<PAGE>
<PAGE> 1
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 September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission file number 1-5358
Sundstrand Corporation
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 36-1840610
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4949 Harrison Avenue, P.O. Box 7003, Rockford, IL 61125-7003
_____________________________________________________________
(Address of principal executive offices and Zip code)
(815) 226-6000
____________________________________________________
(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
_____ _____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at October 24, 1996
______________________________________ _______________________________
Common Stock, par value $.50 per share 60,629,631<PAGE>
<PAGE> 2
SUNDSTRAND CORPORATION
FORM 10-Q
For the Quarter Ended September 30, 1996
INDEX
Page
Part I. Financial Information ____
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2<PAGE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
<TABLE>
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Statement of Earnings (Unaudited)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
(Amounts in millions except ------------------- -------------------
per share data) 1996 1995 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 371 $ 355 $1,110 $1,078
Costs, expenses, and other income:
Costs of products sold 241 226 725 699
Marketing and administration 70 72 226 224
Restructuring charge, net - (3) (8) 58
Interest expense 7 8 22 25
Interest income (1) (2) (4) (4)
Other, net - (1) - (1)
------ ------ ------ ------
317 300 961 1,001
------ ------ ------ ------
Earnings before income taxes 54 55 149 77
Less income taxes 20 21 55 34
------ ------ ------ ------
Net earnings $ 34 $ 34 $ 94 $ 43
====== ====== ====== ======
Weighted-average number of common
shares outstanding 61.1 63.0 61.1 63.0
Earnings per share $ .57 $ .53 $ 1.55 $ .68
====== ====== ====== ======
Cash dividends per common share $ .17 $ .15 $ .51 $ .45
====== ====== ====== ======
</TABLE>
3<PAGE>
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<TABLE>
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows (Unaudited)
<CAPTION>
Nine Months Ended
September 30,
------- -------
(Amounts in millions) 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net earnings $ 94 $ 43
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 55 59
Deferred income taxes 10 (16)
Change in operating assets and liabilities excluding
the effects of acquisitions and divestitures:
Accounts receivable (10) 25
Inventory (29) (52)
Other assets (6) 7
Accounts payable (7) (1)
Accrued expenses (11) 68
Other (4) 4
----- -----
Total adjustments (2) 94
----- -----
NET CASH PROVIDED BY OPERATING ACTIVITIES 92 137
----- -----
Cash flow from investing activities:
Cash paid for property, plant, and equipment (46) (39)
Proceeds from sale of assets 2 41
Cash paid for business acquisitions (10) (8)
Investment in IRB trust 4 (4)
Investment in equity companies - (2)
----- -----
NET CASH USED FOR INVESTING ACTIVITIES (50) (12)
----- -----
Cash flow from financing activities:
Net payments on borrowings supported by lines of credit (2) (39)
Principal payments on long-term debt (2) (5)
Issuance of long-term debt - 8
Purchase of treasury stock (36) (50)
Proceeds from stock options exercised 2 3
Dividends paid (31) (29)
----- -----
NET CASH USED FOR FINANCING ACTIVITIES (69) (112)
----- -----
Effect of exchange rate changes on cash 2 (4)
----- -----
Increase (decrease) in cash and cash equivalents (25) 9
Cash and cash equivalents at January 1 75 66
----- -----
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $ 50 $ 75
===== =====
Supplemental cash flow information:
Interest paid $ 18 $ 20
Income taxes paid $ 45 $ 51
</TABLE>
4<PAGE>
<PAGE> 5
<TABLE>
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Balance Sheet (Unaudited)
<CAPTION>
September 30, December 31,
(Amounts in millions) 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 50 $ 75
Accounts receivable, net 291 281
Inventories, net of progress payments 358 330
Deferred income taxes 45 55
Other current assets 14 20
------- -------
Total current assets 758 761
Property, Plant, and Equipment, net 444 449
Intangible Assets, net 272 266
Deferred Income Taxes 76 75
Other Assets 51 42
------- -------
$ 1,601 $ 1,593
======= =======
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable $ 166 $ 168
Long-term debt due within one year 8 7
Accounts payable 95 102
Accrued salaries, wages, and commissions 29 24
Accrued postretirement benefits other than pensions 17 17
Restructuring liability 23 27
Other accrued liabilities 90 93
------- -------
Total current liabilities 428 438
Long-Term Debt 219 221
Accrued Postretirement Benefits Other Than Pensions 367 363
Other Liabilities 78 90
Shareholders' Equity
Common stock, at par value 38 38
Other shareholders' equity 471 443
------- -------
509 481
------- -------
$ 1,601 $ 1,593
======= =======
</TABLE>
5<PAGE>
<PAGE> 6
The financial information contained herein is unaudited but, in the
opinion of the management of the Registrant, includes all adjustments
(all of which are normal recurring adjustments) necessary for a fair
presentation of the results of operations for the periods indicated.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ACCOUNTING POLICIES
The financial statements are condensed and should be read in
conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1995.
PRINCIPLES OF CONSOLIDATION provide for the inclusion of the accounts
of Sundstrand Corporation and all subsidiaries. All intercompany
transactions are eliminated in consolidation.
CASH EQUIVALENTS are considered by the Registrant to be all highly
liquid debt instruments purchased with original maturities of three
months or less.
<TABLE>
INVENTORIES
The components of inventories at September 30, 1996, and December 31,
1995, were as follows:
<CAPTION>
September 30, December 31,
(Amounts in millions) 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Raw materials . . . . . . . . . . . . . . . . . . $ 50 $ 51
Work in process . . . . . . . . . . . . . . . . . 134 118
Finished goods and parts. . . . . . . . . . . . . 194 179
------ ------
Inventories before progress payments. . . . . . 378 348
Less progress payments. . . . . . . . . . . . . . 20 18
------ ------
Inventories, net of progress payments . . . . . $ 358 $ 330
====== ======
Inventories before progress payments include costs related to long-term
contracts of $56 million and $52 million, at September 30, 1996,
and December 31, 1995, respectively.
</TABLE>
STOCK SPLIT
On February 20, 1996, the Registrant's Board of Directors authorized
a two-for-one stock split payable as a 100 percent stock dividend
which was distributed on March 19, 1996, to shareholders of record on
March 5, 1996. Shareholders' equity has been restated to give
retroactive recognition to the stock split in prior periods by
reclassifying from retained earnings to common stock the par value of
the additional shares arising from the split. In addition, all
references to the number of shares and per share amounts of the
Registrant's common stock have been restated to reflect the split.
6<PAGE>
<PAGE> 7
RESTRUCTURING
During 1995, the Registrant's Board of Directors approved a
restructuring plan which resulted in a pretax charge of $58 million.
The charge was taken to reduce excess manufacturing capacity caused
by reductions in manufacturing volume and increases in manufacturing
productivity, and to write down the assets of the Industrial
segment's Spectronic Instruments business (Spectronic) and the
Aerospace segment's Advanced Power Technology, Inc. (APT) in
anticipation of their divestiture. The charge included $24 million
in termination benefits for approximately 350 employees, primarily
consisting of workers at the Registrant's Lima, Ohio, facility. Also
included in the charge was $29 million for the write-down of the
assets of the Lima facility, Spectronic, and APT, as well as $5
million for disposition of the Lima facility. The shutdown of the
Lima facility was substantially completed in June 1996. The
disposition of the Lima facility is expected to be completed by
mid-1997 and the sales of Spectronic and a majority interest in APT were
completed in the third quarter of 1995.
