-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, L1/15j5exvQnmIZGvudMC2THY3ablJYNYWKxbGDvZIpFHLDhVCY2cY6mf8Rpz+d/ pPnC5UJc1gMW8uJLdr3LIw== 0000950130-95-000959.txt : 19950517 0000950130-95-000959.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950130-95-000959 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: CSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLIN CORP CENTRAL INDEX KEY: 0000074303 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 131872319 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01070 FILM NUMBER: 95537901 BUSINESS ADDRESS: STREET 1: 120 LONG RIDGE RD CITY: STAMFORD STATE: CT ZIP: 06904-1355 BUSINESS PHONE: 2033562000 FORMER COMPANY: FORMER CONFORMED NAME: OLIN MATHIESON CHEMICAL CORP DATE OF NAME CHANGE: 19691008 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 -------------------------------------------------- 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 1-1070 -------------------------------------------------------- OLIN CORPORATION - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) VIRGINIA 13-1872319 - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 120 LONG RIDGE ROAD, STAMFORD, CT 06904 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (203) 356-2000 - -------------------------------------------------------------------------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) - ------------------------------------------------------------------------------- (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 ---- ------ AS OF APRIL 30, 1995 THERE WERE OUTSTANDING 24,322,201 SHARES OF THE REGISTRANT'S COMMON STOCK. Part I - Financial Information Item 1. Financial Statements. OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Balance Sheets (In millions)
March 31, December 31, 1995 1994 --------- ------------ ASSETS - ------ Cash $ 5.4 $ 7.0 Accounts receivable, net 508.7 414.3 Inventories 412.4 386.2 Other current assets 71.5 72.4 -------- -------- Total current assets 998.0 879.9 Investments and advances 103.7 103.1 Property, plant and equipment (less accumulated depreciation of $1,658.2 and $1,624.4) 881.0 879.0 Goodwill 106.1 108.8 Other assets 54.3 58.8 -------- -------- Total assets $2,143.1 $2,029.6 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Short-term borrowings and current installments of long-term debt $ 126.7 $ 29.0 Accounts payable 297.4 332.2 Other current liabilities 281.5 257.0 -------- -------- Total current liabilities 705.6 618.2 Long-term senior debt 297.7 292.8 Long-term subordinated debt 125.0 125.0 Other liabilities 244.9 244.5 Shareholders' equity: Preferred stock, par value $1 per share: Authorized 10.0 shares. Series A Conversion Preferred Stock Issued 2.76 shares (in 1994) - 2.8 ESOP Preferred Stock Issued 1.1 shares 84.3 85.6 Guaranteed ESOP obligations (27.0) (27.0) Common stock, par value $1 per share: Authorized 60.0 shares. Issued 24.3 shares (21.5 in 1994) 24.3 21.5 Additional paid-in capital 402.2 400.7 Cumulative translation adjustment (4.0) (3.1) Retained earnings 290.1 268.6 -------- -------- Total shareholders' equity 769.9 749.1 -------- -------- Total liabilities and shareholders' equity $2,143.1 $2,029.6 ======== ========
___________________________________ The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements. OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Statements of Income (In millions, except per share amounts)
Three Months Ended March 31, ------------------ 1995 1994 ---- ---- Sales $766.1 $604.9 Operating expenses: Cost of goods sold 613.0 487.5 Selling and administration 79.4 76.8 Research and development 7.3 8.5 ------ ------ Operating income 66.4 32.1 Interest expense 10.3 9.4 Interest and other income 3.4 1.2 ------ ------ Income before taxes 59.5 23.9 Income taxes 21.1 8.6 ------ ------ Net income 38.4 15.3 Preferred dividends 1.6 1.7 ------ ------ Net income available to common shareholders $ 36.8 $ 13.6 ====== ====== Per share of common stock: Primary $ 1.52 $ 0.62 Fully diluted $ 1.46 $ 0.62 Dividends $ 0.60 $ 0.55 ====== ====== Average common shares outstanding 24.3 19.2 ====== ======
___________________________________ The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements. OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Statements of Cash Flows (In millions)
Three Months Ended March 31, --------------- 1995 1994 ---- ---- Operating activities - -------------------- Net income $ 38.4 $ 15.3 Depreciation and amortization 34.8 33.4 Changes in: Receivables (90.9) (38.6) Inventories (23.0) (3.4) Other current assets 0.9 2.0 Current liabilities other than borrowings (13.9) (16.1) Noncurrent liabilities 1.7 3.2 Deferred taxes 4.4 (0.9) ----- ----- Net operating activities (47.6) (5.1) ----- ----- Investing activities - -------------------- Capital expenditures (36.8) (20.4) Other investments 0.2 0.3 Other transactions 2.6 12.4 ----- ----- Net investing activities (34.0) (7.7) ----- ----- Financing activities - -------------------- Long-term debt repayments (0.1) - Short-term borrowings 97.2 29.1 Dividends paid (17.1) (14.8) ----- ----- Net financing activities 80.0 14.3 ----- ----- Net (decrease) increase in cash (1.6) 1.5 Cash, beginning of period 7.0 3.3 ----- ----- Cash, end of period $ 5.4 $ 4.8 ===== =====
___________________________________ The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements. OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS 1. The condensed financial statements included herein have been prepared by the company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of the company, reflect all adjustments (consisting only of normal accruals) which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, the company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements, accounting policies and the notes thereto and management's discussion and analysis of financial condition and results of operations included in the company's Annual Report on Form 10-K for the year ended December 31, 1994. 2. Inventories are valued principally by the dollar value last-in, first-out (LIFO) method of inventory accounting. It is not practicable, therefore, to separate the inventory into its components (raw materials, work-in-process and finished products). Inventories under the LIFO method are based on annual determination of quantities and costs as of the year-end; therefore, the consolidated financial statements at March 31, 1995, reflect certain estimates relating to inventory quantities and costs at December 31, 1995. 