UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 01-07284
BALDOR ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Missouri 43-0168840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5711 R.S. Boreham, Jr Street, Fort Smith, Arkansas 72908
(Address of principal executive offices) (Zip Code)
(501) 646-4711
(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 and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
At October 2, 1999, there were 35,902,068 shares of the registrant's common
stock outstanding.
<PAGE>
Index
Baldor Electric Company and Affiliates
Part 1. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated statements of earnings-Three months and
nine months ended October 2, 1999 and October 3, 1998
Condensed consolidated balance sheets-October 2, 1999 and January 2, 1999
Condensed consolidated statements of cash flow-Nine months ended
October 2, 1999 and October 3, 1998
Notes to condensed consolidated financial statements-October 2, 1999
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Part 2. Other Information
Item 2. Recent Sales of Unregistered Securities
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Item 1. Financial Statements
<TABLE>
<CAPTION>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------- -------------------------------
October 2 October 3 October 2 October 3
(In thousands, except share data) 1999 1998 1999 1998
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 144,349 $ 147,358 $ 438,612 $ 453,650
Other income (net) 568 482 1,442 1,309
-------------- -------------- ------------- --------------
144,917 147,840 440,054 454,959
Cost and expenses: Cost of goods sold 100,111 102,808 304,399 316,396
Selling and administrative 24,110 24,269 73,545 75,020
Profit sharing 2,154 2,406 6,967 7,138
Interest 725 292 2,235 1,042
-------------- -------------- ------------- --------------
127,100 129,775 387,146 399,596
-------------- -------------- ------------- --------------
Earnings before income taxes 17,817 18,065 52,908 55,363
Income taxes 6,774 6,873 20,105 21,047
-------------- -------------- ------------- --------------
NET EARNINGS $ 11,043 $ 11,192 $ 32,803 $ 34,316
============== ============== ============= ==============
Net earnings per share-diluted $0.30 $0.29 $0.89 $0.90
============== ============== ============= ==============
Net earnings per share-basic $0.31 $0.30 $0.91 $0.93
============== ============== ============= ==============
Weighted average shares outstanding-diluted 36,653,008 38,352,475 36,901,065 38,194,842
============== ============== ============= ==============
Weighted average shares outstanding-basic 35,982,533 37,224,591 36,175,431 36,946,473
============== ============== ============= ==============
Dividends paid per common share $0.11 $0.10 $0.33 $0.30
============== ============== ============= ==============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Baldor Electric Company and Affiliates
Condensed Consolidated Balance Sheets
October 2 January 2
1999 1999
----------- -----------
<S> <C> <C>
ASSETS (in thousands)
CURRENT ASSETS
Cash and cash equivalents $ 7,918 $ 24,793
Marketable securities 28,196 13,996
Receivables, less allowance of $4,350 105,997 90,045
Inventories: Finished products 67,279 74,561
Work in process 9,945 12,939
Raw materials 46,624 42,477
----------- -----------
123,848 129,977
LIFO valuation adjustment (deduction) (25,702) (26,170)
----------- -----------
98,146 103,807
Other current and deferred tax assets 18,550 23,847
----------- -----------
TOTAL CURRENT ASSETS 258,807 256,488
OTHER ASSETS 32,597 32,301
NET PROPERTY, PLANT AND EQUIPMENT 122,940 123,137
=========== ===========
$ 414,344 $ 411,926
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 24,776 $ 18,900
Employee compensation 7,155 5,620
Profit sharing 6,939 9,420
Anticipated warranty costs 6,100 5,925
Accrued insurance obligations 14,403 15,960
Other accrued expenses 14,861 20,052
Income Taxes 699 3,505
Current portion of long-term obligations 940 980
----------- -----------
TOTAL CURRENT LIABILITIES 75,873 80,362
LONG-TERM OBLIGATIONS 56,493 57,015
DEFERRED INCOME TAXES 15,325 10,257
SHAREHOLDERS' EQUITY
Common stock 3,862 3,841
Additional capital 33,872 31,495
Retained earnings 285,045 264,545
Accumulated other comprehensive income (2,073) (428)
Treasury stock , at cost (54,053) (35,161)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 266,653 264,292
----------- -----------
$ 414,344 $ 411,926
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
----------------------------
October 2 October 3
1999 1998
---------- ----------
(In thousands)
<S> <C> <C>
Operating activities:
Net earnings $ 32,803 $ 34,316
Depreciation and amortization 15,672 15,295
Deferred income taxes 2,933
Changes in operating assets and liabilities:
Receivables (15,952) (7,727)
Inventories 5,661 (2,159)
Other current assets 5,296 (8,818)
Accounts payable 5,876 3,162
Accrued expenses and other liabilities (7,518) (4,074)
Income taxes (2,806) (1,057)
Other , net (3,718) (252)
----------- -----------
Net cash provided from operating activities 35,314 31,619
Investing activities:
Additions to property, plant and equipment (8,967) (26,737)
Sales of available-for-sale securities 12,463 15,362
Purchases of available-for-sale securities (26,663) (12,029)
Acquisitions 0 732
----------- -----------
Net cash used in investing activities (23,167) (22,672)
Financing activities:
Additional long-term borrowings 0 6,270
Reduction of long-term obligations (562) (1,215)
Unexpended debt proceeds (54) (415)
Dividends paid (11,912) (11,158)
Common stock repurchases (17,915) (5,938)
Stock option plans 1,421 2,779
----------- -----------
Net cash used in financing activities (29,022) (9,677)
----------- -----------
Net decrease in cash & cash equivalents (16,875) (730)
Beginning cash and cash equivalents 24,793 9,575
----------- -----------
Ending cash and cash equivalents $ 7,918 $ 8,845
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
Baldor Electric Company and Affiliates
Notes to Unaudited Condensed Consolidated Financial Statements
October 2, 1999
Note A Significant Accounting Policies
Basis of Presentation: The unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements, and therefore should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended January 2,
1999. In the opinion of management, all adjustments (consisting only of normal
recurring items) considered necessary for a fair presentation have been
included. The results of operations for the nine months ended October 2, 1999,
may not be indicative of the results that may be expected for the fiscal year
ending January 1, 2000.
