establishes standards for
computing and presenting earnings per share ("EPS") and will retroactively
restate EPS for the first quarter of fiscal 1998 at that time.
The statement requires dual presentation of basic and diluted EPS on
the face of the income statement for entities with complex capital
structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. Basic EPS excludes
the effect of potentially dilutive securities, while diluted EPS
reflects the potential dilution that would have occurred if
securities or other contracts to issue common stock had been
exercised, converted into, or resulted in the issuance of common
stock that had then shared in the earnings of the entity. The
pro forma EPS amounts shown below have been calculated assuming
the Company had already adopted the provisions of this statement:
<TABLE>
<CAPTION>
3 months ended March 31, 9 months ended March 31,
------------------------ ------------------------
1997 1996 1997 1996
------- ------- ------- ------
<S> <C> <C> <C> <C>
Basic EPS $0.23 $(0.17) $0.71 $(0.07)
Diluted EPS $0.23 $(0.17) $0.70 $(0.07)
</TABLE>
Note 3 - Incentive Stock Plan
On July 1, 1996, the Board of Directors granted, subject to
stockholder approval, options to purchase 625,250 shares of
common stock to the Company's officers and other key employees.
To the extent certain performance objectives regarding (a)
Company quarterly earnings measured against Company goals and
(b) quarterly percentage sales increases measured against a
competitor are met, the options become exercisable in one-third
increments on each of the first three anniversaries of the date
of the grant and expire ten years after the date of the grant.
To the extent the performance objectives are not met, the options
become exercisable on August 10, 2003 and expire September 10,
2003. On November 14, 1996, stockholders approved the amendment
and restatement of the Company's 1994 Incentive Stock Plan and
the Special Option awards under the plan. Accordingly, the
Company will recognize compensation expense equal to the
difference between the exercise price and the fair market value
of the Company's common stock on the date of stockholder
approval, over the appropriate vesting period. During the three
month and nine month periods ended March 31, 1997, the Company
recognized compensation expense of $187,000 and $562,000,
respectively, related to the granting of these options.
Additionally, the Board of Directors granted 260,200 options
that were not based on attaining performance objectives. Full
vesting terms ranged from three to five years with the options
expiring ten years from the date of the grant. The exercise
price for these options is equal to the fair market value on the
date of the grant, July 1, 1996; therefore, no compensation
expense was recognized.
Note 4 - Share Repurchase Program
On May 6, 1997, the Company announced that the Board of
Directors had authorized the purchase of up to five percent of
the outstanding shares of its common stock during the next 24
months. Purchases may be made from time to time in the open
market, in block purchases or in privately negotiated
transactions. The actual number of shares purchased, the timing
of the purchases and the prices paid for the shares will be
dependent upon future market conditions. Funding for the
purchases is expected to come from available working capital and
existing borrowing facilities. The program includes no specific
pricing nor timing targets and may be suspended at any time or
terminated prior to completion. The Company has approximately
16.8 million shares of common stock outstanding.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net sales for the quarter ended March 31, 1997 increased
14.9% to $77.5 million from $67.4 million for the quarter ended
March 31, 1996. Sales for the nine month period ended March 31,
1997 increased 8.8% to $241.2 million from $221.8 million for the
nine months ended March 31, 1996. During the quarter, the
Company's sales increased in all distribution channels except
catalog showroom and OEM. The sales decrease in the catalog
showroom distribution channel was due to the bankruptcy of a
major customer, Best Products Co., Inc. in September 1996. For
the nine month period ended March 31, 1997, the Company had
strong sales increases through the office products, mass
merchants and export channels. These increases were partially
offset by lower sales through the furniture/specialty, catalog
showroom and OEM channels as compared with the first nine months
of fiscal 1996.
On September 4, 1996, two of the Company's office superstore
customers, Office Depot, Inc. and Staples, Inc., announced a
definitive agreement to merge into a single company. On April 9,
1997, the Federal Trade Commission filed suit in the United
States District Court for the District of Columbia to block the
merger, citing antitrust concerns. The merging companies have
announced that they intend to seek an expedited hearing before a
federal judge prior to the May 31, 1997 expiration of the merger
agreement. O'Sullivan sells its products to both Office Depot
and Staples. Management does not currently anticipate that the
completion of the merger, or its cancellation, would impact the
Company's sales to these customers materially; however, there can
be no assurance that future sales will not be materially changed.
Gross profit increased 51.8% to $22.3 million, or 28.8% of
sales, for the three month period ended March 31, 1997, from
$14.7 million, or 21.8% of sales, for the three months ended
March 31, 1996. Gross profit increased 49.8% to $68.5 million,
or 28.4% of sales, for the nine month period ended March 31,
1997, from $45.7 million, or 20.6% of sales for the comparable
prior year period. The Company's higher gross margins were due
to several factors, including: (i) changes in product mix
resulting in the production and sale of higher priced, higher
margin products; (ii) lower material costs for particle board,
laminating papers and packaging materials; and (iii) decreased
overhead on a per unit basis due to increased volume and capacity
utilization rates and improved efficiency.
Selling, marketing and administrative expenses increased to
$15.5 million, or 20.0% of sales, for the three months ended
March 31, 1997, from $13.4 million, or 19.9% of sales, for the
three months ended March 31, 1996. Selling, marketing and
administrative expenses for the nine months ended March 31, 1997,
increased to $47.3 million, or 19.6% of sales, from $39.4
million, or 17.8% of sales, for the comparable prior year period.
The increase in selling, marketing and administrative expenses
for the quarter is due to: (i) certain expenses directly related
to higher sales levels; (ii) higher promotional costs, primarily
retail display; (iii) increased profit sharing and incentive
compensation costs associated with the Company's improved
financial results and compensation expense related to stock
options granted in July 1996; and (iv) increased salaries and
wages due to additional management, marketing and clerical staff.
Selling, marketing and administrative expenses for the nine month
period ended March 31, 1997 increased from the previous year due
to the factors mentioned above as well as higher outbound freight
costs associated with the change in the freight program of a
large customer and bad debt expenses of $0.8 million
($0.5 million after tax) relating to the bankruptcy of Best
Products, both occurring during the first half of the fiscal
year.
In the quarter ended March 31, 1996, the Company incurred a
pre-tax restructuring charge of $5.2 million ($3.2 million
after-tax) principally for the discontinuance and disposal of
certain product lines and certain related assets, for training
costs associated with terminated employees at the Utah facility,
and for costs to modify an international division. The
restructuring charge was part of a program to cut costs and
better utilize working capital, with proceeds from the program
used to reduce debt and for other general corporate purposes.
The disposal of assets and modification of the international
division was completed during the previous twelve months.
Interest expense decreased 36.4% from $0.8 million in the
third quarter of fiscal 1996 to $0.5 million during the third
quarter of fiscal 1997. For the first nine months of fiscal
1997, interest expense totaled $1.8 million compared to $3.0
million during the prior year same period, a decrease of 38.1%.
The decrease was due to reduced borrowings caused by lower
working capital requirements and increased cash flow from
operations.