3. An Employee Stock Ownership Plan (ESOP) was established in June 1989. The ESOP purchased from the company approximately 1.3 million shares ($100 million) of a newly-authorized 1.75 million share series of the company's ESOP preferred stock, financed by $60 million of notes guaranteed by the company, and a $40 million loan from the company. The company's loan to the ESOP has been repaid in full to the company as of December 31, 1992. Such loan was financed by the company through a long-term credit facility which is classified on the March 31, 1995 balance sheet as long-term debt. At March 31, 1995 there were 1.1 million shares of ESOP preferred stock outstanding at a value of $75.00 per share. The quarterly fixed dividend rate is $1.4925 per share. The ESOP preferred stock is convertible by the holder into the company's common stock on a one-for-one basis, subject to anti-dilutive adjustments and may be redeemed at the option of the company, or at the option of the plan under certain circumstances (including upon payment of withdrawing plan participant accounts or if required to meet the plan's debt payments). The company reserves the right to satisfy the redemption in cash, marketable obligations or common stock. The ESOP preferred stock is included in shareholders' equity because the company intends to redeem the outstanding ESOP preferred stock solely with shares of the company's common stock, and has the ability to do so. 4. Primary earnings per share are computed by dividing net income less the ESOP preferred dividend requirement by the weighted average number of common shares outstanding, plus an equivalent number (one-for-one) of common shares, assuming the conversion of the Series A Stock in 1994. Fully diluted earnings per share reflect the dilutive effect of stock options and assume the conversion of outstanding ESOP preferred stock into an equivalent number of common shares. Net income was reduced by an additional ESOP contribution (differential between the common and the ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement. 5. On March 1, 1995, 2.76 million shares of the company's $1 par value Series A Conversion Preferred Stock were converted into shares of common stock on a one-for-one basis. The last dividend on these preferred shares was paid in March 1995. 6. Effective January 1, 1995, the company acquired the remaining 51% interest in a previously nonconsolidated Latin American venture. The purchase price is contingent upon the future earnings of this entity. This acquisition was accounted for as a purchase and accordingly, its results of operations, which were not material, are included in the consolidated financial statements from the date of acquisition. Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations. ---------------------- First quarter sales and net income data by industry segment are presented below:
Three Months Ended March 31, --------------- (in millions) 1995 1994 ---- ---- Sales: Chemicals $350.9 $285.2 Metals 239.6 179.5 Defense and Ammunition 175.6 140.2 ------ ------ Total $766.1 $604.9 ====== ====== Net Income: Chemicals $ 22.3 $ 7.8 Metals 15.0 8.9 Defense and Ammunition 7.2 4.2 Corporate and Other (6.1) (5.6) ------ ------ Total $ 38.4 $ 15.3 ====== ======
Chemicals segment sales and net income increased 23% and 186%, respectively, from 1994's first quarter due to higher demand for most products and improved pricing. Chlor-Alkali's financial performance improved as a result of higher chlorine volumes and improved caustic pricing. Increased shipments contributed to pool chemicals and biocides improved 1995 financial performance. In the urethanes business, additional volumes and increased pricing for certain products more than offset raw materials cost increases and the impact of the TDI plant maintenance turnaround. Electronic Materials' sales and profits were ahead of last year due to continuing strong demand for its products and services. Metals segment sales and net income increased 33% and 69%, respectively from 1994's first quarter. Higher volumes due to increased demand from the automotive, coinage and ammunition markets, along with favorable product mix in most major product lines contributed to the strong profit improvement over 1994's level. These additional volumes, along with higher metal values contributed to the 1995 sales increase. Defense and Ammunition's segment sales and net income increased 25% and 71%, respectively, from 1994's first quarter. Winchester's financial performance was ahead of 1994s levels as improved operating results in Australia and higher Lake City management fee income more than offset the reduction in the domestic commercial ammunition business. After the exceptionally high consumer demand in 1994, commercial ammunition volumes are expected to return to more normal levels in 1995. Aerospace's financial performance was comparable to last year's levels. Additional shipments of Ball Powder(R) propellant and the operating results from the medium caliber ammunition business acquired in April 1994, more than offset production delays of certain medium caliber ammunition and were the main contributors to Ordnance Division's improved 1995 financial performance. Changes in the strategic direction of defense spending, the timing of defense procurements and specific defense program appropriation decisions may adversely affect the performance of the Defense and Ammunition segment and the company in future years, including its income, liquidity, capital resources and financial position. The precise impact of these decisions will depend upon the timing and size of changes and decisions, and the company's ability to mitigate their impact with new business, business consolidations or cost reductions. The company currently provides services to the U.S. government in facilities management and ordnance demilitarization and continues to pursue other business areas. In view of the continuing uncertainty regarding the strategy and priorities of the Department of Defense, the historical financial information of the Defense and Ammunition segment, and to a lesser extent, of the company, may not be indicative of future performance. The inclusion of the medium caliber acquisition in 1995's operating results accounted primarily for the 1995 increase in selling and administration expenses. Interest expense in 1995 increased from last year's amount due primarily to higher short-term interest rates in effect during 1995. The average interest rate on domestic short-term debt increased to 6.1% in 1995's first quarter from 3.4% in the prior year's quarter. The improved operating results of nonconsolidated affiliates was the primary reason for the 1995 increase in interest and other income. The 1995 first quarter effective tax rate of 35.5% was comparable to the 1994 rate. Cash used for operating activities amounted to $47.6 million and $5.1 million for the first quarter of 1995 and 1994, respectively. In 1995, cash flow from operations and the use of credit facilities financed the company's seasonal working capital requirements, capital expenditures and dividends. At March 31, 1995, the company maintained committed credit facilities with banks of $303 million of which $206 million was available. The company believes that these credit facilities are adequate to satisfy its liquidity needs for the near future. In 1995, cash flow from operations decreased significantly from 1994's level. The decrease in 1995 was primarily attributable to higher receivables and inventory levels and was partially offset by higher operating income. Increased volumes as a result of a stronger economy and higher metal values accounted for the increase in receivables while additional funds were invested in inventories to support higher level of business activity. Cash used for investing activities amounted to $34.0 million and $7.7 million for the first quarter of 1995 and 1994, respectively. Capital spending