FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _______________
Commission file number 1-13934
MIDWEST EXPRESS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1828757
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6744 South Howell Avenue
Oak Creek, Wisconsin 53154
(Address of Principal executive offices)
(Zip code)
414-570-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of July 31, 1999, there were 14,156,317 shares of Common Stock, $.01 par
value, of the Registrant outstanding.
Page 1
<PAGE>
MIDWEST EXPRESS HOLDINGS, INC.
FORM 10-Q
For the period ended June 30, 1999
INDEX
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements (unaudited)
Consolidated Statements of Income 3
Condensed Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Unaudited Notes to Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 8
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 18
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
2
<PAGE>
Part I Item I - Financial Statements
<TABLE>
MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating revenues:
Passenger service ........................ $ 108,044 $ 91,597 $ 196,906 $ 170,798
Cargo .................................... 2,893 2,939 5,926 5,869
Other .................................... 6,725 5,561 13,711 11,841
--------- --------- --------- ---------
Total operating revenues ............... $ 117,662 $ 100,097 216,543 188,508
--------- --------- --------- ---------
Operating expenses:
Salaries, wages and benefits ............. 32,210 29,178 61,232 55,481
Aircraft fuel and oil .................... 11,883 10,410 22,240 21,612
Commissions .............................. 8,314 8,128 15,381 14,753
Dining services .......................... 6,237 4,920 11,435 9,318
Station rental, landing and other fees ... 7,293 6,240 15,296 13,446
Aircraft maintenance materials and repairs 11,522 8,985 21,900 16,452
Depreciation and amortization ............ 3,124 2,414 6,093 4,749
Aircraft rentals ......................... 4,648 4,713 9,538 9,424
Other .................................... 11,627 8,278 21,359 17,039
--------- --------- --------- ---------
Total operating expenses ............... 96,858 83,266 184,474 162,274
--------- --------- --------- ---------
Operating income ................................ 20,804 16,831 32,069 26,234
--------- --------- --------- ---------
Other income (expense):
Interest income ........................ 195 476 402 890
Other .................................. (103) (90) (210) (179)
--------- --------- --------- ---------
Total other income (expense) ........... 92 386 192 711
--------- --------- --------- ---------
Income before income taxes ...................... 20,896 17,217 32,261 26,945
Provision for income taxes ...................... 7,836 6,456 12,098 10,104
--------- --------- --------- ---------
Net income ...................................... $ 13,060 $ 10,761 $ 20,163 $ 16,841
========= ========= ========= =========
Net income per common share - basic ............. $ 0.92 $ 0.76 $ 1.43 $ 1.19
========= ========= ========= =========
Net income per common share - diluted ........... $ 0.91 $ 0.75 $ 1.41 $ 1.17
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
Part I Item I - Financial Statements
MIDWEST EXPRESS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
1999 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ................... $ 14,594 $ 13,455
Accounts receivable:
Traffic, less allowance for doubtful
accounts of $207 and $251 at June
30, 1999 and December 31, 1998,
respectively .......................... 8,558 5,450
Other receivables ....................... 2,841 3,804
--------- ---------
Total accounts receivable ...... 11,399 9,254
Inventories ................................. 5,039 4,020
Prepaid expenses ............................ 6,079 6,358
Deferred income taxes ....................... 4,676 5,521
Aircraft and modifications intended to
be financed by sale and leaseback
transactions ............................... -- 951
--------- ---------
Total current assets ........... 41,787 39,559
--------- ---------
Property and equipment, at cost .................. 287,582 243,284
Less accumulated depreciation ............... 90,020 82,701
--------- ---------
Net property and equipment ....................... 197,562 160,583
Landing slots and leasehold rights, net .......... 4,409 4,572
Purchase deposits on flight equipment ............ 4,117 13,383
Other assets ..................................... 3,104 2,380
--------- ---------
Total assets ..................................... $ 250,979 $ 220,477
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................ $ 6,471 $ 5,064
Income taxes payable ........................ 2,288 2,305
Air traffic liability ....................... 42,001 35,285
Accrued liabilities ......................... 37,391 39,367
--------- ---------
Total current liabilities ...... 88,151 82,021
--------- ---------
Long-term debt ................................... 3,144 3,206
Deferred income taxes ............................ 12,782 13,647
Noncurrent scheduled maintenance expense ......... 14,078 12,082
Accrued pension and other postretirement
benefits ........................................ 8,393 6,201
Other noncurrent liabilities ..................... 5,440 5,688
--------- ---------
Total liabilities ................................ 131,988 122,845
--------- ---------
Shareholders' equity:
Preferred stock, without par value,
5,000,000 shares authorized,
no shares issued or outstanding ............ -- --
Common stock, $.01 par value, 25,000,000
shares authorized, 14,539,231 shares
issued in 1999 and 14,464,056 in 1998 ...... 145 145
Additional paid-in capital .................. 10,975 9,680
Treasury stock, at cost, 384,181
shares in 1999 and 381,015
shares in 1998 ............................. (6,501) (6,401)
Retained earnings ........................... 114,372 94,208
--------- ---------
Total shareholders' equity ....................... 118,991 97,632
--------- ---------
Total liabilities and shareholders' equity ....... $ 250,979 $ 220,477
========= =========
See notes to consolidated financial statements.
4
<PAGE>
Part I Item I - Financial Statements
MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Ended June 30,
1999 1998
Operating activities:
Net income .................................... $ 20,163 $ 16,841
Items not involving the use of cash:
Depreciation and amortization ............. 6,093 4,749
Deferred income taxes ..................... (20) (3,141)
Other ..................................... 2,697 2,505
Changes in operating assets and liabilities:
Accounts receivable ....................... (2,145) (635)
Inventories ............................... (1,019) 62
Prepaid expenses .......................... 279 (1,216)
Accounts payable .......................... 1,407 (1,203)
Income taxes payable ...................... (17) 2,811
Accrued liabilities ....................... (1,726) 103
Air traffic liability ..................... 6,716 5,769
-------- --------
Net cash provided by operating activities ..... 32,428 26,645
-------- --------
Investing activities:
Capital expenditures .......................... (36,368) (40,793)
Proceeds from sale of property and equipment .. 28 3
Other ......................................... (973) (3,131)
-------- --------
Net cash used in investing activities ......... (37,313) (43,921)
-------- --------
Financing activities:
Proceeds from sale and leaseback transactions . 951 --
Other ......................................... 5,073 3,689
-------- --------
Net cash provided by financing activities ..... 6,024 3,689
-------- --------
Net increase (decrease) in cash and
cash equivalents .................................. 1,139 (13,587)
Cash and cash equivalents, beginning of period ..... 13,455 32,066
-------- --------
Cash and cash equivalents, end of period ........... $ 14,594 $ 18,479
======== ========
See notes to consolidated financial statements.
5
<PAGE>
Midwest Express Holdings, Inc.
Unaudited Notes to Consolidated Financial Statements
1. Business and Basis of Presentation
The consolidated financial statements for the six-month period ended June 30,
1999 are unaudited and reflect all adjustments (consisting only of normal
recurring adjustments) that are, in the opinion of management, necessary for a
fair presentation of the financial position and operating results for the
interim period. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with Management's Discussion and Analysis of Financial Condition and
Results of Operations, contained in the Company's Annual Report to Shareholders
and incorporated by reference in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998. The results of operations for the six-month
period ended June 30, 1999 are not necessarily indicative of the results for the
entire fiscal year ending December 31, 1999.
2. New Accounting Standards
In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The Company is
currently in the process of evaluating the accounting and disclosure effects of
this Statement and anticipates adopting the Statement in the first quarter of
2001.
3. Segment Reporting
Midwest Express and Astral, doing business as Skyway Airlines, constitute the
reportable segments of the Company. The Company's reportable segments are
strategic units that are managed independently because they provide different
services with different cost structures and marketing strategies. Additional
detail on segment reporting is included in the Company's Annual Report on Form
10-K for the year ended December 31, 1998. Financial information for the three
months and six months ended June 30 on the two operating segments, Midwest
Express and Astral, follows (in thousands):
6
<PAGE>
Three Months Ended June 30, 1999
Midwest
Express Astral Elimination Consolidation
Operating revenues .......... $106,930 $ 11,670 ($ 938) $117,662
Operating income ............ 19,477 1,327 -- $ 20,804
Depreciation and amortization 2,924 200 -- 3,124
Interest income ............. 195 150 (150) 195
Interest expense ............ 218 -- (150) 68
Income before income taxes .. 19,419 1,477 -- 20,896
Provision for income taxes .. 7,282 554 -- 7,836
Total assets ................ 241,813 21,950 (12,784) 250,979
Capital expenditures ........ 9,630 401 -- 10,031
Three Months Ended June 30, 1998
Midwest
Express Astral Elimination Consolidation
Operating revenues .......... $ 90,464 $ 10,673 ($ 1,040) $100,097
Operating income ............ 15,417 1,414 -- 16,831
Depreciation and amortization 2,242 172 -- 2,414
Interest income ............. 476 146 (146) 476
Interest expense ............ 216 -- (146) 70
Income before income taxes .. 15,657 1,560 -- 17,217
Provision for income taxes .. 5,871 585 -- 6,456
Total assets ................ 184,835 18,076 (10,940) 191,971
Capital expenditures ........ 31,223 60 -- 31,283
Six Months Ended June 30, 1999
Midwest
Express Astral Elimination Consolidation
Operating revenues .......... $196,770 $ 21,562 ($ 1,789) $216,543
Operating income ............ 30,673 1,396 -- 32,069
Depreciation and amortization 5,694 399 -- 6,093
Interest income ............. 402 282 (282) 402
Interest expense ............ 419 -- (282) 137
Income before income taxes .. 30,583 1,678 -- 32,261
Provision for income taxes .. 11,469 629 -- 12,098
Total assets ................ 241,813 21,950 (12,784) 250,979
Capital expenditures ........ 35,170 1,198 -- 36,368
Six Months Ended June 30, 1998
Midwest
Express Astral Elimination Consolidation
Operating revenues .......... $170,263 $ 20,191 ($ 1,946) $188,508
Operating income ............ 24,828 1,406 -- 26,234
Depreciation and amortization 4,411 338 -- 4,749
Interest income ............. 890 254 (254) 890
Interest expense ............ 396 -- (254) 142
Income before income taxes .. 25,285 1,660 -- 26,945
Provision for income taxes .. 9,482 623 -- 10,104
Total assets ................ 184,835 18,076 (10,940) 191,971
Capital expenditures ........ 40,702 91 -- 40,793
7
<PAGE>
Part I Item 2.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
Overview
The Company's 1999 second quarter operating income was $20.8 million, an
increase of $4.0 million from the second quarter 1998. Net income increased by
$2.3 million, or 21.4%, to $13.1 million. For the first six months of 1999,
operating income was $32.1 million, an increase of $5.8 million from 1998.
Year-to-date net income increased from $16.8 million to $20.2 million, or 19.7%.
Year-to-date diluted earnings per share were $1.41, a $.24, or 20.5% increase
over 1998 results.
The Company's total revenue in the second quarter increased $17.6 million, or
17.5%, relative to the second quarter 1998. The increase in revenue was
primarily attributable to record passenger traffic resulting from continued
strong passenger demand for air travel. Traffic, as measured by scheduled
service revenue passenger miles (RPMs), increased 24.5% on 23.6% increased
capacity. Revenue yield decreased 5.3% as a result of increased passenger volume
in lower-yield markets and competitive pricing pressures in certain markets. The
Company also realized increased revenue from the Midwest Express MasterCard
program and frequent flyer partnership programs.
The Company's operating costs increased by $13.6 million, or 16.3%, in the
second quarter primarily due to capacity growth. The Company placed four
additional aircraft into scheduled service since second quarter 1998. On a cost
per available seat mile (ASM) basis, costs decreased from 12.7(cent) in second
quarter 1998 to 12.0(cent) in the second quarter 1999, or 5.9%. Excluding the
impact of lower fuel prices, unit costs (cost per total ASM) decreased 5.4%.
Unit costs decreased due to larger capacity MD-80 aircraft placed in service,
improved fixed cost absorption associated with the 23.6% capacity increase and
continued focus on cost and process improvement throughout the Company.
Additional detail on cost changes is included in subsequent sections.
8
<PAGE>
Operating Statistics
The following table provides select operating statistics for Midwest Express and
Skyway.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
% %
1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
Midwest Express Operations
Origin & Destination Passengers 543,446 451,580 20.3 986,036 827,198 19.2
Revenue Passenger Miles (000s) 517,112 412,624 25.3 944,461 764,480 23.5
Scheduled Service Available Seat Miles (000s) 761,802 609,009 25.1 1,467,037 1,194,795 22.8
Total Available Seat Miles (000s) 767,378 613,774 25.0 1,481,225 1,210,433 22.4
Load Factor (%) 67.9% 67.8% 0.1 64.4% 64.0% 0.4
Revenue Yield $ 0.187 $ 0.196 -4.9 $ 0.186 $ 0.197 -5.7
Cost per total ASM $ 0.114 $ 0.122 -6.8 $ 0.112 $ 0.120 -6.7
Average Passenger Trip Length 951.5 913.7 4.1 957.8 924.2 3.6
Number of Flights 11,617 10,127 14.7 22,415 19,920 12.5
Into-plane Fuel Cost per Gallon $ 0.534 $ 0.560 -4.6 $ 0.519 $ 0.587 -11.6
Full-time Equivalent Employees at End of Period 2,301 1,971 16.7 2,301 1,971 16.7
Aircraft in Service at End of Period 30 26 15.4 30 26 15.4
Skyway Airlines Operations
Origin & Destination Passengers 93,205 85,306 9.3 173,050 156,169 10.8
Revenue Passenger Miles (000s) 21,329 19,707 8.2 39,470 36,140 9.2
Scheduled Service Available Seat Miles (000s) 41,283 40,790 1.2 80,362 80,310 0.1
Total Available Seat Miles (000s) 41,443 40,790 1.6 80,662 80,346 0.4
Load Factor (%) 51.7% 48.3% 3.4 49.1% 45.0% 4.1
Revenue Yield $ 0.542 $ 0.538 .7 $ 0.541 $ 0.554 -2.4
Cost per total ASM $ 0.250 $ 0.227 9.9 $ 0.250 $ 0.234 6.9
Average Passenger Trip Length 228.8 231.0 -1.0 228.1 231.4 -1.4
Number of Flights 11,148 10,924 2.1 21,591 21,441 0.7
Into-plane Fuel Cost per Gallon $ 0.643 $ 0.629 2.2 $ 0.600 $ 0.652 -8.1
Full-time Equivalent Employees at End of Period 370 285 29.8 370 285 29.8
Aircraft in Service at End of Period 15 15 -- 15 15 --
Note: All statistics exclude charter operations except the
following: total available seat miles ("ASM"), cost per total
ASM, into-plane fuel cost, number of employees and aircraft in
service. Aircraft acquired but not yet in service are excluded
from the aircraft in service statistics.