Comprehensive Income: Total comprehensive income was approximately $10.3 million
and $11.2 million for the third quarter of 1999 and 1998 and was approximately
$31.8 million and $34.0 million for the nine months ending October 2, 1999, and
October 3, 1998. Cumulative translation adjustments are the only significant
items included in other comprehensive income.
Segment Reporting: The Company has only one reportable segment; therefore, the
consolidated financial statements reflect segment information.
Computer Software Costs: In 1998, the AICPA issued Statement of Position (SOP)
98-1, Accounting For the Costs of Computer Software Developed For or Obtained
For Internal-Use. The Company adopted the SOP during the second quarter of 1998.
Financial Derivatives: In 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. This statement becomes effective
for the first quarter in fiscal year 2001. The Statement will require companies
to recognize all derivatives on the balance sheet at fair value. The Company's
use of derivatives is minimal, and management continues to study the effects of
adopting the standard and currently believes the adoption will not have a
material effect.
<PAGE>
Note B Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share (EPS):
Three Months Ended
------------------
(In thousands, except per share data) October 2, 1999 October 3, 1998
--------------- ---------------
Numerator Reconciliation:
Net earnings $ 11,043 $ 11,192
======== ========
Denominator Reconciliation:
The denominator for basic EPS:
Weighted average shares 35,983 37,225
Effect of dilutive securities:
Stock options 670 1,127
--- -----
The denominator for diluted EPS-adjusted
weighted average shares 36,653 38,352
====== ======
Basic earnings per share $ 0.31 $ 0.30
====== ======
Diluted earnings per share $ 0.30 $ 0.29
====== ======
Nine Months Ended
-----------------
(In thousands, except per share data) October 2, 1999 October 3, 1998
--------------- ---------------
Numerator Reconciliation:
Net earnings $ 32,803 $ 34,316
======== ========
Denominator Reconciliation:
The denominator for basic EPS:
Weighted average shares 36,175 36,946
Effect of dilutive securities:
Stock options 726 1,249
--- -----
The denominator for diluted EPS-adjusted
weighted average shares 36,901 38,195
====== ======
Basic earnings per share $ 0.91 $ 0.93
====== ======
Diluted earnings per share $ 0.89 $ 0.90
====== ======
<PAGE>
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
While total sales for the 3rd quarter were down 2%, sales for September were the
highest for any month in history. Our ability to ship to our customers and to
quickly process their orders was hurt by the July 1 implementation of our new
company-wide software information system. With those start-up problems now
behind us, we believe the investments made in this system will lower costs,
reduce leadtimes, and provide more information to our customers and salespeople.
Year-to-date sales were down 3% compared to same period in 1998. The balance
between OEM and Distributor sales remained approximately 50% for each.
Third quarter 1999 earnings of $11,043,000 were up compared to the two previous
quarters of 1999, but declined 1% compared to the 3rd quarter of 1998.
Year-to-date earnings for 1999 were down 4% compared to 1998. Gross margins were
30.6% for both the 3rd quarter and nine months period in 1999. This is an
improvement compared to 30.2% for the 3rd quarter and 30.3% for the nine months
period of 1998. Operating margins improved to a record 13.9% for the quarter
compared to 13.8% for the third quarter of 1998 and were a year-to-date
improvement of 13.8% for 1999 compared to 13.7% in 1998.
Selling and administrative expenses, as a percentage of sales, were 16.7% for
the quarter, down slightly from the second quarter of 1999 and up slightly from
16.5% for the third quarter of 1998. Year-to-date SG&A expenses were 16.8%
compared to 16.5% in 1998. Pre-tax margins climbed to an all-time record 12.3%
for the third quarter of 1999.
Liquidity and Capital Resources
Baldor's financial position remains solid with cash and marketable securities at
$36.1 million compared to a balance of $38.8 million at the end of 1998. The
current ratio remained at 3.4 and the debt-to-capitalization ratio was 17.5%
compared to 10.9% for the 3rd quarter of 1998. Return on average equity was
16.2% compared to 17.9% for the 3rd quarter of 1998. Baldor's cash flows from
operations increased to $35.3 million for 1999 compared to $31.6 million for the
same period last year. Baldor's strong balance sheet and healthy cash flows have
allowed the repurchase of 1.6 million shares since our stock repurchase program
was authorized in September 1998.
Year 2000
The Company's comprehensive Year 2000 initiative is being managed internally.
The Company's goal is to ensure that there is no material adverse effect on
operations and that transactions with customers, vendors and financial
institutions will be operational in the year 2000. A new Company-wide
information system that is certified by the vendor to be Year 2000 compliant was
purchased in 1996. This fully integrated information reporting system was
purchased to improve visibility and reaction time to customer orders, reduce
lead times, support international operations, improve productivity and better
manage inventory. The Company has adhered to its implementation schedule and
completed installation in July 1999. The system is in operation.
