-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O4OBwPaUnQg+uXpG/L+RKndjfecrUut2hl8xcN3KEYk+KDP0Pa2eXypt5Ww8tnw5 4zXXmcAstZ5FOYLiLBjz3w== 0000950123-98-001293.txt : 19980212 0000950123-98-001293.hdr.sgml : 19980212 ACCESSION NUMBER: 0000950123-98-001293 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980211 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUDSON GENERAL CORP CENTRAL INDEX KEY: 0000048948 STANDARD INDUSTRIAL CLASSIFICATION: AIRPORTS, FLYING FIELDS & AIRPORT TERMINAL SERVICES [4581] IRS NUMBER: 131947395 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05896 FILM NUMBER: 98532260 BUSINESS ADDRESS: STREET 1: 111 GREAT NECK RD CITY: GREAT NECK STATE: NY ZIP: 11021 BUSINESS PHONE: 5164878610 MAIL ADDRESS: STREET 1: P O BOX 355 CITY: GREAT NECK STATE: NY ZIP: 11022 FORMER COMPANY: FORMER CONFORMED NAME: HUDSON LEASING CORP DATE OF NAME CHANGE: 19711207 10-Q 1 HUDSON GENERAL CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-5896 HUDSON GENERAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-1947395 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 111 GREAT NECK ROAD, GREAT NECK, NEW YORK 11021 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (516) 487-8610 Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $1.00 per share: 1,744,149 shares outstanding at January 31, 1998. Page 1 of 20 2 PART I - FINANCIAL STATEMENTS 2 3 HUDSON GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues .................................. $ 1,381,000 $ 1,154,000 $ 2,765,000 $ 2,304,000 ----------- ----------- ----------- ----------- Costs and expenses: Depreciation and amortization ........... 171,000 187,000 347,000 377,000 Selling, general & administrative ....... 1,891,000 1,972,000 3,588,000 3,745,000 ----------- ----------- ----------- ----------- Total costs and expenses .............. 2,062,000 2,159,000 3,935,000 4,122,000 ----------- ----------- ----------- ----------- Operating loss ............................ (681,000) (1,005,000) (1,170,000) (1,818,000) Equity in earnings of Hudson General LLC .. 2,515,000 3,107,000 3,944,000 4,691,000 Equity in loss of Kohala Joint Venture .... (703,000) (663,000) (1,397,000) (1,348,000) Interest income ........................... 1,027,000 1,071,000 1,949,000 2,041,000 ----------- ----------- ----------- ----------- Earnings before provision for income taxes 2,158,000 2,510,000 3,326,000 3,566,000 Provision for income taxes ................ 775,000 850,000 1,161,000 1,220,000 ----------- ----------- ----------- ----------- Net earnings .............................. $ 1,383,000 $ 1,660,000 $ 2,165,000 $ 2,346,000 =========== =========== =========== =========== Earnings per share, basic ................. $ .79 $ .86 $ 1.24 $ 1.28 =========== =========== =========== =========== Earnings per share, diluted ............... $ .79 $ .85 $ 1.23 $ 1.21 =========== =========== =========== =========== Cash dividends per common share ........... $ .50 $ .25 $ .50 $ .25 =========== =========== =========== =========== Weighted average common shares outstanding: Basic ................................... 1,741,000 1,938,000 1,739,000 1,839,000 =========== =========== =========== =========== Diluted ................................. 1,757,000 1,957,000 1,754,000 1,974,000 =========== =========== =========== ===========
See accompanying notes to consolidated financial statements. 3 4 HUDSON GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, June 30, 1997 1997 ------------ ------------ (Unaudited) Assets Current Assets: Cash and cash equivalents .......................... $ 16,097,000 $ 18,425,000 Investment securities available for sale ........... 12,690,000 8,792,000 Receivables ........................................ 873,000 540,000 Advances to Hudson General LLC - net ............... 11,844,000 361,000 Prepaid expenses and other assets .................. 63,000 250,000 ------------ ------------ Total current assets ............................. 41,567,000 28,368,000 Property and equipment at cost, less accumulated depreciation and amortization ..... 2,594,000 2,902,000 Investment in Hudson General LLC ..................... 17,633,000 26,395,000 Investment in Kohala Joint Venture - net ............. 5,450,000 5,893,000 Note receivable from Hudson General LLC .............. 3,130,000 4,630,000 ------------ ------------ $ 70,374,000 $ 68,188,000 ============ ============ Liabilities and Stockholders' Equity Current liabilities: Accounts payable ................................... $ 117,000 $ 161,000 Accrued expenses and other liabilities ............. 2,294,000 2,536,000 Income taxes payable ............................... 1,079,000 -- ------------ ------------ Total current liabilities ........................ 3,490,000 2,697,000 ------------ ------------ Deferred income taxes ................................ 107,000 107,000 ------------ ------------ Stockholders' Equity: Serial preferred stock (authorized 100,000 shares of $1 par value) - none outstanding .................. -- -- Common stock (authorized 7,000,000 shares of $1 par value) - issued 2,098,460 and 2,092,160 shares .... 2,098,000 2,092,000 Paid in capital .................................... 48,825,000 48,732,000 Retained earnings .................................. 27,016,000 25,722,000 Treasury stock, at cost, 357,311 shares ............ (11,162,000) (11,162,000) ------------ ------------ Total stockholders' equity ....................... 66,777,000 65,384,000 ------------ ------------ $ 70,374,000 $ 68,188,000 ============ ============
See accompanying notes to consolidated financial statements. 4 5 HUDSON GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 1997 1996 ------------ ------------ (Unaudited) (Unaudited) Cash flows from operating activities: Net earnings .......................................... $ 2,165,000 $ 2,346,000 Adjustments to reconcile net earnings to net cash used by operating activities: Depreciation and amortization ....................... 347,000 377,000 Equity in earnings of Hudson General LLC ............ (3,944,000) (4,691,000) Equity in loss of Kohala Joint Venture .............. 1,397,000 1,348,000 Accrual of interest income on Kohala Joint Venture advances .................................. (954,000) (883,000) Change in other current assets and liabilities: Receivables ....................................... (333,000) (254,000) Prepaid expenses and other assets ................. 187,000 255,000 Accounts payable .................................. (44,000) (349,000) Accrued expenses and other liabilities ............ (1,113,000) (1,891,000) Income taxes payable .............................. 1,079,000 1,059,000 Other - net ......................................... -- 21,000 ------------ ------------ Net cash used by operating activities ............. (1,213,000) (2,662,000) ------------ ------------ Cash flows from investing activities: Purchase of investment securities available for sale .. (3,898,000) -- Purchases of property and equipment ................... (58,000) (55,000) Proceeds from sale of property and equipment .......... 19,000 4,000 Distributions from Hudson General LLC ................. 12,706,000 -- Advances to Hudson General LLC - net .................. (10,483,000) (645,000) Collections of note receivable from Hudson General LLC 500,000 21,283,000 Advances to Kohala Joint Venture - net ................ -- (74,000) ------------ ------------ Net cash (used) provided by investing activities .. (1,214,000) 20,513,000 ------------ ------------ Cash flows from financing activities: Proceeds from issuance of common stock .............. 99,000 24,000 Purchase of treasury stock .......................... -- (3,356,000) ------------ ------------ Net cash provided (used) by financing activities 99,000 (3,332,000) ------------ ------------ Net (decrease)increase in cash and cash equivalents ... (2,328,000) 14,519,000 Cash and cash equivalents at beginning of period ...... 18,425,000 12,701,000 ------------ ------------ Cash and cash equivalents at end of period ............ $ 16,097,000 $ 27,220,000 ============ ============
See accompanying notes to consolidated financial statements. 5 6 HUDSON GENERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited consolidated financial statements were prepared in accordance with generally accepted accounting principles and include all adjustments which, in the opinion of management, are necessary to present fairly the consolidated financial position of Hudson General Corporation and Subsidiaries (the Corporation) as of December 31, 1997 and June 30, 1997, and the results of operations for the three and six months, and cash flows for the six months ended December 31, 1997 and 1996. In the opinion of management, all necessary adjustments that were made are of a normal recurring nature. The consolidated financial statements include the accounts of the Corporation and the Subsidiaries for which it exercises effective control. All material intercompany accounts and transactions have been eliminated in consolidation. Kohala Joint Venture, a land development joint venture in Hawaii in which the Corporation has a 50% interest (the Venture), is accounted for under the equity method of accounting (see Note 3). Effective June 1, 1996, the Corporation consummated a transaction (the Transaction) in which a third party, Lufthansa Airport and Ground Services GmbH (LAGS), an indirect wholly owned subsidiary of Deutsche Lufthansa AG, acquired a 26% interest in the Corporation's aviation services business (the Aviation Business). As part of the Transaction, the Corporation transferred substantially all of the assets and liabilities of the Aviation Business to Hudson General LLC (Hudson LLC), a newly-formed limited liability company (see Note 2). LAGS received a 26% interest in Hudson LLC. At the same time, the Corporation, Hudson LLC and LAGS USA Inc., a wholly owned subsidiary of LAGS (LAGS USA), entered into a Limited Liability Company Agreement effective June 1, 1996 (the LLC Agreement). Due to the provisions in the LLC Agreement, effective June 1, 1996, the Corporation has accounted for its interest in Hudson LLC under the equity method of accounting. As a result, the consolidated statements of earnings of the Corporation contain the operating results of the Aviation Business under the equity method of accounting. The accounting policies followed by the Corporation are stated in Note 1 to the Corporation's consolidated financial statements in the 1997 Hudson General Corporation Annual Report filed under Item 8 to Form 10-K for the Corporation's fiscal year ended June 30, 1997 (See Note 5 for a discussion of the Corporation's adoption of Statement of Financial Accounting Standards No. 128, Earnings Per Share). 2. The summary consolidated balance sheets for Hudson LLC are as follows:
December 31, June 30, 1997 1997 ----------- ----------- (Unaudited) Cash and cash equivalents ....................... $ 2,592,000 $12,324,000 Accounts and notes receivable - net ............. 19,247,000 15,289,000 Other current assets ............................ 3,049,000 2,711,000 ----------- ----------- Total current assets ......................... 24,888,000 30,324,000 Property, equipment and leasehold rights at cost, less accumulated depreciation and amortization . 46,613,000 44,948,000 Other assets - net .............................. 1,417,000 2,248,000 ----------- ----------- $72,918,000 $77,520,000 =========== =========== Accounts payable ................................ $14,320,000 $18,528,000 Accrued expenses and other liabilities .......... 19,371,000 18,791,000 Advances from Hudson General Corporation - net .. 11,844,000 361,000 ----------- ----------- Total current liabilities .................... 45,535,000 37,680,000 Note payable to Hudson General Corporation ...... 3,130,000 4,630,000 Members' equity ................................. 24,253,000 35,210,000 ----------- ----------- $72,918,000 $77,520,000 =========== ===========
6 7 Summary results of operations for Hudson LLC are as follows:
Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues ................................. $ 42,444,000 $ 41,380,000 $ 81,800,000 $ 77,759,000 ------------ ------------ ------------ ------------ Operating costs .......................... 33,140,000 32,213,000 64,842,000 61,275,000 Depreciation and amortization ............ 2,074,000 1,888,000 4,042,000 3,564,000 Selling, general & administrative costs .. 3,460,000 3,258,000 6,932,000 6,367,000 ------------ ------------ ------------ ------------ Total costs and expenses .............. 38,674,000 37,359,000 75,816,000 71,206,000 ------------ ------------ ------------ ------------ Operating income ......................... 3,770,000 4,021,000 5,984,000 6,553,000 Interest income .......................... 98,000 629,000 276,000 913,000 Interest expense ......................... (119,000) (270,000) (203,000) (659,000) ------------ ------------ ------------ ------------ Earnings before provision for income taxes 3,749,000 4,380,000 6,057,000 6,807,000 Provision for income taxes ............... 350,000 374,000 727,000 684,000 ------------ ------------ ------------ ------------ Net earnings .......................... $ 3,399,000 $ 4,006,000 $ 5,330,000 $ 6,123,000 ============ ============ ============ ============
The Corporation's 74% share of Hudson LLC's results, as calculated in accordance with the LLC Agreement, was $2,515,000 and $3,107,000 for the three months ended December 31, 1997 and 1996, respectively, and $3,944,000 and $4,691,000 for the six months ended December 31, 1997 and 1996, respectively, and are shown as "Equity in earnings of Hudson General LLC" in the accompanying consolidated statements of earnings. Effective June 1, 1996 pursuant to the terms of the Unit Purchase and Option Agreement dated February 27, 1996 (the Purchase Agreement) between the Corporation and LAGS, the Corporation transferred substantially all of the assets and liabilities of the Aviation Business to Hudson LLC. In exchange for the transfer of such assets and liabilities and the assumption by Hudson LLC, as co-obligor with the Corporation, of all of the Corporation's 7% convertible subordinated debentures (the Debentures), the Corporation received a 74% interest in Hudson LLC. In addition, Hudson LLC sold LAGS a 26% interest in Hudson LLC, for a purchase price of $23,686,000 in cash (after certain adjustments), of which $15,848,000 was paid at the closing, and deferred payments (the Deferred Payments) of $2,650,000 and $5,188,000 plus interest thereon were made, respectively, in September 1996 and December 1996. The Corporation's investment in Hudson LLC and paid in capital were increased by its 74% interest in the Deferred Payments. The Purchase Agreement, as amended, provides LAGS an option (the LAGS Option), exercisable on October 1 of each year from 1996 through 1999, effective as of the preceding July 1, pursuant to which LAGS may increase its equity ownership in Hudson LLC from 26% to a maximum of 49%, for a price based on a formula related to the average earnings of the Aviation Business over the four fiscal years preceding the exercise of the option, subject to certain minimum and maximum amounts. The LLC Agreement, as amended, stipulates that the Corporation and LAGS USA will share profits and losses in the same proportion as their respective equity interests in Hudson LLC, except that the Corporation was entitled to all interest earned on the Deferred Payments. In addition, LAGS USA will not share in any pre-tax earnings, as defined, of the Aviation Business in excess of $14,690,000 and $15,863,000 in fiscal 1997 and 1998, respectively, unless the aggregate of the pre-tax earnings of the Aviation Business for fiscal 1997 and 1998 exceeds $30,553,000. In addition, 100% of Hudson LLC's net earnings in June 1996 were allocated to the Corporation. The LLC Agreement, as amended, provides that distributions will be paid annually in an amount at least equal to 50% of domestic net income and 10% of Canadian pre-tax earnings, as defined, from the Aviation Business. Such distributions, totaling approximately $8,300,000 for fiscal 1997 and the month of June 1996 were made in October 1997. An additional distribution of $7,500,000 for fiscal 1997 was made in December 1997. During the six months ended December 31, 1997, the Corporation made 7 8 net advances of $10,483,000 to Hudson LLC, which were utilized to make the distributions noted above. As a result of the conversion of Debentures into shares of the Corporation's common stock in fiscal 1996 and 1997, Hudson LLC is, on a subordinated basis (as defined), indebted to the Corporation (the Corporate Subordinated Debt). At December 31, 1997, the balance of the Corporate Subordinated Debt was $4,630,000. Hudson LLC is obligated to repay $1,500,000 of such debt to the Corporation on July 15, 1998 and on each July 15th thereafter until the entire principal balance is satisfied. The noncurrent portion of the Corporate Subordinated Debt in the amount of $3,130,000 is shown as "Note receivable from Hudson General LLC" in the accompanying consolidated balance sheet at December 31, 1997. The current portion of this debt at December 31, 1997, in the amount of $1,500,000, is included in "Advances to Hudson General LLC - net" in the accompanying consolidated balance sheets. Interest on the Corporate Subordinated Debt is payable semi-annually in January and July at the rate of 7% per annum. 3. The Corporation is a partner in the Venture which was formed to acquire, develop and sell approximately 4,000 contiguous acres of land in Hawaii (the Project). The summary consolidated balance sheets for the Venture are as follows:
December 31, June 30, 1997 1997 ------------ ------------ (Unaudited) Cash and equivalents ........................ $ 925,000 $ 730,000 Land and development costs .................. 9,429,000 9,264,000 Mortgages, accounts and notes receivable .... 1,832,000 2,779,000 Foreclosed real estate - net ................ 2,693,000 2,854,000 Other assets - net .......................... 1,562,000 1,590,000 ------------ ------------ $ 16,441,000 $ 17,217,000 ============ ============ Partner advances and accrued interest payable $ 56,074,000 54,013,000 Accounts payable and accrued expenses ....... 1,118,000 1,162,000 Partners' deficit ........................... (40,751,000) (37,958,000) ------------ ------------ $ 16,441,000 $ 17,217,000 ============ ============
Summary results of operations for the Venture are as follows:
Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales ........... $ 75,000 $ 75,000 $ 151,000 $ 375,000 ----------- ----------- ----------- ----------- Cost of sales ....... -- -- -- 202,000 Selling, general and administrative costs 492,000 510,000 991,000 1,125,000 Interest - net ...... 988,000 891,000 1,953,000 1,743,000 ----------- ----------- ----------- ----------- Total costs ...... 1,480,000 1,401,000 2,944,000 3,070,000 ----------- ----------- ----------- ----------- Net loss ......... $(1,405,000) $(1,326,000) $(2,793,000) $(2,695,000) =========== =========== =========== ===========
The Corporation's 50% share of the Venture's results were losses of $703,000 and $663,000 for the three months ended December 31, 1997 and 1996, respectively, and $1,397,000 and $1,348,000 for the six months ended December 31, 1997 and 1996, respectively, and have been included in "Equity in loss of Kohala Joint Venture" in the accompanying consolidated statements of earnings. The Corporation's partner in the Venture is Oxford Kohala, Inc. (the Partner), a wholly owned subsidiary of Oxford First Corporation (Oxford First). Under the Restated Joint Venture Agreement dated April 29, 1981, as amended (the Agreement), the partners have agreed to make equal advances to the Venture for all costs necessary for the orderly development of the land. During the six months ended December 31, 1997, the Corporation did not make 8 9 any advances to the Venture. The Corporation's net advances (including accrued interest) at December 31, 1997 were $19,537,000. 4. Accrued expenses and other liabilities consisted of the following:
December 31, June 30, 1997 1997 (Unaudited) Salaries and wages .... $ 685,000 $1,940,000 Retirement plan costs . 411,000 319,000 Dividends payable ..... 871,000 -- Other ................. 327,000 277,000 ---------- ---------- $2,294,000 $2,536,000 ========== ==========
