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Proc-Type: 2001,MIC-CLEAR
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q (MARK ONE) / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE For the quarterly period ended June 28, 2003 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE For the transition period from ____________________ to ____________________ Commission File Number 0-2648 HON INDUSTRIES Inc. Iowa 42-0617510 P. O. Box 1109, 414 East Third Street 52761-0071 Registrant's telephone number, including area code: 563/264-7400 Indicated by check mark whether the registrant (1) has filed all required reports 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. Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Class Outstanding at June 28, 2003
WASHINGTON, DC 20549
SECURITIES EXCHANGE ACT OF 1934
SECURITIES EXCHANGE ACT OF 1934
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
Muscatine, Iowa 52761-0071
(Address of principal executive offices)
(Zip Code)
YES X NO
Common Shares, $1 Par Value
57,879,339
HON INDUSTRIES Inc. and SUBSIDIARIES |
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INDEX |
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PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements (Unaudited) |
Page |
Condensed Consolidated Balance Sheets |
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Condensed Consolidated Statements of Income |
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Condensed Consolidated Statements of Income |
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Condensed Consolidated Statements of Cash Flows |
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Notes to Condensed Consolidated Financial Statements |
8-14 |
Item 2. Management's Discussion and Analysis of |
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Item 4. Controls and Procedures |
19 |
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PART II. OTHER INFORMATION |
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Item 4. Submission of Matters to a Vote of Security Holders |
20 |
Item 6. Exhibits and Reports on Form 8-K |
20 |
SIGNATURES |
21 |
EXHIBIT INDEX |
22 |
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|
<Page>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
HON INDUSTRIES Inc. and SUBSIDIARIES |
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June 28, 2003 |
December 28, |
|
ASSETS |
(In thousands) |
|
CURRENT ASSETS |
||
Cash and cash equivalents |
$ 128,292 |
$ 139,165 |
Total Current Assets |
376,167 |
405,054 |
PROPERTY, PLANT, AND EQUIPMENT, at cost |
||
Land and land improvements |
22,367 |
21,566 |
|
754,242 |
734,271 |
Net Property, Plant, and Equipment |
343,853 |
353,270 |
GOODWILL |
192,086 |
192,395 |
OTHER ASSETS |
56,890 |
69,833 |
Total Assets |
$ 968,996 |
$ 1,020,552 |
See accompanying Notes to Condensed Consolidated Financial Statements.
<Page>
HON INDUSTRIES Inc. and SUBSIDIARIES |
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June 28, 2003 |
December 28, |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
(In thousands) |
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CURRENT LIABILITIES |
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Accounts payable and accrued expenses |
$ 194,288 |
$ 252,145 |
Total Current Liabilities |
241,270 |
298,680 |
LONG-TERM DEBT |
2,865 |
8,553 |
CAPITAL LEASE OBLIGATIONS |
1,234 |
1,284 |
OTHER LONG-TERM LIABILITIES |
31,972 |
28,028 |
DEFERRED INCOME TAXES |
39,890 |
37,114 |
SHAREHOLDERS' EQUITY |
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Capital Stock: |
|
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Common, $1 par value; authorized |
|
|
Paid-in capital |
567 |
549 |
Total Shareholders' Equity |
651,765 |
646,893 |
Total Liabilities and Shareholders' Equity |
$ 968,996 |
$1,020,552 |
See accompanying Notes to Condensed Consolidated Financial Statements.
<Page>
HON INDUSTRIES Inc. and SUBSIDIARIES |
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Three Months Ended |
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June 28, 2003 |
June 29,2002 |
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(In thousands, except share |
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Net sales |
$ 406,793 |
$ 399,299 |
Net income per common share (basic & diluted) |
$0.35 |
0.34 |
Average number of common shares outstanding (basic) |
58,142,937 |
58,918,130 |
Cash dividends per common share |
$0.130 |
$0.125 |
See accompanying Notes to Condensed Consolidated Financial Statements.
<Page>
HON INDUSTRIES Inc. and SUBSIDIARIES |
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Six Months Ended |
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June 28, 2003 |
June 29, 2002 |
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(In thousands, except share |
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Net sales |
$ 798,764 |
$ 798,438 |
Net income per common share (basic & diluted) |
$0.62 |
$0.61 |
Average number of common shares outstanding (basic) |
58,230,106 |
58,847,543 |
Cash dividends per common share |
$0.26 |
$0.25 |
See accompanying Notes to Condensed Consolidated Financial Statements.
<Page>
HON INDUSTRIES Inc. and SUBSIDIARIES |
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Six Months Ended |
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June 28, 2003 |
June 29, 2002 |
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(In thousands) |
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Net Cash Flows From (To) Operating Activities: |
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Net Cash Flows From (To) Investing Activities: |
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Net Cash Flows From (To) Financing Activities: |
|
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Net increase (decrease) in cash and |
|
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Cash and cash equivalents at end of period |
$ 128,292 |
$ 88,213 |
<Page>
HON INDUSTRIES Inc. and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 28, 2003
Note A. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 28, 2003 are not necessarily indicative of the results that may be expected for the year ending January 3, 2004. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended December 28, 2002.
Note B. Summary of Significant Accounting Policies
Stock-Based Compensation - The Company accounts for its stock option plan using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," which results in no charge to earnings when options are issued at fair market value. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," to stock-based employee compensation.
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Three Months Ended |
Six Months Ended |
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(in thousands) |
June 28, |
June 29, |
June 28, |
June 29, |
Net income, as reported |
$ 20,172 |
$ 20,143 |
$ 36,057 |
$ 36,038 |
Deduct: Total stock-based employee |
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Pro forma net income |
$ 19,223 |
$ 19,590 |
$ 34,536 |
$ 34,972 |
Earnings per share: |
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|
|
|
Increase in expense during the current quarter is due to accelerated vesting of 74,000 options upon the retirement of a plan participant.
<Page>
Reclassifications - Certain prior year amounts have been reclassified to conform to the current year presentation.
Note C. Inventories |
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Inventories of the Company and its subsidiaries are summarized as follows: |
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June 28, 2003 |
December 28, |
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Finished products |
$ 35,754 |
$ 30,747 |
Note D. Comprehensive Income
The Company's comprehensive income in 2003 consisted of unrealized holding gains or losses on equity securities available-for-sale under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," of $0.2 million, additional minimum pension liability of ($1.9) million, and foreign currency adjustments of $0.2 million.
Note E. Earnings Per Share |
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Three Months Ended |
Six Months Ended |
||
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June 28, |
June 29, |
June 28, |
June 29, |
Numerators: |
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<Page>
Certain exercisable and non-exercisable stock options were not included in the computation of diluted EPS at June 28, 2003 and June 29, 2002, because the option prices were greater than the average market prices for the applicable periods. The number of stock options outstanding, which met this criterion for the three and six months ended June 28, 2003, was 20,000 with a per share exercise price of $32.22 and 30,000 with a range of per share exercise prices of $28.25 - $32.22, respectively. The number of stock options outstanding, which met this criterion for the three and six months ended June 29, 2002, was 30,000 with a per share exercise price of $28.25 -$32.22. There was no difference between EPS on a basic and diluted basis for the periods presented.
Note F. Restructuring Reserve and Plant Shutdowns
As a result of the Company's business simplification and cost reduction strategies the Company began the shutdown of one office furniture facility in second quarter 2003 and is in union negotiations regarding the closure of a second office furniture facility. The Company will close operations in Milan, Tennessee and Hazleton, Pennsylvania and consolidate production into other U.S. manufacturing locations. In connections with the shutdowns, the Company recorded $4.4 million of charges during the quarter. These charges included $1.6 million of accelerated depreciation of machinery and equipment which was recorded in cost of sales, $2.5 million of severance for approximately 430 members and $0.3 million of other costs which were recorded as restructuring costs. The Company expects that the shutdowns and consolidation will be completed prior to the end of the year. Total costs related to the shutdown are estimated to total $16.0 to $18.0 million, comprised of approximately 23% for severance benefits and stay bon
uses, 6% for contract termination costs, 31% for facility exit and other associated costs, and 40% for accelerated depreciation charges. The remaining costs of between $12 and $14 million will be recognized as the shutdowns and consolidation processes are executed during the second half of 2003.
The Company reduced a previously recorded restructuring reserve for the shutdown of its Jackson, Tennessee facility by approximately $0.6 million. The reduction was due to the fact that the Company was able to exit a lease with the lessor at more favorable terms than previously estimated.
