<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-Q
For the Quarter Ended April 2, 1994 Commission File Number 1-5315
------------------------
S P R I N G S I N D U S T R I E S, I N C.
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0252730
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
205 North White Street
Fort Mill, South Carolina 29715
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(803) 547-1500
------------------------
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 at least the past 90 days.
Yes X No
--- ---
------------------------
As of May 12, 1994, there were 10,022,179 shares of Class A Common Stock and
7,853,087 shares of Class B Common Stock of Springs Industries, Inc.
outstanding.
------------------------
There are 31 pages in the sequentially numbered, manually signed original of
this report.
Page 1 of 31
<PAGE> 2
TABLE OF CONTENTS TO FORM 10-Q
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
- - ------------------------------
ITEM PAGE
- - ---- ----
<S> <C>
1. FINANCIAL STATEMENTS 3
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION
- - ---------------------------
4. SUBMISSION OF MATTERS TO A VOTE 9
OF SECURITY HOLDERS
6. EXHIBITS 10
SIGNATURES 11
EXHIBIT INDEX 12
</TABLE>
Page 2 of 31
<PAGE> 3
PART I
ITEM I - FINANCIAL STATEMENTS
SPRINGS INDUSTRIES, INC.
Consolidated Statements of Operations
and Retained Earnings
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THIRTEEN WEEKS
----------------------------
APRIL 2, APRIL 3,
1994 1993
----------- -----------
<S> <C> <C>
OPERATIONS
Net sales. . . . . . . . . . . . . . . . . . . . . . . $ 485,213 $ 501,754
Cost and expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . 392,139 404,809
Selling, general and
administrative expenses. . . . . . . . . . . . . . 74,772 72,162
Interest expense . . . . . . . . . . . . . . . . . . 7,179 8,041
Other (income) expense . . . . . . . . . . . . . . . 764 230
---------- ----------
Total. . . . . . . . . . . . . . . . . . . . . . . 474,854 485,242
---------- ----------
Income before income taxes . . . . . . . . . . . . . . 10,359 16,512
Income taxes . . . . . . . . . . . . . . . . . . . . . 4,558 7,355
---------- ----------
Income before cumulative effects
of changes in accounting
principles . . . . . . . . . . . . . . . . . . . . . 5,801 9,157
Cumulative effects of changes in
accounting principles. . . . . . . . . . . . . . . . - (72,543)
---------- ----------
Net income (loss). . . . . . . . . . . . . . . . . . $ 5,801 $ (63,386)
========== ==========
Per share:
Income before cumulative effects
of changes in accounting
principles . . . . . . . . . . . . . . . . . . . . . $ .33 $ .51
Cumulative effects of changes in
accounting principles. . . . . . . . . . . . . . . . - (4.07)
---------- ----------
Net income (loss). . . . . . . . . . . . . . . . . . . . $ .33 $ (3.56)
========== ==========
Cash dividends - Class A shares. . . . . . . . . . . . . $ .30 $ .30
========== ==========
Cash dividends - Class B shares. . . . . . . . . . . . . $ .27 $ .27
========== ==========
Weighted average shares of
common stock . . . . . . . . . . . . . . . . . . . . 17,813 17,827
========== ==========
RETAINED EARNINGS
Retained earnings at beginning
of period. . . . . . . . . . . . . . . . . . . . . . $ 526,428 $ 571,864
Net income (loss). . . . . . . . . . . . . . . . . . . 5,801 (63,386)
Cash dividends . . . . . . . . . . . . . . . . . . . . (5,041) (5,035)
---------- ----------
Retained earnings at end of period . . . . . . . . . . $ 527,188 $ 503,443
========== ==========
</TABLE>
Page 3 of 31
<PAGE> 4
SPRINGS INDUSTRIES, INC.
Condensed Consolidated Balance Sheet
(In thousands except share data)
<TABLE>
<CAPTION>
(Unaudited)
APRIL 2, JANUARY 1,
1994 1994
---------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 3,173 $ 2,790
Accounts receivable. . . . . . . . . . . . . . . . . . . . . 318,617 315,834
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 282,812 267,842
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,163 40,073
---------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . 643,765 626,539
---------- -----------
Property, plant and equipment. . . . . . . . . . . . . . . . . 1,220,978 1,195,843
Accumulated depreciation . . . . . . . . . . . . . . . . . . (664,851) (645,938)
----------- -----------
Property, plant, and equipment, net. . . . . . . . . . . . 556,127 549,905
---------- -----------
Other assets and deferred charges. . . . . . . . . . . . . . . 113,619 115,687
---------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $1,313,511 $ 1,292,131
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings. . . . . . . . . . . . . . . . . . . . $ 108,400 $ 61,420
Current maturities of long-term debt . . . . . . . . . . . . 20,515 20,511
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 66,262 73,640
Accrued restructuring costs . . . . . . . . . . . . . . . . 9,193 10,317
Other accrued liabilities. . . . . . . . . . . . . . . . . . 92,375 107,122
---------- -----------
Total current liabilities. . . . . . . . . . . . . . . . . 296,745 273,010
---------- -----------
Noncurrent liabilities:
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . 289,714 293,028
Long-term benefit plans and deferred
compensation . . . . . . . . . . . . . . . . . . . . . . . 140,733 139,284
Deferred income taxes and other deferred
credits . . . . . . . . . . . . . . . . . . . . . . . . . . 43,197 43,616
---------- -----------
Total noncurrent liabilities . . . . . . . . . . . . . . . 473,644 475,928
---------- -----------
Shareholders' equity:
Class A common stock- $.25 par value
(9,856,752 and 9,858,035 shares issued
in 1994 and 1993, respectively). . . . . . . . . . . . . . 2,464 2,465
Class B common stock- $.25 par value
(7,853,087 and 7,853,087 shares issued
in 1994 and 1993, respectively). . . . . . . . . . . . . . 1,963 1,963
Additional paid-in capital . . . . . . . . . . . . . . . . . 11,228 11,144
Retained earnings. . . . . . . . . . . . . . . . . . . . . . 527,188 526,428
Cost of Class A shares in treasury
(April 2, 1994-122,338 shares; January
1, 1994 - 129,460 shares). . . . . . . . . . . . . . . . . (2,659) (2,785)
Currency translation adjustment. . . . . . . . . . . . . . . 2,938 3,978
---------- -----------
Shareholders' equity . . . . . . . . . . . . . . . . . . . 543,122 543,193
---------- -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $1,313,511 $ 1,292,131
========== ===========
</TABLE>
Page 4 of 31
<PAGE> 5
SPRINGS INDUSTRIES, INC.