5. Effective for the three months ended December 31, 1997, the Corporation adopted Statement of Financial Accounting Standards No. 128, Earnings per Share, and has restated all prior-period earnings per share (EPS) data presented. This statement establishes standards for computing and presenting EPS, replacing the presentation of previously required Primary EPS with a presentation of Basic EPS. For entities with complex capital structures, the statement requires the dual presentation of both Basic EPS and Diluted EPS on the face of the statement of earnings. The impact of the Corporation's adoption of this statement was not material to previously reported EPS amounts (see Exhibit 11). 9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Effective June 1, 1996, the Corporation consummated a transaction (the Transaction) in which a third party, Lufthansa Airport and Ground Services GmbH (LAGS), acquired a 26% interest in the Corporation's aviation services business (the Aviation Business). As part of the Transaction, the Corporation transferred substantially all of the assets and liabilities of the Aviation Business to Hudson General LLC (Hudson LLC), a newly-formed limited liability company (see Notes 1 and 2). Effective June 1, 1996, the Corporation has accounted for its interest in Hudson LLC under the equity method of accounting and as a result, the Corporation's consolidated statements of earnings contain the operating results of the Aviation Business under the equity method of accounting. (For an analysis of the results of the Aviation Business, see the table and related management's discussion which appear below.) The Corporation's revenues for the three and six months ended December 31, 1997 increased $.2 and $.5 million, or 19.7% and 20.0%, respectively, compared with the corresponding periods of the prior year. The increase is due primarily to higher overhead fees billed by the Corporation to Hudson LLC. (The Corporation and LAGS USA Inc., a wholly-owned subsidiary of LAGS and a party to the Limited Liability Company Agreement of Hudson LLC, agreed to raise these overhead fees for fiscal 1998 to 3-1/2% of Hudson LLC's consolidated domestic revenues and 1-1/4% of Hudson LLC's consolidated Canadian revenues.) Depreciation and amortization for the three and six months ended December 31, 1997 approximated that of the corresponding periods of the previous year. Selling, general and administrative expenses for the three and six months ended December 31, 1997 decreased $.1 and $.2 million or 4.1% and 4.2%, respectively, compared with the corresponding periods of the prior year. The Corporation's 74% share of earnings from Hudson LLC for the three and six months ended December 31, 1997 decreased $.6 and $.7 million, respectively, as compared with the corresponding periods of the prior year. The Corporation's 50% share of losses from its real estate joint venture in Hawaii (the Venture) for the three and six months ended December 31, 1997 approximated that of the corresponding periods of the previous year. As is usual for companies with land development operations, the contribution to 10 11 future results from such operations will fluctuate depending upon land sales closed in each reported period. Interest income for the three and six months ended December 31, 1997 was comparable with that of the corresponding periods of the prior year. The Corporation's provision for income taxes for the three and six months ended December 31, 1997 decreased slightly from the corresponding periods of the previous year due mainly to lower pre-tax earnings. The following table and related management's discussion are intended to provide a presentation and analysis of results of the Aviation Business conducted by Hudson LLC.
Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 ------- ------- ------- ------- (in thousands) Revenues ............................ $42,444 $41,380 $81,800 $77,759 ------- ------- ------- ------- Costs and expenses: Operating ......................... 33,140 32,213 64,842 61,275 Depreciation and amortization ..... 2,074 1,888 4,042 3,564 Selling, general and administrative 3,460 3,258 6,932 6,367 ------- ------- ------- ------- Total costs and expenses ............ 38,674 37,359 75,816 71,206 ------- ------- ------- ------- Operating income .................... $ 3,770 $ 4,021 $ 5,984 $ 6,553 ======= ======= ======= =======
Revenues for the three and six months ended December 31, 1997 increased $1.1 and $4.0 million, or 2.6% and 5.2%, respectively, compared with the corresponding periods of the prior year. The increase reflects: (i) higher domestic ground handling service revenues of $1.4 and $3.2 million, respectively, due primarily to expanded services to new and existing customers; (ii) higher domestic aircraft fueling revenues of $.5 and $1.0 million, respectively, resulting primarily from expanded intoplane fueling services; (iii) the recognition of $.6 million of deferred income related to the prepayment (in October 1997) of a promissory note associated with the sale (in January 1994) of leases and other assets at Long Island MacArthur Airport; and (iv) higher ground transportation revenues of $.3 million, for the six months ended December 31, 1997, due mainly to expanded service at a domestic airport location. The revenue increase was partially offset by lower: (i) Canadian ground handling revenues of $.9 and $.5 million, respectively, due mainly to lower sales of de-icing fluid and for the three months ended December 31, 1997: (a) the negative impact of the mandated realignment by the local Airport Authority of flights between the 11 12 two international airports in Montreal; (b) the cessation of operations by an airline customer; and (c) the decision by several airline customers to provide ground handling services with their own personnel and equipment or through subsidiaries or affiliated carriers; (ii) snow removal revenues of $.3 million for both periods; and (iii) revenues due to the effect of fluctuation in the average rates of exchange used in translating Canadian revenues to their U.S. dollar equivalent. Costs and expenses for the three and six months ended December 31, 1997 increased $1.3 and $4.6 million, or 3.5% and 6.5%, respectively, compared with the corresponding periods of the previous year. Operating costs for the three and six months ended December 31, 1997 increased $.9 and $3.6 million, or 2.9% and 5.8%, respectively, compared with the corresponding periods of the previous year as a result of higher: (i) labor and related costs associated with expanded domestic ground handling, aircraft fueling and ground transportation operations; and (ii) fleet maintenance costs related primarily to ground handling, ground transportation and aircraft fueling operations. Partially offsetting the increases were lower: (i) labor and related costs associated with Canadian ground handling operations; and (ii) costs as a result of the effect of fluctuation in the average rates of exchange used in translating Canadian costs to their U.S. dollar equivalent. Depreciation and amortization expenses for the three and six months ended December 31, 1997 increased $.2 and $.5 million, or 9.9% and 13.4%, respectively, compared with the corresponding periods of the previous year due mainly to additions of ground handling equipment. Selling, general and administrative expenses for the three and six months ended December 31, 1997 increased $.2 and $.6 million, or 6.2% and 8.9%, respectively, compared with the corresponding period of the previous year. The increase primarily reflects higher overhead fees paid to the Corporation as noted above. Operating income for the three and six months ended December 31, 1997 decreased $.3 and $.6 million, respectively, compared with the corresponding periods of the previous year due primarily to: (i) decreased results associated with ground transportation and snow removal operations; (ii) lower sales of de-icing fluid in Canada; (iii) higher selling, general and administrative expenses as described above; and (iv) higher depreciation and amortization. Partially offsetting the decreases were 12 13 improved results from ground handling and domestic aircraft fueling operations and the recognition of deferred income as noted above. Results of aircraft ground handling operations fluctuate depending upon the flight activity and schedules of customers and the ability to deploy equipment and manpower in the most efficient manner to service such customers. Snow removal and aircraft de-icing services are seasonal in nature. The results of these operations are normally reflected in the second and third quarters of the fiscal year, and fluctuate depending upon the severity of the winter season. The state of the North American aviation industry has resulted in increased competitive pressures on the pricing of aviation services and in the exploration of alliances between major commercial airline carriers. While these factors may have an adverse effect on the Corporation, several airlines have been outsourcing services to independent aviation service companies. This trend has provided additional opportunities for Hudson LLC. The Corporation is unable, at this time, to evaluate the future impact of these factors. 