The following is a summary of changes in restructuring accruals during the second quarter of 2003.
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Facility |
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Accrual balance, March 29, 2003 |
$ - |
$ 1,997 |
$ 1,997 |
<Page>
Note G. Asset Impairment
The Company recorded an asset impairment on a facility held-for-sale of $1.1 million during the quarter ended March 29, 2003. The Company entered into a purchase agreement on this facility in March of 2003. The sale was finalized in May of 2003 at the adjusted carrying value.
Note H. Goodwill and Other Intangible Assets
The table below summarizes amortizable definite-lived intangible assets as of June 28, 2003 and December 28, 2002, which are reflected in Other Assets in the Company's condensed consolidated balance sheets:
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June 28, |
December 28, |
Patents |
$ 16,450 |
$ 16,450 |
Aggregate amortization expense for the three and six months ended June 28, 2003 was $673,000 and $1,346,000, respectively.
The Company also owns a trademark with a net carrying amount of $8.1 million. The trademark is deemed to have an indefinite useful life because it is expected to generate cash flows indefinitely.
The following table shows the carrying amount of goodwill by reporting segment:
|
Office |
Hearth |
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Balance as of March 29, 2003 |
$43,611 |
$148,784 |
$192,395 |
The decrease in goodwill is due to an adjustment relating to a prior acquisition.
Note I. Product Warranties
The Company issues certain warranty policies on its furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design, or workmanship.
A warranty reserve is determined by recording a specific reserve for known warranty issues and an additional reserve for unknown claims that are expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Activity associated with warranty obligations was as follows during the period:
<Page>
(in thousands) |
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Balance, December 28, 2002 |
$ 8,405 |
Note J. Guarantees, Commitments & Contingencies
During the second quarter ended June 28, 2003, the Company entered into a one-year financial agreement for the benefit of one of its distribution chain partners. The maximum financial exposure assumed by the Company as a result of this arrangement totals $3 million and is secured by collateral. In accordance with the provisions of FIN45, the Company has recorded the fair value of this guarantee, which is estimated to be less than $0.3 million.
The Company utilizes letters of credit in the amount of $21 million to back certain financing instruments, insurance policies and payment obligations. The letters of credit reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined.
The Company is contingently liable for future minimum payments totaling $12.1 million under a transportation service contract. The Company is also contingently liable for $175,000 of financing arrangements with certain customers, which are deemed to be immaterial.
The Company has contingent liabilities, which have arisen in the course of its business, including pending litigation, preferential payment claims in customer bankruptcies, environmental remediation, taxes and other claims. The Company currently has one preferential payment claim outstanding totaling approximately $7.6 million. The Company intends to vigorously contest this claim and has recorded its best estimate within the range of the likely exposure. It is management's opinion, after consultation with legal counsel, that additional liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Company's financial condition, although such matters could have a material effect on its quarterly or annual operating results and cash flows when resolved in a future period.
Note K. Related Party Transaction
During the first quarter ended March 29, 2003, the Company purchased a hearth products office and production facility located in Lake City, Minnesota, for $3.6 million from R & D Properties of Savage L.L.P. ("R & D Properties"). A significant portion of R & D Properties was owned by trusts for the benefit of members of the family of Daniel Shimek. Mr. Shimek was an officer of the Company. The property was previously leased from R & D Properties and disclosed in the Company's previous filings. The purchase price of the property was determined by soliciting appraisals from independent commercial real estate appraisers.
Note L. New Accounting Standards
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations," on December 29, 2002, the beginning of its 2003 fiscal year. The adoption did not have an impact on the Company's financial statements.
<Page>
The Company adopted the interim disclosure requirements of SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," for the first quarter of 2003.
The Company adopted the accounting requirements of Financial Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others," for guarantees issued or modified after December 31, 2002. The adoption did not have a material impact on the Company's financial statements.
The Financial Accounting Standards Board finalized SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 is not expected to have an impact on the Company's financial statements.
Note M. Business Segment Information
Management views the Company as being in two business segments: office furniture and hearth products with the former being the principal business segment.
The office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes file cabinets, desks, credenzas, chairs, storage cabinets, tables, bookcases, freestanding office partitions and panel systems, and other related products. The hearth product segment manufactures and markets a broad line of manufactured electric, gas-, pellet- and wood-burning fireplaces and stoves, fireplace inserts, and chimney systems principally for the home.
For purposes of segment reporting, intercompany sales transfers between segments are not material and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net cost of the Company's corporate operations, interest income, and interest expense. Management views interest income and expense as corporate financing costs and not as a business segment cost. In addition, management applies one effective tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis.
No geographic information for revenues from external customers or for long-lived assets is disclosed as the Company's primary market and capital investments are concentrated in the United States.
Reportable segment data reconciled to the consolidated financial statements for the three-month and six-month periods ended June 28, 2003, and June 29, 2002, is as follows:
<Page>
Three Months Ended |
Six Months Ended |
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June 28, |
June 29, |
June 28, |
June 29, |
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Net Sales: |
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|
|
|
$ 406,793 |
$ 399,299 |
$ 798,764 |
$ 798,438 |
|
Operating Profit: |
(2,265) |
900 |
(2,265) |
(3,000) |
Depreciation & Amortization Expense: |
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|
|
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Capital Expenditures: |
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|
|
|
As of |
As of |
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Identifiable Assets: |
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<Page>
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations
A summary of the period-to-period changes in the principal items included in the Condensed Consolidated Statements of Income is shown below:
|
Comparison of |
||||||||
Increases (Decreases) |
Three Months Ended |
Six Months Ended |
Three Months Ended |
||||||
Net Sales |
$7,494 |
1.9 |
% |
$ 326 |
0.0 |
% |
$14,822 |
3.8 |
% |
Consolidated net sales for the second quarter ending June 28, 2003, were $406.8 million, a 1.9 percent increase from $399.3 million in the second quarter of 2002 due mainly to the Company's hearth products segment. Compared to the first quarter of 2003, net sales for the second quarter increased 3.8 percent. The increase from the first quarter is a reflection of our normal seasonality and the stabilization in the commercial and transactional office furniture business. Net income was $20.2 million compared to $20.1 million for the same period a year ago. Net income per share was $0.35 per diluted share compared to $0.34 per diluted share in second quarter 2002. Included in second quarter 2003 is $4.4 million of pre-tax charges or $0.05 per diluted share related to the shutdown of two office furniture facilities.
For the first six months of 2003, consolidated net sales were basically flat at $798.8 million compared to $798.4 million in 2002. Net income was $36.1 million or $0.62 per diluted share compared to $36.0 million or $0.61 per diluted share in 2002. Included in the year-to-date results were net pre-tax restructuring charges and accelerated depreciation of $3.8 million or $0.04 per diluted share in 2003 and net pre-tax restructuring charges of $3.0 million or $0.03 per diluted share in 2002.
For the second quarter of 2003, office furniture comprised 75 percent of consolidated net sales and hearth products comprised 25 percent. Net sales for office furniture were up 0.3 percent compared to the same quarter last year. Hearth products sales increased 6.9 percent compared second quarter 2002 due to strong shipments in both the builder and dealer channels and growth in product line extensions. Office furniture contributed 72 percent of second quarter 2003 consolidated operating profit before unallocated corporate expenses and hearth products contributed 28 percent.
<Page>
The consolidated gross profit margin for the second quarter of 2003 increased to 36.0 percent compared to 35.7 percent for the same period in 2002. Included in gross margin for the second quarter of 2003 is $1.6 million of accelerated depreciation of machinery and equipment related to the facility shutdown reducing margins by 0.4 percentage points. This increase in margin was due to benefits from restructuring initiatives implemented over the past few years plus the Company's rapid continuous improvement program.
Selling and administrative expenses for the quarter as a percent of net sales decreased to 27.8 percent from 27.9 percent in second quarter 2002. Selling and administrative dollars increased 1.5 percent or $1.7 million due in part to investments in brand building and selling initiatives.