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------------------
APRIL 2, APRIL 3,
1994 1993
----------- ----------
<S> <C> <C>
CASH PROVIDED (USED) BY:
Operating activities:
Net income (loss). . . . . . . . . . . . . . . . . . $ 5,801 $ (63,386)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating
activities:
Cumulative effects of changes in
accounting principles. . . . . . . . . . . . . . . - 72,543
Other non-cash charges, net . . . . . . . . . . . . 23,205 23,931
Changes in operating assets and liabilities
excluding effects of the transfer of European
subsidiaries . . . . . . . . . . . . . . . . . . . (35,851) (52,215)
Other, net. . . . . . . . . . . . . . . . . . . . . 705 (7,777)
--------- ---------
Net cash (used) by operating activities. . . . . (6,140) (26,904)
--------- ---------
Investing activities:
Purchase of property, plant and
equipment. . . . . . . . . . . . . . . . . . . . . (26,955) (16,398)
Minority interests
acquired . . . . . . . . . . . . . . . . . . . . . - (8,780)
--------- ---------
Net cash (used) by investing activities. . . . . (26,955) (25,178)
--------- ---------
Financing activities:
Proceeds from short-term borrowings. . . . . . . . . 46,980 61,286
Proceeds from commercial paper and long-term
debt borrowings. . . . . . . . . . . . . . . . . . 106 8,034
Payment of long-term debt. . . . . . . . . . . . . . (3,528) (7,453)
Payment of dividends . . . . . . . . . . . . . . . . (10,080) (10,069)
--------- ---------
Net cash provided by financing activities. . . . 33,478 51,798
--------- ---------
Increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . . . . . $ 383 $ (284)
========= =========
</TABLE>
Page 5 of 31
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies:
These condensed consolidated financial statements should be read in
conjunction with the financial statements presented in the Springs
Industries, Inc. (Springs) 1993 Annual Report on Form 10K.
In the opinion of the management of Springs, these unaudited condensed
consolidated financial statements contain all adjustments of a normal
recurring nature necessary for their fair presentation. The results for
interim periods reflect estimates for certain items which can be
definitively determined only on an annual basis. These items include the
valuation of a substantial portion of inventories on a LIFO cost basis and
the provision for income taxes. These interim financial statements reflect
applicable portions of the estimated annual amounts for such items.
The results of operations for interim periods are not necessarily indicative
of operating results to be expected for the remainder of the year.
2. Inventories:
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
April 2, January 1,
1994 1994
---------- ----------
<S> <C> <C>
Standard cost (which approximates
average cost) or average cost:
Finished goods. . . . . . . . . . . . . . . . . . $ 191,065 $ 180,989
In process. . . . . . . . . . . . . . . . . . . . 161,468 165,190
Raw materials and supplies. . . . . . . . . . . . 55,965 50,824
--------- ---------
408,498 397,003
Less LIFO reserve. . . . . . . . . . . . . . . . (125,686) (129,161)
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . $ 282,812 $ 267,842
========= =========
</TABLE>
3. Acquisition of Minority Interest:
On March 25, 1993, Springs' subsidiary, Clark-Schwebel Fiber Glass,
contributed its European fiberglass subsidiaries (net assets of $17.1
million) and $8.8 million in cash to CS-Interglas A.G., of Ulm, Germany,
in consideration for a minority equity interest in CS-Interglas A.G. and a
convertible debenture. No gain or loss was recognized as a result of this
transaction since it was accounted for as a nonmonetary exchange. The
earnings (losses) of the European subsidiaries were consolidated in the
Company's financial statements through March 25, 1993, at which time the
Company removed the assets and liabilities of the subsidiaries from
consolidation and began accounting for its interest in CS-Interglas A.G.
under the equity method of accounting.
Page 6 of 31
<PAGE> 7
4. Legal and Environmental:
Springs is involved in certain administrative proceedings alleging
violations of environmental laws and regulations, including proceedings
under the Comprehensive Environmental Response, Compensation, and
Liability Act. See page 23 of Springs' 1993 Annual Report (Note 10. -
Other Matters). In connection with these proceedings, the Company has
accrued an amount which represents management's best estimate of Springs'
probable liability.