of $36.8 million in 1995 was ahead of 1994. Total year capital spending, including environmental capital spending of $15 million, is estimated to increase 20% from 1994 mainly to provide additional capacity and product quality for selected product lines. Historically, the company has funded its environmental capital spending through cash flow from operations and expects to do so in the future. On March 1, 1995, the outstanding Series A Conversion Preferred stock converted automatically into shares of common stock on a one-for-one basis. The last dividend on these preferred shares was paid in March 1995. Commencing with first quarter of 1995, the quarterly common stock dividend increased to $.60 per share. In 1987, a Federal Trade Commission (FTC) judge ruled that the company must divest the chlorinated isocyanurates business acquired in 1985, which included an isocyanurates manufacturing facility in South Charleston, WV, a packaging facility in Livonia, MI and the SUN(R) brand trademark. Over the years, the company has been unsuccessful in overturning this ruling. The company executed an agreement in 1994 to sell the SUN(R) brand of isocyanurates. In February 1995, the company executed an agreement to sell its South Charleston and Livonia facilities to subsidiaries of Israel Chemicals Ltd. Both sales are pending and subject to FTC approval. These transaction are not expected to have a material adverse effect on the results of operations in 1995. At March 31, 1995, the percent of total debt to total capitalization (excluding the reduction in equity for the Contributing Employee Ownership Plan) was 40.8%, up from 36.5% at year-end 1994 and down from 48.3% at March 31, 1994. The increase from year-end 1994 is attributable to higher short-term borrowings to finance seasonal working capital requirements. In the 1995 first quarter, the company spent approximately $4 million for investigatory and clean-up activities associated with former waste sites and past operations. Spending for environmental investigatory and remedial efforts for the full year 1995 is estimated to be $40 million. These amounts were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior years. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Charges to income for investigatory and remedial efforts were material to operating results in 1994 and are expected to be material to net income in 1995 and future years. Annual environmental-related cash outlays for capital projects, site investigation and remediation, and normal plant operations are expected to range between $90-$105 million over the next several years. While the company does not anticipate a material increase in the projected annual level of its environmental-related costs, there is always the possibility that such increases may occur in the future in view of the uncertainties associated with environmental exposures. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and the financial capability of other potentially responsible parties and the company's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the company. The company's consolidated balance sheets include reserves for future environmental expenditures to investigate and remediate known sites amounting to $111 million at March 31, 1995 and December 31, 1994, of which $71 million was classified as other noncurrent liabilities. Included in the reserve at March 31, 1995 and 1994, were liabilities anticipated to be shared with a third party, with whom the company is currently in litigation. Those reserves did not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology. Those liabilities are reassessed periodically to determine if environmental circumstances have changed and/or remediation efforts and their costs can be better estimated. As a result of these reassessments, future charges to income may be made for additional liabilities. There are a variety of legal proceedings pending or threatened against the company. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be decided unfavorably against the company. Certain of these matters are discussed in Item 3, Legal Proceedings of the 1994 Form 10-K Annual Report and in other filings of the company with the Securities and Exchange Commission, which filings are available on request from the company. Part II - Other Information Item 6. Exhibits and Reports on Form 8-K. ---------------------------------- (a) Exhibits -------- 3. By-laws as amended effective April 27, 1995. 10. Olin Senior Management Incentive Compensation Plan as amended April 27, 1995. 11. Computation of Per Share Earnings (Unaudited). 12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited). 12(b). Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited). 27. Financial Data Schedule. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the quarter ended March 31, 1995. 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. OLIN CORPORATION (Registrant) By: J. A. Riggs ----------- J. A. Riggs Senior Vice President and Chief Financial Officer (Duly authorized signatory and Chief Financial Officer) Date: May 12, 1995 EXHIBIT INDEX Exhibit No. Description - --------- ----------- 3. By-laws as amended effective April 27, 1995. 10. Olin Senior Management Incentive Compensation Plan as amended April 27, 1995. 11. Computation of Per Share Earnings (Unaudited). 12(a). Computation of Ratio of Earnings to Fixed Charges (Unaudited). 12(b). Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited). 27. Financial Data Schedule. EX-3 2 BYLAWS EXHIBIT 3 BY-LAWS OF OLIN CORPORATION ---------------- ARTICLE I. MEETINGS OF SHAREHOLDERS. SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of Olin ------------------ Corporation (hereinafter called the "Corporation") shall be held at such place, either within or without the Commonwealth of Virginia, as may from time to time be fixed by the Board of Directors of the Corporation (hereinafter called the "Board"). SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders of ---------------- the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the last Thursday in April in each year (or, if that day shall be a legal holiday, then on the next succeeding business day), or on such other day and/or in such other month as may be fixed by the Board, at such hour as may be specified in the notice thereof. SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders for ----------------- any purpose or purposes, unless otherwise provided by law or in the Articles of Incorporation of the Corporation as from time to time amended (hereinafter called the "Articles"), may be held at any time upon the call of the Board, the Chairman of the Board, the President or the holders of a majority of the shares of the issued and outstanding stock of the Corporation entitled to vote at the meeting. SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or ------------------- the Articles, not less than ten nor more than sixty days notice in writing of the place, day, hour and purpose or purposes of each meeting of the shareholders, whether annual or special, shall be given to each shareholder of record of the Corporation entitled to vote at such meeting, either by the delivery thereof to such shareholder personally or by the mailing thereof to such shareholder in a postage prepaid envelope addressed to such shareholder at his address as it appears on the stock transfer books of the Corporation; provided, however, that in the case of a special meeting of shareholders called by the shareholders, such notice shall be given at least fifty days before the date of the meeting. Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend the meeting in person or by proxy, unless attendance is for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened, or who shall waive notice thereof in writing signed by the shareholder before, at or after such meeting. Notice of any adjourned meeting need not be given, except when expressly required by law. SECTION 5. QUORUM. Shares representing a majority of the votes entitled to ------- be cast on a mattter by all classes or series which are entitled to vote thereon and be counted together collectively, represented in person or by proxy at any meeting of the shareholders, shall constitute a quorum for the transaction of business thereat with respect to such matter, unless otherwise provided by law or the Articles. In the absence of a quorum at any such meeting or any adjournment or adjournments thereof, shares representing a majority of the votes cast on the matter of adjournment, either in person or by proxy, may adjourn such meeting from time to time until a quorum is obtained. At any such adjourned meeting at which a quorum has been obtained, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 6. VOTING. Unless otherwise provided by law or the Articles, at ------- each meeting of the shareholders each shareholder entitled to vote at such meeting shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation upon any date fixed as hereinafter provided, and may vote either in person or by proxy in writing. Unless demanded by a shareholder present in person or represented by proxy at any meeting of the shareholders and entitled to vote thereon or so directed by the chairman of the meeting, the vote on any matter need not be by ballot. On a vote by ballot, each ballot shall be signed by the shareholder voting or his proxy, and it shall show the number of shares voted. SECTION 7. JUDGES. One or more judges or inspectors of election for any ------- meeting of shareholders may be appointed by the chairman of such meeting, for the purpose of receiving and taking charge of proxies and ballots and deciding all questions as to the qualification of voters, the validity of proxies and ballots and the number of votes properly cast. SECTION 8. CONDUCT OF MEETING. The chairman of the meeting at each meeting ------------------- of shareholders shall have all the powers and authority vested in presiding officers by law or practice, without restriction, as well as the authority to conduct an orderly meeting and to impose reasonable limits on the amount of time taken up in remarks by any one shareholder. ARTICLE II. BOARD OF DIRECTORS. SECTION 1. NUMBER. CLASSIFICATION. TERM. ELECTION. The property, business --------------------------------------- and affairs of the Corporation shall be managed under the direction of the Board as from time to time constituted. The Board shall consist of twelve directors, but the number of directors may be increased to any number, not more than eighteen directors, or decreased to any number, not less than three directors, by amendment of these By-laws, provided that any increase or decrease by more than thirty percent of the number of directors last elected by the shareholders may only be effected by the shareholders. No director need be a shareholder. The Board shall be divided into three classes, Class I, Class II and Class III, as nearly equal in number as possible, with the members of each class to serve for the respective terms of -2- office provided in the Articles, and until their respective successors shall have been duly elected or until death or resignation or until removal in the manner hereinafter provided. In case the number of directors shall be increased, the additional directors to fill the vacancies caused by such increase shall be elected in accordance with the provisions of Section 4 of Article VI of these By-laws. Any increase or decrease in the number of directors shall be so apportioned among the classes by the Board as to make all classes as nearly equal in number as possible. Subject to the rights of holders of any Preferred Stock outstanding, nominations for the election of directors may be made by the Board or a committee appointed by the Board or by any shareholder entitled to vote in the election of directors generally. However, any shareholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if it is a meeting of shareholders for the purposes of electing directors and written notice of such shareholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of shareholders, 90 days in advance of such meeting and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (e) the consent of each nominee to serve as a director of the Corporation if so elected. SECTION 2. Compensation. Each director, in consideration of his serving as ------------ such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at Board and Committee meetings, or both, in cash or other property, including securities of the Corporation, as the Board shall from time to time determine, together with reimbursements for the reasonable expenses incurred by him in connection with the performance of his duties. Nothing contained herein shall preclude any director from serving the Corporation, or any subsidiary or affiliated corporation, in any other capacity and receiving proper compensation therefor. If the Board adopts a resolution to that effect, any director may elect to defer all or any part of the annual and other fees hereinabove referred to for such period and on such terms and conditions as shall be permitted by such resolution. SECTION 3. Place of Meetings. The Board may hold its meetings at such place ----------------- or places within or without the Commonwealth of Virginia as it may from time to time by resolution determine or as shall be specified or fixed in the respective notices or waivers of notice thereof. -3- SECTION 4. Organization Meeting. After each annual election of directors, -------------------- as soon as conveniently may be, the newly constituted Board shall meet for the purposes of organization. At such organization meeting, the newly constituted Board shall elect officers of the Corporation and transact such other business as shall come before the meeting. Notice of organization meetings of the Board need not be given. Any organization meeting may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board, or in a waiver of notice thereof signed by all the directors. SECTION 5. Regular Meetings. Regular meetings of the Board may be held at ---------------- such time and place as may from time to time be specified in a resolution adopted by the Board then in effect; and, unless otherwise required by such resolution, or by law, notice of any such regular meeting need not be given. SECTION 6. Special Meetings. Special meetings of the Board shall be held ---------------- whenever called by the Chief Executive Officer, or by the Secretary at the request of any three directors. Notice of a special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, not later than the second day before the day on which such meeting is to be held, or shall be sent addressed to him at such place by telegraph, cable or wireless, or be delivered personally or by telephone, not later than the day before the day on which such meeting is to be held. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in the notice of such meeting, unless required by the Articles. SECTION 7. Quorum. At each meeting of the Board the presence of a majority ------ of the number of directors fixed by these By-laws shall be necessary to constitute a quorum. The act of a majority of the directors present at a meeting at which a quorum shall be present shall be the act of the Board, except as may be otherwise provided by law or by these By-laws. Any meeting of the Board may be adjourned by a majority vote of the directors present at such meeting. Notice of any adjourned meeting need not be given. SECTION 8. Waivers of Notice of Meetings. Anything in these By-laws or in ----------------------------- any resolution adopted by the Board to the contrary notwithstanding, notice of any meeting of the Board need not be given to any director if such notice shall be waived in writing signed by such director before, at or after the meeting, or if such director shall be present at the meeting. Any meeting of the Board shall be a legal meeting without any notice having been given or regardless of the giving of any notice or the adoption of any resolution in reference thereto, if every member of the Board shall be present thereat. Except as otherwise provided by law or these By-laws, waivers of notice of any meeting of the Board need not contain any statement of the purpose of the meeting. SECTION 9. Telephone Meetings. Members of the Board or any committee may ------------------ participate in a meeting of the Board or such committee by means of a conference telephone or other means of communications whereby all directors participating may simultaneously hear each other during the meeting, and participation by such means shall constitute presence in person at such meeting. -4- SECTION 10. Actions Without Meetings. Any action that may be taken at a ------------------------ meeting of the Board or of a committee may be taken without a meeting if a consent in writing, setting forth the action, shall be signed, either before or after such action, by all of the directors or all of the members of the committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote. ARTICLE III. * INDEMNIFICATION. AND LIMIT ON LIABILITY (a) Every person who is or was a director, officer or employee of the Corporation, or who, at the request of the Corporation, serves or has served in any such capacity with another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise shall be indemnified by the Corporation against any and all liability and reasonable expense that may be incurred by him in connection with or resulting from any claim, action or proceeding (whether brought in the right of the Corporation or any such other corporation, entity, plan or otherwise), civil or criminal, in which he may become involved, as a party or otherwise, by reason of his being or having been a director, officer or employee of the Corporation, or such other corporation, entity or plan while serving at the request of the Corporation, whether or not he continues to be such at the time such liability or expense shall have been incurred, unless such person engaged in willful misconduct or a knowing violation of the criminal law. As used in this Article III: (i) the terms "liability" and "expense" shall include, but shall not be limited to, counsel fees and disbursements and amounts of judgments, fines or penalties against, and amounts paid in settlement by, a director, officer or employee; (ii) the terms "director", "officer" and "employee," unless the context otherwise requires, include the estate or personal representative of any such person; (iii) a person is considered to be serving an employee benefit plan as a director, officer or employee of the plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or, in connection with the plan, to participants in or beneficiaries of the plan; (iv) the term "occurrence" means any act or * [Compilers Note: This Article III was adopted by the shareholders at the Annual Meeting of Shareholders, April 28, 1994.] -5- failure to act, actual or alleged, giving rise to a claim, action or proceeding; and (v) service as a trustee or as a member of a management or similar committee of a partnership or joint venture shall be considered service as a director, officer or employee of the trust, partnership or joint venture. The termination of any claim, action or proceeding, civil or criminal, by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that a director, officer or employee did not meet the standards of conduct set forth in this paragraph (a). The burden of proof shall be on the Corporation to establish, by a preponderance of the evidence, that the relevant standards of conduct set forth in this paragraph (a) have not been met. (b) Any indemnification under paragraph (a) of this Article shall be made unless (i) the Board, acting by a majority vote of those directors who were directors at the time of the occurrence giving rise to the claim, action or proceeding involved and who are not at the time parties to such claim, action or proceeding (provided there are at least five such directors), finds that the director, officer or employee has not met the relevant standards of conduct set forth in such paragraph (a), or (ii) if there are not at least five such directors, the Corporation's principal Virginia legal counsel, as last designated by the Board as such prior to the time of the occurrence giving rise to the claim, action or proceeding involved, or in the event for any reason such Virginia counsel is unwilling to so serve, then Virginia legal counsel mutually acceptable to the Corporation and the person seeking indemnification, deliver to the Corporation their written advice that, in their opinion, such standards have not been met. (c) Expenses incurred with respect to any claim, action or proceeding of the character described in paragraph (a) shall, except as otherwise set forth in this paragraph (c), be advanced by the Corporation prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Article III. No security shall be required for such undertaking and such undertaking shall be accepted without reference to the recipient's financial ability to make repayment. Notwithstanding the foregoing, the Corporation may refrain from, or suspend, payment of expenses in advance if at any time before delivery of the final finding described in paragraph (b), the Board or Virginia legal counsel, as the case may be, acting in accordance with the procedures set forth in paragraph (b), find by a preponderance of the evidence then available that the officer, director or employee has not met the relevant standards of conduct set forth in paragraph (a). (d) No amendment or repeal of this Article III shall adversely