The Company continues to implement its business simplification and cost reduction strategies. As a result, the Company began the shutdown of one office furniture facility during second quarter 2003 and is in union negotiations regarding the closure of a second office furniture facility. The plants located in Milan, Tennessee, and Hazleton, Pennsylvania will close and production will be consolidated into the Company's other U.S. manufacturing locations. In connection with the shutdowns, the Company recorded $4.4 million of pre-tax charges or $0.05 per diluted share during the second quarter of 2003. These charges included $1.6 million of accelerated depreciation on machinery and equipment which was recorded in cost of sales, and $2.5 million of severance and $0.3 million of other costs which were recorded as restructuring costs. The Company expects that the shutdowns and consolidation will be completed prior to the end of the year. Total costs related to the shutdown are estimated to total $16.0 to $18.0 mill
ion, comprised of approximately 23% for severance benefits and stay bonuses, 6% for contract termination costs, 31% for facility exit and other associated costs, and 40% for accelerated depreciation charges. The remaining costs of between $12 and $14 million will be recognized as the shutdowns and consolidation processes are executed during the second half of 2003. This operation realignment is expected to reduce costs $13.0 to $14.0 million on an annualized basis and result in improved service to customers with faster and better-coordinated delivery and lead-time performance.
Approximately $0.6 million of a 2002 pre-tax restructuring charge due to the shutdown of an office furniture facility in Jackson, Tennessee was taken back into income during the second quarter of 2003. The reduction was due to the fact that the Company was able to exit a lease with a lessor at more favorable terms than previously estimated.
The Company's current effective tax rate is 35 percent compared to 36 percent in second quarter 2002 due to tax benefits associated with various federal and state tax credits. The Company currently expects the effective tax rate to remain at this level in 2003; however, the resolution of certain federal and state tax credits could further affect the rate.
Liquidity and Capital Resources
As of June 28, 2003, cash and short-term investments decreased to $136.6 million compared to a $155.5 million balance at year-end 2002. Cash flow from operations for the first six months was $54.5 million compared to $45.1 million last year. The increase was due to working capital improvements. Annualized inventory turns increased to 21.4 compared to 17.8 in the same quarter last year. Accounts receivable days sales outstanding decreased to 35.5 from 38.9 in second quarter 2002. Cash flow and working capital management continue to be a major focus of management to ensure the Company is poised for growth.
<Page>
Net capital expenditures for the first six months of 2003 were $23.7 million compared to $9.3 million in 2002 and included funding for the purchase of a previously leased hearth products plant, information system improvements and tooling and equipment for new products. These investments were funded by cash from operations. The Company's long-term debt decreased from year-end due to the retirement of $5.6 million of Industrial Development Revenue bonds. The company paid off debentures including appreciation related to a previous acquisition, which represented additional purchase consideration.
The Board of Directors declared a regular quarterly cash dividend of $0.13 per share on its common stock on May 5, 2003, to shareholders of record at the close of business on May 15, 2003. It was paid on May 30, 2003, and represented the 193rd consecutive quarterly dividend paid by the Company.
For the six months ended June 28, 2003, the Company repurchased 762,300 shares of its common stock at a cost of approximately $21.5 million. As of June 28, 2003, $41.3 million of the Board's current repurchase authorization remained unspent.
On August 4, 2003, the Board of Directors declared a $0.13 per common share cash dividend to shareholders of record on August 14, 2003 to be paid on August 29, 2003.
Critical Accounting Policies
The Company's critical accounting policies are outlined in its Form 10-K for fiscal year ended December 28, 2002. The following policies are also relevant to 2003.
The Company accounts for its stock option plan using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," which results in no charge to earnings when options are issued at fair market value. The Company adopted the interim disclosure requirements of SFAS No. 148, "Accounting for Stock Based Compensation - Transition and Disclosure," for the quarter ended March 29, 2003.
The Company adopted the accounting requirements of Financial Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others," for guarantees issued or modified after December 31, 2002. The adoption did not have a material impact on the Company's financial statements.
Commitments and Contingencies
During the second quarter ended June 28, 2003, the Company entered into a one-year financial agreement for the benefit of one of its distribution chain partners. The maximum financial exposure assumed by the Company as a result of this arrangement totals $3.0 million and is secured by collateral. In accordance with the provisions of FIN 45, the Company has recorded the fair value of this guarantee, which is estimated to be less than $0.3 million.
The Company utilizes letters of credit in the amount of $21 million to back certain financing instruments, insurance policies and payment obligations. The letters of credit reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined.
The Company is contingently liable for future minimum payments totaling $12.1 million under a transportation service contract. The Company is also contingently liable for $175,000 of financing arrangements with certain customers, which are deemed to be immaterial.
<Page>
The Company has contingent liabilities, which have arisen in the course of its business, including pending litigation, preferential payment claims in customer bankruptcies, environmental remediation, taxes and other claims. The Company currently has one preferential payment claim outstanding totaling approximately $7.6 million. The Company intends to vigorously contest this claim and has recorded its best estimate within the range of the likely exposure. It is management's opinion, after consultation with legal counsel, that additional liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Company's financial condition, although such matters could have a material effect on its quarterly or annual operating results and cash flows when resolved in a future period.
Related Party Transactions
During the current period the Company purchased a hearth products office and production facility located in Lake City, Minnesota, for $3.6 million from R & D Properties of Savage L.L.P. (R & D Properties). A significant portion of R & D Properties was owned by trusts for the benefit of members of the family of Daniel Shimek. Mr. Shimek was an officer of the Company. The property was previously leased from R & D Properties and disclosed in the Company's previous filings. The purchase price of the property was determined by soliciting appraisals from independent commercial real estate appraisers.
Looking Ahead
The Company has begun to experience some stability in incoming order rates for its commercial and transactional office furniture business. However, management is still cautious about the near-term outlook as the economy attempts to stabilize. Management believes that the remainder of 2003 should be positive for the hearth segment due to the expected continued solid demand for new residential construction coupled with low and stable interest rates.
Management believes that the Company will continue to outperform the industries in which it competes. The Company continues to implement its plan to increase long-term shareholder value by streamlining processes and operations, reducing its cost structure, understanding and responding to end-users, and building brand power.
Forward-Looking Statements
Statements in this report that are not strictly historical, including statements as to plans, objectives, and future financial performance, are "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, which may cause the Company's actual results in the future to differ materially from expected results. These risks include, among others: the Company's ability to realize financial benefits from its cost containment and business simplification initiatives, to realize financial benefits from investments in new products, and to mitigate the effects of uncertain steel prices and supplies; lower than expected demand for the Company's products due to uncertain political and economic conditions; competitive pricing pressure from foreign and domestic competitors; and other factors described in the Company's annual and quarterly reports filed with the Securities and Exchange Comm
ission on Forms 10-K and 10-Q.
<Page>
Item 4. Controls and Procedures
Under the supervision and with the participation of management, the chief executive officer and chief financial officer of the Company have evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of June 28, 2003, and, based on their evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures are effective. There were no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
<Page>
PART II. OTHER INFORMATION
Item 4. |
Submission of Matters to a Vote of Security Holders |
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The Annual Meeting of Shareholders of HON INDUSTRIES Inc. was held on May 5, 2003, for purposes of electing four Directors to the Board of Directors, and to amend Section 5.04, "Limitation of Director's Personal Liability," of the Company's Article of Incorporation. As of March 3, 2003, the record date for the meeting, there were 58,351,974 shares of common stock issued and outstanding and entitled to vote at the meeting. The first proposal voted upon was the election of four Directors for a term of three years and until their successors are elected and shall qualify. The four persons nominated by the Company's Board of Directors received the following votes and were elected: |
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For |
Withheld/Abstained |
Against |
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Three-Year Term: |
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Other Directors whose term of office as a Director continued after the meeting are: Cheryl A. Francis, M. Farooq Kathwari, Robert L. Katz, Dennis J. Martin, Jack D. Michaels, Abbie J. Smith, Richard H. Stanley, and Brian E. Stern. M. Farooq Kathwari resigned after the regular meeting of the Board of Directors on May 5, 2003. There were no disagreements with Mr. Kathwari. |
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The second proposal voted upon was the amendment to Section 5.04, "Limitation of Director's Personal Liability," of the Company's Articles of Incorporation. The proposal was approved with 50,892,706 votes, or 87.22% voting for; 445,555 votes, or 0.76% voting against; and 409,826 votes, or 0.70% abstaining. |
Item 6. Exhibits and Reports on Form 8-K
Exhibits. See Exhibit Index.