Liquidity and Capital Resources
As of March 31, 1997, the Company had cash and cash
equivalents amounting to $10.3 million and net working capital of
$80.2 million.
Cash provided by operating activities during the nine month
period ended March 31, 1997, amounted to $20.0 million compared
to cash provided by operating activities of $21.7 million in the
comparable prior year period. The decrease in cash flows from
operations was due in large part to a $7.1 million decrease in
inventories and a $2 million decrease in accounts receivable in
fiscal 1996, offset by improved profitability in the nine months
ended March 31, 1997 compared to 1996. The slight decrease in
inventories and the increase in accounts receivable is due
primarily to improved operations. Capital expenditures for the
nine months ended March 31, 1997 totaled approximately
$9.7 million, which were used for the purchase and installation
of new machinery and equipment and the installation of new
management systems and related hardware and software.
At March 31, 1997, the Company had long-term debt outstanding
of $30.0 million; $10.0 million of industrial revenue bonds that
bear interest at 8.25% and mature on October 1, 2008; and $20.0
million in private placement debt with certain insurance
companies at 8.01% due fiscal 2003. The Company also has a $30
million Revolving Credit Agreement with two banks that expires on
December 31, 1997. At March 31, 1997 there were no borrowings
under the revolving line of credit. The Credit Agreement also
includes a $10.8 million standby letter of credit established in
favor of Tandy Corporation. The letter of credit indemnifies
Tandy Corporation from its obligations as guarantor of the $10
million industrial revenue bonds for which a subsidiary of the
Company is the obligor. Tandy can draw against the standby
letter of credit only in the event that it must pay any amount
with respect to the bonds. Debt as a percentage of total
capitalization was 16.4% and 18.5% at March 31, 1997 and
March 31, 1996, respectively. The lower debt-to-capital
relationship reflects improved operations and lower debt levels.
The Company's announced stock repurchase program may partially
offset the impact of improved operations in this ratio.
On May 6, 1997, the Company announced that the Board of
Directors had authorized the purchase of up to five percent of
the outstanding shares of its common stock during the next 24
months. The actual number of shares purchased, the timing of the
purchases and the prices paid for the shares will be dependent
upon future market conditions. Funding for the purchases is
expected to come from available working capital and existing
borrowing facilities. The program includes no specific pricing
nor timing targets and may be suspended at any time or terminated
prior to completion. The Company has approximately 16.8 million
shares of common stock outstanding.
The Company believes that cash flow from operations, existing
cash and current unused balances under existing credit
agreements, will be sufficient to fund the Company's operations
throughout the remainder of fiscal 1997, including capital
expenditures, which are currently estimated at approximately $3.0
to $4.0 million during the last quarter of the fiscal year.
The Company currently is in compliance with all covenants of
its debt agreements.
Seasonality
The Company generally experiences higher sales levels in the
first and second quarters of the fiscal year in anticipation of
the holiday selling season.
Recently Issued Accounting Standards
In February 1997, the FASB issued FAS No. 128, Earnings per
Share ("FAS 128"), which is effective for financial statements
issued for periods ending after December 15, 1997, including
interim periods. Effective December 15, 1997, the Company will
adopt FAS 128, which establishes standards for computing and
presenting earnings per share ("EPS") and will retroactively
restate EPS for the first quarter of fiscal 1998 at that time.
The statement requires dual presentation of basic and diluted EPS
on the face of the income statement for entities with complex
capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. Basic EPS excludes
the effect of potentially dilutive securities, while diluted EPS
reflects the potential dilution that would have occurred if
securities or other contracts to issue common stock had been
exercised, converted into, or resulted in the issuance of common
stock that had then shared in the earnings of the entity. The
pro forma EPS amounts shown below have been calculated assuming
the Company had already adopted the provisions of this statement:
<TABLE>
<CAPTION>
3 months ended March 31, 9 months ended March 31,
------------------------ ------------------------
1997 1996 1997 1996
------- ------- ------- ------
<S> <C> <C> <C> <C>
Basic EPS $0.23 $(0.17) $0.71 $(0.07)
Diluted EPS $0.23 $(0.17) $0.70 $(0.07)
</TABLE>
PART II OTHER INFORMATION
Item 5. Other Information.
Certain portions of this Report, and particularly the Notes
to the Consolidated Financial Statements and the Management's
Discussion and Analysis of Financial Condition and Results of
Operation in Part I of this report contain forward-looking
statements. These statements can be identified by the use of
future tense or dates or terms such as "believe," "expect" or
"anticipate". Important factors could cause results to differ
materially from those anticipated by some of the statements made
in this report. Some of the factors include, among other things,
changes from anticipated levels of sales, whether due to future
national or regional economic and competitive conditions,
customer acceptance of existing and new products or otherwise,
pricing pressures due to excess capacity, raw material cost
increases, transportation cost increases, the inability of a
major customer to meet its obligations, loss of significant
customers in connection with a merger or acquisition or
otherwise, actions of current or new competitors, increased
advertising costs associated with promotional efforts, change of
tax rates, change of interest rates, pending or new litigation,
future business decisions and other uncertainties, all of which
are difficult to predict and many of which are beyond the control
of the Company.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2 Amended and Restated Stock Exchange Agreement dated as of
February 1, 1994 between O'Sullivan Industries Holdings, Inc.
(the "Company") and TE Electronics Inc. ("TE") (incorporated
by reference from Exhibit 2 to Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994 (File No. 1-12754))
3.1 & 4.1 Certificate of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 to Registration Statement on
Form S-1 (File No. 33-72120))
3.2 & 4.2 Bylaws of the Company (incorporated by reference from
Exhibit 3.2 to Registration Statement on Form S-1
(File No. 33-72120))
4.3 Specimen Stock Certificate of the Company (incorporated by
reference from Exhibit 4.1 to Amendment No. 3 to
Registration Statement on Form S-1 (File No. 33-72120))
4.4 Rights Agreement dated as of February 1, 1994 between the
Company and the First National Bank of Boston,
as Rights Agent (incorporated by reference from
Exhibit 4.4 to Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 (File No. 1-12754))
10.1 O'Sullivan Industries Holdings, Inc. Stock Plan for Directors
10.2 O'Sullivan Industries Holdings, Inc. Deferred Compensation
Plan
10.3 First Amendment to O'Sullivan Industries Holdings, Inc.
Savings and Profit Sharing Plan
11 Statement of Computation of Earnings per Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
None
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.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Date: May 13, 1997 Daniel F. O'Sullivan
Chairman and Chief Executive Officer
Date: May 13, 1997 Terry L. Crump
Vice President - Finance
and Chief Financial Officer
(Principal Financial and Accounting
Officer)
<PAGE>
EXHIBIT 10.1
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
STOCK PLAN FOR DIRECTORS
1. NAME OF PLAN. This plan shall be known as the
"O'Sullivan Industries Holdings, Inc. Stock Plan For Directors"
and is hereinafter referred to as the "Plan."