</TABLE>
9
<PAGE>
The following table provides operating revenues and expenses for the Company
expressed as cents per total ASM, including charter operations, and as a
percentage of total revenues:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Per Total % of Per Total % of Per Total % of Per Total % of
ASM Revenue ASM Revenue ASM Revenue ASM Revenue
--- ------- --- ------- --- ------- --- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues:
Passenger service $0.134 91.8% $0.140 91.5% $0.126 90.9% $0.132 90.6%
Cargo $0.004 2.5% 0.004 2.9% $0.004 2.7% 0.005 3.1%
Other $0.008 5.7% 0.009 5.6% $0.009 6.4% 0.009 6.3%
------ ----- ------ ----- ------ ----- ------ -----
Total operating revenues $0.145 100.0% 0.153 100.0% $0.139 100.0% 0.146 100.0%
------ ----- ------ ----- ------ ----- ------ -----
Operating expenses:
Salaries, wages and benefits $0.040 27.4% 0.045 29.2% $0.039 28.3% 0.043 29.4%
Aircraft fuel and oil $0.015 10.1% 0.016 10.4% $0.014 10.3% 0.017 11.5%
Commissions $0.010 7.1% 0.012 8.1% $0.010 7.1% 0.012 7.8%
Dining services $0.008 5.3% 0.007 4.9% $0.007 5.3% 0.007 5.0%
Station rental, landing and $0.009 6.2% 0.009 6.2% $0.010 7.1% 0.010 7.1%
other fees
Aircraft maintenance
materials/repairs $0.014 9.8% 0.014 9.0% $0.014 10.1% 0.013 8.7%
Depreciation and amortization $0.004 2.7% 0.004 2.4% $0.004 2.8% 0.004 2.5%
Aircraft rentals $0.006 4.0% 0.007 4.7% $0.006 4.4% 0.007 5.0%
Other $0.014 9.9% 0.013 8.3% $0.014 9.9% 0.013 9.1%
------ ----- ------ ----- ------ ----- ------ -----
Total operating expenses $0.120 82.3% $0.127 83.2% $0.118 85.2% $0.126 86.1%
====== ===== ====== ===== ====== ===== ====== =====
Total ASMs (000s) 808,821 654,564 1,561,887 1,290,779
Note: Numbers in this table cannot be recalculated due to rounding.
</TABLE>
Three Months Ended June 30, 1999 Compared to
Three Months Ended June 30, 1998
Operating Revenues
Company operating revenues totaled $117.7 million in the second quarter 1999, a
$17.6 million, or 17.5%, increase over the second quarter 1998. Passenger
revenues accounted for 91.8% of total revenues and increased $16.4 million, or
18.0%, from 1998 to $108.0 million. The increase was attributable to a 24.5%
increase in passenger volume, as measured by revenue passenger miles.
Midwest Express passenger revenue increased by $15.5 million, or 19.1%, from
1998 to $96.5 million. This increase was caused by a 20.3% increase in origin
and destination passengers. Total capacity, as measured by scheduled service
ASMs, increased 25.1% due to four additional aircraft in scheduled service
during the second quarter 1999. Also, load factor increased from 67.8% in 1998
to 67.9% in 1999 due to continued strong travel demand. Revenue yield decreased
4.9% due to competitive pricing pressure in several markets, operating larger
aircraft on certain routes and increased passenger volume in lower-yield markets
such as Los Angeles, Phoenix and Orlando.
Skyway passenger revenue increased by $.9 million, or 8.9%, from 1998 to $11.6
million. This increase was primarily caused by an 8.2% increase in passenger
volume as load factors increased from 48.3% in 1998 to 51.7% in 1999. Revenue
yield increased .7%.
10
<PAGE>
Revenue from cargo, charter and other services increased $1.1 million in the
second quarter 1999. Midwest Express benefited from increased revenue from the
Midwest Express MasterCard program of $.8 million and increased revenue in
frequent flyer partnership programs of $.3 million.
Operating Expenses
1999 operating expenses increased by $13.6 million, or 16.3%, from 1998. The
increase was primarily the result of service expansion. Midwest Express operated
14.7% more flights during the quarter and had four additional aircraft in
service. Cost per total ASM decreased 5.9%, from 12.7(cent) in 1998 to
12.0(cent) in 1999.
Salaries, wages and benefits increased by $3.0 million, or 10.4%. The labor cost
increase reflected the addition of approximately 415 full-time equivalent
employees (330 at Midwest Express and 85 at Skyway) since June 30, 1998, and
increases in labor rates. Midwest Express added employees throughout the
organization to support additional aircraft placed in service; Skyway added
employees primarily to support ground service operations at the Milwaukee
airport and to support the start-up of the regional jet program. These increases
were partially offset by a lower profit sharing accrual, which reflected lower
year-over-year earnings improvements. The profit sharing and incentive plans
which benefit substantially all employees, and are dependent on achieving
certain levels of profitability, are payable annually and accrued monthly based
on earnings to date and projected results for the remainder of the year. On a
cost per total ASM basis, labor costs decreased 10.7%, from 4.5(cent) in 1998 to
4.0(cent) in 1999.
Aircraft fuel and oil and associated taxes increased $1.5 million, or 14.1%, in
second quarter 1999. Fuel consumption increased by 18.8% in the quarter,
primarily because Midwest Express operated 18.7% more aircraft flight hours.
Into-plane fuel prices (which represents the Company's cost after giving effect
to any hedging) decreased 4.3% in 1999, averaging 54.1(cent) per gallon in 1999
versus 56.5(cent) per gallon in 1998. Fuel hedging programs resulted in $1.1
million savings during the quarter and $.3 million savings in July. Into-plane
fuel prices in July 1999 trended upward, averaging 60.4(cent) per gallon. That
average price would have been 62.9(cent) per gallon in the absence of hedging.
The Company manages the price risk of fuel primarily by purchasing caps;
commodity options which establish ceiling prices. The Company has hedged
approximately 50% of third quarter and 25% of fourth quarter fuel requirements.
Commissions increased by $.2 million, or 2.3%. The increase was primarily due to
an 18.0% increase in passenger revenue, partially offset by a commission cap
implemented on February 1, 1999. The Company realized an increase in travel
booked directly through its reservations center, Midwest Express Web site and
other travel-related Web sites not subject to commission. Additionally, during
the quarter electronic ticketing was available to travel agents equipped with
the Apollo reservations system allowing all travel agents the capability of
offering Midwest Express customers the electronic ticket option. Commission
costs decreased 17.2% on a cost per ASM basis.
Dining services costs increased by $1.3 million, or 26.8%, from 1998. The
increase was due to the 20.3% increase in Midwest Express origin and destination
passengers and higher food and service prices.
11
<PAGE>
Maintenance costs increased by $2.5 million, or 28.2%, from 1998. Aircraft
maintenance costs increased 3.8% on a unit cost basis. Midwest Express continued
to accrue higher rates for future engine overhauls and experienced a significant
number of aircraft refurbishment and heavy checks requiring the use of extensive
contract labor. Additionally, the increase was caused by more flight hours at
Midwest Express and higher material and aircraft component repair costs. Station
rental, landing and other fees increased by $1.1 million, or 16.9%, from 1998.
The increase was caused by 14.7% more flight segments at Midwest Express. On a
cost per ASM basis, these costs decreased 5.4%.
Depreciation and amortization increased by $.7 million, or 29.4%, from 1998. The
increase was primarily the result of the depreciation associated with four
additional MD-80 aircraft placed in service.
Aircraft rental costs decreased by $.1 million, or 1.4%, from 1998. During the
quarter, the Company transitioned to new lessors for two MD-88 aircraft, saving
$.2 million.
Other costs increased by $3.3 million, or 40.4%, from 1998. Other operating
expenses consist primarily of advertising and promotion, insurance, property
taxes, reservation fees, administration and other items. The increase was
primarily due to a $1.1 million nonrecurring cost credit received at the
Milwaukee airport in 1998, higher passenger booking fees associated with the
record passenger volume, higher flight simulator rent costs to support increased
pilot training, and an increase in advertising and promotion spending to support
new service.
Provision for Income Taxes
Income tax expense for the second quarter 1999 was $7.8 million, a $1.4 million
increase from 1998. The effective tax rate for the first quarter of 1999 and
1998 was 37.5%. For purposes of calculating the Company's income tax expense and
effective tax rate, the Company treats amounts payable to an affiliate of
Kimberly-Clark under a tax allocation and separation agreement entered into in
connection with the Company's initial public offering as if they were payable to
taxing authorities.
Net Income
Net income for the second quarter increased $2.3 million from 1998. The net
income margin improved from 10.8% in 1998 to 11.1% in 1999.
12
<PAGE>
Six Months Ended June 30, 1999 Compared to
Six Months Ended June 30, 1998
Operating Revenues
Company operating revenues totaled $216.5 million for the six months ended June
30, 1999, a $28.0 million, or 14.9%, increase over 1998. Passenger revenues
accounted for 90.9% of total revenues and increased $26.1 million, or 15.3%,
from 1998 to $196.9 million. The increase was attributable to a 22.9% increase
in passenger volume, as measured by revenue passenger miles, partially offset by
a 6.2% decrease in revenue yield.
Midwest Express passenger revenue increased by $24.8 million, or 16.4%, from
1998 to $175.6 million. This increase was caused by a 19.2% increase in origin
and destination passengers and a 3.6% increase in average passenger trip length,
partially offset by a 5.7% deterioration in yield. Revenue yield decreased
primarily due to competitive pricing pressures and increased passenger volume in
lower-yield markets. Total Midwest Express capacity, as measured by scheduled
service ASMs, increased 22.8% due to additional aircraft in service during 1999.
Load factor increased from 64.0% in 1998 to 64.4% in 1999.
Skyway passenger revenue increased by $1.3 million, or 6.6%, from 1998 to $21.4
million. This increase was caused by a 10.8% increase in origin and destination
passengers, partially offset by a 2.4% decrease in revenue yield.
Load factor increased from 45.0% in 1998 to 49.1% in 1999.
Revenue from cargo, charter and other services increased $1.9 million, or 10.9%,
in 1999. Midwest Express benefited from increased revenue from the Midwest
Express MasterCard program of $1.5 million, ticket exchange administrative fees
of $.5 million and frequent flyer partnership programs of $.4 million. Charter
sales decreased $.4 million primarily because of the NBA lockout in first
quarter 1999 and less aircraft availability for charter operations.
Operating Expenses
1999 operating expenses increased by $22.2 million, or 13.7%, from 1998,
primarily due to expanded operations, offset by lower fuel prices. Cost per
total ASM decreased 6.1% from 12.6(cent) in 1998 to 11.8(cent) in 1999.
Salaries, wages and benefits increased $5.8 million, or 10.4%, from 1998. On a
cost per total ASM basis, these costs decreased 8.8%, from 4.3(cent) in 1998 to
3.9(cent) in 1999. The labor cost increase reflects the addition of
approximately 415 full-time equivalent employees (330 at Midwest Express and 85
at Skyway) since June 30, 1998 and increases in labor rates. Midwest Express
added employees throughout the organization to support the aircraft placed in
service; Skyway added employees primarily to support ground service operations
at the Milwaukee airport. Partially offsetting these increases, labor costs
decreased due to higher maintenance labor hours capitalized in 1999 to major
maintenance projects. In addition, accruals for Midwest Express' profit sharing
and management incentive programs were $1.2 million lower in 1999 than 1998. The
profit sharing and incentive plans, which benefit substantially all employees
and are dependent on achieving certain levels of profitability, are payable
annually and accrued monthly based on earnings to date and projected results for
the remainder of the year.
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Aircraft fuel and oil, and associated taxes increased $.6 million, or 2.9%, in
1999. Into-plane fuel prices decreased 11.4% in 1999, averaging 52.4(cent) per
gallon in 1999 and 59.2(cent) per gallon in 1998. Fuel consumption increased by
16.0% in 1999, primarily because Midwest Express operated 15.7% more aircraft
flight hours.
Commissions increased by $.6 million, or 4.3%, but decreased 13.8% on a cost per
total ASM basis. The increase was primarily due to a 15.3% increase in passenger
revenue, partially offset by a commission cap implemented in February 1999. The
Company also realized savings due to increased travel booked directly through
the reservations center, Midwest Express Web site and other travel-related Web
sites.
Dining services costs increased by $2.1 million, or 22.7%, from 1998. The
increase was primarily due to the 19.2% increase in origin and destination
passengers at Midwest Express.
Station rental, landing and other fees increased by $1.9 million, or 13.8%, from
1998. The increase was caused by 12.5% more flight segments at Midwest Express
and higher airport costs. On a cost per ASM basis, these costs decreased 6.0%.
Maintenance costs increased by $5.4 million, or 33.1%, from 1998. Aircraft
maintenance costs increased 10.0% on a unit cost basis. The increase was
attributable to more flight hours at Midwest Express, an increase in accrual
rates for future engine and airframe overhauls and higher than expected costs
for a major aircraft maintenance check that required maintenance outsourcing.
Depreciation and amortization increased by $1.3 million, or 28.3%, from 1998.
The increase from second quarter 1998 was the result of the depreciation
associated with capital spending consisting primarily of the four additional
MD-80 aircraft placed into service.
Aircraft rental costs increased by $.1 million, or 1.2%, from 1998. On a cost
per ASM basis, these costs decreased 16.4%. During the second quarter 1999,
Midwest Express transitioned to new lessors for two MD-88 aircraft, which
resulted in $.2 million of reduced cost.
Other operating expenses increased by $4.3 million, or 25.4%, from 1998. The
increase was primarily due to a nonrecurring $1.1 million airport rental credit
received in 1998 from Milwaukee County to distribute an airport rental surplus,
higher professional and financial services, higher passenger booking fees,
higher flight simulator rent costs, and an increase in advertising and promotion
spending. On a cost per ASM basis, these costs increased 3.6%.
Provision for Income Taxes
Income tax expense for the first six months of 1999 was $12.1 million, an
increase of $2.0 million from 1998. The effective tax rate for the first six
months 1999 and 1998 was 37.5%.
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Net Income
Net income for the first six months increased $3.3 million from 1998. The net
income margin increased to 9.3% in 1999 from 8.9% in 1998.