Since the restructuring charge was recorded, approximately $5
million has been paid and charged against the restructuring
liability, including costs to terminate 359 employees. In the second
quarter of 1996, as a result of the Lima plant shutdown, future
pension and other postretirement benefits for the terminated Lima
employees were fixed causing recognition of an $8 million curtailment
gain. Additionally, in the first nine months of 1996 approximately
$13 million was charged to costs of products sold related primarily
to the movement of equipment from the Lima facility to other
manufacturing sites.
7<PAGE>
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The financial information for the quarter ended September 30, 1996,
as compared with the financial information for the quarter ended
September 30, 1995, and the balance sheet at December 31, 1995, is
discussed below, and should be read in conjunction with the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995, and the financial data as presented in Item 1 above.
RESULTS OF OPERATIONS
Third quarter 1996 sales increased by $16 million, to $371 million,
compared with third quarter 1995 sales of $355 million. Third
quarter 1996 Aerospace segment sales of $196 million were up $10
million compared with third quarter 1995 primarily as a result of
higher commercial sales. Third quarter 1996 Industrial segment sales
of $175 million were $6 million higher than third quarter 1995
primarily as a result of higher sales of Fluid Handling's Sundyne
pumps, partially offset by lower sales of stock built product at
Falk.
Third quarter 1996 net earnings were $34 million, or $.57 per share,
compared with third quarter 1995 net earnings of $34 million, or $.53
per share. Excluding restructuring related items, third quarter net
earnings were $36 million, or $.59 per share, in 1996 and $33
million, or $.53 per share, in 1995. The increase was due primarily
to the higher Aerospace operating profit stemming from the increase
in commercial sales, partially offset by increased operating losses
at Sullair's European business. Earnings per share also benefitted
from the effects of the share repurchase program.
Sales for the first nine months of 1996 were $1,110 million, an
increase of $32 million, from sales of $1,078 million for the same
1995 period. Aerospace segment sales increased by $37 million to
$556 million in the first nine months of 1996 from $519 million in
the same 1995 period. The increase was due to higher commercial
sales, partially offset by the effects of the third quarter 1995
divestiture of a majority interest in Advanced Power Technology, Inc.
(APT). Industrial segment sales were $554 million in the first nine
months of 1996, a decrease of $5 million from sales of $559 million
in the same 1995 period. The decrease was a result of the 1995
divestiture of the Spectronic Instruments business, partially offset
by higher sales at Falk and Fluid Handling.
Net earnings were $94 million, or $1.55 per share, for the first nine
months of 1996 compared with $43 million, or $.68 per share, in the
first nine months of 1995. Excluding restructuring charges, related
curtailment gains, and related period costs, net income was $97
million, or $1.59 per share, and $85 million, or $1.35 per share, for
the first nine months of 1996 and 1995, respectively. The increase
is due primarily to higher Aerospace operating profit resulting from
the increase in commercial sales, partially offset by increased
operating losses at Sullair's European business. Earnings per share
also benefitted from the effects of the share repurchase program.
8<PAGE>
<PAGE> 9
STOCK SPLIT
On February 20, 1996, the Registrant's Board of Directors authorized
a two-for-one stock split payable as a 100 percent stock dividend
which was distributed on March 19, 1996, to shareholders of record on
March 5, 1996. Shareholders' equity has been restated to give
retroactive recognition to the stock split in prior periods by
reclassifying from retained earnings to common stock the par value of
the additional shares arising from the split. In addition, all
references to the number of shares and per share amounts of the
Registrant's common stock have been restated to reflect the split.
ORDERS
Third quarter 1996 incoming orders were $387 million compared with
third quarter 1995 incoming orders of $322 million. The $65 million
increase was primarily in the Aerospace commercial markets. New
orders for the first nine months of 1996 were $1,177 million compared
with new orders of $1,244 million for the same period of 1995. The
1995 orders included a $172 million long-term contract to provide the
propulsion system for the United Kingdom's Royal Navy Spearfish
heavyweight torpedo program. Total unfilled orders on September 30,
1996, were $998 million, up from $913 million on September 30, 1995,
and $931 million on December 31, 1995.
AEROSPACE OVERVIEW (FOR ONGOING BUSINESSES EXCLUDING RESTRUCTURING)
Third quarter 1996 sales in the Aerospace segment were up $16 million
or 9 percent compared with the third quarter of 1995, as a result of
increased commercial sales. Operating profit increased by $8
million or 26 percent. Total Aerospace orders increased by 28 percent
in the third quarter compared with the same period in 1995.
INDUSTRIAL OVERVIEW (FOR ONGOING BUSINESSES)
Industrial segment sales in the third quarter of 1996 increased by $6
million or 4 percent compared with the third quarter of 1995.
Operating profit fell by $2 million or 7 percent from the 1995 third
quarter due to continued market and margin weakness at Sullair's
European business. Total Industrial orders increased by 2 percent
in the third quarter compared with the same period in 1995.
LIQUIDITY & CAPITAL RESOURCES
Working capital was $330 million at September 30, 1996, compared with
$323 million at December 31, 1995. Higher inventories and accounts
receivable which resulted from the increased sales and order activity
were partially offset by a decrease in cash and cash equivalents and
deferred income taxes.
Net cash provided by operating activities decreased to $92 million for
the first nine months of 1996 from $137 million for the first nine
months of 1995. The year over year decrease in operating cash flow was
due primarily to the net effect of fluctuations in accounts receivable,
inventories, and pension and warranty liabilities. Fluctuations in
cash flow between the nine month periods related to net earnings,
deferred income taxes, and accrued expenses were due primarily to the
$58 million 1995 restructuring accrual, which did not have a material
effect on the net cash provided by operating activities in either
period.
9<PAGE>
<PAGE> 10
In the nine months ended September 30, 1996, the Registrant used $50
million of cash for investing activities, primarily for the purchase of
fixed assets. In the same 1995 period, the Registrant used $12 million
of cash for investing activities, primarily for the purchase of fixed
assets and the ram air turbine product line of Dowty Aerospace
Hydraulics, Dowty Group Plc., Cheltenham, England offset, in part, by
the proceeds from the sale of assets. In the first nine months of
1996, $69 million of cash was used for financing activities, primarily
to repurchase common stock and pay dividends. In the same period of
1995, $112 million of cash was used for financing activities, primarily
to repay borrowings supported by lines of credit, repurchase common
stock, and pay dividends.
The Registrant repurchased 189,000 shares of its common stock during
the third quarter, bringing the total shares repurchased in 1996 to
1,011,000. Through September 30, 1996, the Registrant has repurchased
a total of approximately 13 million shares of the 20 million shares
authorized for repurchase.
At September 30, 1996, the Registrant's ratio of total debt to total
capital was 43.6 percent compared with 45.2 percent at December 31,
1995.
OUTLOOK
The following forward-looking statements are subject to market risks
and opportunities that could have a material impact on actual results,
as set forth in the Registrant's annual report on Form 10-K filed with
the Securities and Exchange Commission.
The Registrant continues to project 1996 full-year earnings per share
of between $2.25 and $2.40, excluding restructuring costs and any
additional share repurchases. Excluding the divested Spectronic
business, Industrial segment sales are expected to increase about 2
percent for 1996, with operating profit margins of around 16 percent.
The projected increase from 1995 for full-year 1996 Aerospace segment
sales, excluding APT, continues to be between 5 percent and 10 percent.
The Registrant is assessing the situation at its Sullair Europe
business and is evaluating its options in the face of current as well
as forecasted market conditions. Operating cash flow after capital
expenditures in 1996 is currently expected to be about $100 million.