2. EFFECTIVE DATE AND TERM. The Plan shall be effective as
of July 1, 1997, subject, however, to the approval of the
stockholders of O'Sullivan Industries Holdings, Inc., a Delaware
corporation (the "Company"), at the Company's 1997 Annual Meeting
of Stockholders (the "1997 Annual Meeting"). If the Plan is not
approved by the stockholders of the Company at the 1997 Annual
Meeting, it shall be automatically terminated, and all amounts
subject to this Plan shall be paid to participating directors
pursuant to Section 13. Upon its approval by the stockholders of
the Company, the Plan shall remain in effect until amended or
terminated by action of the Board of Directors (the "Board") of
the Company.
3. ELIGIBLE PARTICIPANTS. Each member of the Board from
time to time who is not a full-time employee of the Company or
any of its subsidiaries (the "Participants") shall be eligible to
participate in the Plan.
4. ELECTION TO RECEIVE SHARES. Each Participant shall have
the right to elect, on forms provided by the Company, to receive
up to one hundred percent of his annual retainer and Board and
Committee meeting fees (collectively, "Compensation") for
services on the Board and committees thereof which would
otherwise be payable in cash, in the form of shares of common
stock, par value $1.00 per share, of the Company ("Common
Stock"). Any part of the Compensation elected to be paid in
Common Stock shall be payable in equal quarterly installments on
the first day of the month next following the end of each
calendar quarter for services on the Board in such calendar
quarter. The election to receive Compensation in the form of
Common Stock must be made prior to the calendar year in which the
retainer and fees are to be paid in shares; provided, however,
that Participants may elect to participate in the Plan for the
six months ended December 31, 1997 by an election made prior to
June 1, 1997. Common Stock receivable under this Section may be
made subject to the restrictions set forth in Section 6 at the
election of the Participant made at the same time the Participant
elects to receive Common Stock under this Section. Elections
under this Section shall remain in effect from year to year until
changed by the Participant. No change shall be effective until
the next calendar year. Common Stock otherwise receivable under
the Plan prior to the 1997 Annual Meeting shall be issued at the
times specified and shall be subject to the provisions of
Section 13 of the Plan.
5. PURCHASE PRICE OF SHARES. The number of shares to be issued
at the time of payment shall be equal to the amount of Compensation
elected to be taken in Common Stock divided by the Average Fair Market Value
for such quarter. In no event shall the purchase price for
Common Stock under this Agreement be less than the par value of
the Common Stock so purchased.
6. RESTRICTIONS ON SHARES. The Common Stock elected to be
covered by this Section 6 shall be restricted and may not be
sold, hypothecated or transferred (including, without limitation,
transfer by gift or donation) except that such restrictions shall
lapse upon:
(a) Death of the Participant; or
(b) Disability of the Participant preventing continued
service on the Board; or
(c) Retirement of the Participant from service as a Director
of the Company at age 55 or older; or
(d) Involuntary termination of service as a Director; or
(e) A vote of a majority of the members of the Board other
than the Participant; or
(f) A Change in Control as defined in Exhibit A attached
hereto.
If a Participant ceases to be a Director of the Company for
any other reason, the Common Stock issued to such Director
subject to this Section shall be forfeited and revert to the
Company.
The certificates for Common Stock subject to this Section
shall be held by the Company until lapse of restrictions as
provided in this Section; provided, however, the Participant
shall be entitled to all voting, dividend and distribution rights
for such Common Stock.
Participants shall have the right to direct in writing, on
forms provided by the Company, that upon lapse of restrictions in
accordance with subsections (a) through (f) above, the Common
Stock held by such Participant under the Plan shall be
transferred and delivered by the Company to the individuals or
entities as specified by the Participant in such form.
7. FAIR MARKET VALUE and AVERAGE FAIR MARKET VALUE. (a) The
term "Fair Market Value" shall mean the closing price of a share
of Common Stock in consolidated trading as reported by the
New York Stock Exchange or, if the New York Stock Exchange does
not provide such prices, as in The Wall Street Journal.
(b) The Term "Average Fair Market Value" for a calendar
quarter shall mean the average of the Fair Market Values on the
last trading day of each month in the calendar quarter.
8. FRACTIONS OF SHARES. Whenever under the terms of the
Plan a fractional share of Common Stock would be required to be
issued, the number of shares shall be rounded up to the next
highest whole number of shares.
9. WITHHOLDING TAXES. Whenever under the Plan Common Stock
is to be issued or delivered to a Participant, the Company shall
have the right to require the recipient to remit to the Company
an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the issuance or delivery of
any certificate or certificates for such shares.
10. GENERAL RESTRICTION. The issuance of Common Stock or
the delivery of certificates for Common Stock to recipients
hereunder shall be subject to the requirement that, if at any
time the Vice President, General Counsel and Secretary of the
Company shall reasonably determine, in his discretion, that the
listing, registration or qualification of such Common Stock upon
any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with,
such issuance or delivery thereunder, such issuance or delivery
shall not take place unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not reasonably acceptable to the
Vice President, General Counsel and Secretary.
11. AUTHORIZED OR TREASURY SHARES. Common Stock issuable
under the Plan may be authorized but unissued shares or may be
treasury shares as shall be determined from time to time by the
Vice President, General Counsel and Secretary of the Company.
12. RULE 16b-3. It is the intention that the Plan and the
operation thereof qualify for the exemption provisions contained
in Rule 16b-3 adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, as in
effect from time to time or any successor rule ("Rule 16b-3").
To the extent that the implementation or operation of any
provision hereof does not comply with the requirements of
Rule 16b-3 as applicable to the Plan, such provision shall be
inoperative or shall be interpreted, to the extent practicable,
to apply in a manner not inconsistent with the requirements of
Rule 16b-3.
13. COMMON STOCK RECEIVABLE PRIOR TO THE COMPANY'S 1997
ANNUAL MEETING OF STOCKHOLDERS. Common Stock receivable prior to
the 1997 Annual Meeting shall not be delivered to the Directors
participating in the Plan or to escrow for Directors' restricted
stock accounts unless and until the Plan is approved at the 1997
Annual Meeting. If the Plan is approved, the Common Stock
receivable under the Plan shall be delivered in accordance with
Section 5 or Section 6, whichever is applicable. If the Plan is
not so approved, no Common Stock shall be issued under the Plan,
and any retainers and fees which were not paid in accordance with
the Plan shall be delivered to the Directors entitled thereto,
with interest on such amounts payable at the prime rate as
published in The Wall Street Journal.
IN WITNESS WHEREOF, this Plan has been duly executed as of
the 6th day of May, 1997.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: Daniel F. O'Sullivan
Chairman of the Board and
Chief Executive Officer
ATTEST:
Rowland H. Geddie, III
Vice President, General Counsel and
Secretary
<PAGE>
EXHIBIT A to 10-Q EXHIBIT 10.1
CHANGE IN CONTROL
For purposes of this Plan, a "Change in Control" shall mean
any of the following events:
(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by
any "Person" (as the term person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act")), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 15% or more of the combined
voting power of the Company's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
Control has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an acquisition by (1) an
employee benefit plan (or a trust forming a part thereof)
maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by
the Company (a "Subsidiary"); (2) the Company or any Subsidiary;
or (3) any Person in connection with a "Non-Control Transaction"
(as hereinafter defined).