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $14.6 million at June 30, 1999,
compared to $13.5 million at December 31, 1998. Net cash provided by operating
activities totaled $32.4 million for the six months ended June 30, 1999. Net
cash used in investing activities totaled $37.3 million, primarily due to
capital expenditures of $36.4 million, including $1.2 million of purchase
deposits on flight equipment.
As of June 30, 1999, the Company had a working capital deficit of $46.4 million
versus a $42.5 million deficit on December 31, 1998. The working capital deficit
is primarily due to the Company's air traffic liability (which represents
deferred revenue for advance bookings, whereby passengers have purchased tickets
for future flights, that is recognized when the passenger travels). Because of
this, the Company expects to operate at a working capital deficit, which is
common in the industry.
As of June 30, 1999, the Company's two credit facilities, a $55.0 million
revolving bank credit facility and a $20.0 million secondary revolving credit
facility with Kimberly-Clark, had not been used except for letters of credit
totaling approximately $9.9 million that reduce the amount of available credit.
The letters of credit are used to support financing on the Company's new
maintenance facility and for various other purposes. On July 30, 1999 the
Company borrowed $10.0 million under the credit facility. It is anticipated the
funding will be used for short-term liquidity needs.
Net cash used for capital expenditures totaled $36.4 million for the six months
ended June 30, 1999. Capital expenditures primarily consisted of aircraft
purchases and refurbishment costs. Other capital expenditures included aircraft
engine hush kit components, capitalized engine overhauls, acquisition of
capitalized spare parts and construction of new gates at the Milwaukee airport
to support the Skyway operation. The Company anticipates full-year capital
spending to be $80.0 million, excluding the five regional jets that the Company
plans to acquire during the second half of the year. The Company is planning to
lease these aircraft.
During 1997, the Company executed definitive purchase documents to acquire eight
McDonnell Douglas MD-80 series aircraft. The Company financed the first six
deliveries using internal cash flow, and expects to finance the remaining two
aircraft using internal cash flow as well.
As of June 30, 1999, leases relating to three of Midwest Express' jet aircraft
are guaranteed by Kimberly-Clark in return for a guarantee fee paid by the
Company. Kimberly-Clark will continue to guarantee these leases until the end of
the current lease terms. None of these jet aircraft leases expires before second
quarter 2001.
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In April 1999, the Company renegotiated two MD-88 aircraft leases, changing
lessors and extending the lease term by 12 years. This transaction reduces
aircraft rental costs by $.2 million each quarter.
The Company's Board of Directors has authorized a $15.0 million share repurchase
program. As of June 30, 1999, the Company has purchased a total of 418,625
shares of common stock at a cost of $6.8 million under the program.
Pending Developments
This Form 10-Q filing, and particularly this Pending Developments section,
contains forward-looking statements that may state the Company's or management's
intentions, hopes, beliefs, expectations or predictions for the future. It is
important to note that the Company's actual results could differ materially from
those projected results due to factors that include, but are not limited to,
uncertainties related to general economic factors, industry conditions,
scheduling developments, government regulations, labor relations, aircraft
maintenance and refurbishment schedules, potential delays related to acquired
aircraft, fuel prices and year 2000 compliance. Additional information
concerning factors that could cause actual results to differ materially from
those in the forward-looking statements is contained from time to time in the
Company's SEC filings, including but not limited to the Company's prospectus
dated May 23, 1996 included in Registration Statement on Form S-1 No.
333-03325.
MD-80 Aircraft - During January 1999, Midwest Express placed into service the
second and third of eight MD-80 series aircraft the Company agreed to purchase
in 1997. The fourth aircraft was placed into service in April 1999. The fifth
and sixth aircraft are currently being refurbished and have scheduled in-service
dates of August and December 1999. The seventh and eighth aircraft will be
received in the fourth quarter and are expected to enter service in the first
and second quarters of 2000. The Company has financed all deliveries thus far
with internal cash flow and expects to do the same for the remaining aircraft.
These aircraft will be used to increase capacity on the Company's high-traffic
routes and expand service in existing or new markets.
In August 1999, the Company signed a letter of intent to acquire four MD-80
series aircraft currently operated by Scandinavian Airlines System and made a
$.4 million deposit. A definitive purchase agreement is expected to be completed
by October 1999. Assuming successful completion of negotiations, delivery of the
aircraft is anticipated beginning in September 2000 and continuing through
November 2001. After refurbishment and modification, three aircraft are expected
to enter scheduled service in 2001 and the last in 2002. The Company expects
that this project, including aircraft refurbishment, modification and support
equipment, will cost approximately $60.0 million. Financing alternatives are
currently being evaluated.
Regional Jets - Skyway expects to take delivery of the first two of five new
Fairchild Aerospace 328JET aircraft in August 1999 and place the aircraft in
service in October 1999. All five aircraft are expected to be in service by the
end of 1999. Plans for these 32-passenger aircraft have not been announced other
than replacing Midwest Express' DC-9 service in the Milwaukee/Grand
16
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Rapids markets. The Company expects that the cost of these five aircraft,
including purchase price and support equipment, will total approximately $55.0
million, and will be financed via operating leases as deliveries take place. The
Company also holds options for 10 additional aircraft to support future growth,
which are exercisable after January 1, 2001.
Headquarters Building Expansion - In July 1999, the Company announced it will
add a 55,000-square-foot training facility to its Oak Creek, Wisconsin
headquarters. Ground breaking for the building is expected in October 1999, with
facility completion anticipated in July 2000. The Company expects the cost of
this project to be $6.0 million and anticipates funding this project by cash
flows from operations.
Second Call Center - In July 1999, the Company announced plans for a second
reservations center to be located in the Kansas City area by the end of the
year. The Company expects the cost of this project to be less than $1.0 million.
Labor Relations - In December 1997, Midwest Express pilots elected the Air Line
Pilots Association (ALPA), a labor union, for representation in collective
bargaining. Negotiations began in August 1998. In February 1999, ALPA requested
assistance from the National Mediation Board. The Company and ALPA continue in
mediated negotiations. In April 1999, Midwest Express flight attendants elected
the Association of Flight Attendants, AFL-CIO, a labor union, for representation
in collective bargaining. Negotiations have not yet begun.
Year 2000 - In January 1998, the Company created an executive oversite committee
and a year 2000 project team. With safety of the Company's customers and
employees as the highest priority, a comprehensive plan to address issues
related to the impact of the year 2000 was developed. The Company's Year 2000
Project involves five phases: Awareness, Inventory/Assessment, Renovation,
Validation and Implementation.
More than 24,000 items have been inventoried and assessed. Items inventoried
include, but are not limited to, aircraft components, computers, elevators, jet
bridges, ground equipment, telephones, computer applications and HVAC. An
extensive review of aircraft components relative to flight safety was conducted
and both the Midwest Express fleet of McDonnell Douglas DC-9s and MD-80s, and
Skyway Airlines' fleet of 15 Beechcraft 1900Ds are fully year 2000 compliant.
Skyway's new fleet of five Fairchild 328 regional jets arriving this fall will
be delivered year 2000 compliant.
Substantially all internal systems - financial, operations and non-information
technology systems - have been inventoried, assessed and remediated. This
includes all safety-related systems. The Company has one major internally
developed and maintained system that required extensive modifications. This
system is used for purchasing, inventory, accounts payable, and aircraft
maintenance planning and records. The remediation effort of this system was
outsourced and was completed the end of June 1999. The remediated system is
currrently being tested by a user team and is scheduled for a September 1999
implementation.
The Company realizes that preparedness is also predicated on many external
factors. Therefore, the Company is actively contacting suppliers and vendors to
evaluate their respective levels of
17
<PAGE>
preparedness. All of the Company's critical business partners have been
contacted. The Company has received favorable year 2000 readiness responses from
many of its mission-critical vendors and suppliers, and continues to follow up
to ensure readiness predictions are achieved. These efforts are designed to
minimize the extent to which its business will be vulnerable to their failure to
remediate their year 2000 issues. The Company has a contingency plan in place
for partners who are behind in year 2000 efforts.
The Company is also actively involved with the Air Transport Association (ATA)
in an airline industry effort to identify potential year 2000 related issues
within the industry infrastructure, including common vendors, suppliers,
airports and government agencies such as the Federal Aviation Administration
(FAA). A recent news release from the Department of Transportation reported the
FAA had achieved year 2000 readiness. Data being accumulated by ATA indicates
that airports are making significant progress in achieving year 2000 compliance.
The implications for the Company of the Company, a critical vendor or supplier,
the FAA, airports or other third parties not being prepared for the year 2000
could have a material adverse effect on the Company, resulting in customer
inconvenience, increased costs, grounded or delayed flights, or a degraded level
of safety. To be prepared to address unexpected occurrences, the remainder of
the year will be devoted to reviewing and/or creating, enhancing and testing
contingency plans for those scenarios within the Company's control. However, due
to the complexity and pervasiveness of the year 2000 issue, and in particular
the uncertainty regarding the compliance programs of third parties, no assurance
can be given that the Company's compliance plan will be achieved, and actual
results could differ materially from those expected.
The Company has spent $.7 million through June 1999 on the year 2000 project and
estimates that the overall cost associated with year 2000 readiness will be $1.1
million, approximately 50% of which is from reallocation of existing internal
resources. Costs associated with year 2000 readiness are expensed as incurred
and have been funded using internal cash flow.
Other Issues - The Company's Annual Report for the year ended December 31, 1998,
disclosed certain issues relating to the maintenance program and sales taxes.
These issues remain pending.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in the company's market risk since December
31, 1998.
18
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Shareholders held on April 28, 1999, the
following individuals were elected to the Board of Directors:
Authority Granted Authority Withheld
James G. Grosklaus 12,460,414 165,238
Timothy E. Hoeksema 12,461,305 164,347
Ulice Payne, Jr. 12,449,181 176,471
David H. Treitel 12,460,275 165,377
The terms of office for the following directors continued after the Company's
Annual Meeting: John F. Bergstrom, Oscar C. Boldt, Brenda F. Skelton, Samuel K.
Skinner, Richard H. Sonnentag, Frederick P. Stratton, Jr., and John W. Weekly.
Item 5. Other Information.
On April 28, 1999, the Board of Directors of the Company adopted amendments to
the By-Laws of the Company (the "By-Laws"), which, among other things, modified
the requirements for raising matters that can be considered at any annual
meeting of shareholders. As amended, the By-Laws establish procedures for
shareholder nominations for elections for directors of the Company and for
bringing business before any Annual Meeting of Shareholders of the Company.
Among other things, to bring business before an annual meeting, a shareholder
must give written notice to the Secretary of the Company not less than 45 days
nor more than 75 days prior to the first annual anniversary of the date set
forth in the Company's proxy statement for the immediately preceding annual
meeting of shareholders as the date on which the Company first mailed definitive
proxy materials for the immediately preceding annual meeting of shareholders
(subject to certain exceptions if the annual meeting is advanced or delayed a
certain number of days). The notice must contain certain information about the
proposed business or the nominee and the shareholder making the proposal. Under
the By-Laws as amended, if the Company does not receive a shareholder proposal
submitted otherwise than pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934, as amended, prior to February 1, 2000, then the notice will be
considered untimely and the Company is not required to present such proposal at
the 2000 annual meeting of shareholders. If the Board of Directors chooses to
present such proposal at the 2000 annual meeting of shareholders, then the
persons named in proxies solicited by the Board of Directors for the 2000 annual
meeting of shareholders may exercise discretionary voting power with respect to
such proposal.
The By-Laws, as amended, are attached hereto as an exhibit. The foregoing
description of the amendments to the By-Laws does not purport to be complete and
is qualified in its entirety by reference to such exhibit.
19
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(3) By-Laws of Midwest Express Holdings, Inc. as amended
through April 29, 1999.
(10) Fourteenth Amendment to Airline Lease, as amended
between Milwaukee County and Midwest Express, dated
June 15, 1999.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June
30, 1999.
20
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Midwest Express Holdings, Inc.
Date: August 13, 1999 By /s/ Timothy E. Hoeksema
------------------- ---------------------------------
Timothy E. Hoeksema
Chairman of the Board, President and
Chief Executive Officer
Date: August 13, 1999 By /s/ Robert S. Bahlman
------------------- -----------------------------------
Robert S. Bahlman
Senior Vice President and
Chief Financial Officer
21
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EXHIBIT INDEX
(3) By-Laws of Midwest Express Holdings, Inc. as amended through
April 29, 1999.
(10) Fourteenth Amendment to Airline Lease, as amended between
Milwaukee County and Midwest Express, dated June 15, 1999.
(27) Financial Data Schedule.
BY-LAWS
OF
MIDWEST EXPRESS HOLDINGS, INC.
(As Amended through April 29, 1999)
<PAGE>
TABLE OF CONTENTS
Page
----
CAPITAL STOCK..................................................................1
1. Certificates...........................................................1
2. Record Ownership.......................................................1
3. Transfer...............................................................2
4. Lost Certificates......................................................2
5. Transfer Agent; Registrar..............................................2
6. Record Date............................................................2
MEETINGS OF SHAREHOLDERS.......................................................3
7. Annual.................................................................3
8. Special................................................................3
9. Notice of Meeting......................................................6
10. Quorum.................................................................7
11. Meeting Procedure......................................................7
12. Voting................................................................10
13. Corporation's Acceptance of Votes.....................................11
14. Inspectors of Election................................................12
15. Voting List...........................................................13
BOARD OF DIRECTORS............................................................13
16. Resignation...........................................................13
17. Annual Meeting........................................................13
18. Regular Meetings......................................................13
19. Special Meetings......................................................14
20. Telephonic Meetings...................................................14
21. Director's Assent.....................................................14
22. Quorum................................................................14
23. Action Without Meeting................................................15
24. Organization..........................................................15
25. Compensation..........................................................15
COMMITTEES OF THE BOARD.......................................................15
26. Standing and Other Committees.........................................15
27. Procedure.............................................................16
28. Audit Committee.......................................................16
29. Compensation Committee................................................16
30. Executive Committee...................................................16
31. Board Affairs and Nominating Committee................................17
32. Alternates; Vacancies in Committees...................................17
(i)
<PAGE>
OFFICERS......................................................................17
33. Designation; Election; Qualification; Term............................17
34. Duties................................................................17
35. Resignation; Removal; Vacancies.......................................18
36. Chief Executive Officer...............................................18
37. Chairman of the Board, Vice Chairman of
the Board and President..............................................19
38. Vice Presidents.......................................................19
39. Chief Financial Officer...............................................19
40. Controller............................................................20
41. Secretary.............................................................20
42. Treasurer.............................................................21
MISCELLANEOUS.................................................................21
43. Offices...............................................................21
44. Seal..................................................................21
45. Fiscal Year...........................................................22
46. Annual Report.........................................................22
47. Consideration for Shares..............................................22
48. Stock Regulation......................................................22
49. Indemnification.......................................................22
50. Reliance..............................................................28
51. Inspection of Books...................................................28
52. Transactions with the Corporation.....................................28
53. Ratification..........................................................29
54. Voting of Stocks......................................................29
55. Notice................................................................29
56. Waiver of Notice......................................................29
57. Dispensing with Notice................................................29
58. Amendments............................................................30
59. Emergency Provisions..................................................30
60. Terms.................................................................30
61. Foreign Stock Record..................................................30
62. Permitted Percentage..................................................31
63. Registration of Shares................................................31
64. Equity Offerings......................................................31
* This Table of Contents has not been adopted by the Board
of Directors as part of the By-laws of the corporation, but is
provided solely for the convenience of the reader.