(a) |
Reports on Form 8-K. The Company filed a periodic report on Form 8-K dated April 22, 2003, to furnish the Company's earnings release for the first fiscal quarter ended March 29, 2003. |
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SIGNATURES |
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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. |
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HON INDUSTRIES Inc. |
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PART II. EXHIBITS |
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EXHIBIT INDEX |
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3.1 |
Articles of Incorporation of Registrant, as amended May 5, 2003. |
3.2 |
By-laws of Registrant, as amended May 5, 2003. |
31.1 |
Certification of the CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
Certification of the CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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EXHIBIT 3.1
[Articles of Incorporation, as Amended]
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EXHIBIT 3.2
[By-laws, as Amended]
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EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER |
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I, Jack D. Michaels, Chairman and Chief Executive Officer of HON INDUSTRIES Inc., certify that: |
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Date: August 6, 2003 |
/s/ Jack D. Michaels |
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Name: Jack D. Michaels |
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EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER |
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I, Jerald K. Dittmer, Vice President and Chief Financial Officer of HON INDUSTRIES Inc., certify that: |
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Date: August 6, 2003 |
/s/ Jerald K. Dittmer |
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Name: Jerald K. Dittmer |
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EXHIBIT 32.1
Certification of CEO and CFO Pursuant to |
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In connection with the Quarterly Report on Form 10-Q of HON INDUSTRIES Inc. (the "Company") for the quarterly period ended June 28, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Jack D. Michaels, as Chairman and Chief Executive Officer of the Company, and Jerald K. Dittmer, as Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: |
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Name: Jack D. Michaels |
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/s/ Jerald K. Dittmer |
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Name: Jerald K. Dittmer |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
Exhibit 3.1 |
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ARTICLES OF INCORPORATION |
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Amended and restated on May 5, 1987. |
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ARTICLE 1. |
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Section 1.01. Name. The name of the Corporation is HON INDUSTRIES Inc. |
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ARTICLE 2. |
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Section 2.01. Duration. The Corporation shall have perpetual duration. |
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ARTICLE 3. |
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Section 3.01. Purposes and Powers. The Corporation shall have unlimited power to engage in, and to do any lawful act concerning, any or all lawful businesses for which corporations may be organized under the Iowa Business Corporation Act. |
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ARTICLE 4. |
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Section 4.01. Authorized Shares. The aggregate number of shares which the Corporation shall authority to issue is 202,000,000 shares, consisting of 2,000,000 shares designated as "preferred stock" or "preferred shares," with a par value of $1.00 per share, and 200,000,000 shares designated as "common stock" or "common shares," with a par value of $1.00 per share. (Amended 5/12/98 and 5/11/99.) |
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Section 4.02. Series of Preferred Shares. Authority is hereby vested in the Board of Directors to divide the preferred shares into series and, within the limitations set forth in the Iowa Business Corporation Act and in these Articles of Incorporation, to fix and determine the relative rights and preferences of the shares of any series so established. In order to establish such series, the Board of Directors and the Corporation shall comply with the procedure therefor as provided in the Iowa Business Corporation Act. Upon such compliance, the resolution of the Board of Directors establishing and designating the series and fixing and determining the relative rights and preferences thereof shall become effective and shall constitute an amendment of these Articles of Incorporation. |
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(a) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $1.00 per share (the "Common Stock"), of the Corporation and of any other junior stock, shall be entitled to receive, when, as, and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September, and December in each year (each such date being identified as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock. Such dividends shall be in an amount per share (rounded to the nearest cent) equal to
the greater of (1) $1 or (2) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. If the Corporation at any time declares or pays any dividend on the Common Stock payable in shares of Common Stock or effects a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (2) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. |
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3. Voting Rights. Except as required by law, holders of Series A Preferred Stock shall have no voting rights and their consent shall not be required for taking any corporate action. |
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(a) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding have been paid in full, the Corporation shall not: |
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(1) declare or pay dividends or make any other distributions on any shares of stock ranking junior (either as to dividends or on liquidation, dissolution, or winding up) to the Series A Preferred Stock; |
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(b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. |
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5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall, on cancellation, become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Articles of Incorporation, or in any other Statement of Resolution creating a series of Preferred Stock or any similar stock or as otherwise required by law. |
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6. Liquidation, Dissolution or Winding Up. On any liquidation, dissolution, or winding up of the Corporation, no distribution shall be made (a) to the holders of shares of stock ranking junior (either as to dividends or on liquidation, dissolution, or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (B) to the holders of shares of stock ranking on a parity (either as to dividends or on liquidation, dissolution, or winding
up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled on such liquidation, dissolution, or winding up. If the Corporation at any time declares or pays any dividend on the Common Stock payable in shares of Common Stock or effects a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event, and the denominator of which
is the number of shares of Common Stock that were outstanding immediately prior to such event. |
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9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's Preferred Stock. |
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(a) Notwithstanding Section 4.06, the affirmative vote of the holders of a majority of the total outstanding shares of common stock of the Corporation entitled to vote shall be required and shall be sufficient to take any of the following actions or to authorize, adopt, approve, or ratify any of the following which is submitted to a vote at a meeting of shareholders (whether or not such submission is required by law, by action of the Board of Directors, or by agreement): |
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(1) Any amendment to these Articles of Incorporation which has been approved or recommended by the Board of Directors of the Corporation. However, this Subsection shall not apply to any amendment which would amend, limit, or conflict with Sections 4.06, 4.07, 4.08, 4.09, 4.10, 5.01, 5.02, or 5.03. |
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(b) Sections 4.06 and 4.07 shall not be construed to require that any only the preferred shareholders have the right to vote, as provided in Section 4.05, the affirmative vote of the holders of a majority of the total outstanding preferred shares entitled to vote shall be required and shall be sufficient to take action. |
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Section 4.09. Vote Required for Action When Preferred Shareholders Have Voting Rights But Class Voting Not Required. On any matter with respect to which the preferred shareholders have the right to vote but do not have the right to vote as a class (as provided in Section 4.05), the affirmative vote of the holders of two-thirds of the total outstanding shares entitled to vote shall be required and shall be sufficient to take action, notwithstanding any provision of the Iowa Business Corporation Act which requires the vote or concurrence of a greater or lesser proportion of the total outstanding shares. However, if Section 4.07 would be applicable to such matter and Section 4.06 would not be applicable to such matter in the absence of preferred shareholders, voting rights, the affirmative vote of the holders of a majority of the total outstanding shares entitled to vote shall be required and shall be sufficient to take action on such matter.