Springs is also involved in various other legal proceedings and claims
incidental to its business. Springs is defending its position in all such
proceedings.
In the opinion of management, based on the advice of counsel, the
resolution of the above matters should not have a material adverse impact
on the financial condition nor the future results of operations of
Springs.
Page 7 of 31
<PAGE> 8
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales
Net sales for the first quarter were down three percent from those reported in
the first quarter of 1993. While home furnishings sales were higher than last
year by one percent as a result of continued strong volume, sales for the
specialty fabrics segment decreased 11 percent. This decrease in specialty
fabrics sales is due to the exclusion of European fiberglass sales in 1994
as well as reduced volume in apparel fabrics and piece goods.
Earnings
First quarter net income of $.33 per share represented a 36 percent decrease
from net income of $.51 per share in 1993 before the effects of the required
adoption of new accounting standards in 1993. Margin pressure in the home
furnishings segment's bedding divisions produced a substantial decline from
last year's record home furnishings first-quarter operating profits. However,
specialty fabrics margins improved substantially over last year due to improved
operating efficiencies, and as a result, the segment's operating profit
improved. In addition, the results from the Company's minority equity
investment in CS-Interglas A.G. are improving.
CAPITAL RESOURCES AND LIQUIDITY
A normal seasonal increase in working capital since year-end resulted in
increased short-term borrowings. Capital expenditures are still expected to
slightly exceed the 1993 level, and cash needs for the remainder of the year are
expected to be funded from operating cash flows, commercial paper, and
short-term bank borrowings.
OTHER
In February, we communicated to our bedding customers our first general price
increase since 1988. This general price increase was partly in response to the
expected future impact of markedly higher cotton prices. We expect to see the
benefits of this price change after midyear. The Company also announced a plan
on March 22, 1994 to reduce annual operating costs by at least $15 million.
The plan includes acceleration of expense-cutting programs already in progress;
deferral of certain capital projects with associated expense; reduction of
salaried jobs through consolidations, anticipated attrition, and a hold on new
hiring; and efficiencies in administrative areas as a result of systems
improvements.
Page 8 of 31
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the security holders of the Company was held on
April 18, 1994.
(b) During the annual meeting, the security holders of the Company elected
the following directors to hold office until the next annual meeting of the
security holders and until a successor is duly elected and qualified:
John F. Akers John H. McArthur
Crandall Close Bowles Aldo Papone
John L. Clendenin Donald S. Perkins
Leroy S. Close Robin B. Smith
Charles W. Coker Sherwood H. Smith, Jr.
Walter Y. Elisha Stewart Turley
Dan M. Krausse
(c)
Description of Matter For Against or Abstentions
Voted Upon Withheld
(i)
Annual election of
directors:
John F. Akers 39,046,796 36,808 0
Crandall Close Bowles 39,050,294 33,310 0
John L. Clendenin 39,051,061 32,543 0
Leroy S. Close 39,050,660 32,944 0
Charles W. Coker 39,051,061 32,543 0
Walter Y. Elisha 39,051,350 32,254 0
Dan M. Krausse 39,050,771 32,833 0
John H. McArthur 39,050,588 33,016 0
Aldo Papone 39,050,804 32,800 0
Donald S. Perkins 39,050,600 33,004 0
Robin B. Smith 39,048,626 34,978 0
Sherwood H. Smith, Jr. 39,050,860 32,744 0
Stewart Turley 39,050,860 32,744 0
(ii)
Ratification of the 39,046,874 26,850 9,880
appointment of Deloitte &
Touche as the Company's
auditors
(d) N/A
Page 9 of 31
<PAGE> 10
ITEM 6 - EXHIBITS
The following exhibit is filed as part of this report:
(3) Articles of Incorporation and Bylaws
Springs Industries, Inc.'s Bylaws, amended as of April 18, 1994, are
filed herewith (19 pages).
Page 10 of 31
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, Springs
Industries, Inc. has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPRINGS INDUSTRIES, INC.
By:/s/ James F. Zahrn
-----------------------------
James F. Zahrn Vice
President-Finance and
Treasurer
(Duly Authorized Officer
and Principal Financial Officer)
DATED: May 17, 1994
Page 11 of 31
<PAGE> 12
EXHIBIT INDEX
Item (6)
(3) Articles of Incorporation and Bylaws
Springs Industries, Inc.'s Bylaws, amended as of April 18, 1994, are
filed herewith (19 pages).
Page 12 of 31
<PAGE> 1
SPRINGS INDUSTRIES, INC.
Bylaws
(AMENDED AS OF APRIL 18, 1994)
ARTICLE I
Offices
Section 1. The Corporation shall maintain its registered office in
the Town of Fort Mill, York County, South Carolina, where it shall maintain a
registered agent. The Corporation shall maintain such other offices, both
within and without the State of South Carolina, as may be determined from time
to time by the Board of Directors or as the business of the Corporation may
from time to time require.
ARTICLE II
Capital Stock
Section 1. Certificates. The interest of each shareholder in the
Corporation shall be evidenced by certificates in conformity with law and
otherwise as the Board of Directors may determine from time to time. Each such
certificate shall be signed, either manually or in facsimile, by the Chief
Executive Officer, the President or a Vice President and by the Secretary or
an Assistant Secretary and may be sealed with the seal of the Corporation or a
facsimile thereof. In case any officer who has signed or whose facsimile
signature has been placed upon any certificate, shall have ceased to be such
before the certificate is issued, it may be issued by the Corporation with the
same effect as if such officer had not ceased to be such prior to the time of
its issue.