The preliminary estimate for 1997 is for overall sales to increase
between 5 percent and 10 percent with operating margins above 17
percent. Within this preliminary estimate, the Registrant is
projecting that Aerospace segment sales will grow in the 10 percent to
15 percent range in 1997 with operating profit margin improvement
compared to 1996. The Registrant's preliminary projection for the
Industrial segment is for sales to be up about 5 percent with an
operating profit margin in the 16 percent to 16 percent plus range.
10<PAGE>
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Registrant has disclosed various legal proceedings in its Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
There have been no material changes in those proceedings or other
material legal developments since that time.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(3) Articles of Incorporation and By-laws
(a) Text of resolution adopted by the Board of
Directors of Registrant on September 17, 1996,
amending Registrant's By-laws effective as of
September 9, 1996.
(b) Registrant's By-laws, including all amendments
as effective September 9, 1996.
(10) Material Contracts
(a) Termination Agreement dated August 7, 1996,
between Registrant and James F. Ricketts.
(11) Statement Re Computation of Per Share Earnings
(a) Computation of Fully Diluted Earnings Per
Share (Unaudited) for the quarters ended
September 30, 1996, and 1995, and for the
nine months ended September 30, 1996, and 1995.
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
11<PAGE>
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Sundstrand Corporation
----------------------------
(Registrant)
Date: October 29, 1996 /s/ Richard M. Schilling
-----------------------------
Richard M. Schilling
Vice President and General
Counsel and Secretary
Date: October 29, 1996 /s/ DeWayne J. Fellows
-----------------------------
DeWayne J. Fellows
Vice President and Controller
12
<PAGE>
Exhibit (3)(a)
FURTHER RESOLVED, that the By-Laws of the Corporation
be, and they hereby are amended, effective as of September 9,
1996, as follows:
1. Paragraph (a) of Section 4.13 of the By-Laws is
changed by deleting the phrase ", subject to the
direction of the Executive Vice President and Chief
Financial Officer" where it appears in such
Paragraph.
2. Paragraph (b) of Section 4.13 of the By-Laws is
changed by deleting the words "the Executive Vice
President and Chief Financial Officer," where they
appear in such Paragraph.
3. Section 4.13 of the By-Laws is changed by deleting
therefrom Paragraph (d) and by relettering Paragraph
(e) thereof to Paragraph (d) and by deleting from
relettered Paragraph (d) the phrase "or the Executive
Vice President and Chief Financial Officer" where it
appears in such Paragraph.
<PAGE>
Exhibit (3)(b)
BY-LAWS
OF
SUNDSTRAND CORPORATION
(A Delaware Corporation)
Effective September 9, 1996
ARTICLE I
OFFICES
Section 1.1. Principal Office. The principal office of the
Corporation in the State of Delaware shall be in the City of
Wilmington, County of New Castle.
Section 1.2. Other Offices. The Corporation may also have
offices at such other places, either within or without the State
of Delaware, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 2.1. Place of Meetings. All annual and special
meetings of the stockholders shall be held at such place, either
within or without the State of Delaware, as may be fixed by the
Board and specified in the notice of the meeting.
Section 2.2. Annual Meetings. An annual meeting of
stockholders shall be held on such date and at such hour as may
be fixed by the Board and specified in the notice of the meeting,
when they shall elect by a plurality vote a Board of Directors
and transact such other business as may properly be brought
before the meeting.
Section 2.3. List of Stockholders. The Secretary shall
prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by
any stockholder who is present. The original or duplicate stock
ledger shall be the only evidence as to who are the stockholders
entitled to examine such list or stock ledger or transfer book or
to vote in person or by proxy at any meeting of stockholders.
Section 2.4. Special Meetings of Stockholders. Special
meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the Chairman of
the Board and shall be called by the Chairman of the Board or
Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning
eighty percent or more in amount of the entire capital stock of
the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed
meeting.
Section 2.5. Notice of Meetings. Except as otherwise
expressly provided by law or by the Certificate of Incorporation
or these By-Laws, written or printed notice of each annual or
special meeting of stockholders shall be given by mail at least
ten but not more than sixty days before the meeting to the
stockholders of record entitled to vote thereat. Every such
notice shall be directed to a stockholder at his address as it
shall appear on the transfer books of the Corporation; shall
state the date, time and place of the meeting; and, in the case
of a special meeting, shall state briefly the purposes thereof.
Business transacted at all special meetings shall be confined to
the purposes stated in the notice thereof.
Section 2.6. Quorum and Adjournments. The holders of a
majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall be
necessary and sufficient to constitute a quorum at all meetings
of the stockholders for the transaction of business, except as
otherwise provided by statute, by the Certificate of
Incorporation, or by these By-Laws. If, however, such quorum
shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting, at which a quorum shall
be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
The absence from any meeting of the number required by law or by
the Certificate of Incorporation or these By-Laws for action upon
any given matter shall not prevent action at such meeting upon
any other matter or matters which may properly come before the
meeting if the number required in respect of such other matter or
matters shall be present. Once a quorum is present at a meeting,
it shall be deemed to be acting thereafter throughout the
meeting, irrespective of any withdrawals. Nothing in these By-
Laws shall affect the right to adjourn where a quorum is present.
Section 2.7. Voting by Stockholders. When a quorum is
present at any meeting, the vote of the holders of a majority of
the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation or of these By-
Laws a different vote is required, in which case such express
provision shall govern and control the decision of such question.
At any meeting of the stockholders every stockholder having
the right to vote shall be entitled to vote in person, or by
proxy appointed by an instrument in writing, subscribed by such
stockholder or by his attorney or agent thereunto authorized in
writing, and bearing a date not more than three years prior to
said meeting, unless said instrument provides for a longer
period. Except as otherwise provided by the Certificate of
Incorporation, each stockholder present in person or by proxy at
any meeting shall have, on each matter on which stockholders are
entitled to vote, one vote for each share of stock having voting
power, registered in his name on the books of the Corporation.
Section 2.8. New Business Proposals at Annual Meetings.
Only such new business shall be conducted, and only such
proposals shall be acted upon at an annual meeting of
stockholders, as shall have been properly brought before such
annual meeting (a) by, or at the direction of, the Board of
Directors, or (b) by any stockholder of the Corporation who
complies with the notice procedures set forth in this Section
2.8. A stockholder who wishes to bring a proposal before an
annual meeting shall give timely notice thereof in writing to the
Secretary of the Corporation. Such notice, to be timely, shall
be delivered to, or mailed and received by the Secretary at the
principal executive offices of the Corporation at least sixty
days but not more than ninety days prior to the scheduled annual
meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however,
that if less than seventy days' notice or prior public disclosure
of the date of the scheduled annual meeting is given or made,
such notice by a stockholder to be timely shall be so delivered
or received not later than the close of business on the tenth day
following the earlier of the day on which notice of the scheduled
annual meeting was mailed or the day on which public disclosure
thereof was made.
Each such stockholder notice shall set forth as to each
proposal to be brought before the annual meeting (a) a brief
description of the proposal and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they
appear on the transfer books of the Corporation, of the
stockholder proposing such business and any other stockholders
known by such stockholder to be supporting the proposal, (c) the
class and number of shares of the Corporation's stock which are
beneficially owned by the stockholder on the date of such
stockholder notice and by any other stockholders known by such
stockholder to be supporting such proposal, and (d) any financial
interest of the stockholder in such proposal.
The Board of Directors may reject any stockholder proposal
not timely made in accordance with the terms of this Section 2.8.