The Company has evaluated other potential areas, such as vendor compliance, shop
floor technology, and other infrastructure such as phone and alarm systems.
These non-information systems are expected to function properly in the year
2000. Our manufacturing process equipment has been checked and is expected to be
operational in the Year 2000. The cost of addressing these systems for the year
2000 is not material.
We continue to monitor suppliers and financial institutions obtaining written
verification of their compliance status. While we can not guarantee the
performance of outside parties, our suppliers and financial institutions are
indicating that they will be Y2K compliant. Contingency plans have not been
developed due to the responses received from suppliers and financial
institutions and the internal procedures performed by the Company.
The only product that the Company presently produces that utilizes a real-time
clock and a date stamp is the Baldor SmartMotor . This date stamp is used only
for run time and fault logging. It is not used in any control function and in
this capacity will function in the year 2000.
Based upon the procedures described and results achieved, the Company does not
anticipate a materially adverse affect from the Year 2000. Our Company views the
Year 2000 with seriousness and is pleased with the status of our Year 2000
readiness. We will continue to test and monitor our preparedness and address any
complications that may arise.
This Form 10-Q may contain statements which may constitute "forward-looking
statements". Such statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Prospective investors are
cautioned that actual results and experience may differ materially from the
forward-looking statements as a result of many factors, possibly including
changes in economic conditions, competition, fluctuations in raw materials, and
other unanticipated events and conditions. These statements are only as of the
date of this Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in market risk or market risk factors since
the 1998 Annual Report to Shareholders.
PART II. OTHER INFORMATION
Item 2. Recent Sales of Unregistered Securities
During the third quarter of 1999, certain District Managers exercised
non-qualified stock options previously granted to them under the Baldor Electric
Company 1990 Stock Option Plan for District Managers (the DM Plan). The exercise
price paid by the District Manager equaled the fair market value on the date of
grant. The total amount of shares granted under the DM Plan is less than 1% of
the outstanding shares of Baldor common stock.
<PAGE>
None of the transactions were registered under the Securities Act of 1933, as
amended (the "Act"), in reliance upon the exemption from registration afforded
by Section 4(2) of the Act. The Company deems this exemption to be appropriate
given that there are a limited number of participants in the DM Plan and all
parties are knowledgeable about the Company.
Item 5. Other Information
Under Section 7 of Article III of the Company's Bylaws, any shareholder proposal
submitted with respect to Baldor's 2000 Annual Meeting of Stockholders, outside
the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, will
be considered timely if notice is received at the principal office of the
corporation not less than 120 days nor more than 180 days before the first
anniversary of the date the corporation mailed its proxy statement in connection
with the previous year's annual meeting.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit Number Description
3 ii Amendment to the Company's Bylaws as approved at
the Board of Directors meeting November 1999
-filed herewith.
27 Financial Data Schedules-filed herewith in
electronic filing of Form 10-Q.
b. The registrant did not file any reports on Form 8-K during the most
recently completed fiscal quarter.
S I G N A T U R E S
---------------------------
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.
BALDOR ELECTRIC COMPANY
(Registrant)
Date: November 15, 1999 By: /s/ Lloyd G. Davis
----------------- ----------------------
Lloyd G. Davis - Executive Vice President-
Finance, Chief Financial Officer, Secretary
and Treasurer(on behalf of the Registrant and
as principal financial officer)
<PAGE>
BYLAWS
OF
BALDOR ELECTRIC COMPANY
As adopted by the Board of Directors at the May 2,
1980, meeting and including amendments through
August 2, 1999.
ARTICLE I
OFFICES
1. Principal Office. The principal office of the corporation shall be
located at such place, either within or without the State of Missouri, as
the Board of Directors shall designate from time to time.
2. Registered Office and Agent. The corporation shall have and continuously
maintain a registered office and a registered agent within the State of
Missouri. The Board of Directors, from time to time by resolution, may
change the registered agent and the address of the registered office.
3. Additional Offices. The corporation may also have offices and branch
offices at such other places as the Board of Directors from time to time
may designate or the business of the corporation may require.
ARTICLE II
SEAL
The seal of the corporation shall be a circular impression with the name
of the corporation around the rim thereof, the word "CORPORATE" in the
upper portion of the center thereof, the words "MO. 1920" in the lower
portion of the center thereof, and the word "SEAL" in the center. The
Board of Directors, by resolution, may change the form of the corporate
seal from time to time.
ARTICLE III
MEETINGS OF SHAREHOLDERS
1. Place. All meetings of shareholders shall be held at such place within or
without the State of Missouri as may be designated by the Board of
Directors at a meeting held not less than fifteen days prior to such
meeting of shareholders. In the event the Board of Directors fails to
designate a place for the meeting to be held, then the meeting shall be
held at the principal office of the corporation. Anything to the contrary
in this Article III notwithstanding, any meeting of shareholders called
expressly for the purpose of removing one or more directors shall be held
at the registered office or principal office of the corporation in Missouri
or in the city or county in Missouri in which the principal business office
of the corporation is located.
2. Annual Meeting. The annual meeting of the shareholders shall be held the
last Saturday in April or the first Saturday in May of each year, at such
hour as may be specified in the notice of the meeting. However, the day
fixed for such meeting in any year may be changed by resolution of the
Board to such other day in April or May as the Board of Directors may deem
appropriate. If the day fixed for the annual meeting shall be a legal
holiday in the state of the location of such meeting, such meeting shall be
held on the next succeeding business date. At the annual meeting the
shareholders shall elect directors to succeed those directors whose terms
expire and shall transact such other business as may properly come before
the meeting.