(b) The individuals who, as of February 1, 1994, are members
of the Board (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board; provided, however,
that if the election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the
Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or reorganization involving the
Company, unless
(i) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own,
directly or indirectly immediately following such merger,
consolidation or reorganization, at least 60% of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
and
(ii) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation, and
(iii) no Person (other than the Company, any Subsidiary,
any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any
Subsidiary, or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of 15%
or more of the then outstanding Voting Securities) has Beneficial
Ownership of 15% or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities, and
(iv) a transaction described in clauses (i) through
(iii) shall herein be referred to as a "Non-Control Transaction";
(2) A complete liquidation or dissolution of the Company;
or
(3) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject
Person") acquired Beneficial Ownership of more than the permitted
amount of the outstanding Voting Securities as a result of the
acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases
the proportional number of shares Beneficially Owned by the
Subject Person, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(d) Notwithstanding anything contained in this Plan to the
contrary, if the Director's service is terminated following
the Effective Date but within one (1) year prior to a Change in
Control and the Executive reasonably demonstrates that such
termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to
effect a Change in Control and who effectuates a Change in
Control (a "Third Party") or (ii) otherwise occurred in
connection with, or in anticipation of, a Change in Control which
actually occurs, then for all purposes of this Plan, the date of
a Change in Control with respect to the Director shall mean the
date immediately prior to the date of such termination of the
Director's service.
<PAGE>
EXHIBIT 10.2
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
DEFERRED COMPENSATION PLAN
THIS PLAN is hereby established and maintained by O'SULLIVAN
INDUSTRIES HOLDINGS, INC., a corporation organized under the laws
of the State of Delaware, for the purpose of providing deferred
compensation benefits to a select group of management and highly
compensated employees.
ARTICLE I--DEFINITIONS
1.1 "Accounts" shall mean the Elective Deferrals
Contributions Account, Matching Contributions Account and Profit
Sharing Contributions Account, collectively.
1.2 "Accounting Date" shall mean June 30, each year.
1.3 "Administrator" shall mean the person appointed by the
Compensation Committee to administer the Plan.
1.4 "Allocation Date" shall have the meaning set forth in
Section 4.2.
1.5 "Beneficiary" shall mean a person designated by a
Participant who is or may become entitled to a benefit under the
Plan.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.7 "Company" shall mean O'Sullivan Industries Holdings,
Inc., and each of its subsidiary companies which is a member of
the same controlled group as O'Sullivan Industries Holdings, Inc.
within the meaning of Section 1563 of the Code and whose
participation in the Plan is approved by the Compensation
Committee.
1.8 "Compensation" shall mean Compensation as defined in
Section 2.04 of the Savings Plan, except that (a) any limitations
imposed by Section 401(a)(17) of the Code shall not apply and
(b) "Compensation" for purposes of Section 3.3 of this Plan shall
include any amounts deferred pursuant to Section 3.1 of this
Plan.
1.9 "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors of O'Sullivan Industries
Holdings, Inc.
1.10 "Elective Deferral Contributions" shall mean the salary
and bonus reduction amount credited for each Participant pursuant
to Section 3.1.
1.11 "Elective Deferral Contributions Account" shall mean
the recordkeeping account established for maintaining a record of
the Company's obligation to each Participant pursuant to Section
3.1.
1.12 "Matching Contributions" shall mean the matching
amounts credited by the Company pursuant to Section 3.2.
1.13 "Matching Contributions Account" shall mean the
recordkeeping account established for maintaining a record of the
Company's obligation to each Participant pursuant to Section 3.2.
1.14 "Participant" is an employee of the Company who is
eligible to participate in the Plan under Section 2.1.
1.15 "Plan" shall mean this deferred compensation plan
established and continued by the Company in the form of this
Plan, designated as the "O'Sullivan Industries Holdings, Inc.
Deferred Compensation Plan."
1.16 "Plan Year" shall mean the year ending June 30 of each
year, except that the first Plan Year shall be a short year
beginning April 1, 1997, and ending June 30, 1997. During the
first Plan Year, only Profit Sharing Contributions (and no
Elective Deferral or Matching Contributions) shall be made to the
Plan.
1.17 "Profit Sharing Contributions" shall mean the
discretionary amounts credited by the Company pursuant to Section
3.3.
1.18 "Profit Sharing Contributions Account" shall mean the
recordkeeping account established for maintaining a record of the
Company's obligation to each Participant pursuant to Section 3.3.
1.19 "Savings Plan" shall mean the O'Sullivan Industries
Holdings, Inc. Savings and Profit Sharing Plan, as amended from
time to time.
ARTICLE II--PARTICIPATION
2.1 Participation. Participation in the Plan shall be
limited to any employee of the Company who is a "highly
compensated employee" within the meaning of Section 414(q) of the
Code for the Plan Year.
2.2 Limitations Upon Participation. The Company intends this
Plan to be limited to a "select group of management or highly
compensated employees" as such term is used in Sections 201, 301
and 401 of ERISA. If at any time the Compensation Committee
determines that a Participant fails to be a member of a select
group of management or highly compensated employee, his
participation in this Plan shall cease, and his Accounts shall be
paid to him in a lump sum at the end of the calendar quarter in
which his participation ceases.
ARTICLE III--CONTRIBUTIONS
3.1 Elective Deferral Contributions. A Participant who, for
the Plan Year at issue, has elected to make to the Savings Plan
the maximum elective deferrals permitted for highly compensated
employees for such Plan Year, shall be eligible to make Elective
Deferral Contributions under this Plan. At least 15 days prior
to the beginning of each Plan Year, a Participant who is eligible
to make Elective Deferral Contributions to the Plan shall file an
election with the Administrator, specifying the percentage of his
regular salary for such Plan Year and the percentage of bonus to
be earned in such Plan Year (although not paid until the next
succeeding Plan Year) that he has elected to contribute to the
Plan. In the first Plan Year in which an individual becomes a
Participant, the new Participant may make an election to defer
compensation for services to be performed subsequent to the
election within 30 days after he first becomes eligible to
participate in the Plan.
A Participant may file separate elections with respect to his
regular salary and with respect to any bonus. A Participant's
Elective Deferral Contribution shall not be less than 1%
nor more than 15% of his regular salary, in multiples of 1%, and
the Participant may specify separate percentages of his regular
salary below and above the applicable dollar amount under Section
401(a)(17) of the Code for the Plan Year. A Participant's
Elective Deferral Contribution shall be not less than 5% nor more
than 50% of any bonus, in multiples of 1%, and the Participant
may specify separate percentages of his bonus below and above the
applicable dollar amount under Section 401(a)(17) of the Code for
the Plan Year.
Any Elective Deferral Contributions made by a Participant for
a Plan Year shall be credited to the Participant's Elective
Deferral Contributions Account as of the last day of the calendar
month in which the related compensation is paid to the
Participant.