If the Board of Directors, or a designated committee thereof,
determines that the information provided in a stockholder's
notice does not satisfy the informational requirements of this
Section 2.8 in any material respect, the Secretary shall promptly
notify such stockholder of the deficiency in the notice. The
stockholder shall have an opportunity to cure the deficiency by
providing additional information to the Secretary within five
days from the date such notice of deficiency is given to the
stockholder, as the Board of Directors or such committee shall
reasonably determine. If the deficiency is not cured within such
period, or if the Board of Directors or such committee determines
that the additional information provided by the stockholder,
together with the information previously provided, does not
satisfy the requirements of this Section 2.8 in any material
respect, then the Board of Directors may reject such proposal.
The Secretary shall notify the stockholder in writing whether his
proposal has been made in accordance with the time and
informational requirements of this Section 2.8. Notwithstanding
the procedure set forth in this Section 2.8, if neither the Board
of Directors nor such committee makes a determination as to the
validity of any stockholder proposal, the presiding officer of
the annual meeting shall determine and declare at the annual
meeting whether the stockholder proposal was made in accordance
with the terms of this Section 2.8. If the presiding officer
determines that the stockholder's proposal was not made in
accordance with the terms of this Section 2.8, he shall so
declare at the annual meeting and any such proposal shall not be
acted upon at the annual meeting.
This Section 2.8 shall not prevent the consideration and
approval or disapproval at an annual meeting of reports of
officers, directors and committees of the Board of Directors,
but, in connection with such reports, no new business shall be
acted upon at such annual meeting unless stated, filed and
received as herein provided.
ARTICLE III
DIRECTORS
Section 3.1. Number, Election and Terms of Office of
Directors. The number of directors which shall constitute the
whole Board shall be eleven in number. Directors need not be
stockholders in the Corporation. Except as provided in Section
3.3, the directors shall be elected at the annual meeting of the
stockholders, and each director elected shall hold office until
his successor is elected and qualified or until his earlier
resignation. The directors shall be divided into three classes:
Class I, Class II and Class III. Such classes shall be as nearly
equal in number as possible. The term of office of the initial
Class I directors shall expire at the annual meeting of
stockholders in 1971, the term of office of the initial Class II
directors shall expire at the annual meeting of stockholders in
1972, and the term of office of the initial Class III directors
shall expire at the annual meeting of stockholders in 1973, or
thereafter in each case when their respective successors are
elected and qualified. At each annual election held after
classification and the initial election of directors according to
classes, the directors chosen to succeed those whose terms then
expire shall be identified as being of the same class as the
directors they succeed and shall be elected for a term expiring
at the third succeeding annual meeting or thereafter when their
respective successors in each case are elected and qualified.
Section 3.2. Corporate Records. The directors may keep the
books of the Corporation, except such as are required by law to
be kept within the State of Delaware, outside of Delaware at such
place or places as they may from time to time determine.
Section 3.3. Vacancies. Vacancies occurring in the Board of
Directors and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a
quorum, and any director so chosen shall hold office until his
successor is elected and qualified. A director elected to fill a
vacancy shall be elected for the unexpired portion of the term of
his predecessor in office. A director elected to fill a newly
created directorship shall serve for the term provided herein for
the class of directors for which such director was elected.
Section 3.4. General Powers. The business and affairs of
the Corporation shall be managed by its Board of Directors which
may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
Section 3.5. Place of Meetings. The Board of Directors of
the Corporation may hold meetings, both regular and special,
either within or without the State of Delaware.
Section 3.6. Annual Meetings. The first meeting of each
newly elected Board shall constitute the annual meeting of said
Board and shall be convened as soon as is conveniently possible
but in no event more than two weeks after the date of the annual
meeting of stockholders in each year at such time and place as
shall be fixed by the Chairman of the Board.
Section 3.7. Regular Meetings. Regular meetings of the
Board shall be held upon notice, or without notice, at least
quarterly, at such time and place as shall from time to time be
determined by the Board.
Section 3.8. Special Meetings. Special meetings of the
Board may be called by the Chairman of the Board or any four
directors. Notice of each special meeting of the Board may be
given by mail, telegraph or cable, personal delivery or
telephone. Notice by mail shall be given at least three days
before the meeting; notice by any other means shall be given a
reasonable period of time before the time of such meeting but in
no event shall such notice be given less than one hour before
such meeting. If notice is by telephone, such notice shall be
promptly confirmed by telegraph or cable to each director.
Section 3.9. Quorum. At all meetings of the Board, the
presence of a majority of the full number of directors shall be
necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of
Incorporation or by these By-Laws. If a quorum shall not be
present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.
Section 3.10. Action by Board Without Meeting.
Notwithstanding anything contained in these By-Laws, any action
required or permitted to be taken at any meeting of the Board of
Directors or of any Committee thereof may be taken without a
meeting, if a written consent thereto is signed by all members of
the Board or of such Committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the
Board of Directors or the Committee.
Section 3.11. Compensation of Directors. The Board of
Directors, by resolution adopted by a majority of the whole
Board, may establish reasonable compensation of all directors for
services to the Corporation as directors, officers or otherwise.
No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
therefor. Members of any Committee may be allowed like
compensation for their services to the Corporation.
Section 3.12. Interested Directors. No contract or
transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in
which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board or
Committee which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if (1)
the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the
Board of Directors or the Committee, and the Board or Committee
in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors,
even though the disinterested directors be less than a quorum; or
(2) the material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to
stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, Committee, or the
stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board or
of the Committee which authorizes the contract or transaction.
Section 3.13. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one
or more Committees, each Committee to consist of two or more of
the directors of the Corporation. Any such Committee, to the
extent provided in the resolution not inconsistent with the
provisions of the Statutes of Delaware, shall have and may
exercise the powers and authority of the Board of Directors in
the management of the Corporation and may authorize the seal of
the Corporation to be affixed to all papers which may require it.
A majority of the members of the Committee then holding office
shall constitute a quorum at all meetings and each such Committee
shall keep regular minutes of its proceedings and report the same
to the whole Board.
Section 3.14. Nomination for Election of Directors.
Nominations for the election of Directors shall be properly made
by the Board of Directors or a nominating committee appointed by
the Board of Directors or by any stockholder entitled to vote in
the election of Directors generally; provided, however, that any
such stockholder may nominate one or more persons for election as
Directors at a meeting only if such stockholder has given written
notice of such stockholder's intent, either by personal delivery
or by United States mail, postage prepaid, to the Secretary not
later than (1) with respect to an election to be held at an
annual meeting of stockholders, ninety days prior to the
anniversary date of the immediately preceding annual meeting, and
(2) with respect to an election to be held at a special meeting
of stockholders for the election of directors, the close of
business on the tenth day following the date on which notice of
such meeting is first given to stockholders. Each such notice
shall set forth: (a) the name and address, as they appear on the
transfer books of the Corporation, of the stockholder who intends
to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d)
such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission as then in effect; and (e) the consent of
each nominee to serve as a director of the Corporation if so
elected.
The presiding officer of any meeting at which a stockholder
or its representative attempts to nominate one or more persons
for election as directors may refuse to acknowledge the
nomination of any person not made in compliance with the
provisions of this Section 3.14.
ARTICLE IV
OFFICERS
Section 4.1. Designation: Number. The officers of the
Corporation shall consist of a Chairman of the Board; a President
and Chief Executive Officer; an Executive Vice President and
Chief Financial Officer; an Executive Vice President and Chief
Operating Officer, Aerospace; an Executive Vice President and
Chief Operating Officer, Industrial; a Vice President and General
Counsel; one or more other Vice Presidents; a Secretary; a
Treasurer; and a Controller, all of whom shall be elected by the
Board of Directors and shall hold office until their successors
are duly elected and qualified. In addition, the President and
Chief Executive Officer may appoint a Tax Director, one or more
Assistant Secretaries, Assistant Treasurers and Assistant
Controllers and such other officers and agents as the President
and Chief Executive Officer may deem necessary or desirable, who
shall hold their offices for such terms and shall have such
authority and perform such duties as shall be determined by the
President and Chief Executive Officer from time to time. Any
Executive Vice President or Vice President designated by a
resolution of the Board of Directors or by delegation of the
President and Chief Executive Officer shall have authority to
sign contracts and any other documents as specifically authorized
by the Board of Directors or the President and Chief Executive
Officer or which are within the ordinary course of the business
of the Corporation.