3. Special Meetings. Special meetings of shareholders will be called by the
Secretary upon request of the President or a majority of the members of the
Board of Directors or upon the request of the holders of not less than
eighty percent (80%) of all the outstanding shares of the corporation's
stock entitled to vote at such meeting. Notwithstanding the provisions of
any Articles of the Restated Articles of Incorporation, as Amended, or any
other Article herein, this Section of the Bylaws may not be amended or
repealed without the consent of the holders of eighty percent (80%) of the
outstanding shares of the corporation.
4. Notice. Notice, given as provided in Article X of these Bylaws, of each
meeting of shareholders, stating the place, day, and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, is required to be delivered or given as provided in
Article X of these Bylaws not less than ten (10) nor more than seventy (70)
days prior to the date of said meeting.
5. Quorum and Voting. A majority of the outstanding shares of stock of the
corporation, as shall then be in effect, entitled to vote at any meeting,
represented in person or by proxy, constitutes a quorum at all meetings of
the shareholders for the transaction of business, except as otherwise
provided by law, by the corporation's Articles of Incorporation, as then in
effect, or by these Bylaws; provided, however, that in the absence of such
quorum, the holders of a majority of the shares entitled to vote at said
meeting and represented in person or by proxy, have the right successively
to adjourn the meeting to a specified date not longer than ninety (90) days
after such adjournment or to another place. Notice need not be given of the
adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, and no notice of such
adjournment need be given to shareholders not present at the meeting.
Shares represented by a proxy which directs that the shares abstain from
voting or that a vote be withheld on a matter, shall be deemed to be
represented at the meeting for quorum purposes. Shares as to which voting
instructions are given as to at least one of the matters to be voted on
shall also be deemed to be so represented. If the proxy states how shares
will be voted in the absence of instructions by the shareholder, such
shares shall be deemed to be represented at the meeting.
6. Informal Action by Shareholders. In all matters, every decision of a
majority of shares entitled to vote on the subject matter and represented
in person or by proxy at a meeting at which a quorum is present shall be
valid as an act of the shareholders, unless a larger vote is required by
law, by these Bylaws, or the corporation's Articles of Incorporation, as
then in effect. Shares represented by a proxy which directs that the shares
be voted to abstain from voting or that a vote be withheld on a matter
shall be deemed to be represented at the meeting as to such matter. Shares
represented by a proxy as to which voting instructions are not given as to
one or more matters to be voted on shall not be deemed to be represented at
the meeting for purposes of the vote as to such matter or matters. A proxy
which states how shares will be voted in the absence of instructions by the
shareholder as to any matter shall be deemed to give voting instructions as
to such matter.
7. Notice of Shareholder Business at Annual Meetings. At any annual meeting of
shareholders, only such business shall be conducted as shall have been
properly brought before the meeting. In addition to any other requirements
imposed by or pursuant to law, the corporation's Articles of Incorporation,
as then in effect, or these Bylaws, each item of business to be properly
brought before an annual meeting must:
(a) be specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors or the persons
calling the meeting pursuant to the corporation's Articles of
Incorporation, as then in effect;
(b) be otherwise properly brought before the meeting by or at the
direction of the Board of Directors; or
(c) be otherwise properly brought before the meeting by a shareholder.
For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in
writing to the Secretary of the corporation. To be timely, a shareholder's
notice must be delivered to or mailed to and received at the principal
office of the corporation not less than 120 days nor more than 180 days
before the first anniversary of the date the corporation mailed its proxy
statement in connection with the previous year's annual meeting.
A shareholder's notice to the Secretary of the corporation shall set forth
as to each matter the shareholder proposes to bring before the annual
meeting:
(a) a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the annual
meeting,
(b) the name and address, as they appear on the corporation's books, of
the shareholder(s) proposing such business,
(c) the number of shares of common stock of the corporation which are
beneficially owned by the proposing shareholder(s), and
(d) any material interest of the proposing shareholder(s) in such
business.
Notwithstanding anything in these Bylaws to the contrary, but subject to
Section 12 of Article VI hereof, no business shall be conducted at an
annual meeting except in accordance with the procedures set forth in this
Section 7 of Article III. The Chairman of the Board of Directors, if the
facts warrant, determine and declare to the annual meeting that business
was not properly brought before the annual meeting in accordance with the
provisions of this Section 7 of Article III. If the Chairman of the Board
of Directors so determines, the Chairman of the Board of Directors shall so
declare to the meeting and any such business not properly brought before
the annual meeting shall not be transacted. The Chairman of the Board of
Directors shall have absolute authority to decide questions of compliance
with the foregoing procedures, and the ruling thereon shall be final and
conclusive. The provisions of this Section 7 shall also govern what
constitutes timely notice for purposes of Rule 14a-4(c) under the Exchange
Act.
ARTICLE IV
VOTING PROCEDURE
1. List of Voters. The officers having charge of the transfer book for shares
of the corporation shall make a complete list of the shareholders entitled
to vote at any meeting at least ten (10) days before such meeting. Said
list shall be arranged in alphabetical order and shall include the address
and the number of shares of stock of the corporation held by each. Said
list shall be kept on file at the registered office of the corporation
within the State of Missouri, at least ten (10) days prior to such meeting
and shall be open to the inspection of any shareholder during said period
and up to the adjournment of the meeting. Such list also shall be produced
and kept open at the time and place of the meeting and shall be subject to
inspection by any shareholder prior to adjournment of the meeting. The
original share ledger or transfer book or a duplicate thereof kept in the
State of Missouri shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger or transfer book
or to vote at any meeting of shareholders. Failure to comply with the
requirements of this Section 1 of Article IV shall not affect the validity
of any action taken at such meeting.