(ii)
<PAGE>
BY-LAWS
OF
MIDWEST EXPRESS HOLDINGS, INC.
(f/k/a ME WISCONSIN, INC.)
Note: For convenience, the masculine has been used in these By-Laws with the
intention that it include the feminine as well.
CAPITAL STOCK
1. Certificates
Every shareholder shall be entitled to have a certificate in such form as
the Board shall from time to time approve, signed by the Chairman of the Board,
a Vice Chairman of the Board, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
certifying the number of shares owned by him. Any of or all the signatures on
the certificate and the corporate seal may be facsimiles. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue. While the corporation is authorized to issue
more than one class of stock or more than one series of any class, there shall
be set forth on the face or back of each certificate issued a statement that the
corporation will furnish without charge to each shareholder who so requests in
writing a summary of the designations, relative rights, preferences and
limitations applicable to each class of stock, the variations in rights,
preferences and limitations determined for each series and the authority of the
Board to determine variations for future series.
2. Record Ownership
The name and address of the holder of each certificate, the number of
shares represented thereby, and the date of issuance thereof shall be recorded
in the corporation's books and records. The corporation shall be entitled to
treat the holder of record of any share 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 any share on the part of any other person, whether or not it
shall have express or other notice thereof, except as required by law. The
corporation has not established, and nothing in these By-Laws shall be deemed to
establish, any procedure by which a beneficial owner of the corporation's shares
that are registered in the name of a nominee is recognized by the corporation as
the shareholder under Section 180.0723 of the Wisconsin Business Corporation Law
("WBCL").
<PAGE>
3. Transfer
Transfer of stock shall be made on the books of the corporation only by
direction of the person named in the certificate or his attorney, lawfully
constituted in writing, and only upon the surrender for cancellation of the
certificate therefor and a written assignment of the shares evidenced thereby.
4. Lost Certificates
Any person claiming a stock certificate in lieu of one lost or destroyed
shall give the corporation an affidavit as to his ownership of the certificate
and of the facts which go to prove its loss or destruction. He shall also, if
required by the Board, give the corporation a bond or other indemnification, in
such form as may be approved by the Board, sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss of the certificate or the issuance of a new certificate.
5. Transfer Agent; Registrar
The corporation shall maintain one or more transfer offices or agencies,
each in charge of a transfer agent designated by the Board, where the shares of
stock of the corporation shall be transferable. The corporation shall also
maintain one or more registry offices, each in charge of a registrar designated
by the Board, where such shares of stock shall be registered. The same entity
may be both transfer agent and registrar.
6. Record Date
So that the corporation may determine the shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof, the
Board may fix a record date which record date shall not precede the date of any
annual or special meeting of shareholders by more than seventy days nor be less
than ten days before the date of such meeting (the "Meeting Record Date"), and
only such shareholders as shall be shareholders of record on the date so fixed
shall be entitled to such notice of and to vote at such meeting, as the case may
be, notwithstanding any transfer of any stock on the books of the corporation
after any such record date fixed as aforesaid. In the case of any Demand Special
Meeting (as defined in Section 8), (i) the Meeting Record Date shall be not
later than the 30th day after the Delivery Date (as defined in Section 8) and
(ii) if the Board fails to fix the Meeting Record Date within 30 days after the
Delivery Date, then the close of business on such 30th day shall be the Meeting
Record Date. Except as provided by the WBCL for a court-ordered adjournment, a
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting, unless the Board
fixes a new Meeting Record Date, which it must do if the meeting is adjourned to
a date more than 120 days after the date fixed for the original meeting. Subject
to the procedures set forth in Section 8(b) relating to the fixing of a Demand
Record Date (as defined therein), the Board may also fix a future date as the
record date to determine the shareholders entitled to take any other action.
Such record date may not be more than 70 days before the action requiring a
determination of shareholders. The record date for determining shareholders
entitled to a distribution (other than a distribution
2
<PAGE>
involving a purchase, redemption or other acquisition of the corporation's
shares) or a share dividend is the date on which the Board authorizes the
distribution or share dividend, as the case may be, unless the Board fixes a
different record date.
MEETINGS OF SHAREHOLDERS
7. Annual
The annual meeting of shareholders ("Annual Meeting") for the election of
directors and the transaction of such other business as may properly be brought
before the meeting shall be held on the fourth Wednesday in April in each year,
or on such other day, which shall not be a legal holiday, as shall be determined
by the Board. The Annual Meeting shall be held at such place and hour, within or
without the State of Wisconsin, as shall be determined by the Board. The day,
place and hour of each Annual Meeting shall be specified in the notice of the
Annual Meeting. The Annual Meeting may be adjourned by the chairman of the
meeting from time to time and place to place without notice other than
announcement at the meeting. At any adjourned Annual Meeting the corporation may
transact any business which might have been transacted at the Annual Meeting as
originally called. In accordance with the provisions of applicable law, the
Board acting by resolution may postpone and reschedule any previously scheduled
Annual Meeting.
8. Special
(a) A special meeting of the shareholders of the corporation (a
"Special Meeting") may be called only by (i) the Chairman of the Board, (ii) the
President or (iii) the Board and shall be called by the Chairman of the Board or
the President upon the demand, in accordance with this Section 8, of the holders
of record of shares representing at least 10% of all the votes entitled to be
cast on any issue proposed to be considered at the Special Meeting.
(b) In order that the corporation may determine the shareholders
entitled to demand a Special Meeting, the Board may fix a record date to
determine the shareholders entitled to make such a demand (the "Demand Record
Date"). The Demand Record Date shall not precede the date upon which the
resolution fixing the Demand Record Date is adopted by the Board and shall not
be more than 10 days after the date upon which the resolution fixing the Demand
Record Date is adopted by the Board. Any shareholder of record seeking to have
shareholders demand a Special Meeting shall, by sending written notice to the
Secretary of the corporation by hand or by certified or registered mail, return
receipt requested, request the Board to fix a Demand Record Date. The Board
shall promptly, but in all events within 10 days after the date on which a valid
request to fix a Demand Record Date is received, adopt a resolution fixing the
Demand Record Date and shall make a public announcement of such Demand Record
Date. If no Demand Record Date has been fixed by the Board within 10 days after
the date on which such request is received by the Secretary, then the Demand
Record Date shall be the 10th day after the first day on which a valid written
request to set a Demand Record Date is received by the Secretary. To be valid,
such written request shall set forth the purpose or purposes for which the
Special Meeting is to be held, shall be signed by one or more shareholders of
record (or their duly authorized proxies or other representatives), shall
3
<PAGE>
bear the date of signature of each such shareholder (or proxy or other
representative) and shall set forth all information about each such shareholder
and about the beneficial owner or owners, if any, on whose behalf the request is
made that would be required to be set forth in a shareholder's notice described
in Section 11(b) of these By-Laws.
(c) In order for a shareholder or shareholders to demand a Special
Meeting, a written demand or demands for a Special Meeting by the holders of
record as of the Demand Record Date of shares representing at least 10% of all
the votes entitled to be cast on any issue proposed to be considered at the
Special Meeting must be delivered to the corporation. To be valid, each written
demand by a shareholder for a Special Meeting shall set forth the specific
purpose or purposes for which the Special Meeting is to be held (which purpose
or purposes shall be limited to the purpose or purposes set forth in the written
request to set a Demand Record Date received by the corporation pursuant to
subsection (b) of this Section 8), shall be signed by one or more persons who as
of the Demand Record Date are shareholders of record (or their duly authorized
proxies or other representatives), shall bear the date of signature of each such
shareholder (or proxy or other representative), and shall set forth the name and
address, as they appear in the corporation's books, of each shareholder signing
such demand and the class or series and number of shares of the corporation that
are owned of record and beneficially by each such shareholder, shall be sent to
the Secretary by hand or by certified or registered mail, return receipt
requested, and shall be received by the Secretary within 70 days after the
Demand Record Date.
(d) The corporation shall not be required to call a Special Meeting
upon shareholder demand unless, in addition to the documents required by
subsection (c) of this Section 8, the Secretary receives a written agreement
signed by each Soliciting Shareholder (as defined herein), pursuant to which
each Soliciting Shareholder, jointly and severally, agrees to pay the
corporation's costs of holding the Special Meeting, including the costs of
preparing and mailing proxy materials for the corporation's own solicitation,
provided that if each of the resolutions introduced by any Soliciting
Shareholder at such meeting is adopted, and each of the individuals nominated by
or on behalf of any Soliciting Shareholder for election as director at such
meeting is elected, then the Soliciting Shareholders shall not be required to
pay such costs. For purposes of this subsection (d), the following terms shall
have the meanings set forth below:
(i) "Affiliate" of any Person shall mean any Person that,
directly or indirectly through one or more intermediaries, controls,
is controlled by or is under common control with such first Person.
(ii) "Participant" shall have the meaning assigned to such term
in Rule 14a-11 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(iii) "Person" shall mean any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other
entity, as well as
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any syndicate or group deemed to be a person under Section 14(d)(2) of
the Exchange Act.
(iv) "Proxy" shall have the meaning assigned to such term in Rule
14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such term
in Rule 14a-1 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to any
Special Meeting demanded by a shareholder or shareholders, any of the
following Persons:
(A) if the number of shareholders signing the demand or
demands for a meeting delivered to the corporation pursuant to
subsection (c) of this Section 8 is ten or fewer, then each
shareholder signing any such demand;
(B) if the number of shareholders signing the demand or
demands for a meeting delivered to the corporation pursuant to
subsection (c) of this Section 8 is more than ten, then each
Person who either (I) was a Participant in any Solicitation of
such demand or demands or (II) at the time of the delivery to the
corporation of the documents described in subsection (c) of this
Section 8, had engaged or intended to engage in any Solicitation
of Proxies for use at such Special Meeting (other than a
Solicitation of Proxies on behalf of the corporation); or
(C) any Affiliate of a Soliciting Shareholder, if a majority
of the directors then in office determine, reasonably and in good
faith, that such Affiliate should be required to sign the written
notice described in subsection (c) of this Section 8 and/or the
written agreement described in this subsection (d) in order to
prevent the purposes of this Section 8 from being evaded.
(e) Except as provided in the following sentence, any Special Meeting
shall be held at such hour and day as may be designated by whichever of the
Chairman of the Board, the President or the Board shall have called such
meeting. In the case of any Special Meeting called by the Chairman of the Board
or the President upon the demand of shareholders (a "Demand Special Meeting"),
such meeting shall be held at such hour and day as may be designated by the
Board; provided, however, that the date of any Demand Special Meeting shall be
not more than 70 days after the Meeting Record Date; and provided further that
in the event that the directors then in office fail to designate an hour and
date for a Demand Special Meeting within 10 days after the date that valid
written demands for such meeting by the holders of record as of the Demand
Record Date of shares representing at least 10% of all the votes entitled to be
cast on any issue proposed to be considered at the Special Meeting are delivered
to the corporation (the "Delivery Date"), then such meeting shall be held on the
100th day after the Delivery Date or, if such 100th day is not a Business Day
(as defined below), on the first preceding Business Day. In fixing a meeting
date for any Special Meeting, the Chairman of the Board, the President or the
Board may consider such factors as he or it
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deems relevant within the good faith exercise of his or its business judgment,
including, without limitation, the nature of the action proposed to be taken,
the facts and circumstances surrounding any demand for such meeting, and any
plan of the Board to call an Annual Meeting or a Special Meeting for the conduct
of related business. Any Special Meeting may be adjourned by the chairman of the
meeting from time to time and place to place without notice other than
announcement at the meeting. At any adjourned Special Meeting the corporation
may transact any business which might have been transacted at the Special
Meeting as originally called. In accordance with the provisions of applicable
law, the Board acting by resolution may postpone and reschedule any previously
scheduled Special Meeting; provided, however, that a Demand Special Meeting
shall not be postponed beyond the 100th day following the Delivery Date.
(f) The corporation may engage nationally or regionally recognized
independent inspectors of elections to act as an agent of the corporation for
the purpose of promptly performing a ministerial review of the validity of any
purported written demand or demands for a Special Meeting received by the
Secretary. For the purpose of permitting the inspectors to perform such review,
no purported demand shall be deemed to have been delivered to the corporation
until the earlier of (i) 5 Business Days following receipt by the Secretary of
such purported demand and (ii) such date as the independent inspectors certify
to the corporation that the valid demands received by the Secretary represent at
least 10% of all the votes entitled to be cast on each issue proposed to be
considered at the Special Meeting. Nothing contained in this subsection shall in
any way be construed to suggest or imply that the Board or any shareholder shall
not be entitled to contest the validity of any demand, whether during or after
such 5 Business Day period, or to take any other action (including, without
limitation, the commencement, prosecution or defense of any litigation with
respect thereto).
(g) For purposes of these By-Laws, "Business Day" shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in the
State of Wisconsin are obligated by law or executive order to close.
9. Notice of Meeting
Written notice stating the place, day and hour of any Annual Meeting or
Special Meeting shall be delivered not less than 10 (unless a longer period is
required by the WBCL) nor more than 70 days before the date of such meeting,
either personally or by mail, by or at the direction of the Secretary, to each
shareholder of record entitled to vote at such meeting and to other shareholders
as may be required by the WBCL. In the event of any Demand Special Meeting, such
notice of meeting shall be sent not more than 30 days after the Delivery Date.