Section 2. Transfer of Stock. The Corporation shall be entitled to
treat the holder of record of any share of stock as the holder in fact thereof
and the Corporation shall not be bound to recognize any equitable or other
claim to or interest in any share
Page 13 of 31
<PAGE> 2
on the part of any other person, regardless of whether it shall have
express or other notice thereof, except as may be expressly provided by law.
The shares of the stock of the Corporation shall be transferred on the books of
the Corporation by the holder thereof in person or by his attorney, upon
surrender for cancellation of certificates for the same number of shares, with
an assignment and power of transfer endorsed thereon or attached thereto, duly
executed, with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require.
Section 3. Lost, stolen or destroyed certificates. In case the record
holder of a share or shares of stock of the Corporation claims that the
certificate representing such share or shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in its place, but only on
delivery to the Corporation of (a) proof satisfactory to the Corporation in the
reasonable exercise of its discretion of such loss, destruction or wrongful
taking, (b) proof of compliance with the requirements of law relating thereto,
and (c) a sufficient indemnity bond or, if in a form approved by the Board of
Directors, another adequate form of security sufficient to indemnify the
Corporation against loss; provided, however, in no event shall the Corporation
be required to issue a replacement certificate unless the record holder
requests the Corporation to do so before the Corporation has notice that the
certificate or certificates have been acquired by a bona fide purchaser.
Section 4. Regulations transfer agents, and registrars. The Board of
Directors shall have the power and authority to make all such rules and
regulations as it may deem appropriate concerning the issuance, transfer,
conversion, registration, and cancellation of certificates for shares of this
Corporation's stock not inconsistent with the laws of South Carolina, the
Articles of Incorporation, or these Bylaws. The Board of Directors may appoint
one or more transfer agents or registrars, or both, and may require all stock
certificates to bear the signature of a transfer agent or of a registrar or
both.
Page 14 of 31
<PAGE> 3
ARTICLE III
Shareholders Meetings
Section 1. Annual meetings. The annual meeting of the shareholders
shall be held at such place, either within or without the State of South
Carolina, and at such day and hour, not later than May 31 of each year, as may
be determined by the Chairman of the Board or the Board of Directors and
designated in the notice of such meeting. In the absence of such a
determination, the annual meeting shall be held on the last Monday in April of
each year. The business to be transacted at such meeting shall be the election
of directors and such other business as may be properly brought before the
meeting.
Section 2. Special meetings. Special meetings of the shareholders may
be called only by the Board of Directors, the Chairman of the Board, or the
holders of not less than ten percent (10%) of the votes entitled to be cast on
any issue proposed to be considered at the proposed special meeting. Special
meetings of the shareholders may be held at such place, either within or
without the State of South Carolina, as the Board of Directors shall designate.
If no designation is made by the Board of Directors, the place of meeting shall
be the principal office of the Corporation.
Section 3. Notice of meetings, waiver. The Secretary or an Assistant
Secretary shall give to each shareholder entitled to vote at any meeting, or
otherwise entitled by law to notice of such meeting, written notice of the
date, time, place, and, in the case of a special meeting, the purpose or
purposes of such meeting, together with such other data and information as may
be required by law, or as the Board of Directors shall provide. Such notice
shall be given personally or by mail or as otherwise permitted by law not less
than ten (10) nor more than sixty (60) days before the date of the meeting.
Furthermore, such notice shall be deemed to be effective at the earlier of the
date when deposited in the United States mail or its receipt by the
shareholder. If mailed,
Page 15 of 31
<PAGE> 4
such notice shall be directed to the shareholder's address as it appears
on the stock transfer books of the Corporation. Such further notice shall be
given as may be required by law. A shareholder may waive the notice of meeting
by signing, either in person or by proxy, and delivering to the Corporation a
written waiver of notice, either before or after such meeting. Attendance of a
shareholder at a meeting, in person or by proxy, shall constitute waiver of
objection to lack of notice or defective notice of the meeting unless the
shareholder, at the beginning of the meeting, objects to holding the meeting or
transacting business at the meeting. Except where otherwise required by law,
notice need not be given of any adjourned meeting of the shareholders if the
new date, time and place are announced at the meeting before adjournment.
Section 4. List of shareholders. Prior to any meeting of the
shareholders, a complete alphabetical list of the shareholders entitled to
notice of such meeting arranged by voting group (and within each voting group
by class or series of shares), showing the address of and the number of shares
held by each shareholder, shall be prepared by the Secretary or under his
direction. Such list shall be available for inspection by any shareholder at
the principal office of the Corporation beginning on the date on which notice
of the meeting is given for which the list was prepared and continuing through
the meeting. Such list shall also be physically present at the place of the
meeting and available for inspection by any shareholder at any time during the
meeting or any adjournment.
Section 5. Quorum. Except as otherwise provided by law or by the
Articles of Incorporation, the required quorum for the transaction of any item
of business at any meeting of shareholders shall consist of shareholders
representing, either in person or by proxy, a majority of the votes entitled to
be cast within each voting group entitled to vote on such item of business at
such meeting. If a quorum be not present, a meeting of shareholders may be
adjourned from time to time by the Chairman of the Board or by a vote of
shares having a majority of the shares represented at such meeting, until a
quorum is present.