2. Inspectors. Every meeting of the shareholders shall be called to order by
the Chairman of the Board of Directors, the President, or the Secretary of
the corporation, or persons calling said meeting. If the object of said
meeting is to elect directors or to take a vote of the shareholders on any
proposition, then, the person presiding at said meeting may, and if
requested to do so by any officer of the corporation or the holders of a
majority of the shares present at such meeting, and represented in person
or by proxy, shall, appoint not less than two persons who are not directors
as inspectors to receive and canvass the votes given at such meeting and
certify the results to the person presiding. In all cases where the right
to vote any share or shares shall be questioned, it shall be the duty of
the inspectors or the persons conducting the vote to require the transfer
books as evidence of shares held in the corporation, and all shares that
may appear standing thereon in the name of any person or persons shall be
entitled to be voted by such person or persons directly by themselves or by
proxy.
3. Inspectors' Oath. Any inspector, before he shall enter upon the duties of
his office, shall take and subscribe the following oath before any
officer authorized by law to administer oaths: "I do solemnly swear, that
I will execute the duties of an inspector of the election now to be held
with strict impartiality, and according to the best of my ability."
4. Close of Transfer Books. At each meeting of the shareholders, whether
annual or special, the transfer books of the corporation shall be produced
and kept open at the time and place of the meeting and shall be subject to
the inspection of any shareholder. The Board of Directors shall have the
power to close the transfer books, or fix in advance a date not exceeding
seventy (70) days preceding, or in advance of, the date of any meeting of
shareholders as a record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting. If the Board of
Directors shall not have fixed a record date or closed the transfer books
of its shareholders entitled to notice of, and to vote at, a meeting of
shareholders, only the shareholders who are shareholders of record at the
close of business on the twentieth day preceding the date of the meeting
shall be entitled to notice of, and to vote at, the meeting, and any
adjournment of the meeting; except that, if prior to the meeting written
waivers of notice of the meeting are signed and delivered to the
corporation by all the shareholders of record at the time the meeting is
convened, only the shareholders who are shareholders of record at the time
the meeting is convened shall be entitled to vote at the meeting, and any
adjournment(s) of the meeting.
ARTICLE V
VOTERS
1. Eligible Voters. Any shareholder owning one or more shares of stock on
record in the stock books of the corporation on the record date or on the
date of closing of the transfer books of the corporation as provided in
Section 4 of Article IV of these Bylaws, shall be eligible to vote at any
meeting of shareholders; provided, however, that no person or entity
shall be admitted to vote any shares belonging or hypothecated to the
corporation. On each matter submitted to a vote, each such shareholder
shall have as many votes as he has shares of stock in this corporation.
Cumulative voting in the election of directors and for any other purpose
is specifically and expressly denied.
2. Proxies. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or his duly authorized attorney in fact or by
any other method allowed by the laws of the State of Missouri. By way of
explanation but not limitation, a shareholder may authorize another person
to act for the shareholder as proxy by transmitting or authorizing the
transmission of the proxy by way of a telegram, cablegram, facsimile, or
other means of electronic transmission, or by telephone, to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy
support service organization, or like agent duly authorized by the person
who will be the holder of the proxy to receive such transmission. However,
any such telegram, cablegram, facsimile, or other means of electronic
transmission, or telephonic transmission shall either set forth or be
submitted with information from which it can be determined that the
telegram, cablegram, facsimile, or other electronic transmission, or
telephonic transmission was authorized by the shareholder. If it is
determined that such telegrams, cablegrams, facsimiles, or other electronic
transmissions, or telephonic transmissions are valid, the inspectors or, if
there are not inspectors, such other persons making such determination
shall specify the information upon which they relied. Electronic
transmission shall mean any process of communication not directly involving
the physical transfer of paper that is suitable for the retention,
retrieval, and reproduction of information by the recipient. No proxy shall
be valid after eleven (11) months from the date of execution or
transmission unless otherwise provided in the proxy. A duly executed proxy,
or a proxy otherwise transmitted in a manner authorized by this Section 2
of Article V, shall be irrevocable if it states that it is irrevocable and
if, and only so long as, it is coupled with an interest sufficient in law
to support an irrevocable power of attorney. The interest with which it is
coupled need not be an interest in the shares themselves.
ARTICLE VI
BOARD OF DIRECTORS
1. Management and Number. The business of the corporation shall be managed
under the direction of its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed, from
time to time, by resolutions adopted by the Board of Directors, but shall
not be less than three (3) persons. The Board of Directors shall be divided
into three classes whose terms expire at different times. At the annual
shareholders' meeting to be held in 1977, three (3) Directors shall be
elected for a term of one (1) year; three (3) Directors for a term of two
(2) years; and three (3) Directors for a term of three (3) years. At each
subsequent annual shareholders' meeting, successors to the class of
directors whose terms expire that year shall be elected to hold office for
a term of three (3) years. Notwithstanding the provisions of any other
Article herein, this Section of the Bylaws may not be amended or repealed
without the consent of the holders of two-thirds of the outstanding shares
of the corporation.