If mailed, notice pursuant to this Section 9 shall be deemed to be effective
when deposited in the United States mail, addressed to each shareholder at his
address as it appears on the stock record books of the corporation, with postage
thereon prepaid. A notice of an Annual Meeting shall include a description of
the purpose or purposes for which the meeting is called. In the case of any
Special Meeting, (a) the notice of meeting shall describe any business that the
Board shall have theretofore determined to bring before the meeting and (b) in
the case of a Demand Special Meeting, the notice of meeting (i) shall describe
any business set
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forth in the statement or purpose of the demands received by the corporation in
accordance with Section 8 of these By-Laws and (ii) shall contain all of the
information required in the notice received by the corporation in accordance
with Section 11(c) of these By-Laws. If an Annual Meeting or Special Meeting is
adjourned to a different date, time or place, then the corporation shall not be
required to give notice of the new date, time or place if the new date, time or
place is announced at the meeting before adjournment; provided, however, that if
a new Meeting Record Date for an adjourned meeting is or must be fixed, then the
corporation shall give notice of the adjourned meeting to persons who are
shareholders as of the new Meeting Record Date.
10. Quorum
Shares entitled to vote as a separate voting group may take action on a
matter at any Annual Meeting or Special Meeting only if a quorum of those shares
exists with respect to that matter. If the corporation has only one class of
stock then outstanding, then such class shall constitute a separate voting group
for purposes of this Section 10. Except as otherwise provided in the Restated
Articles of Incorporation, any By-Law adopted under authority granted in the
Restated Articles of Incorporation, or the WBCL, a majority of the votes
entitled to be cast on the matter shall constitute a quorum of the voting group
for action on that matter. Once a share is represented for any purpose at any
Annual Meeting or Special Meeting, other than for the purpose of objecting to
holding the meeting or transacting business at the meeting, it is considered
present for purposes of determining whether a quorum exists for the remainder of
the meeting and for any adjournment of that meeting unless a new Meeting Record
Date is or must be set for the adjourned meeting. In the event of lack of a
quorum, the chairman of the meeting or a majority of the voting power of the
shares of capital stock present in person or represented by proxy may adjourn
the meeting from time to time without notice other than announcement at the
meeting, until a quorum shall be obtained. At any such adjourned meeting at
which there is a quorum, any business may be transacted which might have been
transacted at the meeting as originally called. If a quorum exists, except in
the case of the election of directors, then action on a matter shall be approved
if the votes cast within the voting group favoring the action exceed the votes
cast opposing the action, unless the Restated Articles of Incorporation, any
By-Law adopted under authority granted in the Restated Articles of
Incorporation, or the WBCL requires a greater number of affirmative votes.
Unless otherwise provided in the Restated Articles of Incorporation, directors
shall be elected by a plurality of the votes cast by the shares entitled to vote
in the election of directors at any Annual Meeting or Special Meeting at which a
quorum is present. For purposes of this Section 10, "plurality" means that the
individuals with the largest number of votes are elected as directors up to the
maximum number of directors to be chosen at the Annual Meeting or Special
Meeting.
11. Meeting Procedure
(a) Conduct of Meetings. The Chief Executive Officer, or in his
absence such other officer as may be designated by the Board, shall be the
chairman at shareholders' meetings. The Secretary of the corporation shall be
the secretary at shareholders' meetings,
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but in his absence the chairman of the meeting may appoint a secretary for the
meeting. The Board may, to the extent not prohibited by law, adopt by resolution
such rules and regulations for the conduct of the meeting of shareholders as it
shall deem appropriate. Except to the extent inconsistent with such rules and
regulations as adopted by the Board, the chairman of any meeting of shareholders
shall have the right and authority to prescribe such rules, regulations or
procedures and to do all acts as, in the judgment of the chairman, are
appropriate for the proper conduct of the meeting. Such rules, regulations or
procedures, whether adopted by the Board or prescribed by the chairman of the
meeting, may to the extent not prohibited by law include, without limitation,
the following: (i) the establishment of an agenda or order of business for the
meeting; (ii) rules and procedures for maintaining order at the meeting and the
safety of those present; (iii) limitations on attendance at or participation in
the meeting to shareholders of record of the corporation, their duly authorized
and constituted proxies (which shall be reasonable in number) or such other
persons as the chairman of the meeting shall determine; (iv) restrictions on
entry to the meeting after the time fixed for the commencement thereof; and (v)
limitations on the time allotted to questions or comments by participants.
(b) Annual Meetings. At an Annual Meeting, only such business shall be
conducted, and only nominations for the election of directors shall be made, as
shall have been properly brought before the meeting in accordance with these
By-Laws. To be properly brought before an Annual Meeting, business or
nominations must (i) be specified in the notice of the meeting (or any
supplement thereto) given by or at the direction of the Board; (ii) otherwise
properly be brought before the meeting by or at the direction of the Board; or
(iii) otherwise (A) properly be requested to be brought before the meeting by a
shareholder of record entitled to vote in the election of directors generally
and (B) constitute a proper subject to be brought before such meeting. For
nominations or other business to be properly requested to be brought before an
Annual Meeting by a shareholder of record, any shareholder who intends to bring
any matter before an Annual Meeting and is entitled to vote on such matter must
deliver written notice of such shareholder's intent to bring the matter before
the Annual Meeting, either by personal delivery or by United States mail,
postage prepaid, to the Secretary of the corporation. Such notice must be
received by the Secretary not less than 45 days nor more than 70 days prior to
the first annual anniversary of the date set forth in the corporation's proxy
statement for the immediately preceding Annual Meeting as the date on which the
corporation first mailed definitive proxy materials for the immediately
preceding Annual Meeting; provided, however, that in the event that the date for
which the Annual Meeting is called is advanced by more than 30 days or delayed
by more than 30 days from the first annual anniversary of the immediately
preceding Annual Meeting, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 100th day prior to the
date of such Annual Meeting and not later than the close of business on the
later of (x) the 75th day prior to the date of such Annual Meeting or (y) the
10th day following the day on which public announcement of the date of such
Annual Meeting is first made. In no event shall the announcement of an
adjournment of an Annual Meeting commence a new time period for the giving of a
shareholder notice as described above. For purposes of this Section 11, "public
announcement" shall mean the date disclosure of the date of the meeting of
shareholders is first made in a press release reported by the Dow Jones New
Service,
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Associated Press or comparable national news service, or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act.
A shareholder's notice to the Secretary required by this Section 11(b)
shall set forth as to each matter the shareholder proposes to bring before the
Annual Meeting: (i) in the case of any proposed nomination for election or
re-election as a director, (A) the name, age, business and residence addresses,
and principal occupation or employment of each nominee; (B) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (C) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (D) the written consent of each
nominee to serve as a director of the corporation if so elected; (ii) in the
case of any other business that such shareholder proposes to bring before the
Annual Meeting, (A) a brief description of the business to be brought before the
meeting and the reasons for conducting such business at the meeting and (B) any
material interest of the shareholder in such business; (iii) the name and
address of the shareholder intending to propose such business; (iv) the number
of shares of stock of the corporation beneficially held, either personally or in
concert with others, by the shareholder, and (v) a representation that the
shareholder is a holder of stock of the corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to make such
nomination or present such proposal. The corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
corporation to determine the eligibility of such proposed nominee to serve as a
director of the corporation. No business shall be conducted at an Annual Meeting
except in accordance with the procedures set forth in this Section 11(b). The
chairman of the Annual Meeting shall, if the facts warrant, determine and
declare to the Annual Meeting that a nomination was not made or business was not
properly brought before the meeting in accordance with the provisions hereof
and, if he should so determine, he shall so declare to the Annual Meeting that
any such nomination shall be disregarded and/or any such business not properly
brought before the Annual Meeting shall not be transacted.
Notwithstanding anything in the fourth sentence of this Section 11(b)
to the contrary, in the event that the number of directors to be elected to the
Board is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board made by the
corporation at least 85 days prior to the date specified in clause (x) or (y),
as the case may be, of such sentence, a shareholder's notice required by this
Section 11(b) with respect to any nomination of a person for election to the
Board shall also be considered timely, but only with respect to nominees for any
new positions created by such increase, if it shall be received by the Secretary
of the corporation not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
corporation.
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(b) Special Meeting. At a Special Meeting, only such business shall be
conducted, and only nominations for the election of directors shall be made, as
shall have been described in the notice of meeting sent to shareholders pursuant
to Section 9 of these By-Laws. Nominations of persons for election to the Board
may be made at a Special Meeting at which directors are to be elected pursuant
to such notice of meeting (i) by or at the direction of the Board or (ii) by any
shareholder of the corporation who (A) is a shareholder of record, (B) is
entitled to vote in the election of directors at the meeting and (C) complies
with the notice procedures set forth in this Section 11(c). Any shareholder
desiring to nominate persons for election to the Board at such a Special Meeting
must deliver written notice of such shareholder's proposed nomination, either by
personal delivery or by United States mail, postage prepaid, to the Secretary of
the corporation. Such notice must be received by the Secretary not more than 90
days prior to such Special Meeting and not later than the close of business on
the later of (x) the 60th day prior to such Special Meeting or (y) the 10th day
following the day on which public announcement is first made of the date of such
Special Meeting and of the nominees proposed by the Board to be elected at such
meeting.
A shareholder's notice to the Secretary required by this Section 11(c)
shall set forth (i) the name, age, business and residence addresses, and
principal occupation or employment of each nominee; (ii) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (iii) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; (iv) the written consent of each
nominee to serve as a director of the corporation if so elected; (v) the name
and address of the shareholder intending to propose such business; (vi) the
number of shares of stock of the corporation beneficially held, either
personally or in concert with others, by the shareholder; and (vii) a
representation that the shareholder is a holder of stock of the corporation
entitled to vote at such meeting and intends to appear in person or by proxy at
the meeting to make such nomination. The corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
corporation to determine the eligibility of such proposed nominee to serve as a
director of the corporation. No business shall be conducted at a Special Meeting
except in accordance with the procedures set forth in this Section 11(c). The
chairman of the Special Meeting shall, if the facts warrant, determine and
declare to the Special Meeting that a nomination was not made or business was
not properly brought before the meeting in accordance with the provisions hereof
and, if he should so determine, he shall so declare to the Special Meeting that
any such nomination shall be disregarded and/or any such business not properly
brought before the Special Meeting shall not be transacted.
12. Voting
Unless otherwise provided in the Restated Articles of Incorporation, at
each meeting of shareholders, each holder of shares entitled to vote at such
meeting shall, as to all matters in respect of which such shares have voting
rights, be entitled to one vote in person or by written proxy for each share
held of record by him. No vote upon any matter, except the election of
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directors or the amendment of the Restated Articles of Incorporation, is
required to be by ballot unless demanded by the holders of at least 10% of the
voting power of the shares of capital stock represented and entitled to vote at
the meeting. All motions to introduce a matter for a vote by shareholders at a
meeting thereof, except for nominations for election as directors recommended by
the Nominating Committee and approved by the Board, shall be seconded prior to a
vote thereon by shareholders.
Except as otherwise provided by the WBCL, a shareholder may authorize
another person or persons to act for him as proxy by transmitting or authorizing
the transmission of a telegram, cablegram or other means of electronic
transmission 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, provided that any such telegram, cablegram or other means of
electronic transmission must either set forth or be submitted with information
from which it can be determined that the telegram, cablegram or other
transmission was authorized by the shareholder. Any proxy shall be filed with
the Secretary of the corporation or other person authorized to tabulate votes
before or at the time of the meeting. No proxy shall be valid after 11 months
from the date of its execution unless otherwise provided in the proxy. Unless
otherwise provided in the appointment form, a proxy appointment may be revoked
at any time before it is voted by written notice filed with the Secretary or
other officer or agent of the corporation authorized to tabulate votes. The
presence of a shareholder who has filed his proxy appointment shall not of
itself constitute a revocation.
No ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls.
13. Corporation's Acceptance of Votes
(a) If the name signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the corporation, if acting
in good faith, is entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy
appointment does not correspond to the name of its shareholder, the corporation,
if acting in good faith, is nevertheless entitled to accept the vote, consent,
waiver, or proxy appointment and give it effect as the act of the shareholder
if:
(i) the shareholder is an entity (as defined in the WBCL) and the
name signed purports to be that of an officer or agent of the entity;
(ii) the name signed purports to be that of a personal
representative, administrator, executor, guardian, or conservator
representing the shareholder and, if the corporation requests,
evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, or proxy
appointment;
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(iii) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation has
been presented with respect to the vote, consent, waiver, and proxy
appointment;
(iv) the name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's
authority to sign for the shareholder has been presented with respect
to the vote, consent, waiver, or proxy appointment; or
(v) two or more persons are the shareholder as cotenants or
fiduciaries and the name signed purports to be the name of at least
one of the coowners and the person signing appears to be acting on
behalf of all the coowners.
(c) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(d) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
14. Inspectors of Election
The Chief Executive Officer shall, in advance of any meeting of
shareholders, appoint one or more inspectors to act at the meeting and make a
written report thereof. He may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of shareholders, the chairman of the
meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality
and according to the best of his ability.
The inspectors shall (i) ascertain the number of shares outstanding and the
voting power of each, (ii) determine the number of shares represented at a
meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
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The inspectors shall determine the validity of and count the proxies and ballots
in accordance with applicable law.
15. Voting List
The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, before each meeting of shareholders, a complete
list of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The list must be arranged by voting group, if such exists,
and within each voting group by class or series of shares. The corporation shall
make such shareholder list available for inspection at the corporation's
principal office or other location permitted by the WBCL by any shareholder at
any time prior to the meeting during usual business hours for any proper
purpose, beginning two (2) business days after notice is given of the meeting
for which the list was prepared. A shareholder, or his agent or attorney, is
entitled on written demand to inspect and, subject to the requirements of the
WBCL, to copy the list during regular business hours and at the shareholder's
expense, during such period that it is available for inspection. Such list also
shall be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder during the meeting for purposes
related to the meeting. The corporation shall maintain the shareholder list in
written form or in another form capable of conversion into written form within a
reasonable time. Notwithstanding the foregoing, the corporation's failure or
refusal to prepare or make available the shareholder list shall not affect the
validity of any action taken at such shareholder meeting.
BOARD OF DIRECTORS
16. Resignation
A director may resign at any time by giving written notice to the
corporation, addressed to the Chief Executive Officer or the Secretary. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein. Acceptance of a resignation shall not be necessary
to make it effective unless otherwise stated in the notice.
17. Annual Meeting
A meeting of the Board, to be known as the annual Board meeting, shall be
held without call or notice immediately after and at the same general place as
the annual meeting of the shareholders. The annual Board meeting shall be held
for the purpose of organizing the Board, electing officers, and transacting any
other business that may properly come before the meeting.
18. Regular Meetings
Regular meetings of the Board may be held without call or notice at
such place and at such time as shall be fixed by the Board.