13 14 Liquidity and Capital Expenditures and Commitments The Corporation's recurring sources of liquidity are funds provided from Hudson LLC and bank lines of credit. As a result of the Transaction, Hudson LLC pays to the Corporation an overhead fee, which for fiscal 1998 was raised to the sum of 3-1/2% of Hudson LLC's consolidated domestic revenues and 1-1/4% of Hudson LLC's consolidated Canadian revenues. It is anticipated that approximately $3.0 million of the Corporation's overhead will not be allocated to Hudson LLC on an annual basis. In addition, the LLC Agreement provides that distributions from Hudson LLC will be paid annually to the Corporation and LAGS (the Members) in amounts at least equal to 50% of domestic net income and 10% of Canadian pre-tax earnings for the fiscal year from the Aviation Business, as defined, multiplied by the Members' respective equity interests in Hudson LLC. The Corporation's 74% share of such minimum distribution for fiscal 1997 and its 100% share of June 1996 earnings, in the total amount of $6.8 million, were received in October 1997. In December 1997, Hudson LLC made an additional distribution with respect to fiscal 1997. The Corporation's 74% share of such additional distribution was $5.9 million. Furthermore, as a result of the conversion of the Corporation's 7% convertible subordinated debentures (the Debentures) in fiscal 1996 and 1997 into shares of the Corporation's common stock, Hudson LLC is, on a subordinated basis (as defined), indebted to the Corporation. During the six months ended December 31, 1997, Hudson LLC repaid $.5 million of such debt to the Corporation. Hudson LLC is obligated to repay to the Corporation $1.5 million on July 15, 1998 and on each July 15th thereafter until the remaining principal balance of $4.6 million is satisfied. Pursuant to a Revolving Credit Agreement (the Credit Agreement) with a group of banks dated June 1, 1996, the Corporation may borrow funds (including outstanding letters of credit) up to a limit of $6.0 million until June 30, 1999 at which time the Credit Agreement terminates. There were no direct borrowings or letters of credit outstanding at December 31, 1997. During the six months ended December 31, 1997 and 1996, net cash used by operating activities was $1.2 and $2.7 million, respectively, due mainly to equity in earnings of Hudson LLC which were not distributed to the Corporation. Net cash used by investing activities 14 15 for the six months ended December 31, 1997 was $1.2 million, while net cash provided by investing activities was $20.5 million for the six months ended December 31, 1996 due mainly to Hudson LLC's partial repayment of the outstanding balance of its subordinated debt to the Corporation. Cash and cash equivalents were $16.1 and $18.4 million at December 31, 1997 and June 30, 1997, respectively. In fiscal 1997, the Board of Directors authorized the repurchase of up to 400,000 shares of the Corporation's common stock, which purchases could be made from time to time in either open market or privately negotiated transactions. Prior to the fiscal 1997 authorization, the Corporation still had authority to repurchase up to 35,700 shares from a previous authorization. During fiscal 1997, the Corporation repurchased 243,000 shares in the open market for an aggregate purchase price of $9.2 million. No shares were repurchased during the six months ended December 31, 1997. Hudson LLC's recurring sources of liquidity are funds provided from operations, advances from the Corporation and bank lines of credit. Pursuant to a Revolving Credit Agreement (the LLC Credit Agreement) with a group of banks dated June 1, 1996, Hudson LLC may borrow funds (including outstanding letters of credit) up to a limit of $18.0 million (the LLC Limit) until September 30, 1998. At such time, and at the end of each subsequent quarter, the LLC Limit will be reduced by one-sixteenth of the LLC Limit that was in effect on June 30, 1998 until June 30, 2002, at which time the LLC Credit Agreement terminates. There were no direct borrowings and $3.0 million of outstanding letters of credit at December 31, 1997. In addition, net advances to Hudson LLC from the Corporation were $11.8 million as of December 31, 1997. At December 31, 1997 Hudson LLC had commitments to fund $1.6 million for operating equipment, the majority of which is expected to be expended during the third quarter of fiscal 1998. In addition to such commitments, Hudson LLC is obligated to expend funds of $1.2, $2.1 and $1.4 million in fiscal 1998, 1999 and 2000, respectively, for equipment to be used in providing de-icing and snow removal services at Lester B. Pearson International Airport in Toronto pursuant to a contract entered into in December 1997 with the Greater Toronto Airport Authority. Capital expenditures are primarily for equipment and facilities used in Hudson LLC's operations. Hudson LLC is unable to determine the extent 15 16 of additional future capital expenditures since, as a service company, its capital expenditure requirements fluctuate depending upon facility requirements and equipment purchases associated with Hudson LLC's ability to successfully obtain additional contracts. During fiscal 1992, the County of Hawaii passed an ordinance pursuant to which the Venture, after subdivision approvals are obtained, would be able to develop Phase IV of the Project into 1,490 units. Pursuant to such ordinance, the Venture is required to expend approximately $2.3 million for public infrastructural improvements and in lieu payments. Shortly after passage of the ordinance, a lawsuit against the County of Hawaii was filed in the Circuit Court of Hawaii by two local residents of Hawaii (Plaintiffs) seeking to invalidate such ordinance on various grounds including that the ordinance was adopted without following State of Hawaii procedure relating to the preparation of an Environmental Impact Statement. During fiscal 1993, the Judge in this action granted Plaintiffs' motion for partial summary judgment without indicating any effect on Phase IV zoning. The County and the Venture appealed this ruling. The appeal was heard before the Hawaii Supreme Court in March 1994, and on May 6, 1997, the Supreme Court vacated the summary judgment which was previously granted and remanded certain related issues to the Circuit Court for that Court to decide. The Venture cannot, at this time, determine the impact of the Supreme Court's ruling and the Circuit Court's proceedings on the timing of development of Phase IV or the expenditures related thereto. The Joint Venture Agreement provides that the Corporation and its partner in the Venture, Oxford Kohala, Inc. (the Partner) are obligated to make equal advances of any of the Venture's required fundings. It is anticipated that the Venture's capital commitments will be funded by cash flow from its operations and advances from the Corporation and the Partner and that any advances which the Corporation may be required to make to the Venture will be provided from the Corporation's cash flow and lines of credit. Pursuant to the Credit Agreement the Corporation may advance up to $2.0 million to the Venture in any fiscal year or up to $5.0 million during the term of the Credit Agreement, net of any distributions received from the Venture by the Corporation during such periods. Since the inception of the Credit Agreement, the Corporation 16 17 has not increased its net advances to the Venture. At present, it is anticipated that the advances required to meet the obligations of the Venture will not exceed the limits set forth in the Credit Agreement. At December 31, 1997, the Venture had commitments (in addition to the commitments noted above) aggregating $2.6 million for project expenditures. Included in this amount is $1.7 million for the construction of water well equipment and a reservoir by June 30, 1999. It is currently expected that funds for most of the Venture's other commitments will be expended subsequent to fiscal 1998. The extent to which advances to the Venture will be required in the future, as well as the timing of the return to the Corporation of the advances made by it, will depend upon the amount of sales generated by the Venture, the terms upon which parcels are sold and expenses incurred in the planning and development of future phases of the Project. It is expected that the sources of the Corporation's liquidity, as noted above, will provide sufficient funding to allow the Corporation to meet its liquidity requirements. 17 18 PART II - OTHER INFORMATION Item 1. Legal Proceedings In 1988, Texaco Canada Inc. (Texaco) (now known as McColl-Frontenac Inc.) instituted a lawsuit (the Texaco Lawsuit) in the Supreme Court of Ontario, Canada against the Corporation, the Corporation's Canadian subsidiary (now owned by Hudson LLC) and Petro-Canada Inc. (the corporation which supplied aviation fuel for the Corporation's Canadian fixed base operations). The Texaco Lawsuit's allegations, as amended, are that the defendants interfered with contractual and fiduciary relations, conspired to injure, and induced the breach of a fuel supply agreement between Texaco and Innotech Aviation Limited (Innotech) in connection with the purchase by the Corporation from Innotech in 1984 of certain assets of Innotech's airport ground services business. The Texaco Lawsuit seeks compensatory and punitive damages totaling $110,000,000 (Canadian) (approximately $80,000,000 (U.S.)) plus all profits earned by the defendants subsequent to the alleged breach. The trial, which began in May 1996, concluded after several adjournments on May 7, 1997, at which time the trial judge indicated that he intended to issue his decision on or about June 30, 1997. However, to date the judge has not yet rendered his decision. Innotech (which due to a name change is now called Aerospace Realties (1986) Limited (Aerospace)) had agreed to defend and indemnify the Corporation against claims of whatever nature asserted in connection with, arising out of or resulting from the fuel supply agreement with Texaco. In February 1996, Aerospace notified the Corporation that Aerospace had entered into a liquidation phase, and in December 1997, Aerospace filed for bankruptcy in Montreal, Canada. The Corporation's management believes, and counsel for the Corporation has advised based on the facts as disclosed at trial, that the Corporation will successfully defend the Texaco Lawsuit. Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Stockholders of the Corporation, held on November 21, 1997, the only matter voted upon was the election of directors. All eight incumbent directors of the Corporation were re-elected. The voting was as follows:
Shares for which Name of Nominee Shares Voted For Authority Withheld - --------------- ---------------- ------------------ Milton H. Dresner 1,309,389 10,784 Jay B. Langner 1,309,389 10,784 Paul R. Pollack 1,308,889 11,284 Edward J. Rosenthal 1,308,889 11,284 Michael Rubin 1,308,889 11,284 Hans H. Sammer 1,308,789 11,384 Richard D. Segal 1,309,389 10,784 Stanley S. Shuman 1,308,644 11,529