3.2 Matching Contributions. For each Plan Year the Company
shall make a Matching Contribution for each Participant who has
elected to make Elective Deferral Contributions under this Plan.
The Matching Contribution shall be equal to the amount by which
(a) below exceeds (b) below, plus the amount by which (c) below
exceeds (d) below:
(a) 50% of the first 5% of Compensation deferred under this
Plan; and
(b) The matching contributions (disregarding any
discretionary matching contributions) made on behalf of the
Participant under the Savings Plan, but assuming for this
purpose that the Participant had made the maximum elective
deferrals to the Savings Plan permitted by Sections
401(k)(3), 401(m) and 402(g) of the Code;
(c) A percentage of the Participant's compensation equal to
the percentage of the Participant's compensation matched
under the Savings Plan for the Plan Year less any Matching
Contribution provided above; and
(d) The discretionary matching contribution made on behalf
of the Participant under the Savings Plan for the Plan Year
but assuming for this purpose that the Participant made the
elective maximum deferrals to the Savings Plan permitted by
Sections 401(k)(3), 401(m) and 402(g) of the Code.
Any Matching Contribution made on behalf of a Participant for
a Plan Year under subparagraphs (a) and (b) above shall be
credited to such Participant's Matching Contributions Account as
of the last day of the calendar month in which the related
Elective Deferral Contribution is made to this Plan. Any
Matching Contribution made on behalf of a Participant for a Plan
Year under subparagraphs (c) and (d) above shall be credited to
such Participant's Matching Contributions Account as of the last
day of the Plan Year.
3.3 Profit Sharing Contributions. For each Plan Year, the
Company shall make a Profit Sharing Contribution on behalf of
each Participant equal to the amount by which (a) below exceeds
(b) below:
(a) The amount of any profit sharing contribution which the
Participant would have been entitled to receive under the Savings
Plan, except that the definition of Compensation in Section 1.8
of the Plan shall be used and any limitations imposed on such
contributions under Section 401(a)(17) or 415 of the Code shall
be disregarded; and
(b) The amount of the annual profit sharing contribution
which the Participant is entitled to receive under the Savings
Plan as limited by the definition of Compensation in Section 2.04
of the Savings Plan and Section 401(a)(17) and 415 of the Code.
Any Profit Sharing Contribution made on behalf of a
Participant for a Plan Year shall be credited to such
Participant's Profit Sharing Contribution Account as of the date
that the Company actually contributes the Profit Sharing
Contribution to the Savings Plan for the Plan Year.
ARTICLE IV--INVESTMENT OF ACCOUNTS
4.1 Investment Alternatives. Each Participant may elect to
have his Elective Deferral Contributions Account and his Profit
Sharing Contributions Account allocated among the following three
investment alternatives. The investment percentage for each
investment alternative selected by the Participant must be a
multiple of 25%.
(a) Phantom Stock Units. The amount owed by the Company
with respect to any amount allocated to the Phantom Stock
Unit investment shall be determined as if such amount had
been invested in shares of common stock of O'Sullivan
Industries Holdings, Inc. Amounts invested shall be credited
with earnings (whether gains or losses) equal to the total
return (changes in share price plus dividends) of the common
stock of O'Sullivan Industries Holdings, Inc. Earnings shall
be credited to Accounts as of the last day of each calendar
quarter based on changes in the share price, plus dividends
during such quarter.
(b) Fixed Interest Rate. The amount owed by the Company
with respect to any amount allocated to the Fixed Interest
Rate investment shall be determined by crediting earnings on
such amount (whether gains or losses) equal to the percentage
changes in the PIMCO Total Return II Fund, assuming
reinvestment of all dividends and distributions. Earnings
shall be credited to Accounts as of the last day of each
calendar quarter.
(c) S & P 500. The amount owed by the Company with respect
to any amount allocated to the S & P 500 investment shall be
determined by crediting earnings on such amount (whether
gains or losses) equal to the percentage changes in the
Vanguard Index Trust 500 Portfolio fund, assuming
reinvestment of all dividends and distributions. Earnings
shall be credited to Accounts as of the last day of such
calendar quarter.
The Participant shall make his initial investment selection
by filing a form with the Administrator at least 15 days prior to
the effective date of his participation.
4.2 Transfers Between Investments. The Participant's
investment direction shall remain in effect unless and until the
Participant replaces the direction in accordance with this
Section 4.2. Participants may change the percentages of the
future contributions credited to their Elective Deferral
Contributions Account and Profit Sharing Contributions Accounts
or the percentages of their existing Elective Deferral
Contributions Accounts and Profit Sharing Contributions Accounts
allocated among the investment alternatives as of January 1 and
July 1 of each Plan Year (each, an "Allocation Date") by filing a
form with the Administrator. Any election must be filed on or
before 15 days prior to the effective date. Notwithstanding the
foregoing, the following restrictions apply with respect to
Officers:
(a) In the event a Participant who is an Officer shall make
an election to change the investment of the existing balances
in his Accounts in a manner that results in a transfer of
part or all of such balances to the Phantom Stock Unit
investment from one or more other investments, such election
must be made at least 6 months after the date of any previous
election which resulted in a transfer or cash distribution of
part or all of such Officer's investment from any account or
fund consisting of, or based on the value of, equity
securities of the Company under this Plan or any other
employee benefit plan of the Company.
(b) In the event a Participant who is an Officer shall make
an election:
(i) to receive a cash distribution which results in a
reduction of the investment of any of his Accounts in the
Phantom Stock Unit investment; or
(ii) to change the investment of the existing balances
in his Accounts in a manner that results in a transfer of
part or all of such balances from the Phantom Stock Unit
investment to one or more other investments;
such election must be made at least 6 months after the date
of any previous election which resulted in a transfer of part
or all of such Officer's investment into any account or fund
consisting of, or based on the value of, equity securities of
the Company under this Plan or any other employee benefit
plan of the Company.
For the purpose of this Section 4.2, "Officer" shall, with
respect to a Participant have the meaning ascribed to such term
in Title 17, Section 240.16a-1(f) of the Code of Federal
Regulations or any subsequent law or regulation of similar
import.
4.3 Investment of Matching Contributions Account. Matching
Contribution Accounts shall be invested in the Phantom Stock Unit
investment. Earnings shall be credited to the Matching
Contributions Accounts as described in Section 4.1(a) above.
ARTICLE V--DISTRIBUTIONS
5.1 Limitation on Distributions. Distributions shall be made
to Participants only as permitted under this Article V.
5.2 Termination of Employment for Other Than Death or
Disability. If the Participant's employment with the Company is
terminated for any reason (including retirement) other than death
or disability, the Participant's Accounts shall be paid to him as
follows. The Participant shall receive his Elective Deferral
Contributions Account and Matching Contributions Account, as
elected in accordance with Section 5.6, commencing as soon as
practicable after the end of the calendar quarter in which the
termination occurs. The Participant shall receive the percentage
of his Profit Sharing Contributions Account equal to such
Participant's vested percentage of his Profit Sharing Account
under the Savings Plan, as elected in accordance with Section
5.6, commencing as soon as practicable after the end of the
calendar quarter in which the termination occurs.