Section 4.2. Non-Corporate Officers. The President and
Chief Executive Officer shall have authority to appoint from time
to time officers of divisions, product groups or other segments
of the Corporation's business for such terms, with such authority
and at such salary as the President and Chief Executive Officer
in his sole discretion shall determine; provided, however, such
appointed officer shall under no circumstances have authority to
bind any other division, product group or other segment of the
Corporation's business nor to bind the Corporation, except as to
the normal and usual business affairs of the division, product
group or other segment of the Corporation's business of which he
is an officer. Such appointed officer, as such, shall not be
construed as an officer of the Corporation.
Section 4.3. Salaries. The salaries of the officers elected
pursuant to Section 4.1 above shall be determined by the Board of
Directors. The salaries of all other officers and agents of the
Corporation appointed by the President and Chief Executive
Officer shall be determined by the Board of Directors or the
President and Chief Executive Officer.
Section 4.4. Removal. Any officer elected by the Board of
Directors and any officer or agent appointed by the President and
Chief Executive Officer, as the case may be, may be removed at
any time by the Board of Directors or the President and Chief
Executive Officer, respectively, whenever in its or his judgment
the best interests of the Corporation will be served thereby, but
such removal shall be without prejudice to the contract rights,
if any, of the person so removed. Any vacancy occurring in any
elected office of the Corporation shall be filled by the Board of
Directors.
Section 4.5. Chairman of the Board. The Chairman of the
Board shall preside at all meetings of stockholders and of the
Board. He shall counsel the President and Chief Executive
Officer on plans, policies, strategies, budgets and operating
plans. The Chairman of the Board shall participate in activities
such as strategic planning, acquisitions and divestitures, and
presentations to analysts. The Chairman of the Board, the
President and Chief Executive Officer, and/or the Executive Vice
President and Chief Financial Officer shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required by law to be otherwise
signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation.
Section 4.6. President and Chief Executive Officer. The
President and Chief Executive Officer shall be the chief
executive officer of the Corporation. He shall see that all
orders and resolutions of the Board are carried into effect.
Subject to the control of the Board, the President and Chief
Executive Officer shall have general supervision, control and
management of the affairs and business of the Corporation. The
President and Chief Executive Officer, the Chairman of the Board,
and/or the Executive Vice President and Chief Financial Officer
shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the Corporation, except where required by
law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the
Corporation.
Section 4.7. Executive Vice President and Chief Financial
Officer. The Executive Vice President and Chief Financial
Officer shall be the chief financial officer of the Corporation
and shall be in charge of the financial, accounting, taxation,
administration, personnel and public relations activities of the
Corporation and shall be under the direction and report to the
President and Chief Executive Officer. He and/or the President
and Chief Executive Officer shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the
Corporation, except where required by law to be otherwise signed
and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation.
Section 4.8. Executive Vice President and Chief Operating
Officer, Aerospace. The Executive Vice President and Chief
Operating Officer, Aerospace shall be the chief operating officer
of the Corporation's aerospace businesses. He shall assist the
President and Chief Executive Officer in the general supervision,
control and management of the affairs and business of the
Corporation's aerospace businesses and the Corporation's
government contracts and compliance activities.
Section 4.9. Executive Vice President and Chief Operating
Officer, Industrial. The Executive Vice President and Chief
Operating Officer, Industrial shall be the chief operating
officer of the Corporation's industrial businesses. He shall
assist the President and Chief Executive Officer in the general
supervision, control and management of the affairs and business
of the Corporation's industrial businesses.
Section 4.10. Vice President and General Counsel. The Vice
President and General Counsel shall be the chief legal officer of
the Corporation, shall be responsible for all legal and
environmental matters involving the Corporation and shall direct
the Corporation's legal and environmental affairs staffs. He
shall be under the direction of and report to the Chief Executive
Officer.
Section 4.11. Other Vice Presidents. The other Vice
Presidents shall perform such duties as may be prescribed by the
Board of Directors or the President and Chief Executive Officer.
Section 4.12. Secretary and Assistant Secretaries.
(a) The Secretary shall attend all sessions of the
Board of Directors and all meetings of the stockholders and
record the minutes of all proceedings in a book to be kept for
that purpose, and shall perform like duties for Committees of the
Board when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and of the Board of
Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or the President and Chief
Executive Officer. He shall keep in safe custody the seal of the
Corporation, and affix the same to any instrument requiring it,
and when affixed it shall be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary.
(b) The Assistant Secretaries in the order of their
seniority shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary, and
shall perform such other duties as the Chairman of the Board
and/or the President and Chief Executive Officer shall prescribe.
Section 4.13. Treasurer and Assistant Treasurers.
(a) The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all money and other valuable
effects in the name and to the credit of the Corporation, in such
depositories as may be designated by the Board of Directors.
(b) He shall disburse the funds of the Corporation
when proper to do so, taking proper vouchers for such
disbursements, and shall render to the President and Chief
Executive Officer and the Board of Directors, at the regular
meetings of the Board, or whenever they may require it, an
account of all his transactions as Treasurer and of the financial
condition of the Corporation.
(c) If required by the Board of Directors, he shall
give the Corporation a bond in such sum, and with such surety or
sureties as shall be satisfactory to the Board, for the faithful
performance of the duties of his office, and for the restoration
to the Corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the Corporation.
(d) The Assistant Treasurers in the order of their
seniority shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and
shall perform such other duties as the Board of Directors shall
prescribe.
Section 4.14. Controller and Assistant Controllers.
(a) The Controller shall be the chief accounting
officer of the Corporation and shall be responsible for the
installation and supervision of all accounting records, including
the preparation and interpretation of financial statements, the
continuous audit of accounts and records, and such other duties
usually incident to the office of Controller. He shall be under
the direction of the Executive Vice President and Chief Financial
Officer and shall, in addition to the foregoing duties, perform
such other duties as may be assigned to him by the Board of
Directors or the Executive Vice President and Chief Financial
Officer.
(b) The Assistant Controllers in the order of their
seniority shall, in the absence or disability of the Controller,
perform the duties and exercise the powers of the Controller and
shall perform such other duties as the Board of Directors or the
Executive Vice President and Chief Financial Officer shall
prescribe.
Section 4.15. Tax Director. The Tax Director shall be
responsible for the preparation and signing of all federal and
state tax returns, consents, elections, closing agreements and
all other documents related to the determination of any federal
or state tax liability of the Corporation, and as such shall be
under the direction of and report to the Treasurer.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 5.1. Certificates of Stock. Certificates for shares
of stock of the Corporation shall be in such form as shall be
approved by the Board, and during the period while more than one
class of stock or more than one series of any class of the
Corporation is authorized, the powers, designations, preferences
and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of
the certificates which the Corporation shall issue to represent
such class or series of stock, or else there shall appear on the
certificates a statement that the Corporation shall furnish such
information to a stockholder without charge if it be requested.