2. Vacancies. Whenever any vacancy on the Board of Directors shall occur due
to death, resignation, retirement, removal, increase in the number of
directors, or otherwise, a majority of the remaining directors then in
office, even if less than a majority of the entire Board of Directors, may
fill the vacancy or vacancies. A director so elected by the Board of
Directors pursuant to this Section 2 of Article VI to fill a vacancy or a
newly created directorship need not be presented for election by
shareholders until the class to which the director has been so elected by
the Board of Directors is presented for election by the shareholders. The
Board of Directors shall apportion any increase or decrease in
directorships among the classes as nearly equal in number as possible.
Notwithstanding the provisions of any other Article herein, only the
remaining directors of the corporation shall have the authority, in
accordance with the procedure stated above, to fill any vacancy which
exists on the Board of Directors.
3. Quorum. A majority of the full Board of Directors shall constitute a quorum
for the transaction of business by the Board of Directors, unless a greater
number is required by the corporation's Articles of Incorporation, as then
in effect, or these Bylaws. However, in the absence of such a quorum, a
majority of the directors present and voting at a meeting shall have the
right successively to adjourn the meeting to a specified date, and no
notice of such adjournment need be given to directors not present at the
meeting. Any act or decision of a majority of the directors present at a
meeting at which a quorum is present shall be the act or decision of the
Board of Directors, unless the act of a greater number is required by the
corporation's Articles of Incorporation, as then in effect, or these
Bylaws.
4. Place of Meetings. Meetings of directors shall be held at the principal
office of the corporation or such other place or places, either within or
without the State of Missouri, as may be agreed upon by the Board of
Directors. Members of the Board of Directors may also participate in
meetings of the Board of Directors by means of conference telephone or
similar communications equipment whereby all persons participating in the
meeting can hear each other, and participation in a meeting in such
manner shall constitute presence in person at the meeting for all
purposes.
5. Regular and Special Meetings. Regular meetings of the Board of Directors
shall be held as frequently and at such time and place as may be
determined by the Board of Directors from time to time. Special meetings
of the Board of Directors shall be called by the Secretary of the
corporation at any time on request of the Chairman of the Board, the
President of the corporation, or two members of the Board of Directors.
6. Notice. Regular meetings of the Board of Directors may be held without
notice. Special meetings of the Board of Directors may be held upon three
(3) days' notice, given as provided in Article X of these Bylaws or by
telephone.
7. Interest in Transactions. No contract or transaction between the
corporation and one or more of its directors or officers, or between the
corporation and any other corporation, partnership, association, or other
organization in which one or more of the corporation's directors or
officers are directors or officers, or have a financial interest, shall
be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting of the
board or committee thereof which authorizes the contract or transaction,
or solely because his or their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of
Directors of the corporation or committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors,
even though the disinterested directors be less than a quorum; or
(b) The material facts as his relationship or interest and as to the
contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the shareholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized or approved by the Board of Directors, a
committee thereof, or the shareholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or a committee which
authorizes a contract or transaction.
8. Executive Committee. The Board of Directors may appoint two or more
directors to constitute an Executive Committee and may vest such
committee with all or any portion of the powers vested by law or in these
Bylaws in the full Board of Directors and may provide for rules of
procedure to govern the operation of such committee; provided that in no
event shall the Executive Committee or any other committee have the power
to approve plans of liquidation, merger, or reorganization, the sale of
all or substantially all of the assets of the corporation, or amendments
of these Bylaws or the corporation's Articles of Incorporation, as then
in effect, of the corporation.
9. Other Committees. The Board of Directors by resolution adopted by a
majority of the whole Board of Directors may appoint other committees
composed of two or more members of the Board of Directors and may vest in
such committees, to the extent provided in the resolution, any portion of
the powers vested by law or in these Bylaws in the full Board of
Directors and may provide for rules for procedure to govern the operation
of such committees.
10. Informal Action by the Board of Directors and Committees of the Board of
Directors. Any action which is required to be or may be taken at a meeting
of the Board of Directors or any Committee of the Board of Directors, may
be taken without a meeting if consents in writing, setting forth the action
so taken, are signed by all the members of the Board of Directors or of the
Committee, as the case may be. The consents shall have the same force and
effect as a unanimous vote of the directors, at a meeting duly held, and
may be stated as such in any certificate or document filed under the
provisions of the General and Business Corporation Law of Missouri. The
Secretary of the corporation shall file the consents with the minutes of
the meetings of the Board of Directors or the appropriate Committee of the
Board of Directors, as the case may be.
11. Qualification of Directors. The Board of Directors shall be composed of
individuals who are at least 21 years of age, shareholders of the
corporation, and citizens of the United States. The Board of Directors, by
the affirmative vote of at least a majority of the directors then serving
on the Board of Directors, shall determine that an individual meets these
qualifications prior to his nomination as a director. If not nominated by
the Board of Directors but nominated by shareholders of the corporation,
then the Board of Directors shall determine by the affirmative vote of at
least a majority of the directors then serving on the Board of Directors
that such individual meets the qualifications of this Section 11 of Article
VI or such individual shall not stand for election. The Board of Directors
may, upon the affirmative vote of at least a majority of the directors then
serving on the Board of Directors, waive any or all of the above
qualification requirements as to any existing director or any individual
who has been or is to be nominated as a director.
12. Nomination of Directors. Nominations for election to the Board of Directors
may be made by the Board of Directors, or by any shareholder of any
outstanding class of capital stock of the corporation entitled to vote in
the election of directors. Nominations, other than those made by the
existing Board of Directors, shall be made in writing and shall be
delivered or mailed to the Secretary of the corporation not less than 120
days nor more than 180 days before the first anniversary of the date the
corporation mailed its proxy statement in connection with the previous
year's annual meeting. Such nomination and notification shall contain the
following information to the extent known to the notifying shareholder:
(a) The names and addresses of the proposed nominee or nominees;
(b) The principal occupation of each proposed nominee;
(c) The total number of shares that, to the knowledge of the notifying
or nominating shareholder, will be noted for each of the proposed
nominees;
(d) The name and residence address of each notifying or nominating
shareholder; and
(e) The number of shares owned by the notifying or nominating
shareholder.