5.3 Disability. If the Participant's employment with the
Company is terminated because of disability, the Participant's
Accounts shall be paid to him, as elected in accordance with
Section 5.6, commencing as soon as practicable after the end of
the calendar quarter in which he is determined to be disabled.
For purposes of this Plan, a Participant shall be considered
disabled if he is determined to be disabled under the Company's
Long-Term Disability Plan.
5.4 Death. If the Participant's employment with the Company
is terminated because of death, the Participant's Accounts shall
be paid to his Beneficiary, as elected in accordance with Section
5.6, commencing as soon as practicable after the end of the
calendar quarter in which he dies.
5.5 Distribution of Elective Deferrals. Prior to the
beginning of each Plan Year, at the time that the Participant
elects to make Elective Deferral Contributions for such Plan
Year, the Participant may elect to receive a distribution of any
such Elective Deferral Contributions that are not eligible for a
Matching Contribution under Section 3.2, at any time after the
end of the fifth Plan Year following the Plan Year during which
such election is made. A distribution shall be made in cash
except that with respect to any amount credited to the Phantom
Stock Unit investment at the time of distribution, the
Participant or Beneficiary may elect to receive his distribution
in the form of whole shares of common stock of O'Sullivan
Industries Holdings, Inc. provided, however, that the
restrictions specified in Section 4.2 shall apply to such latter
election by an Officer, as defined in Section 4.2. Any election
made pursuant to this Section 5.5 shall be made on a form
prescribed by the Administrator and shall be irrevocable once
made.
5.6 Method of Payment. A Participant may elect distribution
of the Accounts in a lump sum or in installments over a period of
years (not to exceed ten). Any such election must be made no
later than twelve months prior to the time a Participant first
becomes eligible to receive a distribution of his Accounts under
the Plan. If the Participant elects installment payments, the
unpaid amount shall continue to be invested as provided in
Article IV and shall continue to accrue earnings until paid. A
distribution shall be made in cash except that with respect to
any amount credited to the Phantom Stock Unit investment at the
time of distribution, the Participant or his Beneficiary may
elect to receive his distribution in the form of whole shares of
common stock of O'Sullivan Industries Holdings, Inc., provided,
however, that the restrictions specified in Section 4.2 shall
apply to such latter election by an officer, as defined in
Section 4.2. Any election pursuant to this Section 5.6 shall be
made on a form prescribed by the Administrator and shall be
irrevocable once made.
5.7 Financial Hardship. If the Compensation Committee in its
sole discretion permits, a Participant may elect to receive a
distribution from his Elective Deferrals Account if he has
incurred an "unforeseeable emergency." For purposes of this
Section 5.7, an "unforeseeable emergency" is an unanticipated
emergency caused by an event beyond the control of the
Participant that would result in a severe financial hardship to
the Participant if the distribution were not permitted. Any
distribution on account of a financial hardship shall be made in
a lump sum. Any hardship withdrawal must be limited to the
amount necessary to alleviate the emergency. Notwithstanding
the foregoing, the restrictions specified in Section 4.2 shall
apply to the election by an Officer, as defined in Section 4.2,
to receive a distribution under this Section 5.7.
ARTICLE VI--MISCELLANEOUS
6.1 No Trust. Nothing contained in this Plan and no action
taken pursuant to the provisions of the Plan shall create or be
construed to create a trust of any kind or a fiduciary
relationship between the Company and the Participant, his
Beneficiary or any other person.
6.2 Source of Payments. The Participant, Beneficiary and any
other person or persons having or claiming a right to payments
hereunder or to any interest in this Plan shall rely solely on
the unsecured promise of the Company set forth herein and nothing
in this Plan shall be construed to give the Participant,
Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve,
account or property of any kind whatsoever owned by the Company
or in which it may have any right, title or interest now or in
the future, but the Participant or Beneficiary shall have the
right to enforce his claim against the Company in the same manner
as any unsecured creditor of the Company.
The Plan constitutes a mere promise by the Company to make
benefit payments in the future. It is the intention of the
Company that the Plan be unfunded for purposes of federal income
tax law and for purposes of Title I of ERISA.
6.3 No Assignment. The right of the Participant or any other
person to the payment of benefits under this Plan is not subject
in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by
creditors.
6.4 Beneficiary. The Beneficiary referred to in this Plan
may be designated or changed by the Participant (without the
consent of any prior Beneficiary) on a form provided by the
Administrator and delivered to the Company before his death. If
no such Beneficiary shall have been designated, or if no
designated Beneficiary shall survive the Participant, the
Participant's Accounts shall be payable to the Participant's
estate.
6.5 Incapacity of Participant or Beneficiary. If the
Compensation Committee shall find that any person to whom any
payment is payable under this Plan is unable to care for his
affairs because of illness or accident or is a minor, any payment
due (unless a prior claim therefor shall have been made by duly
appointed guardian, committee or other legal representative) may
be paid to the spouse, a child, a parent or a brother or sister,
or to any person deemed by the Compensation Committee to have
incurred expense for such person otherwise entitled to payment in
accordance with the applicable provisions of Article V above.
Any such payment shall be a complete discharge of the liabilities
of the Company under this Plan.
6.6 Claims Procedures. An initial claim for benefits under
the Plan must be made by the Participant or his Beneficiary in
accordance with the terms of the Plan. Not later than 90 days
after receipt of such a claim, the Administrator will render a
written decision on the claim to the claimant, unless special
circumstances require the extension of such 90-day period. If
such extension is necessary, the Administrator shall provide the
Participant or the Participant's beneficiary with written
notification of such extension before the expiration of the
initial 90-day period. Such notice shall specify the reason or
reasons for such extension and the date by which a final decision
can be expected. In no event shall such extension exceed a
period of 90 days from the end of the initial 90-day period. In
the event the Administrator denies the claim of a Participant or
the beneficiary in whole or in part, the Administrator's written
notification shall specify, in a manner calculated to be
understood by the claimant, the reason for the denial; a
reference to the Plan or other document or form that is the basis
for the denial; a description of any additional material or
information necessary for the claimant to perfect the claim; an
explanation as to why such information or material is necessary;
and an explanation of the applicable claims procedure. Should
the claim be denied in whole or in part and should the claimant
be dissatisfied with the Administrator's disposition of the
claim, the claimant may have a full and fair review of the claim
by the Compensation Committee upon written request therefor
submitted by the claimant or the claimant's duly authorized
representative and received by the Compensation Committee within
60 days after the claimant receives written notification that the
claim has been denied. In connection with such review, the
claimant or the claimant's duly authorized representative shall
be entitled to review pertinent documents and submit the
claimant's views as to the issues, in writing. The Compensation
Committee shall act to deny or accept the claim within 60 days
after the receipt of the claimant's written request for review
unless special circumstances require the extension of such 60-day
period. If such extension is necessary, the Compensation
Committee shall provide the claimant with written notification of
such extension before the expiration of such initial 60-day
period. In all events, the Compensation Committee shall act to
deny or accept the claim within 120 days of the receipt of the
claimant's written request for review. The action of the
Compensation Committee shall be in the form of a written notice
to the claimant and its contents shall include all of the
requirements for action on the original claim. In no event may a
claimant commence legal action for benefits the claimant believes
are due the claimant until the claimant has exhausted all of the
remedies and procedures afforded the claimant by this Section
6.6. Any claims which the claimant does not in good faith pursue
through the review stage of the procedure shall be treated as
having been irrevocably waived.