affect or deny to any director, officer or employee the rights of indemnification provided in this Article III with respect to any liability or expense arising out of a claim, action or proceeding based in whole or substantial part on an occurrence the inception of which takes place before or while this Article III, as adopted by the shareholders of the Corporation at the 1986 Annual Meeting of the Corporation, is in effect. The provisions of this paragraph (d) shall apply to any such claim, action or proceeding whenever commenced, including any such claim, action or proceeding commenced after any amendment or repeal to this Article III. -6- (e) The rights of indemnification provided in this Article III shall be in addition to any rights to which any such director, officer or employee may otherwise be entitled by contraction or as a matter of law. (f) In any proceeding brought by or in the right of the Corporation or brought by or on behalf of shareholders of the Corporation, no director or officer of the Corporation shall be liable to the Corporation or its shareholders for monetary damages with respect to any transaction, occurrence or course of conduct, whether prior or subsequent to the effective date of this Article lll, except for liability resulting from such person's having engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law. (g) An amendment to this Article iii shall be approved only by a majority of the votes entitled to be cast by each voting group entitled to vote thereon. ARTICLE IV. COMMITTEES. SECTION 1. Executive and Finance Committee. The Board may, by resolution or -------------------------------- resolutions adopted by a majority of the number of directors fixed by these By- laws, appoint two or more directors to constitute an Executive and Finance Committee, each member of which shall serve as such during the pleasure of the Board, and may designate for such Committee a Chairman, who shall continue as such during the pleasure of the Board. All completed action by the Executive and Finance Committee shall be reported to the Board at its meeting next succeeding such action or at its meeting held in the month following the taking of such action, and shall be subject to revision or alteration by the Board; provided, that no acts or rights of third parties shall be affected by any such revision or alteration. The Executive and Finance Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board. At all meetings of the Executive and Finance Committee, a majority of the full number of members of such Committee shall constitute a quorum, and in every case the affirmative vote of a majority of members present at any meeting of the Executive and Finance Committee at which a quorum is present shall be necessary for the adoption of any resolution. During the intervals between the meetings of the Board, the Executive and Finance Committee shall possess and may exercise all the power and authority of the Board (including, without limitation, all the power and authority of the Board in the management, control and direction of the financial affairs of the Corporation) except with respect to those matters reserved to the Board by Virginia law, in such manner as the Executive and Finance Committee shall deem best for the interests of the Corporation, in all cases in which specific directions shall not have been given by the Board. -7- SECTION 2. Other Committees. To the extent permitted by law, the Board may ---------------- from time to time by resolution adopted by a majority of the number of directors fixed by these By-laws create such other committees of directors, officers, employees or other persons designated by it as the Board shall deem advisable and with such limited authority, functions and duties as the Board shall by resolution prescribe. The Board shall have the power to change the members of any such committee at any time, to fill vacancies, and to discharge any such committee, either with or without cause, at any time. ARTICLE V. OFFICERS. SECTION 1. Number. Term. Election. The officers of the Corporation shall be ---------------------- a Chief Executive Officer, a Chairman of the Board, a President, one or more Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may appoint such other officers and such assistant officers and agents with such powers and duties as the Board may find necessary or convenient to carry on the business of the Corporation. Such officers and assistant officers shall serve until their successors shall be chosen, or as otherwise provided in these By- laws. Any two or more offices may be held by the same person. SECTION 2. Chief Executive Officer. The Chief Executive Officer shall, ----------------------- subject to the control of the Board and the Executive and Finance Committee, have full authority and responsibility for directing the conduct of the business, affairs and operations of the Corporation. In addition to acting as Chief Executive Officer of the Corporation, he shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board and shall see that all orders and resolutions of the Board and the Executive and Finance Committee are carried into effect. In the event of the inability of the Chief Executive Officer to act, the Board will designate an officer of the Corporation to perform the duties of that office. SECTION 3. Chairman of the Board. The Chairman of the Board shall preside --------------------- at all meetings of the Board and of the shareholders and, in the absence of the Chairman of the Executive and Finance Committee, at all meetings of the Executive and Finance Committee. He shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board or, if he shall not be the Chief Executive Officer, by the Chief Executive Officer. SECTION 4. President. The President shall have such powers and perform such --------- duties as may from time to time be prescribed by the Board or, if he shall not be the Chief Executive Officer, by the Chief Executive Officer. SECTION 5. Vice Presidents. Each Vice President shall have such powers and --------------- perform such duties as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. -8- SECTION 6. Treasurer. The Treasurer shall have the general care and custody --------- of the funds and securities of the Corporation. He shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. If the Board shall so determine, he shall give a bond for the faithful performance of his duties, in such sum as the Board may determine to be proper, the expense of which shall be borne by the Corporation. To such extent as the Board shall deem proper, the duties of the Treasurer may be performed by one or more assistants, to be appointed by the Board. SECTION 7. Controller. The Controller shall be the accounting officer of the ---------- Corporation. He shall keep full and accurate accounts of all assets, liabilities, receipts and disbursements and other transactions of the Corporation and cause regular audits of the books and records of the Corporation to be made. He shall also perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. If the Board shall so determine, he shall give a bond for the faithful performance of his duties, in such sum as the Board may determine