There were no abstentions or broker nonvotes. 18 19 Item 5. Other Information On February 6, 1998, the Board of Directors of the Corporation elected Richard D. Segal to the newly-created position of Vice Chairman of the Board. Mr. Segal has been a member of the Board of Directors since 1981. Item 6. Exhibits and Reports on Form 8-K a) Exhibits 3.2(a) Amendment to By-laws of the Registrant. 3.2(b) By-laws of the Registrant as amended to date. 11 Computations of Earnings Per Share Information, Basic and Diluted. 27 Financial Data Schedule. b) Reports on Form 8-K - None 19 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HUDSON GENERAL CORPORATION (Registrant) Date: February 11, 1998 /s/ MICHAEL RUBIN ------------------------------------ Michael Rubin President /s/ BARRY REGENSTEIN ------------------------------------ Barry Regenstein Chief Financial Officer 20 21 HUDSON GENERAL CORPORATION & SUBSIDIARIES EXHIBIT INDEX
Exhibit No. Exhibit Page No. - ------------------------------------------------------------------------------ 3.2(a) Amendment to By-laws of the Registrant 22 - 28 3.2(b) By-laws of the Registrant as amended to date. 29 - 66 11 Computations of Earnings Per Share, Basic and Diluted 67 - 69 27 Financial Data Schedule 70 - 71
21 EX-3.2.A 2 AMENDMENT TO BY-LAWS 1 EXHIBIT 3.2(a) Amendment to By-laws of the Registrant 2 ARTICLE IV Officers SECTION 1. Number and Qualifications. The officers of the Corporation shall be elected by the Board of Directors and shall include the President, one or more Vice-Presidents, the Secretary and the Treasurer. If more than one Vice-President is elected, they shall have the following order of seniority: Executive Vice-President, Senior Vice-President, Vice-President. If the Board of Directors wishes, it may also elect as an officer of the Corporation a Chairman of the Board, and if it shall elect a Chairman of the Board, it may also elect a Vice Chairman of the Board, and it may elect other officers including one or more Assistant Treasurers and one or more Assistant Secretaries, as may be necessary or desirable for the business of the Corporation. Any two or more offices may be held by the same person. Each officer shall hold office until his successor shall have been -18- 3 duly elected and shall have qualified, or until his death, or until he shall have resigned or have been removed, as hereinafter provided in these By-Laws. SECTION 2. Resignations. Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon receipt. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective. SECTION 3. Removal. Any officer of the Corporation may be removed, either with or without cause, at any time, by the Board of Directors at any meeting thereof. SECTION 4. Chairman of the Board. The Chairman of the Board, if one shall have been elected, shall be a member of the Board of Directors, an officer of the Corporation, and, if present, shall preside at each meeting of the Board of Directors or the stockholders. Except where by law the signature of the President is required, the Chairman of the Board shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation. During the absence or disability of the President, the Chairman of the Board shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board shall also perform such other duties and exercise such other powers as from time to time may be assigned to the Chairman of the Board by these By-Laws or by the Board of Directors. -19- 4 SECTION 5. Vice Chairman of the Board. The Vice Chairman of the Board, if one shall have been elected, shall be a member of the Board of Directors and an officer of the Corporation. In the absence of the Chairman of the Board, the Vice Chairman of the Board shall preside at each meeting of the Board of Directors or the stockholders. Except where by law the signature of the President is required, the Vice Chairman of the Board shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation. During the absence or disability of the Chairman of the Board, the Vice Chairman of the Board shall exercise all the powers and discharge all the duties of the Chairman of the Board. The Vice Chairman of the Board shall also perform such other duties and exercise such other powers as from time to time may be assigned to the Vice Chairman of the Board by these By-Laws or by the Board of Directors. SECTION 6. President. The President shall, in the absence of the Chairman of the Board and the Vice Chairman of the Board, or if a Chairman of the Board and a Vice Chairman of the Board shall not have been elected, preside at each meeting of the Board of Directors or the stockholders. The President shall perform all duties incident to the office of President and such other duties as may from time to time be assigned to the President by the Board of Directors. SECTION 7. Vice President. Each Vice-President shall perform all such duties as from time to time may be assigned to him by the Board of Directors or the President. At the request of the President or in his absence or in the event of his inability or refusal to act, the -20- 5 Vice-President, or if there shall be more than one, the Vice-Presidents in the order of their seniority, shall perform the duties of the President, and, when so acting, shall have the powers of and be subject to the restrictions placed upon the President in respect of the performance of such duties. SECTION 8. Treasurer. The Treasurer shall (a) have charge and custody of, and be responsible for, all the funds and securities of the Corporation; (b) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation; (c) deposit all moneys and other valuables to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to its direction; (d) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; (e) disburse the funds of the Corporation and supervise the investments of its funds, taking proper vouchers therefor; (f) render to the Board of Directors, whenever the Board of Directors may require, an account of the financial condition of the Corporation; and (g) in general, perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Secretary. The Secretary shall (a) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board of -21- 6 Directors, the committees of the Board of Directors and the stockholders; (b) see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; (c) be custodian of the records and seal of the Corporation and affix and attest the seal to all certificates for shares of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (d) see that the books, reports, statements, certificates and other documents and records required by law are kept and filed; and (e) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 10. Assistant Treasurer. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 11. Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order deter- -22- 7 mined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 12. Officers' Bonds or Other Security. If required by the Board of Directors, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety as the Board of Directors may require. SECTION 13. Compensation. The compensation of the officers of the Corporation for their services as such officers shall be fixed from time to time by the Board of Directors. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation. EX-3.2.B 3 BY-LAWS AS AMENDED 1 EXHITIB 3.2(b) By-laws of the Registrant as Amended to Date 29 2 As in effect 2/6/98 BY-LAWS OF HUDSON GENERAL CORPORATION INDEX
Page No. -------- ARTICLE I - Offices Section 1. Registered Office 1 2. Other Offices 1 ARTICLE II - Meetings of Stockholders Section 1. Place of Meetings 1 2. Annual Meeting 1 3. Special Meetings 4 4. Notice of Meetings 4 5. List of Stockholders 5 6. Quorums, Adjournments 6 7. Organization 6 8. Order of Business 7 9. Voting 7 10. Inspectors 8 ARTICLE III - Board of Directors Section 1. General Powers 9 2. Number, Qualifications, Election and Term of Office 9 3. Nomination of Directors 10 4. Place of Meetings 13 5. First Meeting 13 6. Regular Meetings 13 7. Special Meetings 14 8. Notice of Meetings 14 9. Quorum and Manner of Acting 15 10. Organization 15 11. Resignations 16 12. Vacancies 16 13. Removal of Directors 16 14. Compensation 16 15. Committees 17 16. Action by Consent 17 17. Telephonic Meeting 18
3 By-Law Index (Continued)
Page No. -------- ARTICLE IV - Officers Section 1. Number and Qualifications 18 2. Resignations 19 3. Removal 19 4. Chairman of the Board 19 5. Vice Chairman of the Board 20 6. President 20 7. Vice-President 20 8. Treasurer 21 9. Secretary 21 10. Assistant Treasurer 22 11. Assistant Secretary 22 12. Officers' Bonds or Other Security 23 13. Compensation 23 ARTICLE V - Stock Certificates and Their Transfer Section 1. Stock Certificates 23 2. Facsimile Signatures 24 3. Lost or Abandoned Certificates 24 4. Transfers of Stock 25 5. Transfer Agents and Registrars 25 6. Regulations 26 7. Fixing Record Date 26 8. Registered Stockholders 26 ARTICLE VI - Indemnification Section 1. Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation 27 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation 28 3. Authorization of Indemnification 29 4. Good Faith Defined 29 5. Indemnification by a Court 30 6. Expenses Payable in Advance 31 7. Non-exclusivity and Survival of Indemnification 31 8. Insurance 32 9. Meaning of "Corporation" for Purposes of Article VI 32 ARTICLE VII - General Provisions Section 1. Dividends 33 2. Reserves 33 3. Seal 33 4. Fiscal Year 34 5. Checks, Notes, Drafts, etc. 34 6. Execution of Contracts, Deeds, etc. 34 7. Voting of Stocks in Other Corporations 34 ARTICLE VIII - Amendments 35