Page 16 of 31
<PAGE> 5
Section 6. Voting. Except as otherwise provided in the Articles of
Incorporation, at every meeting of the shareholders, each shareholder of the
Corporation entitled to vote generally on a matter shall have, as to such
matter, one vote per share in person or by properly executed proxy for each
share of Class A Common Stock or voting Preferred Stock registered in his name
and four votes per share in person or by properly executed proxy for each share
of Class B Common Stock registered in his name. In all elections of directors,
each shareholder shall be entitled to cumulate his votes as provided in the
Artlcles of Incorporation. A shareholder may vote his shares through a proxy
appointed by a written instrument signed by the shareholder or by his duly
authorized attorney in fact and delivered to the Secretary of the meeting. No
proxy shall be valid after eleven (11) months from the date of its execution
unless a longer period is expressly provided therein and such longer period is
permitted by law. If a quorum exists within a voting group whose vote is
required on a matter other than the election of directors, action on such
matter by such voting group is approved if the votes cast within such voting
group favoring the action exceed the votes cast opposing the action, unless a
greater number of affirmative votes is required by law, the Articles of
Incorporation, or a bylaw. In electing directors, those candidates who receive
the greatest number of votes cast at the meeting shall be deemed elected even
though not receiving a majority of votes cast.
Section 7. Inspectors of Elections. The Board of Directors by resolution
shall appoint one or more inspectors, which inspector or inspectors may include
individuals who serve the Corporation in other capacities, including, without
limitation, as officers, employees, agents or representatives of the
Corporation, to act at the meeting and make a written report thereof. One or
more persons may be designated as alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate has been appointed to act, or if
all inspectors or alternates who have been appointed are unable to act at a
meeting of shareholders, the chairman of the meeting shall appoint one or more
inspectors to act at the meeting. The inspectors of election shall receive
17 of 31
<PAGE> 6
and take charge of all proxies and ballots, shall resolve all questions
respecting the validity of proxies, and the qualifications of voters, and shall
certify and report the results of the voting to the presiding officer.
Section 8. Organization. The Chairman of the Board shall preside over
all meetings of shareholders, or if he shall not be present, such person as
may be designated by the Board of Directors shall preside. The Secretary of the
Corporation, or in his absence an Assistant Secretary, shall act as secretary
of every meeting.
ARTICLE IV
Board of Directors
Section 1. General powers. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors. In
addition to the powers and authorities expressly conferred on it by these
Bylaws, the Board of Directors may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by law, by the Articles of
Incorporation, or by these Bylaws directed or required to be exercised or done
by the shareholders. Directors shall be elected at the annual meeting of the
shareholders and shall serve until the next annual meeting or any special
meeting of shareholders called earlier for the purpose of election of
directors and until their successors shall be elected and qualified or until
their earlier resignation or removal. The Board of Directors may appoint a
Chairman and one or more Vice Chairmen of the Board. Only members of the Board
of Directors are eligible to be the Chairman and Vice Chairmen. Directors,
including the Chairman of the Board and any Vice Chairman of the Board, may
also serve as officers of the corporation.
Section 2. Number and qualification. The number of directors shall be
not less than three (3) nor more than fifteen (15), the exact number of
directors within such
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<PAGE> 7
limits to be fixed and determined from time to time by the vote of the
Board of Directors or by a resolution of the shareholders. No decrease in the
number of directors fixed by the Board of Directors or the shareholders shall
have the effect of shortening the term of any incumbent director. No person who
is elected for the first time to the Board of Directors prior to April 30,
1990, and who has attained the age of 70 years shall be eligible to be elected
or appointed to the Board of Directors, and no person elected for the first
time after April 30, 1990, and who has attained the age of 72 years shall be
eligible to be elected or appointed to the Board of Directors.
Section 3. Vacancies. Any vacancy on the Board of Directors, including
a vacancy resulting from an increase in the number of directors, may be filled
by the shareholders at an annual meeting or a special meeting called for that
purpose or by a majority of the remaining directors, even if the directors
remaining in office constitute less than a quorum of the Board, at any regular
or special meeting of the Board. A director so elected shall serve until the
next annual meeting of the shareholders or any special meeting of shareholders
called earlier for the purpose of the election of directors and until his
successor shall be elected and qualified or until his earlier resignation or
removal.
Secton 4. Meetings. The regular annual meeting of the Board of
Directors shall be held not more than thirty (30) days subsequent to the
annual meeting of the shareholders at such time and place as the Chairman of
the Board or the Board of Directors shall direct. Other regular meetings of the
Board of Directors may be held at such time and place, within or without the
State of South Carolina, as the Board by resolution determines. A special
meeting of the Board of Directors may be called by the Chairman of the Board
or by a majority of the members of the Board of Directors then in office. Each
director shall be notified by the Secretary or any Assistant Secretary of the
date, time and place of each special meeting of the Board of Directors by
written notice addressed to him at his business or residence, by telephone
communication or by any other means permitted by law. If mailed, such notice
shall be
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deemed adequately delivered when deposited in the United States mails
so addressed, with postage thereon prepaid, at least five days before such
meeting. If by overnight carrier service, such notice shall be deemed
adequately given when delivered to the carrier at least two days before the
meeting; if by telegram, when the telegram is delivered to the telegraph
company at least 24 hours before the time set for the meeting; if by facsimile
transmission, when transmitted at least 24 hours before the time set for the
meeting; or if by telephone, when given at least 12 hours before the time set
for the meeting. Notice of a meeting of directors need not be given of regular
meetings of the Board of Directors held at times fixed by resolution of the
Board of Directors. Notice need not be given of adjourned meetings, whether
regular or special. Notice of a meeting of directors need not be given to any
director who signs a waiver of notice, either before or after the meeting and
such waiver is filed with the minutes or corporate records. Attendance of a
director at a meeting shall of itelf constitute a waiver of notice of such
meeting, unless such director at the beginning of the meeting (or promptly upon
his arrival) objects to holding or transacting business at the meeting and does
not thereafter vote for or consent to action at the meeting. Unless otherwise
required by law, the Articles of Incorporation, or these Bylaws, neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or waiver of
notice.