Nominations not made in accordance herewith may, in his discretion, be
disregarded by the Chairman of the Board of Directors, and upon his
instructions, the judges of election may disregard all votes cast for
each such nomination.
ARTICLE VII
OFFICERS
1. Executive Officers. The executive officers of the corporation shall be a
Chairman of the Board of Directors, a President, a Vice President, a
Secretary and a Treasurer, and such other additional officers, including
an Executive Vice President, Vice Presidents by whatever designation
determined by the Board of Directors, Assistant Secretaries and Assistant
Treasurers, as the Board of Directors may from time to time elect. Any
two or more offices may be held by the same individual.
2. Election and Term. Each executive officer shall be elected by a majority
of the whole number of the Board of Directors, and shall hold office as
determined by the Board of Directors. At any meeting of the Board of
Directors, the Board of Directors may elect such other officers as it
shall deem necessary, who shall hold office as determined by the Board of
Directors, and who shall have such authority and shall perform such
duties as from time to time shall be prescribed by the Board of
Directors.
3. Removal. Any officer elected by the Board of Directors may be removed by
the affirmative vote of a majority of the entire Board of Directors
whenever, in its judgment, the interests of the corporation will be
served thereby.
ARTICLE VIII
DUTIES OF OFFICERS
1. Chairman of the Board of Directors. The Chairman of the Board of Directors
shall:
(a) be the Chairman of the Executive Committee and the Board of Directors
and shall perform such duties as shall be assigned to him and shall
exercise such powers as may be granted to him by the Board of
Directors;
(b) preside at all meetings of the shareholders and
directors;
(c) have the authority to sign or countersign certificates,
contracts, and other instruments of the corporation, including bonds,
mortgages, conveyances and other contracts requiring the seal of the
corporation; and (d) in the absence of the direction by the Board of
Directors to the contrary, have the power to vote all securities held
by the corporation and to issue proxies therefor.
2. President. The President shall:
(a) be the Chief Executive Officer of the corporation and perform such
duties as shall be assigned to him and shall exercise such powers as
may be granted to him by the Board of Directors or by the Chairman of
the Board of Directors of the corporation;
(b) have general supervision and active management of the business and
finances of the corporation;
(c) see that all orders and resolutions of the Board of Directors are
carried into effect; subject, however, to the right of the directors
to delegate any specific powers to any other officer or officers of
the corporation, except such as may be by statute exclusively
conferred upon the President;
(d) have the authority to sign or countersign certificates, contracts, and
other instruments of the corporation, including bonds, mortgages,
conveyances and other contracts requiring the seal of the corporation;
and
(e) in the absence or disability of the Chairman of the Board of
Directors, perform the duties and exercise the powers of the Chairman
of the Board of Directors with the same force and effect as if
performed by the Chairman of the Board of Directors, and shall be
subject to all restrictions imposed upon him.
3. Vice Presidents. The Executive Vice President, if any, and the Vice
Presidents shall:
(a) perform such duties as shall be assigned to them; and
(b) exercise such powers as may be granted to them by the Board of
Directors or by the Chairman of the Board of Directors.
4. The Secretary. The Secretary shall:
(a) attend all meetings of the shareholders and of the Board of
Directors and act as clerk thereof, and shall record all votes and
the minutes of all proceedings in a minute book to be kept for
that purpose;
(b) keep in safe custody the seal of the corporation, and when
authorized by the Chairman of the Board of Directors, the
President or a Vice President, shall affix the seal to any
instrument requiring the seal, and, when so ordered, add his
signature as an attestation thereof;
(c) give, or cause to be given, a notice as required of all meetings
of the shareholders and of the Board of Directors;
(d) keep or cause to be kept a stock certificate and transfer book and
a list of all the shareholders and their respective addresses; and
(e) perform such other duties as may be prescribed from time to time
by the Board of Directors or the Chairman of the Board of
Directors.
5. The Treasurer. The Treasurer shall:
(a) have custody of the corporate funds and securities and shall keep
or cause to be kept full and accurate accounts of receipts and
disbursements in books of the corporation to be maintained for
such purpose;
(b) deposit all moneys and other valuable effects of the corporation
in the name and to the credit of the corporation in depositories
designated by the Board of Directors;
(c) render to the Board of Directors and the Chairman of the Board of
Directors, as they may require, an account of all transactions and
of the financial condition of the corporation;
(d) disburse the funds of the corporation as may be ordered by
the Board of Directors; and (e) perform such other duties as may
be prescribed from time to time by the Board of Directors or the
Chairman of the Board of Directors.
6. Delegation of Power. In the absence of the Chairman of the Board of
Directors, or if the Chairman of the Board of Directors is unable to
perform the duties of the Chairman's position, the President shall perform
the duties and exercise the powers of the Chairman of the Board of
Directors, with the same force and effect as if performed by the Chairman
of the Board of Directors, and shall be subject to all restrictions imposed
on the authority of the position. In the absence of the President, or if
the President is unable to perform the duties of the President's position,
the Chief Financial Officer (or the principal financial officer) shall
exercise the powers of the President with the same force and effect as if
performed by the President, and shall be subject to all restrictions
imposed on the authority of the position. In the absence or disability of
any officer of the corporation other than the Chairman of the Board of
Directors or the President, the Assistant of such officer shall perform the
duties and exercise the powers of such officer with the same force and
effect as if performed by such officer, and shall be subject to all
restrictions imposed upon such officer. In addition, and without limiting
the generality of the foregoing, in case of the absence of any officer of
the corporation or for any other reason that the Board of Directors may
deem sufficient, the Board of Directors, by resolution, may delegate the
powers or duties of such officer to any other officer or to any director
for the time being.