6.7 Compensation Committee Powers and Liabilities. (a) The
Plan shall be interpreted by the Compensation Committee in
accordance with the terms of the Plan and their intended
meanings. However, the Compensation Committee shall have the
discretion to make any findings of fact needed in the
administration of the Plan, and shall have the discretion to
interpret or construe ambiguous, unclear or implied (but
omitted) terms in any fashion the Compensation Committee
deems to be appropriate in its sole judgment. The validity
of any such finding of fact, interpretation, construction or
decision shall not be given de novo review if challenged in
court or in any other forum, and shall be upheld unless
clearly arbitrary or capricious.
(b) To the extent that the Compensation Committee or the
Administrator has been granted discretionary authority under
the Plan, the prior exercise of such authority shall not
obligate any of them to exercise its authority in a like
fashion thereafter.
(c) If, due to errors in drafting, any Plan provision does
not accurately reflect its intended meaning, as demonstrated
by consistent interpretations or other evidence of intent, or
as determined by the Compensation Committee in its sole and
exclusive judgment, the provision shall be considered
ambiguous and shall be interpreted by the Compensation
Committee in a fashion consistent with its intent, as
determined by the Compensation Committee. The Compensation
Committee shall amend the Plan retroactively to cure any such
ambiguity, notwithstanding anything in the Plan to the
contrary.
(d) This Section 6.7 may not be invoked by any person to
require the Plan to be interpreted in a manner which is
inconsistent with its interpretation by the Compensation
Committee. All actions taken and all determinations made in
good faith by the Compensation Committee shall be final and
binding upon all persons claiming any interest in or under
the Plan.
6.8 Benefits Not Treated As Compensation. Any benefits
payable under this Plan shall not be deemed salary or other
compensation to the Participant for the purpose of computing
benefits to which he may be entitled under any profit sharing
plan, pension plan or any other arrangement of the Company for
the benefit of its employees.
6.9 Governing Law. This Plan shall be construed in
accordance with and governed by the law of the State of Missouri
to the extent not preempted by federal law.
6.10 Merger. The Company agrees it will not be a party to
any merger, consolidation or reorganization, unless and until its
obligations hereunder shall be assumed by its successor or
successors.
6.11 Amendment. The Company reserves the right to amend or
terminate the Plan at any time. Any such termination shall be
effective as of the end of the calendar quarter during which
written notification is given to each Participant or as of such
later date specified in the written notification. Any amounts
properly credited to the Accounts of any Participant shall remain
subject to the provisions of the Plan after termination and
distribution, but payment thereof may be accelerated by the
Company because of the termination of the Plan. No amendment or
termination shall directly or indirectly reduce the proper
balance of any Accounts, as of the effective date of any
amendment or termination.
6.12 Construction. Unless the context of the Plan otherwise
clearly requires, references in the plural shall include the
singular and references in the singular shall include the plural.
The section and other headings contained in this Plan are for
reference purposes only and shall not control or affect the
construction of this Plan or its interpretation in any respect.
Section and subsection references are to this Plan unless
otherwise specified.
6.13 Binding Effect. This Plan shall be binding upon and
inure to the benefit of the Company, its successors and assigns
and the Participants and their heirs, executors, administrators
and legal representatives.
IN WITNESS WHEREOF, this Plan has been duly executed as of
the 15th day of March, 1997.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: Daniel F. O'Sullivan
Chairman of the Board and
Chief Executive Officer
"Sponsoring Employer"
ATTEST:
Rowland H. Geddie, III
Vice President, General Counsel and
Secretary
<PAGE>
EXHIBIT 10.3
FIRST AMENDMENT TO THE
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
SAVINGS AND PROFIT SHARING PLAN
This First Amendment is made as of the 5th day of May, 1997,
by O'Sullivan Industries Holdings, Inc., a Delaware corporation.
WHEREAS, on July 1, 1995, the Employer established a
retirement plan for the exclusive benefit of its eligible
employees, which plan is known as the O'Sullivan Industries
Holdings, Inc. Savings and Profit Sharing Plan (the "Plan"); and
WHEREAS, pursuant to the terms of the Plan, the Employer
reserved the right to amend the Plan from time to time in its
discretion; and
WHEREAS, the Employer desires to amend the Plan as set forth
below;
NOW, THEREFORE, in consideration of these premises, the Plan
is amended as follows, effective July 1, 1997:
A. Section 4.01 is amended to read in its entirety as
follows:
4.01 Employee Pre-Tax Contributions. Each Employee who
becomes a Participant in this Plan shall specify the amount of
Employee Pre-Tax Contributions, if any, he or she wishes to make
by payroll deduction pursuant to this Article IV. Such
contributions shall be transmitted to the trustee as soon as
reasonably practicable. A Participant's Employee Pre-Tax
Contributions shall not be less than 1% nor more than 15%, in
multiples of 1%, of his Compensation per scheduled pay period,
and may not exceed the limitation set forth in Section 4.03. The
Committee may from time to time specify a maximum deferral
percentage for Highly Compensated Employees that is less than
15%. A Participant's Employee Pre-Tax Contributions shall also
be limited to the maximum dollar limitation per calendar year, as
adjusted, set forth in Code Section 402(g).
Any Employee Pre-Tax Contributions in excess of the
limitation set forth in Code Section 402(g) as adjusted, together
with allocable income thereon determined in accordance with
applicable rules and regulations, for any Participant for any
calendar year shall be distributed to such Participant no later
than April 15 of the following year. Such excess contributions
shall not be included in Annual Additions, but the excess
contribution shall be included as a contribution for purposes of
the mathematical nondiscrimination test set forth in Section
4.08.
Any Employer Matching Contributions and Employer
Discretionary Matching Contributions that are attributable to any
Employee Pre-Tax Contributions that are distributed to the
Participant pursuant to this Section shall be treated as a
forfeiture, and applied in accordance with Section 4.09.
To the extent that a Participant has directed that his
Employee Pre-Tax Contributions be invested in the O'Sullivan
Stock Fund, the Company may make the Employee Pre-Tax
Contribution in cash and/or Stock, and such contribution shall be
credited to the Employee Pre-Tax Contribution Account of such
Participant.