4 BY-LAWS OF HUDSON GENERAL CORPORATION ARTICLE I Offices SECTION 1. Registered Office. The registered office of the Corporation within the State of Delaware shall be in the City of Wilmington, County of New Castle. SECTION 2. Other Offices. The Corporation may also have an office or offices other than said registered office at such place or places, either within or without the State of Delaware, as the Board of Directors shall from time to time determine or the business of the Corporation may require. ARTICLE II Meetings of Stockholders SECTION 1. Place of Meetings. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such place or places either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of meeting to stockholders. SECTION 2. Annual Meeting. The Annual Meeting of Stockholders shall be held on such date and at such time and place as may be fixed by the Board of Directors and stated in the notice of the meeting, for the purpose of electing directors and for the transaction of only such -1- 5 other business as is properly brought before the meeting in accordance with these By-Laws. No business may be transacted at an Annual Meeting of Stock-holders, other than business that is either (a) specified in the notice of Annual Meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought be-fore the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Article II, Section 2 and on the record date for the determination of stockholders entitled to vote at such Annual Meeting, and (ii) who complies with the notice procedures set forth in this Article II, Section 2. In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty -2- 6 (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Annual Meeting was mailed or public disclosure of the date of the Annual Meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the Annual Meeting (v) a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, (w) the name and record address of such stockholder, (x) the class or series and number of shares of capital stock of the Corporation which are owned beneficially by such stockholder and which are owned of record by such stockholder, (y) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business, and (z) a representation that such stockholder intends to appear in person or by proxy at the Annual Meeting to bring such business before the Annual Meeting. No business shall be conducted at the Annual Meeting of Stock-holders except business brought before the Annual Meeting in accordance with the procedures set forth in this Article II, Section 2, provided, however, that, once business has been properly brought be- -3- 7 fore the Annual Meeting in accordance with such procedures, nothing in this Article II, Section 2 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the Chairman shall declare to the Annual Meeting that the business was not properly brought before the Annual Meeting and such business shall not be transacted. SECTION 3. Special Meetings. Unless otherwise prescribed by law or by the Certificate of Incorporation, special meetings of stockholders, for any purpose or purposes, may be called by the Board of Directors, the Chairman of the Board, if there be one, or the President. Special meetings of stockholders may not be called by any other person or persons. SECTION 4. Notice of Meetings. Written notice of each annual and special meeting of stockholders stating the date, place and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder of record entitled to vote thereat not less than ten nor more than sixty days before the date of the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Notice shall be given personally or by mail, and if by mail, shall be sent in a postage prepaid envelope, addressed to the stockholder at his address as it appears on the rec- -4- 8 ords of the Corporation. Notice by mail shall be deemed given at the time when the same shall be deposited in the United States mail, postage prepaid. Notice of any meeting shall not be required to be given to any person who, either before or after the meeting shall submit a signed written waiver of notice, in person or by proxy or who attends such meeting, except when such person attends the meeting in person or by proxy for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, an annual or special meeting of stockholders need be specified in any written waiver of notice. SECTION 5. List of Stockholders. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city, town or village where the meeting is to be held, which place shall be specified in the notice of meeting, or, if not specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. -5- 9 SECTION 6. Quorum, Adjournments. The holders of a majority of the voting power of the issued and outstanding stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty days, or, if after adjournment a new record date is set, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 7. Organization. At each meeting of stockholders the Chairman of the Board, if one shall have been elected, or in his absence or if one shall not have been elected, the President, shall act as chairman of the meeting. The Secretary, or in his absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting, shall act as secretary of the meeting and keep the minutes thereof. -6- 10 SECTION 8. Order of Business. The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting. SECTION 9. Voting. Except as otherwise provided by statute or the Certificate of Incorporation, each stockholder of the Corporation shall be entitled at each meeting of stockholders to one vote for each share of capital stock of the Corporation standing in his name on the record of stockholders of the Corporation: (a) on the date fixed pursuant to the provisions of Section 7 of Article V of these By-Laws as the record date for the determination of the stockholders who shall be entitled to notice of and to vote at such meeting; or (b) if no such record date shall have been so fixed, then at the close of business on the day next preceding the day on which notice thereof shall be given, or, if notice is waived, at the close of business on the date next preceding the day on which the meeting is held. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for him by a proxy signed by such stockholder or his attorney-in-fact, but no proxy shall be voted after one year from its date, unless the proxy provides for a longer period. Any such proxy shall be delivered to the secretary of the meeting at or prior to the time designated in the order of business for so delivering such proxies. When a quorum is present at any meeting, the vote of the holders of a majority of the voting power of -7- 11 the issued and outstanding stock of the Corporation entitled to vote thereon, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Certificate of Incorporation or of these By-Laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by his proxy, and shall state the number of shares voted. SECTION 10. Inspectors. The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more inspectors or alternate inspectors to act at such meeting or any adjournment thereof. If any of the inspectors or alternate inspectors so appointed shall fail to appear or act, the chairman of the meeting shall appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity of proxies and ballots, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection -8- 12 with the right to vote, count and tabulate all votes, ballots or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. The inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. Inspectors need not be stockholders. ARTICLE III Board of Directors SECTION 1. General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the Certificate of Incorporation directed or required to be exercised or done by the stockholders. SECTION 2. Number, Qualifications, Election and Term of Office. The number of directors constituting the Board of Directors shall be not less than three. The number of directors may be fixed, from time to time, by the affirmative vote of a majority of the entire Board of Directors or by action of the stockholders of the Corporation. Any decrease in the number of directors shall be effective at the time of the next succeeding annual meeting of stockholders unless there shall be vacancies in the Board of Directors, in which case such decrease may become effective at any time prior to the next succeeding annual meeting to the extent of the number of such vacancies. Directors need -9- 13 not be stockholders. Except as otherwise provided by statute or these By-Laws, the directors shall be elected at the annual meeting of stockholders. Each director shall hold office until his successor shall have been elected and qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-Laws. SECTION 3. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called in the manner set forth in Article II, Section 3 hereof for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Article III, Section 3 and on the record date for the determination of stockholders entitled to vote at such meeting, and (ii) who complies with the notice procedures set forth in this Article III, Section 3. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices -10- 14 of the Corporation (a) in the case of an annual meeting, not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Annual Meeting was mailed or public disclosure of the date of the Annual Meeting was made, whichever first occurs, and (b) in the case of a special meeting of stockholders called in the manner set forth in Article II, Section 3 hereof for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially by the person and which are owned of record by the person, and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings -11- 15 required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder, and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially by such stockholder and which are owned of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the Meeting to nominate the persons named in its notice, and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Article III, Section 3. If the Chairman of the Meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the Meeting that the -12- 16 nomination was defective and such defective nomination shall be disregarded. SECTION 4. Place of Meetings. Meetings of the Board of Directors shall be held at such place or places, within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be specified in the notice of any such meeting. SECTION 5. First Meeting. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. Such meeting may be held at any other time or place (within or without the State of Delaware) which shall be specified in a notice thereof given as hereinafter provided in Section 8 of this Article III. SECTION 6. Regular Meetings. Regular meetings of the Board of Directors shall be held at such time and place as the Board of Directors may fix. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular meetings of the Board of Directors need not be given except as otherwise required by statute or these By-Laws. -13- 17 SECTION 7. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, if one shall have been elected, or by two or more directors of the Corporation or by the President. SECTION 8. Notice of Meetings. Notice of each special meeting of the Board of Directors (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 8, in which notice shall be stated the time and place of the meeting. Except as otherwise required by these By-Laws, such notice need not state the purposes of such meeting. Notice of each such meeting shall be mailed, postage prepaid, to each director, addressed to him at his residence or usual place of business, by first-class mail, at least two days before the day on which such meeting is to be held, or shall be sent addressed to him at such place by telegraph, cable, telex, telecopier or other similar means, or be delivered to him personally or be given to him by telephone or other similar means, at least twenty-four hours before the time at which such meeting is to be held. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting, except when he shall attend for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. -14- 18 SECTION 9. Quorum and Manner of Acting. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and, except as otherwise expressly required by statute or the Certificate of Incorporation or these By-Laws, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of the time and place of any such adjourned meeting shall be given to the directors unless such time and place were announced at the meeting at which the adjournment was taken, to the other directors. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. The directors shall act only as a Board and the individual directors shall have no powers as such. SECTION 10. Organization. At each meeting of the Board of Directors, the Chairman of the Board, if one shall have been elected, or in the absence of the Chairman of the Board or if one shall not have been elected, the President (or, in his absence, another director chosen by a majority of the directors present) shall act as chairman of the meeting and preside thereat. The Secretary (or, in his absence, any person appointed by the Chairman) shall act as secretary of the meeting and keep the minutes thereof. -15- 19 SECTION 11. Resignations. Any director of the Corporation may resign at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 12. Vacancies. Any vacancy in the Board of Directors, whether arising from death, resignation, removal (with or without cause), may be filled by the vote of a majority of the directors then in office, though less than a quorum, or by the sole remaining director or by the stockholders at the next annual meeting thereof or at a special meeting thereof. Each director so elected shall hold office until his successor shall have been elected and qualified. SECTION 13. Removal of Directors. Any director may be removed either with or without cause, at any time, by the holders of a majority of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote at an election of directors. Any director may be removed for cause by the Board of Directors. SECTION 14. Compensation. The Board of Directors shall have authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity. -16- 20 SECTION 15. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, including an executive committee, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In addition, in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member. Except to the extent restricted by statute or the Certificate of Incorporation, each such committee, to the extent provided in the resolution creating it, shall have and may exercise all the powers and authority of the Board of Directors and may authorize the seal of the Corporation to be affixed to all papers which require it. Each such committee shall serve at the pleasure of the Board of Directors and have such name as may be determined from time to time by resolution adopted by the Board of Directors. A majority of each committee shall constitute a quorum for the transaction of business. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. SECTION 16. Action by Consent. Unless restricted by the Certificate of Incorporation, any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken with- -17- 21 out a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board of Directors or such committee, as the case may be. SECTION 17. Telephonic Meeting. Unless restricted by the Certificate of Incorporation, any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at a meeting. ARTICLE IV Officers SECTION 1. Number and Qualifications. The officers of the Corporation shall be elected by the Board of Directors and shall include the President, one or more Vice-Presidents, the Secretary and the Treasurer. If more than one Vice-President is elected, they shall have the following order of seniority: Executive Vice-President, Senior Vice-President, Vice-President. If the Board of Directors wishes, it may also elect as an officer of the Corporation a Chairman of the Board, and if it shall elect a Chairman of the Board, it may also elect a Vice Chairman of the Board, and it may elect other officers including one or more Assistant Treasurers and one or more Assistant Secretaries, as may be necessary or desirable for the business of the Corporation. Any two or more offices may be held by the same person. Each officer shall hold office until his successor shall have been -18- 22 duly elected and shall have qualified, or until his death, or until he shall have resigned or have been removed, as hereinafter provided in these By-Laws. SECTION 2. Resignations. Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon receipt. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective. SECTION 3. Removal. Any officer of the Corporation may be removed, either with or without cause, at any time, by the Board of Directors at any meeting thereof. SECTION 4. Chairman of the Board. The Chairman of the Board, if one shall have been elected, shall be a member of the Board of Directors, an officer of the Corporation, and, if present, shall preside at each meeting of the Board of Directors or the stockholders. Except where by law the signature of the President is required, the Chairman of the Board shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation. During the absence or disability of the President, the Chairman of the Board shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board shall also perform such other duties and exercise such other powers as from time to time may be assigned to the Chairman of the Board by these By-Laws or by the Board of Directors. -19- 23 SECTION 5. Vice Chairman of the Board. The Vice Chairman of the Board, if one shall have been elected, shall be a member of the Board of Directors and an officer of the Corporation. In the absence of the Chairman of the Board, the Vice Chairman of the Board shall preside at each meeting of the Board of Directors or the stockholders. Except where by law the signature of the President is required, the Vice Chairman of the Board shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation. During the absence or disability of the Chairman of the Board, the Vice Chairman of the Board shall exercise all the powers and discharge all the duties of the Chairman of the Board. The Vice Chairman of the Board shall also perform such other duties and exercise such other powers as from time to time may be assigned to the Vice Chairman of the Board by these By-Laws or by the Board of Directors. SECTION 6. President. The President shall, in the absence of the Chairman of the Board and the Vice Chairman of the Board, or if a Chairman of the Board and a Vice Chairman of the Board shall not have been elected, preside at each meeting of the Board of Directors or the stockholders. The President shall perform all duties incident to the office of President and such other duties as may from time to time be assigned to the President by the Board of Directors. SECTION 7. Vice President. Each Vice-President shall perform all such duties as from time to time may be assigned to him by the Board of Directors or the President. At the request of the President or in his absence or in the event of his inability or refusal to act, the -20- 24 Vice-President, or if there shall be more than one, the Vice-Presidents in the order of their seniority, shall perform the duties of the President, and, when so acting, shall have the powers of and be subject to the restrictions placed upon the President in respect of the performance of such duties. SECTION 8. Treasurer. The Treasurer shall (a) have charge and custody of, and be responsible for, all the funds and securities of the Corporation; (b) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation; (c) deposit all moneys and other valuables to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to its direction; (d) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; (e) disburse the funds of the Corporation and supervise the investments of its funds, taking proper vouchers therefor; (f) render to the Board of Directors, whenever the Board of Directors may require, an account of the financial condition of the Corporation; and (g) in general, perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Secretary. The Secretary shall (a) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board of -21- 25 Directors, the committees of the Board of Directors and the stock-holders; (b) see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; (c) be custodian of the records and seal of the Corporation and affix and attest the seal to all certificates for shares of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (d) see that the books, reports, statements, certificates and other documents and records required by law are kept and filed; and (e) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 10. Assistant Treasurer. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, per-form the duties and exercise the powers of the Treasurer and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 11. Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order deter- -22- 26 mined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 12. Officers' Bonds or Other Security. If required by the Board of Directors, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety as the Board of Directors may require. SECTION 13. Compensation. The compensation of the officers of the Corporation for their services as such officers shall be fixed from time to time by the Board of Directors. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation. ARTICLE V Stock Certificates and Their Transfer SECTION 1. Stock Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by, or in the name of the Corporation by, the Chairman of the Board or the Vice Chairman of the Board or the President or the Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporation shall be auth- -23- 27 orized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restriction of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. SECTION 2. Facsimile Signatures. Any of or all the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 3. Lost or Abandoned Certificates. The Board of Directors may direct, or establish a procedure providing for, a new certificate or certificates to be issued in place of any certificate or -24- 28 certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, or which have been claimed as abandoned property by a governmental authority or its agent. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as it may direct sufficient to indemnify it against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. SECTION 4. Transfers of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its records; provided, however, that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer. Whenever any transfer of stock shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the certificates are presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 5. Transfer Agents and Registrars. The Board of Directors may appoint, or authorize any officer or officers to appoint, one or more transfer agents and one or more registrars. -25- 29 SECTION 6. Regulations. The Board of Directors may make such additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. SECTION 7. Fixing Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 8. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its records as the owner of shares of stock to receive dividends and to vote as such owners, shall be entitled to hold liable for calls and assessments a person registered on its records as the owner of shares of stock, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares of stock on the -26- 30 part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VI Indemnification SECTION 1. Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 3 of this Article VI, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he -27- 31 reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. SECTION 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article VI, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. -28- 32 SECTION 3. Authorization of Indemnification. Any indemnification under this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VI, as the case may be. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. To the extent, however, that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. SECTION 4. Good Faith Defined. For purposes of any determination under Section 3 of this Article VI, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Corporation or an- -29- 33 other enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article VI, as the case may be. SECTION 5. Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 3 of this Article VI, and notwithstanding the absence of any determination thereunder, any director, officer, employee or agent may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VI. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article VI, as the case may be. Notice of -30- 34 any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. SECTION 6. Expenses Payable in Advance. Expenses incurred in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article VI. SECTION 7. Non-exclusivity and Survival of Indemnification. The indemnification and advancement of expenses provided by or granted pursuant to this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this Article VI shall be made to the fullest extent permitted by law. The provisions of this Article VI shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 or 2 of this Article VI but whom the Corporation has the power or obligation to indemnify under the pro- -31- 35 visions of the General Corporation Law of the State of Delaware or otherwise. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. SECTION 8. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power or obligation to indemnify him against such liability under the provisions of this Article VI or otherwise. SECTION 9. Meaning of "Corporation" for Purposes of Article VI. For purposes of this Article VI, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent -32- 36 corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. ARTICLE VII General Provisions SECTION 1. Dividends. Subject to statute and the Certificate of Incorporation, dividends upon the shares of stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of stock of the Corporation, unless otherwise provided by statute or the Certificate of Incorporation. SECTION 2. Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may, from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors may think conducive to the interests of the Corporation. The Board of Directors may modify or abolish any such reserve in the manner in which it was created. SECTION 3. Seal. The seal of the Corporation shall be in such form as shall be approved by the Board of Directors. -33- 37 SECTION 4. Fiscal Year. The fiscal year of the Corporation shall be fixed, and once fixed, may thereafter be changed, by resolution of the Board of Directors. SECTION 5. Checks, Notes, Drafts, etc. All checks, notes, drafts or other orders for the payment of money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or by an officer or officers authorized by the Board of Directors to make such designation. SECTION 6. Execution of Contracts, Deeds, etc. The Board of Directors shall authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. SECTION 7. Voting of Stocks in Other Corporations. Unless otherwise provided by resolution of the Board of Directors, the Chairman of the Board or the President, from time to time, may (or may appoint one or more attorneys or agents to) cast the votes which the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation at meetings of the holders of the shares or other securities of such other corporation, or to consent in writing to any action by any such other corporation. In the event one or more attorneys or agents are appointed, the Chairman of the -34- 38 Board or the President may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent. The Chairman of the Board or the President may, or may instruct the attorneys or agents appointed, to execute or cause to be executed in the name and on behalf of the Corporation and under its seal or otherwise, such written proxies, consents, waivers or other instruments as may be necessary or proper in the premises. ARTICLE VIII Amendments These By-Laws may be amended or repealed or new By-Laws adopted (a) by action of the stockholders entitled to vote thereon at any annual or special meeting of stockholders, or (b) if the Certificate of Incorporation so provides, by action of the Board of Directors at a regular or special meeting thereof. Any By-Law made by the Board of Directors may be amended or repealed by action of the stockholders at an annual or special meeting of stockholders. -35- EX-11 4 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 Computations of Earnings Per Share, Basic and Diluted 67 2 HUDSON GENERAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE, BASIC
Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 --------- --------- --------- --------- (in thousands, except per share amounts) Net earnings ....................................... $ 1,383 $ 1,660 $ 2,165 $ 2,346 ========= ========= ========= ========= Weighted average number of common shares outstanding ..................................... 1,741 1,938 1,739 1,839 ========= ========= ========= ========= Earnings per share, basic .......................... $ .79 $ .86 $ 1.24 $ 1.28 ========= ========= ========= =========
68 3 HUDSON GENERAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE, DILUTED
Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 ---- ---- ---- ---- (in thousands, except per share amounts) Net earnings ................................ $1,383 $1,660 $2,165 $2,346 Plus: Interest on 7% convertible subordinated debentures due 2011 less applicable income taxes .......................... -- -- -- 50 ------ ------ ------ ------ Net earnings for computing earnings per share, diluted .......................... $1,383 $1,660 $2,165 $2,396 ====== ====== ====== ====== Weighted average number of common shares outstanding ................................. 1,741 1,938 1,739 1,839 Plus: Incremental shares from assumed: Exercise of stock options ............ 16 19 15 18 Conversion of 7% convertible subordinated debentures .............. -- -- -- 117 ------ ------ ------ ------ Weighted average number of common and potential common shares outstanding ......... 1,757 1,957 1,754 1,974 ====== ====== ====== ====== Earnings per share, diluted ................. $ .79 $ .85 $ 1.23 $ 1.21 ====== ====== ====== ======
69 EX-27 5 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 6-MOS JUN-30-1998 JUL-01-1997 DEC-31-1997 16,097 12,690 873 0 0 41,567 2,594 0 70,374 3,490 0 0 0 2,098 64,679 66,777 2,765 2,765 0 3,935 3,588 0 0 3,326 1,161 0 0 0 0 2,165 1.24 1.23 - ------------- AMOUNT REPORTED IS EPS BASIC.
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