to be proper, the expense of which shall be borne by the Corporation. To such extent as the Board shall deem proper, the duties of the Controller may be performed by one or more assistants, to be appointed by the Board. SECTION 8. Secretary. The Secretary shall keep the minutes of meetings of --------- shareholders, of the Board, and, when requested, of Committees of the Board; and he shall attend to the giving and serving of notices of all meetings thereof. He shall keep or cause to be kept such stock and other books, showing the names of the shareholders of the Corporation, and all other particulars regarding them, as may be required by law. He shall also perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. To such extent as the Board shall deem proper, the duties of the Secretary may be performed by one or more assistants, to be appointed by the Board. ARTICLE VI. REMOVALS, RESIGNATIONS AND VACANCIES SECTION 1. Removal of Directors. Any director may be removed at any time but -------------------- only with cause, by the affirmative vote of the holders of record of a majority of the shares of the Corporation entitled to vote on the election of directors, given at a special meeting of the shareholders called expressly for the purpose. SECTION 2. Removal of Officers. Any officer, assistant officer or agent of ------------------- the Corporation may be removed at any time, either with or without cause, by the Board in its absolute discretion. Any such removal shall be without prejudice to the recovery of damages for breach of the contract rights, if any, of the officer, assistant officer or agent removed. Election or appointment of an officer, assistant officer or agent shall not of itself create contract rights. -9- SECTION 3. Resignation. Any director, officer or assistant officer of the ----------- Corporation may resign as such at any time by giving written notice of his resignation to the Board, the Chief Executive Officer or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein or, if no time is specified therein, at the time of delivery thereof, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 4. Vacancies. Any vacancy in the Board caused by death, resignation, --------- disqualification, removal, an increase in the number of directors, or any other cause, may be filled (a) by the holders of shares of the Corporation entitled to vote on the election of directors, but only at an annual meeting of shareholders, or (b) by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board at any regular or special meeting thereof. Each director so elected by the Board shall hold office until the next annual election of directors, and each director so elected by the shareholders shall hold office for a term expiring at the annual meeting of shareholders at which the term of the class to which he has been elected expires, and, in each case, until his successor shall be elected, or until his death, or until he shall resign, or until he shall have been removed in the manner hereinabove provided. Any vacancy in the office of any officer or assistant officer caused by death, resignation, removal or any other cause, may be filled by the Board for the unexpired portion of the term. ARTICLE VII. CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC. SECTION 1. Execution of Contracts. Except as otherwise provided by law or by ---------------------- these By-laws, the Board (i) may authorize any officer, employee or agent of the Corporation to execute and deliver any contract, agreement or other instrument in writing in the name and on behalf of the Corporation, and (ii) may authorize any officer, employee or agent of the Corporation so authorized by the Board to delegate such authority by written instrument to other officers, employees or agents of the Corporation. Any such authorization by the Board may be general or specific and shall be subject to such limitations and restrictions as may be imposed by the Board. Any such delegation of authority by an officer, employee or agent may be general or specific, may authorize re-delegation, and shall be subject to such limitations and restrictions as may be imposed in the written instrument of delegation by the person making such delegation. SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation ----- and no negotiable paper shall be issued in its name unless authorized by the Board. When authorized by the Board, any officer, employee or agent of the Corporation may effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidences of indebtedness of the Corporation and when so authorized may pledge, hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. Such authority may be general or confined to specific instances. -10- SECTION 3. Checks. Drafts. etc. All checks, drafts and other orders for the ------------------- payment of money out of the funds of the Corporation and all notes or other evidences of indebtedness of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by the Board. SECTION 4. Deposits. All funds of the Corporation not otherwise employed -------- shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board may select or as may be selected by the Treasurer or any other officer, employee or agent of the Corporation to whom such power may from time to time be delegated by the Board. SECTION 5. Voting of Securities. Unless otherwise provided by the Board, the -------------------- Chief Executive Officer may from time to time appoint an attorney or attorneys, or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as such officer may deem necessary or proper in the premises. ARTICLE VIII. CAPITAL STOCK. SECTION 1. Certificates. Every shareholder shall be entitled to a ------------ certificate, or certificates, in such form as shall be approved by the Board, signed by the Chairman of the Board, the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer or any other officer authorized by these By-laws or a resolution of the Board, certifying the number of shares owned by him in the Corporation. Any such certificate may, but need not, bear the seal of the Corporation or a facsimile thereof. If any such certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation or an employee of the Corporation, the signatures of any of the officers above specified upon such certificate may be facsimiles. In case any such officer who shall have signed or whose facsimile signature shall have been placed upon such certificate shall have ceased to be such before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer had not ceased to be such at the date of its issue. SECTION 2. Transfers. Shares of stock of the Corporation shall be --------- transferable on the stock books of the Corporation by the holder in person or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or the transfer -11- agent, but, except as hereinafter provided in the case of loss, destruction or mutilation of certificates, no transfer of stock shall be entered until the previous certificate, if any, given for the same shall have been surrendered and cancelled. Except as otherwise provided by law, no transfer of shares shall be valid as against the Corporation, its shareholders or creditors, for any