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19. Special Meetings
Special meetings of the Board may be called by the Chief Executive Officer,
and shall be called by the Secretary upon the request in writing of not less
than two of the directors then in office. Special meetings of the Board may be
held at such place and at such time as shall be designated in the call thereof.
Notice of special meetings of the Board shall either be mailed by the Chief
Executive Officer or the Secretary to each director at least three days before
the meeting, or served upon, or sent by electronic means by the Chief Executive
Officer or the Secretary to, each director at least one day before the meeting,
but during an emergency as defined in Section 22 hereof, notice may be given
only to such of the directors as it may be feasible to reach at the time and by
such means as may be feasible at the time, including publications or private or
public electronic means. Unless required by law, the notice need not state the
purposes of the meeting.
20. Telephonic Meetings
The Board, or any committee of the Board, may, in addition to conducting
meetings in which each director participates in person, and notwithstanding any
place set forth in the notice of the meeting or these By-laws, conduct any
regular or special meeting by the use of any electronic means of communication,
such as by conference telephone, provided all participating directors may
simultaneously hear each other during the meeting. If a meeting will be
conducted at which any directors do not participate in person, all participating
directors shall be informed that a meeting is taking place at which official
business may be transacted.
21. Director's Assent
A director who is present at a meeting of the Board or a committee of the
Board when corporate action is taken is deemed to have assented to the action
taken unless: (1) the director objects at the beginning of the meeting (or
promptly upon the director's arrival) to holding the meeting or transacting
business at the meeting; (2) the director dissents or abstains from the action
taken and minutes of the meeting are prepared that show the director's dissent
or abstention from the action; (3) the director dissents or abstains from an
action taken, minutes of the meeting are prepared that fail to show the
director's dissent or abstention from the action taken and the director delivers
to the corporation a written notice of that failure that complies with Section
180.0141 of the WBCL promptly after receiving the minutes; or (4) the director
delivers written notice of his dissent or abstention to the presiding officer of
the meeting before its adjournment or to the corporation immediately after
adjournment of the meeting. The right of dissent or abstention is not available
to a director who votes in favor of the action taken.
22. Quorum
Except during the existence of an emergency and except as otherwise
provided in these By-Laws or in the Restated Articles of Incorporation,
one-third of the total number of directors, as fixed pursuant to Section (2) of
Article Seven of the Restated Articles of Incorporation, shall constitute a
quorum for the transaction of business. During the existence of an emergency,
three directors shall constitute a quorum for the transaction of business. To
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the extent required to constitute a quorum at any meeting of the Board during an
emergency, the officers of the corporation who are present shall be deemed, in
order of rank and within the same rank in order of seniority, directors for such
meeting. Subject to the provisions of the Restated Articles of Incorporation,
the action of the majority of directors present at a meeting at which a quorum
is present shall be the act of the Board. In the event of lack of a quorum, a
majority of the directors present may adjourn the meeting from time to time
without notice other than announcement at the meeting until a quorum shall be
obtained. At any such adjourned meeting at which there is a quorum, any business
may be transacted which might have been transacted at the meeting originally
called.
An "emergency" for the purpose of these By-Laws shall mean a catastrophic
event that prevents a quorum of the corporation's directors from being readily
assembled.
23. Action Without Meeting
Any action required or permitted to be taken at any meeting of the Board
may be taken without a meeting if all members of the Board consent thereto in
writing and such written consent is filed with the minutes of the proceedings of
the Board.
24. Organization
The Chairman of the Board, or in his absence the Chief Executive Officer,
or in his absence a director chosen by the directors present, shall act as
chairman at meetings of the Board. The Secretary of the corporation shall act as
secretary at meetings of the Board but in his absence the chairman of the
meeting may appoint a secretary for the meeting.
25. Compensation
The compensation of directors for services as directors and as members of
committees of the Board shall be as fixed by the Board from time to time. The
compensation, if any, of the directors need not be uniform as between directors
and the compensation, if any, of the members of the committees of the Board need
not be uniform either as between members of a committee or as between
committees. The Board shall provide for reimbursing the directors for expenses
incurred in attending meetings of the Board or committees thereof.
Any director may also serve the corporation in any other capacity and
receive compensation, including fees and expenses, for such service.
COMMITTEES OF THE BOARD
26. Standing and Other Committees
The directors shall from time to time designate, by resolution passed by a
majority of the entire Board of Directors (as defined in Section (2) of Article
7 of the Restated Articles of Incorporation), members of an Audit Committee, a
Compensation Committee, a Board Affairs and Nominating Committee and an
Executive Committee, each of which shall have and may
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exercise the powers of the Board in the direction of the business and affairs of
the corporation in respect to the matters and to the extent set forth in one or
more resolutions of the Board similarly adopted, subject to the power of the
Board to assign from time to time to any such committees or to any other
committees such powers in respect to specific matters as the Board may deem
desirable and subject to any limitations of applicable law, the Restated
Articles of Incorporation or these By-Laws.
These four committees shall be the standing committees of the corporation.
The Board may, by resolution passed by a majority of the entire Board of
Directors, designate such other committees as it from time to time may deem
appropriate. The powers of each such committee shall be limited to those
specified in the resolution designating the committee.
Each committee shall consist of not less than two directors, one of whom
shall be designated chairman. In the case of standing committees, members shall
be elected annually by resolution passed by a majority of the entire Board of
Directors at the regular meeting of the Board held in connection with the Annual
Meeting.
27. Procedure
Each committee shall fix its own rules of procedure and shall meet where
and as provided by such rules, but the presence of a majority shall be necessary
to constitute a quorum, unless otherwise provided by these By-Laws. The
Secretary of the corporation or a member of the appropriate committee shall keep
minutes of proceedings. Any action required or permitted to be taken at any
meeting of any committee may be taken without a meeting if all the members
consent thereto in writing and such written consent is filed with the minutes of
the proceedings of such committee. Each committee shall make such reports to the
Board of its activities as the Board may request.
28. Audit Committee
The Audit Committee shall be comprised solely of members of the Board who
shall be independent of management and free from any relationship that, in the
opinion of the Board, would interfere with their exercise of independent
judgment as committee members. The policy statement on audit committees issued
by the New York Stock Exchange shall be applicable in determining whether
directors are "independent" for this purpose.
29. Compensation Committee
The Board shall select the members of the Compensation Committee from among
the directors who are not, and have not been for at least one year prior to
selection, officers or employees of the corporation.
30. Executive Committee.
The Executive Committee shall include, by virtue of his office, the Chief
Executive Officer, and the Chief Executive Officer shall serve as the chairman
thereof.
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31. Board Affairs and Nominating Committee.
The Board shall select the members of the Nominating Committee from among
the directors who (except in the case of the Chairman of the Board) are not
officers or employees of the corporation.
32. Alternates; Vacancies in Committees
The Board may elect one or more of its members as alternate members of any
committee who may take the place of any absent member or members at any meeting
of such committee, upon request by the Chief Executive Officer of the
corporation or upon request by the chairman of the committee or the chairman of
the meeting of any committee. Alternate members shall serve, in the order in
which the Board shall determine, when one or more members of the committee shall
be absent or disqualified. Alternate members may attend committee meetings as
observers, without the right to vote when all members are present; when fewer
than all are present, only an alternate member serving in the place of an absent
or disqualified member shall have the right to vote. If no alternate is
available, the committee member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any absent or disqualified member. All members of all committees (including
chairmen) shall serve at the pleasure of the Board.
OFFICERS
33. Designation; Election; Qualification; Term
Each year at the annual Board meeting the directors shall elect a Chairman
of the Board, a Chief Executive Officer and a Treasurer. From time to time the
Board may also elect or appoint a Vice Chairman of the Board or Vice Chairmen of
the Board, a President, such Executive, Senior or other Vice Presidents as it
may deem appropriate, a Chief Financial Officer, and such other officers,
including a Controller, Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers and Assistant Controllers, as it may deem appropriate. The
Chief Executive Officer may appoint any officers of the corporation not required
to be elected by the Board, as he may deem appropriate. The Chairman of the
Board, the Chief Executive Officer, and any Vice Chairman of the Board must be
directors; no other officer need be a director. Any number of offices may be
held by the same person. The term of each officer, whenever elected or
appointed, shall be until the election or appointment (as the case may be) and
qualification of his successor or until his earlier resignation or removal.
34. Duties
The officers shall have such powers and perform such duties as are
prescribed in these By-Laws, or, in the case of an officer whose powers and
duties are not so prescribed, as may be assigned by the Board or delegated by or
through the Chief Executive Officer.
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35. Resignation; Removal; Vacancies
Any officer may resign at any time by giving notice to the corporation
addressed to the Chief Executive Officer or the Secretary. Such resignation
shall take effect at the date of the receipt of such notice or at any later time
specified therein. Acceptance of a resignation shall not be necessary to make it
effective unless otherwise stated in the notice. Any officer may be removed by
the Board at any time with or without cause. Any appointed officer may be
removed by the Chief Executive Officer at any time with or without cause. A
vacancy in any office may be filled by the Board, and a vacancy in any appointed
office may be filled by the Chief Executive Officer, for the unexpired portion
of the term.
36. Chief Executive Officer
The Chief Executive Officer of the corporation shall be elected by the
Board. Subject to the Board, he shall be in general and active charge, control
and supervision over the management and direction of the business, property and
affairs of the corporation. He shall keep the Board fully informed, and shall
freely consult it, concerning the business of the corporation in his charge.
He shall, subject to these By-Laws, have authority to:
(i) appoint or approve the appointment of employees to various posts
and positions in the corporation bearing titles designated or approved by
him and to prescribe their authority and duties, which may include the
authority to appoint subordinates to various other posts and positions; and
(ii) remove or approve the removal of employees so appointed; and
(iii) sign, execute and acknowledge, on behalf of the corporation, all
deeds, mortgages, bonds, notes, debentures, stock certificates, contracts,
including contracts of guaranty and suretyship, leases, reports and other
documents and instruments, except where the signing or execution thereof by
some other officer or employee of the corporation shall be expressly
authorized and directed by law, or by the Board, or by these By-Laws.
Unless otherwise provided by law, or by these By-Laws, or by the Board, he
may authorize in a writing filed with the Secretary, any officer, employee,
or agent of the corporation to sign, execute and acknowledge, on behalf of
the corporation and in his place and stead, any or all such documents and
instruments.
He shall have such other authority and perform such other duties as are
incident to the office of Chief Executive Officer and as may be prescribed from
time to time by the Board and these By-Laws.
In the absence or disability of the Chief Executive Officer, or in case of
an unfilled vacancy in that office, until such time as the Board shall elect his
successor, his duties shall be performed and his powers shall be exercised by
other elected officers of the corporation who
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are also directors (unless none are directors) in the order in which such
officers were listed in their respective elections.
37. Chairman of the Board, Vice Chairman of the Board and President
The Chairman of the Board, any Vice Chairman of the Board and the
President, each acting alone, shall have authority to sign, execute and
acknowledge on behalf of the corporation, all deeds, mortgages, bonds, notes,
debentures, stock certificates, contracts, including contracts of guaranty and
suretyship, leases, reports and other documents and instruments, except where
the signing or execution thereof by some other officer or employee shall be
expressly authorized and directed by law, or by the Board, or by the Chief
Executive Officer or by these By-Laws. Each shall have such additional powers
and perform such additional duties as may be assigned to him by the Board or as
may be delegated to him by the Chief Executive Officer.
38. Vice Presidents
Each Vice President shall have such powers and perform such duties as may
be assigned to him by the Board or as may be delegated to him by the Chief
Executive Officer.
Each Executive Vice President shall have authority to sign, execute and
acknowledge on behalf of the corporation, all deeds, mortgages, bonds, notes,
debentures, contracts, including contracts of guaranty and suretyship, leases,
reports and other documents and instruments, except where the signing or
execution thereof by some other officer or employee shall be expressly
authorized and directed by law, or by the Board, or by the Chief Executive
Officer, or by these By-Laws.
39. Chief Financial Officer
The Chief Financial Officer shall:
(i) be the principal financial officer of the corporation and have
responsibility for all financial affairs of the corporation; and
(ii) protect the cash, securities, receivables and other financial
resources of the corporation, have responsibility for investment, receipt,
custody and disbursement of such resources, and establish policies for
granting credit to customers; and
(iii) maintain the creditworthiness of the corporation; and
(iv) negotiate and procure capital required by the corporation,
including long-term debt and equity, maintain adequate sources for the
corporation's short-term financing requirements and maintain banking
relationships; and
(v) administer the accounting policies of the corporation and the
internal controls with respect to its financial affairs; and
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(vi) supervise the corporation's books of account, and have access to
all records, including the Secretary's records; and
(vii) in general, have such other powers and perform such other duties
as may be assigned from time to time by the Board or by or through the
Chief Executive Officer.
40. Controller
The Controller shall:
(i) be the principal accounting officer of the corporation; and
(ii) have custody and charge of the corporation's books of account,
and have access to all records, including the Secretary's and the
Treasurer's records, for purpose of obtaining information necessary to
verify or complete the records of the Controller's office; and
(iii) implement the policies for granting credit to customers; and
(iv) implement the internal controls with respect to the financial
affairs of the corporation; and
(v) have the responsibility for processing vouchers for payment by the
Treasurer; and
(vi) in general, have such other powers and perform such other duties
as may be assigned from time to time by the Board or by or through the
Chief Executive Officer.
41. Secretary
The Secretary shall:
(i) attend and keep the minutes of all meetings of the shareholders,
the Board, and of such committees as the Board may direct; and
(ii) have custody of the corporate seal and all corporate records
(including transfer books and stock ledgers), contracts, papers,
instruments, documents and books of the corporation except those required
to be kept by other officers under these By-Laws; and
(iii) sign on behalf of the corporation such documents and instruments
as require his signature when approved in accordance with these By-Laws,
and to such documents he shall affix the corporate seal when necessary and
may do so when he deems it desirable; and
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(iv) see that notices are given and records and reports are properly
kept and filed by the corporation as required by these By-Laws or as
required by law; and
(v) in general, have such other powers and perform such other duties
as are incident to the office of Secretary and as may be assigned to him
from time to time by the Board or by or through the Chief Executive
Officer.
42. Treasurer
The Treasurer shall:
(i) receive and sign receipts for all moneys paid to the corporation
and shall deposit the same in the name and to the credit of the corporation
in authorized banks or depositories; and
(ii) when necessary or desirable, endorse for collection on behalf of
the corporation all checks, drafts, notes and other obligations payable to
it; and
(iii) disburse the funds of the corporation only upon vouchers duly
processed and under such rules and regulations as the Board may from time
to time adopt; and
(iv) keep full and accurate accounts of the transactions of his office
in books belonging to the corporation; and
(v) render as the Board may direct an account of the transactions of
his office; and
(vi) in general, have such other powers and perform such other duties
as are incident to the office of Treasurer and as may be assigned to him
from time to time by the Board or by or through the Chief Executive
Officer.