Section 5. Quorum and required vote. Two-thirds of the directors in
office immediately before a meeting begins shall be necessary at any regular or
special meeting to constitute a quorum for the transaction of business. If a
quorum is not present, a majority of the directors present at any meeting of
the Board may adjourn the meeting to a subsequent day and hour without further
notice. The vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
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Section 6. Compensation. The Board of Directors may by resolution
provide for the payment of compensation to directors for their services as such
and for the payment of fees and expenses to directors for attendance at any
regular or special meeting of the Board; provided, however, that nothing herein
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor.
Section 7. Removal. At any meeting of the shareholders called for that
purpose, with notice of such purpose given, any director or directors may be
removed from office, with or without cause, by a vote of the holders of a
majority of the shares then entitled to be cast within each voting group
entitled to vote for the election of each such director; provided, however,
that no director may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
Board of Directors or of the class of directors of which he is a part. When any
director or directors are removed, new directors may be elected at the same
meeting of the shareholders for the unexpired term of the director or directors
removed.
Section 8. Executive committee. The Board of Directors, by a resolution
or resolutions adopted by a majority of the members of the board then in
office, may appoint from among its membership an executive committee consisting
of such number of directors as may be so designated, but in no event fewer than
three (3). Except as otherwise limited by law, the Articles of Incorporation,
or by the resolution or resolutions creating or concerning the executive
committee, the executive committee shall have full power and authorization, in
the intervals between meetings of the Board of Directors, to do any and all
things in relation to the management and direction of the business and affairs
of the Corporation and to exercise any and all powers of the Board of Directors.
Section 9. Other committees. Other standing committees may be appointed
by the Board of Directors from among its membership by a resolution adopted by
a majority of the members of the Board then in office consisting of such number
of
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<PAGE> 10
directors as may be so designated, but in no event fewer than three (3).
Except as otherwise limited by law or the Articles of Incorporation, the Board
may, by resolution invest any such committee with such powers, and impose upon
it such conditions within the power and authority of the Board, as the Board
shall see fit. The Board of Directors may, by a resolution or resolutions
adopted by a majority of the members of the Board then in office, designate one
or more directors from among its membership as alternate members of the
Executive or other committees who may act in the place and stead of any
absent member or members at any committee meeting.
Section 10. Conduct of committees. Within the powers conferred upon it
and as permitted by law, the Executive committee and any other committee
appointed by the Board of Directors may adopt rules for the conduct of its own
business, shall keep minutes of its meetings, and shall report, as the Board of
Directors may request, its activities since the last regular or special meeting
of the Board. Any committee appointed by the Board of Directors, including the
Executive committee, may be disestablished at any regular or special meeting of
the Board or its power and purposes amended as the Board may determine.
Section 11. Action of the Board of Directors taken without a
meeting. Except as otherwise provided by law, any action which is required or
permitted to be taken by the Board of Directors, or any committee thereof, may
be taken without a meeting if all of the directors, or all of the committee
members, as the case may be, execute either before or after the action is
taken a written consent thereto and such consent is filed with the records of
the Corporation or with the minutes of the Board or committee.
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<PAGE> 11
ARTlCLE V
Officers
Section 1. Corporate officers. The Board of Directors shall appoint a
Chief Executive Officer, a President, a Secretary, and a Treasurer. The Board
of Directors, the Chairman of the Board, or the Chief Executive Officer may
appoint one or more Vice Presidents and such other officers as the Board of
Directors, the Chairman of the Board or the Chief Executive Officer may
determine.
Section 2. Division officers. The Board of Directors, the Chairman of
the Board or the Chief Executive Officer may appoint officers with titles
indicating their responsibilities in operating divisions of the Corporation
which may include President, Vice President, and any other divisional titles
which may be deemed appropriate.
Section 3. Compensation. The compensation of the Chairman of the Board,
the Chief Executive Officer, the President, and the Vice Chairman of the Board,
shall be determined by the Board of Directors, and unless the Board of Directors
shall determine otherwise, the Chairman of the Board or the Chief Executive
Officer shall determine the compensation of all other officers of the
Corporation.
Section 4. Chairman of the Board and Vice Chairman of the Board. The
Chairman of the Board shall preside at all meetings of the shareholders and of
the Board of Directors, unless the Vice Chairman of the Board has been
designated by the Board of Directors to preside at meetings of the Board of
Directors. The Chairman of the Board and Vice Chairman of the Board shall
perform such other duties as may be determined by the Board of Directors.
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Section 5. Chief Executive Officer. The Chief Executive Officer shall
be responsible for the general management of the affairs of the Corporation and
shall perform all such other duties as are properly required of him by the
Board of Directors.
Section 6. President. Unless the President is also appointed Chief
Executive Officer, the President shall perform all duties incident to the
office of President and such other duties as are properly required of him by
the Board of Directors or the Chief Executive Officer.