They shall exhibit the holder's name and number of shares, and,
with respect to each class of stock of the Corporation, or series
thereof, if there be more than one class or series thereof, shall
bear a distinguishing letter, and each class or series thereof,
if any, shall be numbered serially and be issued in consecutive
order. They shall bear the Corporate seal or a facsimile thereof
and shall be signed by the President and Chief Executive Officer,
an Executive Vice President, or a Vice President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation. If such certificate is
countersigned (1) by a transfer agent other than the Corporation
or its employee, or, (2) by a registrar other than the
Corporation or its employee, any other signature on the
certificate may be a facsimile. 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 same effect as
if he were such officer, transfer agent, or registrar at the date
of issue.
Section 5.2. Transfer of Stock. Upon surrender to the
Corporation or its transfer agent of a certificate representing
shares, duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and
the old certificate canceled, and the transaction recorded upon
the books of the Corporation.
Section 5.3. Lost, Stolen or Destroyed Certificates. Any
person, claiming a certificate for shares of the Corporation to
be lost, stolen or destroyed, shall make affidavit of the fact
and lodge the same with the Secretary of the Corporation
accompanied by a signed application for a new certificate. Such
person shall also give the Corporation a bond of indemnity with
one or more sureties satisfactory to the Board of Directors, and
in an amount which in their judgment shall be sufficient to save
the Corporation from loss, or shall qualify under such blanket
bond as may from time to time be approved by the Board of
Directors, and thereupon the proper officers may cause to be
issued a new certificate of like tenor with the one alleged to be
lost, stolen or destroyed.
Section 5.4. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action.
Section 5.5. Registered Stockholders. The Corporation shall
be entitled to treat the holder of record of any share or shares
of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
Section 5.6. Transfer Agents and Registrars. The Board of
Directors may from time to time appoint a transfer agent and
registrar in one or more cities; may require all certificates
evidencing shares of stock of the Corporation to bear the
signatures of a transfer agent and registrar; and may provide
that such certificates shall be transferable in more than one
city.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, or
any other applicable laws, as from time to time in effect,
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director
or officer of the Corporation or a division thereof, or is or was
serving at the request of the Corporation as a director or
officer of another corporation, partnership, joint venture, trust
or other enterprise, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action,
suit or proceeding.
The provisions of this Article shall be deemed to be a
contract between the Corporation and each director or officer who
serves in any such capacity at any time while this Article and
the relevant provisions of the General Corporation Law of
Delaware or other applicable law, if any, are in effect, and any
repeal or modification of any such law or of this Article shall
not affect any rights or obligations then existing with respect
to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of
facts.
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware,
and with respect to the Employee Retirement Income Security Act
of 1974, or any other applicable laws, as from time to time in
effect, indemnify any officer, director or employee of the
Corporation or an affiliated corporation, who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is
or was serving at the request of the Corporation as an individual
Trustee, Committee member, administrator or fiduciary of a
pension or other benefit plan for employees of the Corporation,
or of an affiliated corporation or other enterprise.
Persons who are not covered by the foregoing provisions of
this Article and who are or were employees or agents of the
Corporation or a division thereof, or are or were serving at the
request of the Corporation as employees or agents of another
corporation, partnership, joint venture, trust or other
enterprise, may be indemnified to the extent authorized at any
time or from time to time by the Board of Directors of the
Corporation.
The indemnification provided or permitted by this Article
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled by law or otherwise, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under the
provisions of this Article.
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, or
any other applicable laws, as from time to time in effect, pay
expenses, including attorneys' fees, incurred in defending any
action, suit or proceeding, in advance of the final disposition
of such action, suit or proceeding, to any person who is or was a
party or is threatened to be made a party to any such threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the
Corporation, upon receipt of an undertaking by or on behalf of
such person to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by
the Corporation as authorized by applicable laws.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. Checks, Drafts and Other Instruments; Security
Voting and Proxies. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness,
issued in the name of the Corporation shall be signed by such
officer or officers, or such other person or persons, as the
Board of Directors may from time to time designate. In the
absence of specific action by the Board of Directors, the
President and Chief Executive Officer or any Executive Vice
President or Vice President shall have the authority to grant
proxies to vote, or vote, on behalf of the Corporation the
securities of other corporations, both domestic and foreign, held
by the Corporation.
Section 7.2. Seal. The corporate seal of the Corporation
shall be in such form as the Board of Directors may determine and
shall include the name of the Corporation and the words
"Corporate Seal, Delaware." The seal may be used by causing it,
or a facsimile thereof, to be impressed or affixed or in any
manner reproduced.
Section 7.3. Fiscal Year. The fiscal year of the
Corporation shall commence on the first day of January in each
year and end on the following 31st day of December.
Section 7.4. Notices. Notice by mail shall be deemed to
have been given at the time the same shall be mailed. Notice by
telegraph shall be deemed to have been given when the same shall
have been delivered for prepaid transmission into the custody of
a company ordinarily engaged in the transmission of such
messages.
Section 7.5. Waiver of Notice. Whenever any notice whatever
is required to be given under the provisions of the laws of the
State of Delaware or under the provisions of the Certificate of
Incorporation or these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed
equivalent thereto. Except as may be otherwise specifically
provided by law, any waiver by mail, telegraph, cable or wireless
bearing the name of the person entitled to notice shall be deemed
a waiver in writing duly signed. The presence of any person at
any meeting either in person or by proxy shall be deemed the
equivalent of a waiver in writing duly signed, except where the
person attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened.
Section 7.6. Dividends. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board at any
regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock,
subject to the provisions of law and of the Certificate of
Incorporation.
Section 7.7. Creation of Reserves. Before payment of any
dividend or making any distribution of profits, there may be set
aside out of any funds of the Corporation available for dividends
such sum or sums as the Board from time to time, in its absolute
discretion, may think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interest of the
Corporation, and the Board may at any time modify or abolish any
such reserve in the manner in which it was created.
Section 7.8. Amendments. These By-Laws may be altered or
repealed by the affirmative vote of the majority of the entire
number of directors specified from time to time in the restated
Certificate of Incorporation at any regular meeting of the Board
or at any special meeting of the Board, if notice of the proposed
alteration or repeal be contained in the notice of such special
meeting; provided, however, that any provisions of these By-Laws
resulting from such alteration or repeal shall at all times be in
conformance with the Restated Certificate of Incorporation and
the laws of the State of Delaware.
<PAGE>
Exhibit (10)(a)
SUNDSTRAND CORPORATION
Corporate offices
4949 Harrison Avenue
P.O. Box 7003
Rockford, Illinois 61125-7003
Phone (815) 226-6000
TWX 910-4255
Telex 25-7440
August 7, 1996
Mr. James F. Ricketts
1922 Riverside Road
Belvidere, IL 61008
Dear Jim:
The purpose of this letter agreement is to set forth terms
and conditions under which you will resign your employment with
Sundstrand Corporation ("Sundstrand") and the Company, effective
as of the earliest of (a) December 31, 1996, (b) the date of your
acceptance of employment with another employer, or (c) such other
date as you determine to be effective 14 days after written
notice to the Secretary of the Company (the "Resignation Date").
When used in this letter agreement, "Company" shall include
Sundstrand and all of the subsidiary companies owned or
controlled by Sundstrand, as well as any business entity in which
Sundstrand has an equity interest. Your signing below will
indicate your agreement with the provisions of this letter
agreement, which supersedes all prior negotiations,
understandings and agreements and constitutes the entire
agreement between Sundstrand and you, with both parties intending
to be legally bound and acknowledging that modifications hereto
may be made only in writing.