ARTICLE IX
CERTIFICATES OF STOCK AND TRANSFERS
1. Issuance. Certificates of stock of the corporation shall be issued and
signed by:
(a) (i) the Chairman of the Board of Directors,
(ii) the President, or
(iii) a Vice President, and
(b) (i) the Secretary,
(ii) an Assistant Secretary,
(iii) the Treasurer, or
(iv) an Assistant Treasurer.
Certificates of stock of the corporation shall bear the corporate seal.
Such seal may be facsimile, engraved or printed, and if any such
certificate shall be signed by a transfer agent or by a registrar, the
signature of any such officer upon such certificate may be facsimile,
engraved or printed. Certificates shall be numbered consecutively and
registered as they are issued. Each certificate shall indicate, upon its
face, among other things, the name of the corporation, the owner's name,
the number and class of shares of stock represented by the certificate,
the par value of shares of such class, the date of its issuance, and the
manner in which the shares may be transferred.
2. Transfers. Transfers of stock shall be made only on the books of the
corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or a transfer agent of the corporation,
and on surrender of the certificates for such shares properly endorsed
and the payment of all taxes thereon.
3. Transfer Books. Proper books shall be kept under the direction of the
Secretary of the corporation, showing the ownership and transfer of all
certificates of stock. The Board of Directors shall have power to close
said transfer books of the corporation for a period not exceeding seventy
(70) days preceding the date of payment of any dividend, or the date for
the allotment of rights, or the date when any change or conversion or
exchange of shares shall go into effect. In lieu of closing the stock
transfer books as aforesaid, the Board of Directors may fix in advance a
date not exceeding seventy (70) days preceding the date for the payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of shares shall go into effect, as a
record date for the determination of the shareholders entitled to receive
payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any change, conversion or exchange of
shares. In such case, such shareholders and only such shareholders as shall
have been shareholders of record on the date of closing the transfer books
or on the record date so fixed shall be entitled to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any shares on
the books of the corporation after such date of closing of the transfer
books or such record date fixed as aforesaid.
4. Holders of Record. The corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person or
entity, whether or not it shall have express or other notice thereof, save
as expressly provided by the laws of the State of Missouri.
5. Lost, Stolen or Destroyed Certificates. The Board of Directors may
authorize a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation and
alleged to have been lost, stolen or destroyed, upon the making of an
affidavit of the fact by the shareholder claiming the certificate of stock
to be lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors, in its discretion and
as a condition precedent to the issuance thereof, may require the owner of
such lost, stolen or destroyed certificate or certificates, or the owner's
legal representative, to give the corporation a bond sufficient to
indemnify it against any claim that may be made against the corporation on
account of the alleged loss, theft, or destruction of such certificate(s)
or the issuance of such new certificate(s).
ARTICLE X
NOTICES
1. Notice Deemed Given. Whenever under the provisions of these Bylaws notice
is required to be delivered to any director, officer, or shareholder,
such notice shall be deemed to be delivered when:
(a) deposited in the United States mail with postage thereon prepaid,
(b) dispatched by prepaid telegram, addressed to such party at such
party's address as it appears on the records of the corporation,
(c) delivered in person to the party, or
(d) transmitted to such party the recipient by electronic
transmission, which means any process of communication not
directly involving the physical transfer of paper that is suitable
for the retention, retrieval, and reproduction of information by
the recipient.
2. Attendance as Waiver. Notice of any meeting required to be given under
the provisions of these Bylaws or the laws of the State of Missouri shall
be deemed waived by the attendance at such meeting of the party or
parties entitled to notice thereof, except where a party or parties
attend a meeting for the express purpose of objecting to the transaction
of any business because the meeting was not lawfully called or convened.
3. Waiver of Notice. Any notice required to be given under the provisions of
these Bylaws or the laws of the State of Missouri may be waived by the
persons entitled thereto signing a waiver of notice before or after the
time of said meeting, and such waiver shall be deemed equivalent to the
giving of such notice. Such waiver of notice may be executed in person by
the party entitled thereto or by the shareholder's agent duly authorized
in writing so to do.
ARTICLE XI
AMENDMENTS
1. By Shareholders. These Bylaws, or any of them, or any additional or
supplementary Bylaws, may be altered, amended, or repealed, and new
Bylaws may be adopted at any annual meeting of the shareholders without
notice, or at any special meeting the notice of which shall set forth the
terms of the proposed Bylaw or Bylaws, or action to be taken with respect
to any Bylaw or Bylaws, by a vote of the majority of the shares
represented in person or by proxy and entitled to vote at such annual or
special meeting, as the case may be.
2. By Directors. The Board of Directors also shall have the power to adopt
new Bylaws, and to amend, alter, and repeal these Bylaws and any
additional and supplementary Bylaws, at any regular or special meeting of
the Board of Directors unless otherwise provided in the corporation's
Articles of Incorporation, as then in effect. Notice of any such action
to be taken on any Bylaws need not be included in the call of said
meeting.
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