MISCELLANEOUS
43. Offices
The registered office of the corporation in the State of Wisconsin shall be
located at 6744 South Howell Avenue, Oak Creek, Wisconsin 53154-1402. The
corporation may have such other offices as the Board may from time to time
determine. The books of the corporation may be kept outside the State of
Wisconsin.
44. Seal
The corporation may have a seal, but the use of such seal shall not be
necessary to evidence authority for any action on behalf of the corporation or
to evidence the authenticity of any signature on behalf of the corporation or of
any officer of the corporation.
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45. Fiscal Year
The fiscal year of the corporation shall begin on January 1 of each year.
46. Annual Report
At least fifteen days in advance of the annual meeting of shareholders, but
not later than three months after the close of the fiscal year, the Board shall
publish and submit to the shareholders a consolidated balance sheet of the
corporation and its consolidated subsidiaries as of the end of the previous
fiscal year and the related consolidated income and cash flow statements of the
corporation and its consolidated subsidiaries for the previous fiscal year.
47. Consideration for Shares
The Board may authorize shares to be issued for consideration consisting of
any tangible or intangible property or benefit to the corporation, including
cash, promissory notes, services performed, contracts for services to be
performed or other securities of the corporation. Before the corporation issues
shares, the Board shall determine that the consideration received or to be
received for the shares to be issued is adequate. In the absence of a resolution
adopted by the Board expressly determining that the consideration received or to
be received is adequate, Board approval of the issuance of the shares shall be
deemed to constitute such a determination. The determination of the Board is
conclusive insofar as the adequacy of consideration for the issuance of shares
relates to whether the shares are validly issued, fully paid and nonassessable.
The corporation may place in escrow shares issued in whole or in part for a
contract for future services or benefits, a promissory note, or other property
to be issued in the future, or make other arrangements to restrict the transfer
of the shares, and may credit distributions in respect of the shares against
their purchase price, until the services are performed, the benefits or property
are received or the promissory note is paid. If the services are not performed,
the benefits or property are not received or the promissory note is not paid,
the corporation may cancel, in whole or in part, the shares escrowed or
restricted and the distributions credited.
48. Stock Regulation
The Board shall have the power and authority to make all such further rules
and regulations not inconsistent with the statutes of the State of Wisconsin as
it may deem expedient concerning the issue, transfer and registration of
certificates representing shares of the corporation.
49. Indemnification
(a) Certain Definitions. All capitalized terms used in this Section 49
and not otherwise hereinafter defined in this Section 49(a) shall have the
meaning set forth in Section 180.0850 of the Statute. The following capitalized
terms (including any plural forms thereof) used in this Section 49 shall be
defined as follows:
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(i) "Affiliate" shall include, without limitation, any Person (as
defined in Section 8(d) of these By-Laws) (including without
limitation an employee benefit plan) that, directly or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Corporation.
(ii) "Authority" shall mean the entity selected by the Director
or Officer to determine his right to indemnification pursuant to
Section 49(d).
(iii) "Board" shall mean the entire then elected and serving
Board of Directors of the Corporation, including all members thereof
who are Parties to the subject Proceeding or any related Proceeding.
(iv) "Breach of Duty" shall mean the Director or Officer breached
or failed to perform his duties to the Corporation and his breach of
or failure to perform those duties is determined, in accordance with
Section 49(d), to constitute misconduct under Section 180.0851(2)(a)
1, 2, 3 or 4 of the Statute.
(v) "Corporation," as used herein and as defined in the Statute
and incorporated by reference into the definitions of certain other
capitalized terms used herein, shall mean this corporation, including,
without limitation, any successor corporation or entity to this
corporation by way of merger, consolidation or acquisition of all or
substantially all of the capital stock or assets of this corporation.
(vi) "Director or Officer" shall have the meaning set forth in
the Statute; provided, that, for purposes of this Section 49, it shall
be conclusively presumed that any Director or Officer serving as a
director, officer, partner, trustee, member of any governing or
decision-making committee, employee or agent of an Affiliate shall be
so serving at the request of the Corporation.
(vii) "Disinterested Quorum" shall mean a quorum of the Board who
are not Parties to the subject Proceeding or any related Proceeding.
(viii) "Party" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Section 49, the term "Party"
shall also include any Director or Officer or employee of the
Corporation who is or was a witness in a Proceeding at a time when he
has not otherwise been formally named a Party thereto.
(ix) "Proceeding" shall have the meaning set forth in the
Statute; provided, that, in accordance with Section 180.0859 of the
Statute and for purposes of this Section 49, the term "Proceeding"
shall also include all Proceedings (i) brought under (in whole or in
part) the Securities Act of 1933, as amended, the Exchange Act, their
respective state counterparts, and/or any rule or regulation
promulgated under any of the foregoing; (ii) brought before an
Authority or otherwise to enforce rights hereunder; (iii) any appeal
from a Proceeding; and (iv) any Proceeding in which the Director or
Officer is a plaintiff or petitioner because he is a Director or
Officer;
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provided, however, that any such Proceeding under this subsection (iv)
must be authorized by a majority vote of a Disinterested Quorum.
(x) "Statute" shall mean Sections 180.0850 through 180.0859,
inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of
the Wisconsin Statutes, as the same shall then be in effect, including
any amendments thereto, but, in the case of any such amendment, only
to the extent such amendment permits or requires the Corporation to
provide broader indemnification rights than the Statute permitted or
required the Corporation to provide prior to such amendment.
(b) Mandatory Indemnification of Directors and Officers. To the
fullest extent permitted or required by the Statute, the Corporation shall
indemnify a Director or Officer against all Liabilities incurred by or on behalf
of such Director or Officer in connection with a Proceeding in which the
Director or Officer is a Party because he is a Director or Officer.
(c) Procedural Requirements.
(i) A Director or Officer who seeks indemnification under Section
49(b) shall make a written request therefor to the Corporation.
Subject to Section 49(c)(ii), within sixty days of the Corporation's
receipt of such request, the Corporation shall pay or reimburse the
Director or Officer for the entire amount of Liabilities incurred by
the Director or Officer in connection with the subject Proceeding (net
of any Expenses previously advanced pursuant to Section 49(e)).
(ii) No indemnification shall be required to be paid by the
Corporation pursuant to Section 49(b) if, within such sixty-day
period, (A) a Disinterested Quorum, by a majority vote thereof,
determines that the Director or Officer requesting indemnification
engaged in misconduct constituting a Breach of Duty or (B) a
Disinterested Quorum cannot be obtained.
(iii) In either case of nonpayment pursuant to Section 49(c)(ii),
the Board shall immediately authorize by resolution that an Authority,
as provided in Section 49(d), determine whether the Director's or
Officer's conduct constituted a Breach of Duty and, therefore, whether
indemnification should be denied hereunder.
(iv) (A) If the Board does not authorize an Authority to
determine the Director's or Officer's right to indemnification
hereunder within such sixty-day period and/or (B) if indemnification
of the requested amount of Liabilities is paid by the Corporation,
then it shall be conclusively presumed for all purposes that a
Disinterested Quorum has affirmatively determined that the Director or
Officer did not engage in misconduct constituting a Breach of Duty
and, in the case of subsection (A) above (but not subsection (B)),
indemnification by the Corporation of the requested amount of
Liabilities shall be paid to the Director or Officer immediately.
(d) Determination of Indemnification.
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(i) If the Board authorizes an Authority to determine a
Director's or Officer's right to indemnification pursuant to Section
49(c), then the Director or Officer requesting indemnification shall
have the absolute discretionary authority to select one of the
following as such Authority:
(A) An independent legal counsel; provided, that such
counsel shall be mutually selected by such Director or Officer
and by a majority vote of a Disinterested Quorum or, if a
Disinterested Quorum cannot be obtained, then by a majority vote
of the Board;
(B) A panel of three arbitrators selected from the panels of
arbitrators of the American Arbitration Association in Wisconsin;
provided, that (I) one arbitrator shall be selected by such
Director or Officer, the second arbitrator shall be selected by a
majority vote of a Disinterested Quorum or, if a Disinterested
Quorum cannot be obtained, then by a majority vote of the Board,
and the third arbitrator shall be selected by the two previously
selected arbitrators, and (II) in all other respects (other than
this Section 49), such panel shall be governed by the American
Arbitration Association's then existing Commercial Arbitration
Rules; or
(C) A court pursuant to and in accordance with Section
180.0854 of the Statute.
(ii) In any such determination by the selected Authority there
shall exist a rebuttable presumption that the Director's or Officer's
conduct did not constitute a Breach of Duty and that indemnification
against the requested amount of Liabilities is required. The burden of
rebutting such a presumption by clear and convincing evidence shall be
on the Corporation or such other party asserting that such
indemnification should not be allowed.
(iii) The Authority shall make its determination within sixty
days of being selected and shall submit a written opinion of its
conclusion simultaneously to both the Corporation and the Director or
Officer.
(iv) If the Authority determines that indemnification is required
hereunder, then the Corporation shall pay the entire requested amount
of Liabilities (net of any Expenses previously advanced pursuant to
Section 49(e)), including interest thereon at a reasonable rate, as
determined by the Authority, within ten days of receipt of the
Authority's opinion; provided, that, if it is determined by the
Authority that a Director or Officer is entitled to indemnification
against Liabilities' incurred in connection with some claims, issues
or matters, but not as to other claims, issues or matters, involved in
the subject Proceeding, the Corporation shall be required to pay (as
set forth above) only the amount of such requested Liabilities as the
Authority shall deem appropriate in light of all of the circumstances
of such Proceeding.
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(v) The determination by the Authority that indemnification is
required hereunder shall be binding upon the Corporation regardless of
any prior determination that the Director or Officer engaged in a
Breach of Duty.
(vi) All Expenses incurred in the determination process under
this Section 49(d) by either the Corporation or the Director or
Officer, including, without limitation, all Expenses of the selected
Authority, shall be paid by the Corporation.
(e) Mandatory Allowance of Expenses.
(i) The Corporation shall pay or reimburse from time to time or
at any time, within ten days after the receipt of the Director's or
Officer's written request therefor, the reasonable Expenses of the
Director or Officer as such Expenses are incurred; provided, the
following conditions are satisfied:
(A) The Director or Officer furnishes to the Corporation an
executed written certificate affirming his good faith belief that
he has not engaged in misconduct that constitutes a Breach of
Duty; and
(B) The Director or Officer furnishes to the Corporation an
unsecured executed written agreement to repay any advances made
under this Section 49(e) if it is ultimately determined by an
Authority that he is not entitled to be indemnified by the
Corporation for such Expenses pursuant to Section 49(d).
(ii) If the Director or Officer must repay any previously
advanced Expenses pursuant to this Section 49(e), then such Director
or Officer shall not be required to pay interest on such amounts.
(f) Indemnification and Allowance of Expenses of Certain Others.
(i) The Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify a
director or officer of an Affiliate (who is not otherwise serving as a
Director or Officer) against all Liabilities, and shall advance the
reasonable Expenses, incurred by such director or officer in a
Proceeding to the same extent hereunder as if such director or officer
incurred such Liabilities because he was a Director or Officer, if
such director or officer is a Party thereto because he is or was a
director or officer of the Affiliate.
(ii) The Corporation shall indemnify an employee who is not a
Director or Officer, to the extent he has been successful on the
merits or otherwise in defense of a Proceeding, for all reasonable
Expenses incurred in the Proceeding if the employee was a Party
because he was an employee of the Corporation.
(iii) The Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify (to
the extent not otherwise
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provided in Section 49(f)(ii) hereof) against Liabilities incurred by,
and/or provide for the allowance of reasonable Expenses of, an
employee or authorized agent of the Corporation acting within the
scope of his duties as such and who is not otherwise a Director or
Officer.
(g) Insurance. The Corporation may purchase and maintain insurance on
behalf of a Director or Officer or any individual who is or was an employee or
authorized agent of the Corporation against any Liability asserted against or
incurred by such individual in his capacity as such or arising from his status
as such, regardless of whether the Corporation is required or permitted to
indemnify against any such Liability under this Section 49.
(h) Notice to the Corporation. A Director, Officer or employee shall
promptly notify the Corporation in writing when he has actual knowledge of a
Proceeding that may result in a claim of indemnification against Liabilities or
allowance of Expenses hereunder, but the failure to do so shall not relieve the
Corporation of any liability to the Director, Officer or employee hereunder
unless the Corporation shall have been irreparably prejudiced by such failure
(as determined, in the case of Directors or Officers only, by an Authority
selected pursuant to Section 51(d)(i)).
(i) Severability. If any provision of this Section 49 shall be deemed
invalid or inoperative, or if a court of competent jurisdiction determines that
any of the provisions of this Section 49 contravene public policy, then this
Section 49 shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such provisions
that are invalid or inoperative or that contravene public policy shall be
deemed, without further action or deed by or on behalf of the Corporation, to be
modified, amended and/or limited, but only to the extent necessary to render the
same valid and enforceable; it being understood that it is the Corporation's
intention to provide the Directors and Officers with the broadest possible
protection against personal liability allowable under the Statute.
(j) Nonexclusivity of Section 49. The rights of a Director, Officer or
employee (or any other person) granted under this Section 49 shall not be deemed
exclusive of any other rights to indemnification against Liabilities or
allowance of Expenses to which the Director, Officer or employee (or such other
person) may be entitled under any written agreement, Board resolution, vote of
shareholders of the Corporation or otherwise, including, without limitation,
under the Statute. Nothing contained in this Section 49 shall be deemed to limit
the Corporation's obligations to indemnify against Liabilities or allow Expenses
to a Director, Officer or employee under the Statute.
(k) Contractual Nature of Section 49; Repeal or Limitation of Rights.
This Section 49 shall be deemed to be a contract between the Corporation and
each Director, Officer and employee of the Corporation, and any repeal or other
limitation of this Section 49 or any repeal or limitation of the Statute or any
other applicable law shall not limit any rights of indemnification against
Liabilities or allowance of Expenses then existing or arising out of events,
acts or omissions occurring prior to such repeal or limitation, including,
without
27
<PAGE>
limitation, the right to indemnification against Liabilities or allowance of
Expenses for Proceedings commenced after such repeal or limitation to enforce
this Section 49 with regard to acts, omissions or events arising prior to such
repeal or limitation.