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(1) The Corporate Combination will result in an involuntary sale, redemption, cancellation, or other termination of ownership of all shares of common stock of the Corporation owned by shareholders who do not vote in favor of or consent in writing to the Corporate Combination; |
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(3) During the period from the earlier of the date that a person becomes a Transaction Person or a Transaction Person becomes a Related Person until the date of consummation of such Corporate Combination: |
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(i) There shall have been no failure to declare and pay at the regular date therefor any full dividends, whether or not cumulative, on any outstanding preferred stock of the Corporation; |
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(4) A proxy statement responsive to the requirements of the Securities Exchange Act of 1934 shall be mailed to the shareholders of the Corporation at least 30 days prior to the proposed consummation of a Corporate Combination (whether or not such proxy statement is required to be mailed pursuant to such Act or subsequent provisions) for the purpose of soliciting shareholder approval of the proposed Corporate Combination. |
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(2) An "Associate" of a person is any officer, Director, partner, or employee of such person (or of an Affiliate of such person); any person which owns ten percent or more of any class of Equity Securities of such person (or of any Affiliate of such person); any corporation or other person of which such person is an officer, Director, or a partner; any corporation or other person of which such person is the owner of ten percent or more of any class of Equity Securities; any trust or estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a fiduciary capacity; and.any person acting under the direction of such person in connection with the matter in question. |
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(i) Any merger or consolidation of the Corporation or any subsidiary with (a) any Related Person other than a subsidiary, or (b) any other corporation, other than a Subsidiary (whether or not itself a Related Person) which is, or after such merger or consolidation would be, an Affiliate of a Related Person; |
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(v) Any reclassification of securities, including any reverse stock |
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(5) "Equity Securities" means any shares of capital stock and any securities which are convertible (with or without consideration) into shares of capital stock or into other securities convertible into shares of capital stock. |
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(i) Any person who would become a Related Person as the result of any proposed Corporate Combination; |
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(d) When evaluating any offer to make a tender or exchange offer for any Equity Securities of the Corporation or any offer to effect any Corporate Combination, it is appropriate for the Board of Directors, in the exercise of its judgment in determining what is in the best near-term and long-range interests of the shareholders of the Corporation, to give consideration to all relevant factors, including, without limitation, the economic and social effects on the employees, customers, and other constituents of the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located. |
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ARTICLE 5. |
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Section 5.01. Directors: Number, Terms, Classification. The number of Directors shall be fixed by the By-laws. The Directors shall be divided into three classes, each of which shall be as nearly equal in number as possible. The term of office of one class shall expire in each year. At each annual meeting of the shareholders, a number of Directors equal to the number of the class whose term expires at the annual meeting shall be elected for a term ending when Directors are elected at the third succeeding annual meeting. This Section is subject to Section 5.03. |
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(a) Failure in any one or more years to elect one or more Directors or to elect any class of Directors shall not: (1) end the term of any Director or class of Directors (except as otherwise provided in Subsection 5.03(c)); (2) cause any vacancy or vacancies in the Board of Directors (except as otherwise provided in Subsection S.03(c)); (3) constitute a reason for liquidation of the Corporation or its assets or business; or (4) affect the existence or powers of (or the validity of any act of) the Corporation or the Board of Directors. |
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ARTICLE 6. |
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Section 6.01. By-laws. The power to amend the By-laws is vested in the Board of Directors. Wherever used in these Articles of Incorporation with respect to the By-laws, the word "amendment" or "amend" includes and shall apply to the amendment, alteration, or repeal of any or all provisions of the By-laws or the adoption of new By-laws. |
Exhibit 3.2 |
BY-LAWS OF HON INDUSTRIES Inc. |
Adopted on September 7, 1960. |
ARTICLE 1. OFFICES AND PLACES OF BUSINESS |
Section 1.01. Principal Place of Business. The principal place of business of the Corporation shall be located in such place, within or without the State of Iowa, as shall be fixed by or pursuant to authority granted by the Board of Directors from time to time. |
Section 1.02. Registered Office. The registered office of the Corporation required by the Iowa Business Corporation Act to be maintained in the State of Iowa may be, but need not be, the same as its principal place of business. The registered office may be changed from time to time by the Board of Directors as provided by law. |
Section 1.03. Other Places. The Corporation may conduct its business, carry on its operations, have offices, carry out any or all of its purposes, and exercise any or all of its powers anywhere in the world, within or without the State of Iowa. |
ARTICLE 2. SHAREHOLDERS |
Section 2.01. Annual Meeting. The annual meeting of the shareholders shall be held in each year at such time and place as shall be fixed by the Board of Directors or by the Chairman of the Board of Directors; provided, however, that the annual meeting shall not be scheduled on a legal holiday in the state where held. Any previously scheduled annual meeting may be postponed by resolution of the Board of Directors and on public notice given prior to the date previously scheduled for such annual meeting. At the annual meeting, the shareholders shall elect Directors as provided in Section 3.02 and may conduct any other business properly brought before the meeting. (As amended 4/23/64, 8/1/79, 10/31/83, and 4/29/91.) |
Section 2.02. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, may be called, and the time and place thereof fixed by the Board of Directors or by the holders of not less than one-tenth of the outstanding shares entitled to vote at the meeting. Business conducted at any special meeting of shareholders shall be limited to the purposes stated in the notice of the meeting. Any previously scheduled special meeting of shareholders may be postponed by resolution of the Board of Directors and public notice given prior to the date previously scheduled for such special meeting of shareholders. (As amended 4/23/64, 8/1/79, and 4/29/91.) |
Section 2.03. Place of Shareholders' Meetings. Any annual meeting or special meeting of shareholders may be held at any place, either within or without the State of Iowa. The place of each meeting of shareholders shall be fixed as provided in these By-laws, or by a waiver or waivers of notice fixing the place of such meeting and signed by all shareholders entitled to vote at such meeting. If no designation is made of the place of a meeting of shareholders, the place of meeting shall be the registered office of the Corporation in the State of Iowa. |
Section 2.04. Notice of Shareholders' Meetings. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days (unless a longer period shall be required by law) nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. (As amended 4/29/91.) |
Section 2.05. Closing of Transfer Books, Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, seventy days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least fifteen days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more t
han seventy days and, in case of a meeting of shareholders, not less than fifteen days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the Board of Directors does not provide that the stock transfer books shall be closed and does not fix a record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the record date for such determination of shareholders shall be seventy days prior to the date fixed for such meeting or seventy days prior to the date of payment of such dividend, as the case may be. When any record date is fixed for any determination of shareholders such determination of shareholders shall be made as of the close of business on the record date. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment
thereof. (As amended 4/30/80, 8/3/82 and 4/29/91.) |
Section 2.06. Voting List. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least ten days 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, which list, for a period of ten days prior to such meeting shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also 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 whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at
any meeting of shareholders. Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting. (As amended 4/29/91.) |
Section 2.07. Quorum of Shareholders. Except as otherwise expressly provided by the Articles of Incorporation or these By-laws, a majority of the outstanding common shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders. |
Section 2.08. Adjourned Meetings. Any meeting of shareholders may be adjourned from time to time and to any place, without further notice, by the chairman of the meeting or by the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote and represented at the meeting, even if less than a quorum. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. (As amended 4/29/91.) |
Section 2.09. Vote Required for Action. The vote required for the adoption of any motion or resolution or the taking of any action at any meeting of shareholders shall be as provided in the Articles of Incorporation. However, action may be taken on the following procedural matters by the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote and represented at the meeting, even if less than a quorum: election or appointment of a Chairman or temporary Secretary of the meeting (if necessary), or adoption of any motion to adjourn or recess the meeting or any proper amendment of any such motion. Whenever the minutes of any meeting of shareholders shall state that any motion or resolution was adopted or that any action was taken at such meeting of shareholders, such minutes shall be prima facie evidence that such motion or resolution was duly adopted or that such action was duly tak
en by the required vote, and such minutes need not state the number of shares voted for and against such motion, resolution, or action. |
Section 2.10. Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Each such proxy shall be filed with the Secretary of the Corporation or the person acting as Secretary of the meeting, before or during the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. |