Until the Resignation Date you will remain on Sundstrand's
payroll, with participation in all benefit plans and programs in
which you currently participate, but subject to modifications
effective to any such plan or program which apply to all
participants in the plans. In the event the Resignation Date
precedes December 31, 1996, Sundstrand will pay you, within 10
days after the Resignation Date and in a lump sum, an amount
equal to your salary for the period from the Resignation Date
through December 31, 1996. You will receive a bonus payment
pursuant to the Officer Incentive Compensation Plan for the year
1996 as though you were employed through December 31, 1996,
computed and paid in accordance with the provisions of the plan.
Such payment shall be made at the same time as bonuses are paid
to officers participating in the plan, but in no event prior to
February 28, 1997, or later than March 15, 1997. It is
recognized that, in the performance of your duties, you will be
gone from time to time to seek other employment.<PAGE>
James F. Ricketts
August 7, 1996
Page 2
All options under the Sundstrand Corporation Stock
Incentive Plan (the "Stock Plan") that are not exercisable as of
the Resignation Date will be made exercisable as of such date and
will remain exercisable for a period of one year thereafter. As
of the date of this letter agreement, you have options for 19,000
shares of Sundstrand common stock, of which 5,000 options are
currently exercisable. Unless the Resignation Date occurs
earlier, 2,250 options will become exercisable on November 15,
1996, and 2,500 will become exercisable on December 1, 1996. Any
options which became exercisable prior to the Resignation Date
will not have the exercise period affected by the Resignation
Date.
You currently own 4,000 restricted shares of Sundstrand
common stock under the Stock Plan and 8,700 restricted shares
under the 1989 Restricted Stock Plan. None of these restricted
shares is scheduled to vest from the date of this letter
agreement through December 31, 1996. Sundstrand will repurchase
all these restricted shares (the "Restricted Shares") at the
price you paid for them ($.25 per share). Additionally,
Sundstrand will pay you, subject to the provisions of the
following paragraph, the "Value of the Restricted Shares", which
shall be determined by multiplying the number of the Restricted
Shares by the average of the closing prices on the New York Stock
Exchange of one share of Sundstrand common stock during the 30
calendar-day period preceding the Resignation Date, less the $.25
per share paid you pursuant to the preceding sentence.
Within 10 days following the Resignation Date, Sundstrand
shall determine whether there is any deficiency in the amount of
the collateral you have provided for your loan under the Elected
Officers' Loan Program (the "Loan Program"). In determining
whether a deficiency exists, Sundstrand shall take into
consideration the average of two appraisals which you obtain, at
your discretion, at least 10 days but not more than 20 days prior
to the Resignation Date from reliable appraisal experts of
residential property in the areas of the city of Rockford and
Winnebago, Boone and McHenry Counties (the "Appraisers"). The
Appraisers engaged will be subject to Sundstrand's advance
approval, which approval will not be unreasonably withheld. The
Appraisers shall determine the reasonable market value, as of the
Resignation Date, of your Boone County residence which is part of
the collateral you have provided for your loan under the Loan
Program (which market value may not exceed the greater of the
price at which it is presently listed for sale or its then listed
price). If having considered the average of the appraisals, less
the customary real estate commission in Boone County, the
Executive Vice President and Chief Financial Officer of
Sundstrand determines that the collateral for your loan under the
Loan Program is deficient, the amount of any deficiency so<PAGE>
James F. Ricketts
August 7, 1996
Page 3
determined will be withheld from the amount due you as the Value
of the Restricted Shares and shall be applied to pay down your
loan under the Loan Program so that your collateral will then be
sufficient for the remaining loan balance. If your Boone County
residence is sold before your Resignation Date, you agree to
apply the net proceeds to the repayment of your loan and,
following such repayment if the Executive Vice President and
Chief Financial Officer of Sundstrand determines there is a
deficiency in the collateral for the remaining loan balance,
Sundstrand agrees to accept as collateral an interest in the
Restricted Shares equal in amount to the deficiency of the
collateral. Payment of the Value of the Restricted Shares, plus
the $.25 per share repurchase price, less the amount of any Loan
Program collateral deficiency, will be paid to you in cash within
ten days after Sundstrand's determination following the
Resignation Date of such deficiency, if any. You agree that,
upon the sale of your Boone County residence, before or after the
Resignation Date, the net proceeds from such sale will be applied
to the repayment of your loan under the Loan Program, unless
prior to such sale you have repaid such loan. You further agree
that, upon the later of your Resignation Date or the sale of your
Boone County residence, you will fully liquidate your outstanding
loan balance under the Loan Program.
Following the Resignation Date and pursuant to the Federal
law commonly known as "COBRA", you will receive a notice
announcing your right to elect continued coverage for yourself
and your eligible dependent under Sundstrand's medical plan for
active employees. In the event you elect to continue the
coverage, Sundstrand will charge you the active employee premium
rate for the level of coverage you elect until the first to occur
of the date (a) that is 18 months following the Resignation Date,
(b) on which you are covered under comparable coverage from
another employer, or (c) as of which you rescind your coverage
election and/or cease premium payment. It is further understood
that if such coverage shall cease because of the operation of
clause "(a)" in the preceding sentence, you will have 6 months
thereafter of COBRA continuation at the regular COBRA premium for
the level of coverage you elect, such coverage to continue until
the first to occur of (x) the expiration of such 6-month period,
(y) the date on which you are covered under comparable coverage
from another employer, or (z) the date as of which you rescind
your coverage election and/or cease paying the premium.
In the event you have not secured other employment by
February 1, 1997, you and your spouse may arrange through Sundstrand
to have a physical examination performed at a medical facility generally
used by Sundstrand's elected officers for such purpose; provided
that you must notify Sundstrand of your desire to have such
medical examination by no later than February 28, 1997, and such<PAGE>
James F. Ricketts
August 7, 1996
Page 4
medical examination must be completed by no later than April 30,
1997. The examination must be scheduled by Sundstrand in order
for its cost to be paid by Sundstrand, and the examination that
will be ordered for you and your spouse will be that which is
otherwise provided to an elected officer and spouse with age and
medical histories similar to those of yourself and your spouse.
Sundstrand will pay expenses attendant to this physical
examination except those related to transportation to and lodging
at the site of the examination, which expenses shall be borne by
you.
But for the fact that your Resignation Date will occur prior
to February 28, 1997, you would on that date have become vested
in a (1) deferred retirement benefit under the Sundstrand
Corporation Retirement Plan-Aerospace (the "Aerospace Plan"), (2)
a supplemental pension benefit from the non-tax-qualified
Sundstrand Corporation Supplemental Retirement Plan ((1) and
(2)collectively, "Pension Plan"), and (3) a Sundstrand matching
contribution under its 401(k) program. In order that you may
vest in and have a nonforfeitable right to these benefits,
Sundstrand will consider you as reinstated to employment whether
or not you are physically capable of employment on February 28,
1997, and terminate your employment the same day. This day of
reinstatement will give rise to no other compensation or benefit
eligibility, its sole purpose being to allow your vesting in
Pension Plan benefits and the matching contribution under the
401(k) program. Only for purposes of applying the Aerospace
Plan's early retirement reduction factors in lieu of actuarial
factors in the calculation of your total Pension Plan benefit
will your resignation be treated as a layoff due to corporate
restructuring. Consequently, Section 6.5 of the Aerospace Plan
will apply to the calculation of your benefit, and the benefit
will be calculated in accordance with the table contained in
Section 4.2 of the Aerospace Plan as such Section is in effect on
July 22, 1996. Deeming your resignation to be a layoff for the
sole purpose expressed in this paragraph will give rise to no
other benefit or entitlement normally available to laidoff
employees under any Sundstrand plan, policy or practice.