B. Section 4.06 is amended to read in its entirety as
follows:
4.06 Employer Profit Sharing Contributions. For each Plan
Year, the Employer shall contribute to the Plan up to 7.5% of the
consolidated pre-tax net income of the Employers (excluding
extraordinary items) for such Year, as calculated by the
Sponsoring Employer in its sole and absolute discretion
(hereinafter "Target Contribution") to be allocated among and
credited to the Employer Profit Sharing Contributions Account of
each Participant who is employed by an Employer or an Affiliate
as of the last day of the Year based on the ratio that each
Participant's Annual Compensation bears to the total Annual
Compensation of all Participants. Notwithstanding the foregoing,
the Target Contribution for any Plan Year may be increased,
decreased or eliminated, at any time or from time to time, prior
to the date the contribution is made, by action of the Board of
Directors of the Sponsoring Employer. For the purpose of
determining whether a Participant shall receive an Employer
Profit Sharing Contribution for any Plan Year, a Participant who is not
employed as of the last day of the Year as a result of such
Participant's death, termination of employment on or after
attaining age 65, or termination of employment due to Disability,
shall receive a proportionate allocation of the Employer Profit
Sharing Contribution as if such Participant were a Participant
as of the last day of the Year.
The Sponsoring Employer's determination of consolidated pre-tax
net income (excluding extraordinary items) and the amount of
Employer Profit Sharing Contribution to be made at any time, shall
be made in the Sponsoring Employer's sole and absolute discretion
and shall be final and binding upon all persons. The Employer
Profit Sharing Contribution actually contributed to the Trust
shall, by definition, be the Employer Profit Sharing Contribution
due hereunder, regardless of any claim by any person of error, or
improper determination of consolidated pre-tax net income
(excluding extraordinary items) or any other amount by any
person.
For purposes of the foregoing, each participating Affiliate
in the Plan shall contribute out of its current or accumulated
earnings and profits that portion of the aggregate Employer
Profit Sharing Contribution for each Plan Year (if any) that the
Compensation paid or accrued to Participants by such Affiliate
during the Plan Year bears to the total Compensation paid or
accrued to all Participants by all participating Employers during
the Plan Year.
To the extent that a Participant has directed that his
Employer Profit Sharing Contributions Account be invested in the
O'Sullivan Stock Fund, the Company may make the Employer Profit
Sharing Contribution in cash and/or Stock, and such contribution
shall be credited to the Employer Profit Sharing Contributions
Account of such Participant.
C. Section 7.05 is amended to read in its entirety as
follows:
7.05 Limitations on Officer Transactions. Notwithstanding
the foregoing provisions of this Article VII or any other
provisions hereof, the following restrictions apply with respect
to Officers:
(a) In the event a Participant who is an Officer shall make
an election to change the investment of the existing balances in
his Accounts in a manner that results in a transfer of part or
all of such balances to the O'Sullivan Stock Fund from one or
more other Investment Funds, such election must be made at least
6 months after the date of any previous election which resulted
in a transfer or cash distribution or loan of part or all of such
Officer's investment from any account or fund consisting of, or
based on the value of, equity securities of the Company under
this Plan or any other employee benefit plan of the Company.
(b) In the event a Participant who is an Officer shall make
an election:
(i) to receive a cash distribution or loan which results in
a reduction of the investment of any of his Accounts in the
O'Sullivan Stock Fund; or
(ii) to change the investment of the existing balances
in his Accounts in a manner that results in a transfer of part or
all of such balances from the O'Sullivan Stock Fund to one or
more other Investment Funds;
such election must be made at least 6 months after the date of
any previous election which resulted in a transfer of part or all
of such Officer's investment into any account or fund consisting
of, or based on the value of, equity securities of the Company
under this Plan or any other employee benefit plan of the
Company.
Except as modified by this Section 7.05, the other provisions
of Article VII shall be applicable to any such Officer's
investment direction. For the purpose of this Section 7.05,
"Officer" shall, with respect to an Employee, have the meaning
ascribed to such term in Title 17, Section 240.16a-1(f) of the
Code of Federal Regulations or any subsequent law or regulation
of similar import.
IN WITNESS WHEREOF, and to record the formal adoption of this
First Amendment, the Employer has caused the same to be executed
as of the day and year first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: Daniel F. O'Sullivan
Chairman of the Board and
Chief Executive Officer
ATTEST:
Rowland H. Geddie, III
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 11
O'Sullivan Industries Holdings, Inc.
Statement of Computation of Earnings per Share
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1997 1996
------ ------
<S> <C> <C>
Net income available to common stockholders;
as reported $ 3,895,000 $ (2,942,000)
========= ==========
Weighted average number of common shares
outstanding 16,777,857 16,819,950
Weighted average number of common shares
issuable under stock option plans,
net of assumed treasury stock repurchases
at average market prices 314,398 -
---------- -----------
Weighted average number of common shares
and common share equivalents outstanding,
as adjusted 17,092,255 16,819,950
========== ==========
Primary earnings per share $0.23 $(0.17)
========== ==========
Weighted average number of common shares
outstanding 16,777,857 16,819,950
Weighted average number of common shares
issuable under stock option plans,
net of assumed treasury stock repurchases
at ending market prices 330,462 -
---------- ----------
Weighted average number of common shares
and common share equivalents outstanding,
as adjusted 17,108,319 16,819,950
========== ==========
Fully diluted earnings per share $0.23 $(0.17)
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nine months ended
March 31,
--------------------------
1997 1996
------ ------
<S> <C> <C>
Net income available to common stockholders;
as reported $11,945,000 $ (1,136,000)
========== ==========
Weighted average number of common shares
outstanding 16,790,430 16,819,950
Weighted average number of common shares
issuable under stock option plans,
net of assumed treasury stock repurchases
at average market prices 199,514 -
---------- -----------
Weighted average number of common shares
and common share equivalents outstanding,
as adjusted 16,989,944 16,819,950
========== ==========
Primary earnings per share $0.70 $(0.07)
========== ==========
Weighted average number of common shares
outstanding 16,790,430 16,819,950
Weighted average number of common shares
issuable under stock option plans,
net of assumed treasury stock repurchases
at ending market prices 330,420 -
---------- ----------
Weighted average number of common shares
and common share equivalents outstanding,
as adjusted 17,120,850 16,819,950
========== ==========
Fully diluted earnings per share $0.70 $(0.07)
========== ==========
</TABLE>
This calculation is submitted in accordance with Regulation S-K,
Item 601(b)(11), although not required by footnote 2 to paragraph
14 of APB No. 15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF O'SULLIVAN INDUSTRIES HOLDINGS, INC. FOR THE PERIOD
ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 10,260
<SECURITIES> 0
<RECEIVABLES> 58,244
<ALLOWANCES> 1,850
<INVENTORY> 40,110
<CURRENT-ASSETS> 109,714
<PP&E> 118,512
<DEPRECIATION> 46,823
<TOTAL-ASSETS> 226,576
<CURRENT-LIABILITIES> 29,556
<BONDS> 30,000
0
0
<COMMON> 16,820
<OTHER-SE> 136,266
<TOTAL-LIABILITY-AND-EQUITY> 226,576
<SALES> 241,224
<TOTAL-REVENUES> 241,224
<CGS> 172,724
<TOTAL-COSTS> 172,724
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,834
<INCOME-PRETAX> 19,330
<INCOME-TAX> 7,385
<INCOME-CONTINUING> 11,945
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,945
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0
</TABLE>