Section 2.11. Shareholders' Voting Rights. Each outstanding share entitled to vote shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except as otherwise provided in the Articles of Incorporation. Voting rights for the election of Directors shall be as provided in Section 3.02 and in the Articles of Incorporation. (As amended 2/12/76.) |
Section 2.12. Voting of Shares by Certain Holders. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the By-laws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. |
Section 2.13. Organization. The Chairman of the Board of Directors or the Vice-Chairman or the President or a Vice-President, as provided in these By-laws, shall preside at each meeting of shareholders; but if the Chairman of the Board of Directors, the Vice-Chairman, the President, and each Vice-President shall be absent or refuse to act, the shareholders may elect or appoint a Chairman to preside at the meeting. The Secretary or an Assistant Secretary, as provided in these By-laws, shall act as Secretary of each meeting of shareholders; but if the Secretary and each Assistant Secretary shall be absent or refuse to act, the shareholders may elect or appoint a temporary Secretary to act as Secretary of the meeting. (As amended 4/23/64 and 8/1/79.) |
Section 2.14. Waiver of Notice by Shareholders. Whenever any notice whatsoever is required to be given to any shareholder of the Corporation under any provision of law or the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether signed before or after the time of the meeting or event of which notice is required, shall be deemed equivalent to the giving of such notice. Neither the business to be conducted at, nor the purpose of, any annual or special meeting of shareholders need be specified in any waiver of notice of such meeting. The attendance of any shareholder, in person or by proxy, at any meeting of shareholders shall constitute a waiver by such shareholder of any notice of such meeting to which such shareholder would otherwise be entitled, and shall constitute consent by such shareholder to the place, day, and hour of such meetin
g and all business which may be conducted at such meeting, unless such shareholder attends such meeting and objects at such meeting to any business conducted because the meeting is not lawfully called or convened. (As amended 4/29/91.) |
Section 2.15. Postponement of Shareholders' Meetings. Any meeting of the shareholders may be postponed prior to the record date by the Board of Directors or by the Chairman. Written or printed notice of the postponement shall be delivered not less than 10 days nor more than 60 days before the date set for the meeting, either personally or by mail to each shareholder of record entitled to vote. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. (As adopted 2/11/91.) |
Section 2.16. Notice of Shareholder Business and Nominations. |
ARTICLE 3. BOARD OF DIRECTORS |
Section 3.01. General Powers. The business and affairs of the Corporation shall be managed by its Board of Directors. The Board of Directors may exercise all such powers of the Corporation and may do all such lawful acts and things as are not by law or the Articles of Incorporation or these By-laws expressly required to be exercised or done by the shareholders. |
Section 3.02. Election of Directors. Subject to the Articles of Incorporation, the common shareholders shall elect one class of Directors at each annual meeting of shareholders. At each election of Directors, each common shareholder entitled to vote shall have the right to vote, in person or by proxy, the number of common shares owned by him and entitled to vote, for as many persons as the number of the class to be elected. Cumulative voting shall not be permitted. The election of Directors may be conducted by written ballot, but need not be conducted by written ballot unless required by a rule or motion adopted by the shareholders. (As amended 2/12/76.) |
Section 3.03. Number, Terms, Classification, and Qualifications. Subject to the Articles of Incorporation: |
Section 3.04. Vacancies in Board. Any vacancy occurring in the Board of Driectors for any reason, and any Directorship to be filled by reason of an increase in the number of Directors, may be filled by the affirmative vote of a majority of the Directors then in office even if less than a quorum (notwithstanding Sections 3.09 and 3.11). Except as otherwise provided in Section 6.03 of the Articles of Incorporation, a Director elected as provided in this Section shall be elected for the unexpired term of his predecessor in office or the unexpired term of the class of Directors to which his new Directorship is assigned. However, if a Director is elected to fill a vacancy caused by the resignation of a predecessor whose resignation has not yet become effective, the new Director's term shall begin when his predecessor's resignation becomes effective. (As amended 4/23/64 and 2/12/76.) |
Section 3.05. Regular Meetings. A regular meeting of the Board of Directors may be held without notice other than this Section, promptly after and at the same place as each annual meeting of shareholders. Other regular meetings of the Board of Directors may be held at such time and at such places as shall be fixed by (or pursuant to authority granted by) resolution or motion adopted by the Board of Directors from time to time, without notice other than such resolution or motion. However, unless both the time and place of a regular meeting shall be fixed by the Board of Directors, notice of such meeting shall be given as provided in Section 3.08. |
Section 3.06. Special Meetings. Special meetings of the Board of Directors may be called, and the time and place thereof fixed, by the Chairman of the Board of Directors or the Vice-Chairman or the President or the Secretary or by a majority of the Directors then in office. (As amended 4/23/64 and 8/1/79.) |
Section 3.07. Place of Meetings. Any regular meeting or special meeting of the Board of Directors may be held at any place, either within or without the State of Iowa. The place of each meeting of the Board of Directors shall be fixed as provided in these By-laws, or by waiver or waivers of notice fixing the place of such meeting and signed by all Directors then in office. If no designation is made of the place of a meeting of the Board of Directors, the place of meeting shall be the registered office of the Corporation in the State of Iowa. |
Section 3.08. Notice of Special Meetings. Written or printed notice stating the place, day and hour of a special meeting of the Board of Directors shall be delivered before the time of the meeting, either personally or by mail or by telegram, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Director at his address as it appears on the records of the Corporation, with postage thereon prepaid. If given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company, addressed to the Director at his address as it appears on the records of the Corporation. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice of such meeting. (As ame
nded 7/7/88.) |
Section 3.09. Quorum. Except as otherwise expressly provided by the Articles of Incorporation or these By-laws, a majority of the number of Directors fixed by these By-laws shall constitute a quorum at any meeting of the Board of Directors. |
Section 3.10. Adjourned Meetings. Any meeting of the Board of Directors may be adjourned from time to time and to any place, without further notice, by the affirmative vote of a majority of the Directors present at the meeting, even if less than a quorum. At any adjourned meeting at which a quorum shall be present, any business may be conducted which might have been transacted at the meeting as originally notified. (As amended 4/29/91.) |
Section 3.11. Vote Required for Action. Except as otherwise provided in these By-laws, the affirmative vote of a majority of the number of Directors fixed by these By-laws shall be required for and shall be sufficient for the adoption of any motion or resolution or the taking of any action at any meeting of the Board of Directors. However, the following actions may be taken by the affirmative vote of a majority of the Directors present at the meeting, even if less than a quorum: election or appointment of a Chairman or temporary Secretary of the meeting (if necessary), or adoption of any motion to adjourn or recess the meeting or any proper amendment of any such motion. Whenever the minutes of any meeting of the Board of Directors shall state that any motion or resolution was adopted or that any action was taken at such meeting of the Board of Directors, such minutes shall be prima facie evidence that such motion or r
esolution was duly adopted or that such action was duly taken by the required vote, and such minutes need not state the number of Directors voting for and against such motion, resolution, or action. |
Section 3.12. Voting. Each Director (including, without limiting the generality of the foregoing, any Director who is also an officer of the Corporation and any Director presiding at a meeting) may vote on any question at any meeting of the Board of Directors, except as otherwise expressly provided in these By-laws. (As amended 4/23/64.) |
Section 3.13. Organization. The Chairman of the Board of Directors or the Vice-Chairman or the President or a Vice-President, as provided in these By-laws, shall preside at each meeting of the Board of Directors; but if the Chairman of the Board of Directors, the Vice-Chairman, the President, and each Vice-President shall be absent or refuse to act, the Board of Directors may elect or appoint a Chairman to preside at the meeting. The Secretary or an Assistant Secretary, as provided in these By-laws, shall act as Secretary of each meeting of the Board of Directors; but if the Secretary and each Assistant Secretary shall be absent or refuse to act, the Board of Directors may elect or appoint a temporary Secretary to act as Secretary of the meeting. (As amended 4/23/64 and 8/1/79.) |
Section 3.14. Rules and Order of Business. The Board of Directors may adopt such rules and regulations, not inconsistent with applicable law or the Articles of Incorporation or these By-laws, as the Board of Directors deems advisable for the conduct of its meetings. Except as otherwise expressly required by law or the Articles of Incorporation or these By-laws or such rules or regulations, meetings of the Board of Directors shall be conducted in accordance with Robert's Rules of Order, Revised (as further revised from time to time). Unless otherwise determined by the Board of Directors, the order of business at the first meeting of the Board of Directors held after each annual meeting of shareholders, and at other meetings of the Board of Directors to the extent applicable, shall be as follows: |
Section 3.15. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered or certified mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. |
Section 3.16. Waiver of Notice by Directors. Whenever any notice whatsoever is required to be given to any Director of the Corporation under any provision of law or the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the Director or Directors entitled to such notice, whether signed before or after the time of the meeting or event of which notice is required, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in any waiver of notice of such meeting. The attendance of any Director at any meeting of the Board of Directors shall constitute a waiver by such Director of any notice of such meeting to which such Director would otherwise be entitled, and shall constitute consent by such Director to the place, day, and hour of such meeting and all business which may be con
ducted at such meeting, unless such Director attends such meeting and objects at such meeting to any business conducted because the meeting is not lawfully called or convened. (As amended 4/29/91.) |