From the effective date of this agreement until the
earlier of December 31, 1996, or the date you secure other
employment, Sundstrand will cover the expenses of an outplacement
counselor of your selection, up to a maximum of $7,500. You
should instruct the selected counselor to bill Sundstrand
directly for the performance of such services. Such billing
shall be kept in confidentiality by Sundstrand and reasonable
efforts will be taken by Sundstrand to ensure privacy in this
matter. All other expenses attendant to your obtaining other
employment are your sole responsibility.<PAGE>
James F. Ricketts
August 7, 1996
Page 5
If requested by you, Sundstrand will provide a favorable
letter of recommendation to a prospective employer from the
current Chief Financial Officer or the current Chairman of the
Board of Sundstrand.
Your deferred compensation will continue to be paid in
accordance with the terms of the deferral, and those terms will
not be changed with respect to you.
You acknowledge that the payment of taxes with respect to
any payments or benefits provided by Sundstrand is your sole
responsibility, whether or not income taxes are withheld by
Sundstrand, and you agree to hold Sundstrand harmless from any
obligation in connection therewith.
You acknowledge that you are an officer of Sundstrand and
several of the Companies and (a) are privy to and have knowledge
of trade secrets and other Confidential Information (defined
below), and (b) have occupied a position of trust and confidence
with respect to the Company's business and Confidential
Information. For purposes of this letter agreement,
"Confidential Information" shall mean trade secrets and
information regarding all aspects relative to the financial
affairs and financial projections of the Company, existing and
proposed products, processes, techniques, know-how, programs,
costs, margins and pricing structures, business plans, market
analyses and marketing plans, sales figures and customer
relationships, customer lists, and any other information
regarding the Company not generally known or a matter of public
knowledge or available from other sources without restrictions
and not bound to any obligation of confidentiality to the
Company. You agree that from and after the date hereof you will
not, without the written consent of Sundstrand's Chief Executive
Officer, disclose to others any trade secrets or other
Confidential Information of which you have knowledge. The
foregoing notwithstanding, you agree at all times to comply with
the terms and conditions of that certain "Employee Patent and
Confidential Information Agreement" executed by you on or about
your date of hire, February 28, 1992. You also agree immediately
to turn over, at the Resignation Date, to Sundstrand all copies
of documents and other written, printed or graphic matter and
computer materials in your possession or control that relate to
the Company's business.
You agree not to divulge or to disclose, without the prior
written permission from Sundstrand's Chief Executive Officer, at
any time in the future any information concerning the terms of
this letter agreement unless required by court process or order of
court or otherwise required by law. Sundstrand will share the terms of
this letter agreement only with those individuals who have a need to<PAGE>
James F. Ricketts
August 7, 1996
Page 6
know or as required by law in order to maintain your privacy. In
view of the positions you held with the Company, you agree not to
engage in any conduct harmful to the Company or its employees or
businesses and not to publish or otherwise make any statement
which is critical of the Company, its employees, businesses or
products.
You hereby unconditionally release and forever discharge
the Company, its directors, officers, employees and agents, and
their respective predecessors, successors, heirs, personal
representatives and assigns, from any and all actions, claims,
rights, lawsuits, damages and expenses (including attorneys'
fees) of any kind, known or unknown, fixed or contingent,
liquidated or unliquidated, in law or in equity, which you or
your heirs or personal representatives now or in the future may
have, or have ever had, arising from your employment and other
relationships with the Company, except for a breach of this
agreement by Sundstrand. This includes a waiver of any claim you
may have under local, state or federal law, including but not
limited to the Illinois Human Rights Law, the Civil Rights Act of
1964, the Employee Retirement Income Security Act, the Americans
with Disabilities Act, the Consolidated Omnibus Budget
Reconciliation Act of 1985 (in connection with your waiver of any
right you may have to receive a COBRA notice, in regard to your
limited reinstatement on February 28, 1997), and the Age
Discrimination in Employment Act of 1967, as amended by the Older
Workers Benefit Protection Act , in each case as amended, and the
Illinois doctrines of defamation, libel, slander, invasion of
privacy, intentional infliction of emotional distress,
interference with contractual relations, retaliatory discharge,
employment contracts, wrongful discharge, implied contracts or
implied covenants of good faith, fair dealing, any other statute,
authority or law and all other civil rights, human rights and
anti-discrimination statutes, codes, executive orders,
regulations, rules, and ordinances. You agree not to sue the
Company or any of the other released entities or persons with
respect to claims covered by the foregoing release.
You hereby acknowledge and agree that, in the event of a material
breach of this letter agreement by you, damages constitute an inadequate
remedy at law and that the Company shall be entitled to specific performance
of the terms of this letter agreement, attorneys' fees and/or injunctive
relief. This letter agreement shall be construed in accordance with the laws
of the State of Illinois (other than its conflicts of laws principles)
applicable to contracts made and to be performed entirely within Illinois,
and you and Sundstrand agree that Illinois shall have exclusive personal
jurisdiction over both parties in any lawsuit with respect to this letter
agreement or your employment and other relationships with the Company,<PAGE>
James F. Ricketts
August 7, 1996
Page 7
and venue for any such suit shall lie in any state or federal
court in the City of Rockford, Illinois.
You acknowledge and agree that you would not otherwise be
entitled to receive from Sundstrand the consideration set forth
in the second through ninth paragraphs of this letter agreement,
but for the agreement of Sundstrand herein to provide such
consideration. In the event that the release provisions of this
letter agreement are found by a court and/or agency of competent
jurisdiction to be invalid or unenforceable because of action
taken by you, you agree that you will return to Sundstrand all
consideration and the value of the other benefits provided to you
pursuant to the provisions of this letter agreement.
As to your release and waiver of rights under the Age
Discrimination in Employment Act, you acknowledge that you are
hereby advised to consult with an attorney prior to executing
this release and have been given a period of 21 days within which
to consider its terms. You further acknowledge being informed
that for a period of 7 days following your execution of this
letter agreement, you have the right to revoke said document and
that it shall not become effective or enforceable until such
revocation period has expired.
Very truly yours,
SUNDSTRAND CORPORATION
/s/ Richard M. Schilling
Richard M. Schilling
Vice President and General
Counsel and Secretary
I have read and agree to the terms and conditions stated above.
Date: August 12, 1996 /s/ James F. Ricketts
__________________ _________________________
James F. Ricketts
<PAGE>
Exhibit (11)(a)
<TABLE>
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
------------- -----------------
(Amounts in millions except per share data) 1996 1995 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EARNINGS
Net earnings $ 34 $ 34 $ 94 $ 43
===== ===== ===== =====
- --------------------------------------------------------------------------------
SHARES
Weighted-average number of common shares
outstanding 61.1 63.0 61.1 63.0
Additional shares assuming conversion
of stock options .5 .4 .5 .4
----- ----- ----- -----
Fully diluted shares 61.6 63.4 61.6 63.4
===== ===== ===== =====
- --------------------------------------------------------------------------------
FULLY DILUTED EARNINGS PER SHARE
Net earnings $ .56 $ .53 $1.53 $ .67
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 291
<ALLOWANCES> 0
<INVENTORY> 358
<CURRENT-ASSETS> 758
<PP&E> 444
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,601
<CURRENT-LIABILITIES> 428
<BONDS> 219
0
0
<COMMON> 38
<OTHER-SE> 471
<TOTAL-LIABILITY-AND-EQUITY> 1,601
<SALES> 1,110
<TOTAL-REVENUES> 1,110
<CGS> 725
<TOTAL-COSTS> 943
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> 149
<INCOME-TAX> 55
<INCOME-CONTINUING> 94
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94
<EPS-PRIMARY> .55
<EPS-DILUTED> 0
</TABLE>