Section 7. Secretary. The Secretary shall issue notices for all
meetings of the Board of Directors, any committees thereof, and shareholders
and shall cause the minutes of the same to be recorded in books provided for
that purpose. He shall have charge of the corporate seal and of all corporate
records and shall have the responsibility for authenticating records of the
Corporation. He shall make such reports and perform such other duties as the
Board of Directors, the Chairman of the Board, or the Chief Executive Officer
shall determine are properly required of him and, in general, perform all
duties incident to the office of Secretary.
Section 8. Treasurer. The Treasurer shall have the custody of all
monies and securities of the Corporation. He shall perform such other duties as
the Board of Directors, the Chairman of the Board, or the Chief Executive
Officer shall determine are properly required of him and, in general, perform
all duties incident to the office of Treasurer.
Sectlon 9. Duties of other officers. All other officers shall perform
such duties as the Board of Directors, the Chairman of the Board, or the Chief
Executive Officer may determine are properly required of him.
Section 10. Term of office, removal, and vacancies. The appointment of
officers by the Board of Directors shall take place annually at the meeting of
the Board of
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<PAGE> 13
Directors following the annual meeting of the shareholders. Officers
may also be appointed by the Board of Directors at any regular meeting of the
Board or at any special meeting of the Board called for that purpose. Officers
permitted to be appointed by the Chairman of the Board or the Chief Executive
Officer may be appointed any time. Each officer shall hold office until his
successor shall have been duly appointed and shall have qualified or until his
death or until he shall resign. Any officer may be removed from office, with
or without cause, at any time by a vote of a majority of the members of the
Board of Directors then in office. Any officer appointed by the Chairman of the
Board or the Chief Executive Officer may be removed from office, with or without
cause, at any time by the Chairman of the Board or the Chief Executive Officer.
Any vacancy in an office may be filled by the Board of Directors, the Chairman
of the Board, or the Chief Executive Officer, except that only the Board of
Directors may fill a vacancy in the positions of Chief Executive Officer,
President, Secretary or Treasurer.
Section 12. Bonds. The Board of Directors, the Chairman of the Board,
or the Chief Executive Officer may require any officer, agent, or employee of
the Corporation to give bond to the Corporation, with sufficient surety or
sureties to insure the faithful performance of such officer's, agent's, or
employee's duties.
ARTICLE VI
Miscellaneous
Section 1. Seal. The seal of the Corporation shall be in such form and
shall contain such symbols and wording as the Board of Directors may from time
to time adopt.
Section 2. Buying and selling property. Without limiting the authority
granted to officers pursuant to Article V, the Chairman of the Board, Vice
Chairman, the Chief
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<PAGE> 14
Executive Officer, and such other person or persons as the Chairman of
the Board, Vice Chairman, the Chief Executive Officer, or the Board of
Directors shall designate by name or position, shall have the authority to buy
or sell, and to contract to buy or sell, on behalf of the Corporation, any real
property of any kind whatsoevor.
Section 3. Execution of documents. Any contract, negotiable instrument,
or other written obligation shall be binding on the Corporation when executed by
the Chairman of the Board, Vice Chairman, the Chief Executive Officer, or such
other person or persons as the Chairman of the Board, Vice Chairman, the Chief
Executive Officer, or the Board of Directors shall designate by name or
position.
Section 4. Deposits. The cash monies of the Corporation shall be
deposited in such banks, trust companies, or other depositories as the Chairman
of the Board, Vice Chairman, the Chief Executive Officer, the Corporation's
principal financial officer, or the Board of Directors shall designate by name
and may be withdrawn therefrom only upon the signature of persons designated by
the Chairman of the Board, Vice Chairman, the Chief Executive Officer, the
Corporation's principal financial officer, or the Board of Directors.
Section 5. Voting securities held by the Corporation. Unless the Board
of Directors orders otherwise, the Chairman of the Board, Vice Chairman of the
Board, the Chief Executive Officer, and such other officer or officers as the
Chairman of the Board, Vice Chairman of the Board, or the Chief Executive
Officer shall designate in writing, shall each have full power and authority
on behalf of the Corporation to attend, to act and to vote at any meeting of
the security holders of other corporations in which the Corporation may hold
securities and at such meeting shall possess and may exercise any and all rights
and powers incident to the ownership of such securities which the Corporation
might have possessed and exercised if it had been present.
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Section 6. Dividends and distributions. Before declaring any
distributions, the Board of Directors may fix and set aside from time to
time such sums over and above paid-in capital of the Corporation as a reserve
for any proper purpose, including expansion, maintenance, or contingencies,
as the Board may deem desirable, and the Board may from time to time
increase, diminish, and vary any such sums so set aside.
Section 7. Indemnification.
(a) General. The Corporation shall indemnify each person who:
(i) is or was a director or officer of the Corporation (including
the heirs, executors, administrators or estate of such person); or
(ii) while holding a status described in (i) above, is or was
serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise
as follows: (A) if such person is or was a director of the Corporation,
to the full extent permitted under South Carolina Business Corporation Act of
1988, as amended ("SCBCA") Sections 33-8-510 and 520, or as required by the
determination of a court pursuant to SCBCA Section 33-8-540; or (B) if such
person is or was a non-director officer of the Corporation, to the full extent
permitted by SCBCA Section 33-8-560(1) as to mandatory and court-ordered
indemnification and otherwise in the same manner and to the same extent that
directors are permitted to be indemnified under SCBCA Section 33-8-510.