Section 3.17. Informal Action by Directors. Any action required by law or the Articles of Incorporation or these By-laws to be taken by vote of or at a meeting of the Board of Directors, or any action which may or could be taken at a meeting of the Board of Directors (or of a committee of Directors), may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the Directors then in office (or all of the members of such committee, as the case may be). Such consent shall have the same force and effect as unanimous vote. The signing by each such Director (or by each member of such committee) of any one of several duplicate originals or copies of the instrument evidencing such consent shall be sufficient. The written instrument or instruments evidencing such consent shall be filed with the Secretary, and shall be kept by the Secretary as part of the minutes of the Corp
oration. Such action shall be deemed taken on the date of such written instrument or instruments as stated therein, or on the date of such filing with the Secretary, whichever of such two dates occurs first. (As amended 4/23/64.) |
Section 3.18. Committees. The Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of Directors fixed by Section 3.03, may designate one or more committees (including, without limiting the generality of the foregoing, an Executive Committee). Each committee shall consist of two or more Directors elected or appointed by the Board of Directors. To the extent provided in such resolution as initially adopted and as thereafter supplemented or amended by further resolution adopted by a like vote, any such committee shall have and may exercise, when the Board of Directors is not in session, all the authority and powers of the Board of Directors. However, no committee shall have or exercise any authority prohibited by law. |
Section 3.19. Compensation. The Board of Directors may fix or provide for reasonable compensation of any or all Directors for services rendered to the Corporation as Directors, officers, or otherwise, including, without limiting the generality of the foregoing, payment of expenses of attendance at meetings of the Board of Directors or committees, payment of a fixed sum for attendance at each meeting of the Board of Directors or a committee, salaries, bonuses, pensions, pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans (subject to approval of the shareholders if required by law), and other incentive, insurance, and welfare plans, whether or not on account of prior services rendered to the Corporation. No such compensation shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. |
ARTICLE 4. OFFICERS |
Section 4.01. Number and Designation. The officers of the Corporation shall be a Chairman of the Board of Directors, a Vice-Chairman, a President, one or more Vice-Presidents, a Secretary, a Treasurer, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as the Board of Directors deems advisable. (As amended 4/23/64 and 8/1/79.) |
Section 4.02. Election or Appointment of Officers. At the first meeting of the Board of Directors held after each annual meeting of shareholders, the Board of Directors shall elect the officers specifically referred to in Section 4.01, shall appoint certified public accountants to perform the annual audit, and shall elect or appoint such other officers and agents as the Board deems advisable. If in any year the election of officers does not take place at such meeting, such election shall be held as soon thereafter as may be convenient. In addition, the Board of Directors may from time to time elect, appoint, or authorize any officer to appoint such other officers and agents as the Board deems advisable. Any election may be conducted by ballot, but need not be conducted by ballot unless required by a rule, regulation, or motion adopted by the Board of Directors. (As amended 3/3/80.) |
Section 4.03. Tenure and Qualifications. Each officer, unless sooner removed as provided in Section 4.04, shall hold office until his successor shall be elected or appointed and shall qualify. However, any officer may resign at any time by filing his written resignation with the President or Secretary of the Corporation; and such resignation shall take effect immediately upon such filing, unless a later effective date is stated therein. Officers need not be residents of the State of Iowa or Directors or shareholders of the Corporation. Any two or more offices may be held by the same person. |
Section 4.04. Removal. Any officer or agent of the Corporation may be removed by the Board of Directors whenever in its 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. Election or appointment of an officer or agent shall not of itself create contract rights. |
Section 4.05. Vacancies. Any vacancy occurring in any officer for any reason may be filled by the Board of Directors. |
Section 4.06. Duties and Powers of Officers. Except as otherwise expressly provided by law or the Articles of Incorporation or these By-laws, the duties and powers of all officers and agents of the Corporation shall be determined and defined from time to time by the Board of Directors. Unless otherwise determined by the Board of Directors, the officers referred to in the following Sections shall have the duties and powers set forth in the following Sections, in addition to all duties and powers of such officers prescribed by law or by the Articles of Incorporation or other provisions of these By-laws. However, the Board of Directors may from time to time alter, add to, limit, transfer to another officer or agent, or abolish any or all of the duties and powers of any officer or agent of the Corporation (including, without limiting the generality of the foregoing, the duties and powers set forth in the following Section
s and in other provisions of these By-laws). Any person who holds two or more offices at the same time may perform or exercise any or all of the duties and powers of either or both of such offices in either or both of such capacities. |
Section 4.07. Chairman of the Board of Directors; Vice-Chairman; Chief Executive Officer; President. |
(b) The Vice-Chairman shall preside at meetings of the shareholders or of the Board in the absence of the Chairman. He shall also perform such other duties as the Chairman may authorize or direct. (As amended 7/29/91.) |
(c) The Chief Executive Officer shall be the principal executive officer of the Corporation. Subject only to the Board of Directors, he shall be in charge of the business of the Corporation; he shall see that all Corporation policies and all orders and resolutions of the Board are carried into effect except in those instances in which that responsibility is specifically assigned to some other person by the Board of Directors; and, in general, he shall discharge all duties incident to the office of the chief executive officer of the Corporation and such other duties as may be prescribed by the Board from time to time. In the absence of the Chairman and Vice-Chairman, the Chief Executive Officer shall preside at meetings of shareholders and of the Board. (As adopted 2/13/03.) |
(d) The President shall be the principal operating officer of the Corporation and, subject to the control of the Board of Directors and to the Chief Executive Officer, he shall have the general authority over and general management and control of the property, business and affairs of the Corporation. In general, he shall discharge all duties incident to the office of the principal operating officer of the Corporation and such other duties as may be prescribed by the Board of Directors and the Chief Executive Officer from time to time. In the absence of the Chairman, Vice-Chairman and Chief Executive Officer, the President shall preside at all meetings of the shareholders and Board of Directors. In the absence of the Chairman and Chief Executive Officer or in the event of their disability, or inability to act, or to continue to act, the President shall perform the duties of the Chief Executive Officer, and when so acti
ng, shall have all the powers of and be subject to all of the restrictions upon the office of the Chief Executive Officer. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the Corporation or a different mode of execution is expressly prescribed by the Board of Directors or these By-laws, he may employ, appoint and discharge such employees, agents, attorneys and accountants (except the certified public accountants appointed by the Board pursuant to Section 4.02) for the Corporation as he deems necessary or advisable, and shall prescribe their authority, duties, powers, and compensation, including, if appropriate, the authority to perform some or all of the duties or exercise some or all of the powers of the President; and may make and enter into on behalf of the Corporation all deeds, conveyances, mortgages, leases, contracts, agreements, bonds, reports, releases, and other documents or instruments which may in his judgment be necessary or advis
able in the ordinary course of the Corporation's business or which shall be authorized by the Board. (As amended 7/29/91 and 2/12/03.) |
Section 4.08. Vice-Presidents. Two or more Vice Presidents, one or more of whom may also be designated as Executive Vice President or Senior Vice President, each of whom shall have such duties and powers as may be prescribed from time to time by the President or the Board of Directors. (As amended 4/23/64, 10/27/77 and 11/10/00.) |
Section 4.09. Secretary. The Secretary: |
Section 4.10. Treasurer. The Treasurer: |
Section 4.11. Assistant Secretaries. In the absence of the Secretary or in the event of his death or inability or refusal to act, the Assistant Secretary (or, if there shall be more than one, the Assistant Secretaries in the order designated by the Board of Directors from time to time, or, in the absence of any such designation, in the order in which their names shall appear in the minutes showing their election) shall perform the duties and exercise the powers of the Secretary. Each Assistant Secretary shall also have such duties and powers as may be prescribed from time to time by the Secretary or the President or the Board of Directors. (As amended 4/23/64.) |
Section 4.12. Assistant Treasurers. In the absence of the Treasurer or in the event of his death or inability or refusal to act, the Assistant Treasurer (or, if there shall be more than one, the Assistant Treasurers in the order designated by the Board of Directors from time to time, or, in the absence of any such designation, in the order in which their names shall appear in the minutes showing their election) shall perform the duties and exercise the powers of the Treasurer. Each Assistant Treasurer shall also have such duties and powers as may be prescribed from time to time by the Treasurer or the President or the Board of Directors. (As amended 4/23/64.) |
Section 4.13. Compensation. The Board of Directors may fix or provide for, or may authorize any officer to fix or provide for, reasonable compensation of any or all of the officers and agents of the Corporation, including, without limiting the generality of the foregoing, salaries, bonuses, payment of expenses, pensions, pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans (subject to approval of the shareholders if required by law), and other incentive, insurance, and welfare plans, whether or not on account of prior services rendered to the Corporation. (As amended 4/23/64.) |
Section 4.14. Bond. The Board of Directors may require an officer or agent to give a bond for the faithful performance of his duties, in such amount and with such surety or sureties as the Board of Directors deems advisable. |
ARTICLE 5. SHARES AND CERTIFICATES |