50. Reliance
Unless the director or officer has knowledge that makes reliance
unwarranted, a director or officer, in discharging his duties to the
corporation, may rely on information, opinions, reports or statements any of
which may be written or oral, formal or informal, including financial
statements, valuation reports and other financial data, if prepared or presented
by any of the following: (a) an officer or employee of the corporation whom the
director or officer believes in good faith to be reliable and competent in the
matters presented; (b) legal counsel, public accountants or other persons as to
matters that the director or officer believes in good faith are within the
person's professional or expert competence; or (c) in the case of reliance by a
director, a committee of the Board of which the director is not a member if the
director believes in good faith that the committee merits confidence.
51. Inspection of Books
The directors shall determine from time to time whether, and, to what
extent and at what times and places and under what conditions and regulations
the accounts and other books and records of the corporation (except such as may
by statute be specifically open to inspection) or any of them, shall be open to
the inspection of the shareholders, and the shareholders' rights in this respect
are and shall be restricted and limited accordingly.
52. Transactions with the Corporation
No transaction with the corporation in a which a director of the
corporation has a direct or indirect interest (a "conflict of interest
transaction") shall be voidable by the corporation solely because of the
director's interest in the transaction if any of the following is true:
(a) the material facts of the transaction and the director's interest
were disclosed or known to the Board or a committee of the Board and the Board
or committee authorized, approved or specifically ratified the transaction in
accordance with Section 180.0831(4) of the WBCL;
(b) the material facts of the transaction and the director's interest
were disclosed or known to the shareholders entitled to vote and they
authorized, approved or specifically ratified the transaction under Section
180.0831(5) of the WBCL; or
(c) the transaction was fair to the corporation.
No other contract or transaction in which a director or officer has an
interest and which may, under law, be authorized, approved or ratified by the
Board, a committee thereof, or the shareholders shall be void or voidable if
authorized, approved or ratified by the body which under law may authorize,
approve or ratify such contract or transaction.
28
<PAGE>
53. Ratification
Any transaction questioned in any shareholders' derivative suit on the
ground of lack of authority, defective or irregular execution, adverse interest
of director, officer or shareholder, nondisclosure, miscomputation, or the
application of improper principles or practices of accounting may be ratified
before or after judgment, by the Board or by the shareholders in case less than
a quorum of directors is qualified; and, if so ratified, shall have the same
force and effect as if the questioned transaction had been originally duly
authorized, and said ratification shall be binding upon the corporation and its
shareholders and shall constitute a bar to any claim or execution of any
judgment in respect to such questioned transaction.
54. Voting of Stocks
Unless otherwise ordered by the Board, any one of the Chief Executive
Officer, the Chairman of the Board, the President, any Vice Chairman of the
Board, any Executive Vice President or any Senior Vice President shall have full
power and authority, on behalf of the corporation, to consent to or approve of
any action by, and to attend, act and vote at any meeting of shareholders of,
any company in which the corporation may hold shares of stock, and in giving
such consent or approval or at any such meeting shall possess and may exercise
any and all rights and powers incident to the ownership of such shares and which
as the holder thereof, the corporation might possess and exercise if personally
present, and may exercise such power and authority through the execution of
proxies or may delegate such power and authority to any other officer, agent or
employee of the corporation.
55. Notice
Except as provided in Section 9 of these By-Laws, any notice which the
corporation is required to give under these By-Laws may be given personally or
it may be given in writing by depositing the notice in the post office or letter
box in a postpaid envelope directed to such address as appears on the books of
the corporation. Such notice shall be deemed to be given at the time of mailing.
56. Waiver of Notice
Whenever any notice is required to be given, a waiver thereof in writing
signed by the person or persons entitled to the notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
57. Dispensing with Notice
No notice need be given to any person with whom communication is made
unlawful by any law of the United States or any rule, regulation, proclamation
or executive order issued under any such law.
29
<PAGE>
58. Amendments
Subject to the provisions of the Restated Articles of Incorporation, these
By-Laws may be altered, amended or repealed by the shareholders or by the Board.
59. Emergency Provisions
The following emergency provisions shall be operative to the extent and
under the circumstances set forth in Section 180.0207 of the WBCL:
The board of directors, either before or during any such emergency, may
provide, and from time to time modify, lines of succession in the event that
during such emergency any or all officers or agents of the corporation shall for
any reason be rendered incapable of discharging their duties.
The Board of Directors, either before or during any such emergency, may,
effective in the emergency, change the head office or designate several
alternative head offices or regional offices, or authorize the officers so to
do.
No officer, director or employee acting in anticipation of or during an
emergency in accordance with any emergency by-laws shall be liable for action
taken in good faith to further the ordinary business affairs of the corporation
during any such emergency.
To the extent not inconsistent with any emergency by-laws so adopted, the
by-laws of the corporation shall remain in effect during any emergency and upon
its termination the emergency by-laws shall cease to be operative.
Unless otherwise provided in emergency by-laws, notice of any meeting of
the Board of Directors during such an emergency may be given only to such of the
directors as it may be feasible to reach at the time and by such means as may be
feasible at the time, including publication or radio.
60. Terms
Capitalized terms used in Sections 61 through 63 and not defined in these
By-Laws are used as defined in the corporation's Restated Articles of
Incorporation.
61. Foreign Stock Record
There shall be maintained a separate stock record, designated the "Foreign
Stock Record", for the registration of Alien Owned Shares. The Beneficial
Ownership by persons of Alien Owned Shares may be determined in conformity with
procedures prescribed by the Board.
30
<PAGE>
62. Permitted Percentage
At no time shall ownership of shares representing more than the Permitted
Percentage be registered on the Foreign Stock Record.
63. Registration of Shares
If at any time there exist Alien Owned Shares that are not registered on
the Foreign Stock Record, the Beneficial Owner thereof may request, in writing
by notice to the Secretary of the corporation, that the corporation register
ownership of such shares on the Foreign Stock Record, and the corporation shall
promptly comply with such request, subject to the limitation set forth in
Section 62. The corporation shall also maintain a record of requests to register
Alien Owned Shares on the Foreign Stock Record that the corporation cannot
accommodate due to the limitation set forth in Section 62. If at any time the
corporation shall find that, due to changes in ownership of Alien Owned Shares
reflected on the Foreign Stock Record, the combined voting power of Alien Owned
Shares no longer equals or exceeds the Permitted Percentage for any reason, then
any Alien Owned Shares with respect to which a request for registration on the
Foreign Stock Record was made but not accommodated due to the limitation set
forth in Section 62 shall be so registered subject to the procedures and
limitations set forth herein. The order in which Alien Owned Shares shall be
registered on the Foreign Stock Record shall be chronological, based on the date
the corporation received a written request to so register such shares of Alien
Owned Shares; provided, that any person who is not a Citizen who purchases or
otherwise acquires Alien Owned Shares that are registered on the Foreign Stock
Record may register such shares in its own name within thirty days of such
acquisition, in which event such person will assume the position of the seller
of such shares in the chronological order of shares registered on the Foreign
Stock Record. If at any time the corporation shall find that the combined voting
power of Alien Owned Shares then registered on the Foreign Stock Record exceeds
the Permitted Percentage for any reason, then there shall be removed from the
Foreign Stock Record the registration of such number of shares so registered as
is sufficient to reduce the combined voting power of the shares so registered to
an amount not in excess of the Permitted Percentage. The order in which such
shares shall be removed shall be reverse chronological order based upon the date
the corporation received a written request to so register such shares of Alien
Owned Shares.
64. Equity Offerings
For a period of ninety days following the consummation of any Equity
Offering (as defined below), the Foreign Stock Record shall be closed to all
shareholders seeking to register shares on the Foreign Stock Record except for
any purchaser of Alien Owned Shares in such Equity Offering but if and only if
such purchaser provides evidence satisfactory to the corporation that the
purchaser was the actual initial purchaser of shares of Voting Stock of the
corporation sold by the corporation or a shareholder of the corporation in such
Equity Offering. The term "Equity Offering" means the offering of Voting Stock
by the corporation or any shareholder of the corporation (excluding any such
offering where the Offering consists solely of Voting Stock owned by
shareholders of the corporation) in either an underwritten
31
<PAGE>
public offering registered under the Securities Act of 1933 or an offering
pursuant to Rule 144A under the Securities Act of 1933.
32
AMENDMENT NO. 14
TO
AIRLINE LEASE NO. AC-865
THIS AMENDMENT TO CONTRACT OF LEASE is made and entered into as of the 15th
day of June, 1999, by and between MILWAUKEE COUNTY, a municipal corporation,
organized and existing as one of the counties in Wisconsin (hereinafter referred
to as "Lessor" or "County"), and MIDWEST EXPRESS AIRLINES, INC., a corporation
organized and existing under the laws of the State of Wisconsin (hereinafter
referred to as "Lessee" or "Airline").
W I T N E S S E T H
THAT, WHEREAS, the parties hereto have heretofore entered into an Airline
Lease dated April 5, 1985, as amended, relating to space, occupancy and the use
of the premises and facilities of General Mitchell International Airport (GMIA)
for the transportation of persons and cargo by air; and
WHEREAS, Airline requests that Lessor accept surrender of the commitment
for Gates D-37, 52, 54, 55 and 56 and associated areas for reassignment to
Astral Aviation, Inc.; and,
WHEREAS, Airline requests that Lessor accept surrender of the commitment
for Gate D-42 and associated areas from Astral Aviation, Inc., for reassignment
to Airline; and,
WHEREAS, on April 22, 1999, (File No. 99-201) County's board of Supervisors
approved amending Airline's Lease to delete Gates D-37, 52, 54, 55 and 56 and
associated areas for reassignment to Astral Aviation, Inc., and add Gate D-42
and associated areas;
<PAGE>
NOW, THEREFORE, for and in consideration of the premises and of the mutual
covenants and agreements herein contained and other valuable considerations, it
is mutually agreed between the parties hereto that the aforesaid agreement dated
April 5, 1985, as amended, be and it is hereby further amended in the following
particulars, to wit:
1. Effective on May 1, 1999, paragraph S of Article IV shall be deleted in its
entirety and a new paragraph S inserted therefore, reading as follows:
"S. LESSEE'S EXCLUSIVE USE SPACE WITHIN THE TERMINAL BUILDING ON MAY 1,
1999
For purposes of calculation of Lessee's Terminal rents for those areas
designated for Lessee's exclusive use in the Terminal building, the
following space definitions, relative cost factors, and resultant ERUs
shall be utilized:
Relative Cost
Space Function Sq. Ft. Factor ERUs
-------------- ------- ------------- ----
Concourse Lower Level -0- .20 -0-
Office Unfinished
(Unheated)
Concourse Lower Level 4,588.50 .70 3,211.95
Office Unfinished
(Heated)
Concourse Lower Level 30,460.90 .85 25,891.77
Office Finished
(Heated & Air Conditioned)
Concourse Upper Level -0- .95 -0-
Office Finished
Concourse Upper Level 833.00 .95 791.35
Office Finished
Ticket Counter 661.70 1.10 727.87
Ticket Counter Office 1,307.40 .95 1,242.03
Gate Hold Rooms 19,692.00 1.00 19,692.00
Baggage Makeup Area 3,939.10 .75 2,954.33
Baggage Service Office 405.00 1.00 405.00
2
<PAGE>
Hold Room Stairwell 1,796.44 .15 269.47
Basement 0 .25 0
Mezzanine Office Areas 0 .90 0
Operations Control Tower 401.00 1.08 433.08
TOTALS 64,085.04 55,618.84
The spaces outlined above are those occupied by Lessee on May 1, 1999,
which deletes: 674 square feet of Concourse Lower Level Office
Unfinished (Heated) space; 5,580 square feet of Concourse Lower Level
Office Finished (Heated and Air Conditioned) space; 112 square feet of
Concourse Upper Level Office Finished space; deletes 11,386 square
feet of Gate Hold Room space and adds 1,560 square feet of Gate Hold
room space at Gate D-42; and, deletes 935 feet of Hold Room Stairwell
space and adds 106 feet of Hold Room space at Gate D-42, as shown on
Exhibit "P", pages 5, 9, 13 and 14 of 14, Revised 5/98, attached
hereto and made a part hereof."
2. Effective May 1, 1999, the areas referred to in Article IV, paragraph I,
will be further amended to delete approximately 369 linear feet of ramp
areas associated with the gates 52, 54, 55, and 56 on Concourse D and 129
square linear feet of ramp associated with Gate 37, and add approximately
115 linear feet associated with Gate D-42, as shown on Exhibit "J", PAGE 1
OF 1, Dated "REV. 5/99."
3. Except as specifically provided herein, the terms and conditions of the
Lease heretofore entered into between the parties dated April 5, 1985, as
amended, shall remain in full force and effect.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed
by their respective proper officers and their corporate seals hereto affixed on
the dates hereinafter set forth.
COUNTY
------
Dated at Milwaukee, Wisconsin, this 15th day of June, 1999.
APPROVED: MILWAUKEE COUNTY
a municipal corporation
/s/ C. Barry Batzman 6/7/99 By:/s/ William Heinemann 6/14/99
- -------------------------------------- ------------------------------
Airport Director Date William Heinemann
Director of Public Works
/s/ Andrew Hunseck 6/9/99 By:/s/ Mark Ryan 6/15/99
- -------------------------------------- ------------------------------
Corporation Counsel Date Mark Ryan
County Clerk
AIRLINE
-------
Dated at Milwaukee, Wisconsin, this 28th day of May, 1999.
MIDWEST EXPRESS AIRLINES, INC.
a Wisconsin corporation
By:/s/ Robert S. Bahlman
------------------------------
Robert S. Bahlman
Title: Sr. Vice President
Date: May 28, 1999
By________________________________
Title_____________________________
Date______________________________
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF MIDWEST EXPRESS HOLDINGS, INC. AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 14,594
<SECURITIES> 0
<RECEIVABLES> 11,606
<ALLOWANCES> 207
<INVENTORY> 5,039
<CURRENT-ASSETS> 41,787
<PP&E> 287,582
<DEPRECIATION> 90,020
<TOTAL-ASSETS> 250,979
<CURRENT-LIABILITIES> 88,151
<BONDS> 3,144
0
0
<COMMON> 145
<OTHER-SE> 118,846
<TOTAL-LIABILITY-AND-EQUITY> 250,979
<SALES> 0
<TOTAL-REVENUES> 216,543
<CGS> 0
<TOTAL-COSTS> 184,474
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8
<INTEREST-EXPENSE> 137
<INCOME-PRETAX> 32,261
<INCOME-TAX> 12,098
<INCOME-CONTINUING> 20,163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,163
<EPS-BASIC> 1.43
<EPS-DILUTED> 1.41
</TABLE>