(b) Procedure.
(i) Directors. If indemnification is requested by a director
pursuant to subsection (a) of this Section 7 under the authority
granted by SCBCA Section 33-8-510, then the Board shall cause a
determination to be made in one of the manners prescribed in SCBCA
Section 33-8-550 as to whether indemnification of the director
requesting such indemnification is permissible in the circumstances
because such director has met the standard of conduct set forth in
SCBCA Section 33-8-510. Upon any such determination that such
indemnification is proper or upon mandatory
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indemnification pursuant to SCBCA Section 33-8-520, the Corporation
shall make indemnification payments to the maximum extent permitted by
SCBCA Section 33-8-510 or 520.
(ii) Non-director officers. If indemnification is requested by a
non-director officer pursuant to subsection (a) of this Section 7, then
the Board shall cause a determination to be made as to whether such
indemnification is permissible in the circumstances because such person
has met the standard of conduct set forth in SCBCA Section 33-8-510 or
as otherwise provided in subsection (a) of this Section 7. Upon the
determination by the Board that indemnification of any such
non-director officer is proper or upon mandatory indemnification
pursuant to SCBCA Section 33-8-520, the Corporation shall make
indemnification payments to the maximum extent permitted by SCBCA
Section 33-8-520 or 560, as the case may be.
(c) Interim payment of expenses. The Corporation shall pay in advance
the expenses (including attorneys' fees) of defending a civil or criminal
action, suit, or proceeding that are incurred by a person who:
(i) is or was a director or officer of the Corporation (including
the heirs, executors, administrators or estate of such person); or
(ii) while holding a status described in (i) above, is or was
serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise
as follows: (A) if such person is or was a director, to the full
extent permitted by and in accordance with SCBCA Section 33-8-530; and (B)
with respect to non-director officers, in the same manner and to the same
extent it is permitted to advance expenses to directors pursuant to SCBCA
Section 33-8-530; provided, however, that such person [whether covered by
clause (A) or (B) above] shall provide the Corporation with (1) a written
affirmation of such person's good faith belief that such person has met the
applicable standard of conduct, and (2) a written understanding by such person
or on such person's behalf to
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repay any expenses advanced if it shall ultimately be determined that
such person is not entitled to be indemnified against such expenses.
(d) Non-officer/non-director agents and employees. The Board may
indemnify, or advance expenses in connection with a proceeding that may be the
subject of indemnification to, a non-officer or non-director agent or employee
of the Corporation if, to the extent and on such terms as the Board may from
time to time determine.
(e) Subsequent amendment. No amendment, termination, recision or
other elimination of this Section 7 or of any relevant provisions of the
SCBCA or any other applicable law shall affect or diminish in any way the
rights to indemnification under this Section 7 with respect to any action,
suit or proceeding arising out of, or relating to, any event or act or
omission occurring or fact or circumstance existing prior to such amendment,
termination, recision or other elimination.
(f) Other rights; indemnification agreements; certain limitations. The
indemnification and advancement of expenses provided by, or granted pursuant
to, other subsections of this Section 7 shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled pursuant to any applicable law (including
court-ordered indemnification pursuant to SCBCA Section 33-8-540), to any
agreement, or to any vote of shareholders (including a vote pursuant to SCBCA
Section 33-8-550) or of disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in any other capacity while
an officer or director. Nothing contained in this Section 7 shall be deemed to
prohibit, and the Corporation is specifically authorized to enter into,
agreements which provide indemnification rights and procedures permitted by the
SCBCA. Notwithstanding the foregoing or any other provision of the Bylaws, the
Corporation's Articles of Incorporation or applicable law, indemnification of a
director shall not be permitted (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve gross negligence, intentional misconduct, or a
knowing violation of law, (iii) for the types of liability set forth in SCBCA
Section 33-8-330, or (iv) for any transaction from which he received an
improper
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personal benefit; and indemnification of officers shall not be permitted if
inconsistent with public policy.
(g) Continuation of right to indemnifiction. All rights to
indemnification under this Section 7 [including those arising pursuant to
subsection (e) above] shall continue as to a person who has ceased to be a
director or officer, shall inure to the benefit of heirs, executors,
administrators and the estate of such person, and shall be deemed to be a
contract between the Corporation and each such person or entity. This Section 7
shall be binding upon any successor corporation to the Corporation, whether by
way of merger, consolidation, liquidation, dissolution or otherwise.
(h) Notice. If the Corporation indemnifies or advances expenses to a
director under Section 7(a) in connection with a proceeding by or in right of
the Corporation, the Corporation shall report the indemnification or advance
in writing to the shareholders with or before the notice of the next meeting of
shareholders.
(i) Savings clause. If this Section 7 or any portion of it shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify persons specified in this Section 7 to
the full extent permitted by any applicable portion of this Section 7 that
shall not have been invalidated and to the full extent permitted by applicable
law.
ARTICLE VII
Amendment
Subject to the Articles of Incorporation and the SCBCA, the Bylaws may
be amended or repealed at any meeting of the shareholders at which a quorum
exists if the votes in favor of the amendment exceed the votes opposed to the
amendment, or at
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any meeting of the Board of Directors of the Corporation at which a quorum
exists by an affirmative vote of a majority of the members of the Board of
Directors then in office. The shareholders may prescribe that any bylaws
adopted by them shall not be altered, amended or repealed by the Board.
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