Section 5.01. Issuance of and Consideration for Shares. Shares and securities convertible into shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, and may be issued to such persons as may be designated from time to time by or pursuant to authority granted by the Board of Directors, except as otherwise required by law or the Articles of Incorporation or these By-laws. (As amended 5/12/97.) |
Section 5.02. Restrictions on Issuance of Shares and Certificates. No share of the Corporation shall be issued until such share is fully paid as provided by law. (As amended 5/12/97.) |
Section 5.03. Certificates Representing Shares. Each shareholder shall be entitled to a certificate or certificates representing the shares of the Corporation owned by him. Certificates representing shares of the Corporation shall be in such form as shall be determined by or pursuant to authority granted by the Board of Directors. Each certificate shall be signed by the President or a Vice-President and by the Secretary or an Assistant Secretary, and the corporate seal may be affixed thereto. All certificates shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, and the number and class of shares and date of issuance, shall be entered on the stock transfer books of the Corporation. |
Section 5.04. Lost, Destroyed, Stolen or Mutilated Certificates. The Board of Directors may authorize a new certificate to be issued in place of any certificate alleged to have been lost, destroyed, or stolen, or which shall have been mutilated, upon production of such evidence and upon compliance with such conditions as the Board of Directors may prescribe. |
Section 5.05. Transfer of Shares. Shares of the Corporation shall be transferable only on the stock transfer books of the Corporation, by the holder of record thereof or by his duly authorized attorney or legal representative (who shall furnish such evidence of authority to transfer as the Corporation or its agent may reasonably require), upon surrender to the Corporation for cancellation of the certificate representing such shares, duly endorsed or with a proper written assignment or power of attorney duly executed and attached thereto, and with such proof of the authenticity of signatures as the Corporation or its agent may reasonably require. The Corporation shall cancel the old certificate, issue a new certificate to the person entitled thereto, and record the transaction on its stock transfer books. However, if the applicable law permits shares to be transferred in a different manner, then to the extent required
to comply with such law all references in this Section to "shares" shall mean the rights against the Corporation inherent in or arising out of such shares. |
Section 5.06. Shareholders of Record, Change of Name or Address. The Corporation shall be entitled to recognize the exclusive right of a person shown on its stock transfer books as the holder of shares to receive notices and dividends, to vote as such holder, and to have and exercise all other rights deriving from such shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have actual or constructive notice thereof. Unless the context or another provision of these By-laws clearly indicates otherwise, all references in these By-laws to "shareholders" and "holders" shall mean the shareholders of record as shown on the stock transfer books of the Corporation. |
Section 5.07. Regulations. The Board of Directors may adopt such rules and regulations, not inconsistent with applicable law or the Articles of Incorporation or these By-laws, as it deems advisable concerning the issuance, transfer, conversion, and registration of certificates representing shares of the Corporation. |
ARTICLE 6. GENERAL PROVISIONS |
Section 6.01. Seal. The corporate seal shall be circular in form and shall have inscribed thereon the name of the Corporation and the words "Corporate Seal" and "Iowa". The seal may be affixed by causing it or a facsimile thereof to be impressed or reproduced or otherwise. |
Section 6.02. Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board of Directors from time to time. |
Section 6.03. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on the outstanding shares in the manner and upon the terms and conditions provided by law and the Articles of Incorporation. |
Section 6.04. Execution of Documents and Instruments. All deeds and conveyances of real estate, mortgages of real estate, and leases of real estate (for an initial term of five years or more) to be executed by the Corporation shall be signed in the name of the Corporation by the Chairman of the Board of Directors or the Vice-Chairman or the President or a Vice-President and signed or attested by the Secretary or an Assistant Secretary, and the corporate seal shall be affixed thereto. |
Section 6.05. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by or pursuant to authority granted by the Board of Directors. Such authorization may be either general or confined to specific instances. |
Section 6.06. Checks and Drafts. All checks and drafts issued in the name of the Corporation shall be signed by such person or persons and in such manner as shall be authorized by or pursuant to authority granted by the Board of Directors. |
Section 6.07. Voting of Shares Owned by Corporation. Any shares or securities of any other other corporation or company owned by this Corporation may be voted at any meeting of shareholders or security holders of such other corporation or company by the Chairman of the Board of Directors of this Corporation. Whenever in the judgment of the Chairman of the Board of Directors it shall be advisable for the Corporation to execute a proxy or waiver of notice or to give a consent with respect to any shares or securities of any other corporation or company owned by this Corporation, such proxy, waiver, or consent shall be executed in the name of this Corporation, as directed by the Chairman of the Board of Directors, without necessity of any authorization by the Board of Directors. Any person or persons so designated as the proxy or proxies of this Corporation shall have full right, power, and authority to vote such shares o
r securities on behalf of this Corporation. In the absence of the Chairman of the Board of Directors or in the event of his death or inability to act, the Vice-Chairman may perform the duties and exercise the powers of the Chairman of the Board of Directors under this Section. The provisions of this Section shall be subject to any specific directions by the Board of Directors. (As amended 4/23/64 and 8/1/79.) |
Section 6.08. Director Conflict of Interest. |
(c) For purposes of subsection a(1), a conflict of interest transaction is authorized, approved or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors or on the committee, who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved or ratified under this section by a single Director. If a majority of the Directors who have not direct or indirect interest in the transaction vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action. The presence of, or a vote cast by, a Director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subsection a(1), if the transaction is otherwise authorized, approved or ratified as provided in that subsection. |
Section 6.09. Limitation of Officers' Liability. An officer shall not be liable as an officer to the Corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, if the duties of the officer are performed in compliance with the standards of conduct for officers prescribed in the Iowa Business Corporation Act. (As amended 2/12/03.) |
Section 6.10. Indemnification. The Corporation may indemnify a Director or officer of the Corporation who is a party to a proceeding against liability incurred by such Director or officer in the proceeding to the maximum extent now or hereafter permitted by and in the manner prescribed by the Iowa Business Corporation Act, including the advancement of expenses. Without limiting the generality of the foregoing, the Corporation may enter into indemnification agreements consistent with the Iowa Business Corporation Act with each Director of the Corporation and such officers of the Corporation as the Board of Directors deems appropriate from time to time. (As amended 2/15/88, 5/12/97 and 2/12/03.) |
Section 6.11. Reliance on Documents. Each Director and officer shall, in the performance of his duties, be fully protected in relying and acting in good faith upon the books of account or other records of the Corporation, or reports made or financial statements presented by any officer of the Corporation or by an independent public or certified public accountant or firm of such accountants or by an appraiser selected with reasonable care by the Board of Directors or by any committee thereof; and each Director and officer is hereby expressly relieved from any liability which might otherwise exist or arise from or in connection with any such action. |
Section 6.12. Effect of Partial Invalidity. If a court of competent jurisdiction shall adjudge to be invalid any clause, sentence, paragraph, section, or part of the Articles of Incorporation or these By-laws, such judgment or decree shall not affect, impair, invalidate, or nullify the remainder of the Articles of Incorporation or these By-laws, but the effect thereof shall be confined to the clause, sentence, paragraph, section, or part so adjudged to be invalid. |
Section 6.13. Definitions. Any word or term which is defined in the Iowa Business Corporation Act shall have the same meaning wherever used in the Articles of Incorporation or in these By-laws, unless the context or another provision of the Articles of Incorporation or these By-laws clearly indicates otherwise. Wherever used in the Articles of Incorporation or in these By-laws, unless the context or another provision of the Articles of Incorporation or these By-laws clearly indicates otherwise, the use of the singular shall include the plural, and vice versa; and the use of any gender shall be applicable to any other gender. Wherever used in the Articles of Incorporation or in these By-laws, the word "written" shall mean written, typed, printed, duplicated, or reproduced by any process. (As amended 4/23/64.) |
Section 6.14. Authority to Carry Out Resolutions and Motions. Each resolution or motion adopted by the shareholders or by the Board of Directors shall be deemed to include the following provision, unless the resolution or motion expressly negates this provision: The officers of the Corporation are severally authorized on behalf of the Corporation to do all acts and things which may be necessary or convenient to carry out this resolution (motion), including, without limitation, the authority to make, execute, seal, deliver, file, and perform all appropriate contracts, agreements, certificates, documents, and instruments. |
ARTICLE 7. AMENDMENTS |
Section 7.01. Reservation of Right to Amend. The Corporation expressly reserves the right from time to time to amend these By-laws, in the manner now or hereafter permitted by the provisions of the Articles of Incorporation and these By-laws, whether or not such amendment shall constitute or result in a fundamental change in the purposes or structures of the Corporation or in the rights or privileges of shareholders or others or in any or all of the foregoing. All rights and privileges of shareholders or others shall be subject to this reservation. Wherever used in these By-laws with respect to the By-laws, the word "amend," "amended," or "amendment" includes and applies to the amendment, alteration, or repeal of any or all provisions of the By-laws or the adoption of new By-laws. (As amended 4/28/66.) |
Section 7.02. Procedure to Amend. Any amendment to these By-laws may be adopted at any meeting of the Board of Directors by the affirmative vote of a majority of the number of Directors fixed by Section 3.03. No notice of any proposed amendment to the By-laws shall be required. (As amended 4/28/66.) |