purpose, until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. The Board may also make such additional rules and regulations as it may deem expedient concerning the issue and transfer of certificates representing shares of the capital stock of the Corporation. SECTION 3. Record Date. For the purpose of determining shareholders entitled ----------- to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. SECTION 4. Lost. Destroyed or Mutilated Certificates. In case of loss, ----------------------------------------- destruction or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, destruction or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. SECTION 5. Restrictions on Transfer. To the extent that the Rights Agreement ------------------------ dated as of February 27, 1986, between the Corporation and Manufacturers Hanover Trust Company may be deemed to impose restrictions on the transfer of securities of the Corporation, such restrictions are hereby authorized. ARTICLE IX. INSPECTION OF RECORDS. The Board from time to time shall determine whether, to what extent, at what times and places, and under what conditions and regulations the accounts and books and papers of the Corporation, or any of them, shall be open for the inspection of the shareholders, and no shareholder shall have any right to inspect any account or book or paper of the Corporation except as expressly conferred by statute or by these By-laws or authorized by the Board. -12- ARTICLE X. AUDITOR. The Board shall annually appoint an independent accountant who shall carefully examine the books of the Corporation. One such examination shall be made immediately after the close of the fiscal year and be ready for presentation at the annual meeting of shareholders of the Corporation, and such other examinations shall be made as the Board may direct. ARTICLE XI. SEAL. The seal of the Corporation shall be circular in form and shall bear the name of the Corporation and the year "1892." ARTICLE XII. FISCAL YEAR. The fiscal year of the Corporation shall end on the 3lst day of December in each year. ARTICLE XIII. AMENDMENTS. The By-laws of the Corporation may be altered, amended or repealed and new By-laws may be adopted by the Board (except as Section 1 of Article II may otherwise require), or by the holders of the outstanding shares of the Corporation entitled to vote generally at any annual or special meeting of the shareholders when notice thereof shall have been given in the notice of the meeting of shareholders. EMERGENCY BY-LAWS. SECTION 1. Definitions. As used in these Emergency By-laws, (a) the term "period of emergency" shall mean any period during which a quorum of the Board cannot readily be assembled because of some catastrophic event. (b) the term "incapacitated" shall mean that the individual to whom such term is applied shall not have been determined to be dead but shall be missing or unable to discharge the responsibilities of his office; and -13- (c) the term "senior officer" shall mean the Chairman of the Board, the President, any corporate Vice President, the Treasurer, the Controller and the Secretary, and any other person who may have been so designated by the Board before the emergency. SECTION 2. Applicability. These Emergency By-laws, as from time to time ------------- amended, shall be operative only during any period of emergency. To the extent not inconsistent with these Emergency By-laws, all provisions of the regular By- laws of the Corporation shall remain in effect during any period of emergency. No officer, director or employee shall be liable for actions taken in good faith in accordance with these Emergency By-laws. SECTION 3. Board of Directors. (a) A meeting of the Board may be called by ------------------ any director or senior officer of the Corporation. Notice of any meeting of the Board need be given only to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publication or radio, and at a time less than twenty-four hours before the meeting if deemed necessary by the person giving notice. (b) At any meeting of the Board, three directors in attendance shall constitute a quorum. Any act of a majority of the directors present at a meeting at which a quorum shall be present shall be the act of the Board. If less than three directors should be present at a meeting of the Board, any senior officer of the Corporation in attendance at such meeting shall serve as a director for such meeting, selected in order of rank and within the same rank in order of seniority. (c) In addition to the Board's powers under the regular By-laws of the Corporation to fill vacancies on the Board, the Board may elect any individual as a director to replace any director who may be incapacitated and to serve until the latter ceases to be incapacitated or until the termination of the period of emergency, whichever first occurs. In considering officers of the Corporation for election to the Board, the rank and seniority of individual officers shall not be pertinent. (d) The Board, during as well as before any such emergency, may change the principal office or designate several alternative offices or authorize the officers to do so. SECTION 4. Appointment of Officers. In addition to the Board's powers under ----------------------- the regular By-laws of the Corporation with respect to the election of officers, the Board may elect any individual as an officer to replace any officer who may be incapacitated and to serve until the latter ceases to be incapacitated. SECTION 5. Amendments. These Emergency By-laws shall be subject to repeal or ---------- change by further action of the Board of Directors or by action of the shareholders, except that no such repeal or change shall modify the provisions of the second paragraph of Section 2 with regard to action or inaction prior to the time of such repeal or change. Any such amendment of these Emergency By-laws may make any further or different provision that may be practical and necessary for the circumstances of the emergency. -14- EX-10 3 COMPENSATION PLAN EXHIBIT 10 OLIN SENIOR MANAGEMENT INCENTIVE COMPENSATION PLAN (As Amended through April 27, 1995) Section 1. Purpose. The purposes of the Olin Senior Management Incentive Compensation Plan (the "Plan") are (i) to compensate certain members of senior management of Olin Corporation (the "Company") on an individual basis for significant contributions to the Company and its subsidiaries and (ii) to stimulate the efforts of such members by giving them a direct financial interest in the performance of the Company. Section 2. Definitions. The following terms utilized in this Plan shall have the following meanings: "Cash Flow" shall mean consolidated net income of the Company, before the after-tax effect of any special charge or gain or cumulative effect of any change in accounting, plus depreciation and amortization, less capital and investment spending and plus or minus changes in working capital. "Committee" shall mean the Compensation and Stock Option Committee of the Board of Directors of the Company or such other committee of such Board as such Board may from time to time designate. "Consolidated Net Assets" shall mean consolidated total assets of the Company less total non-interest bearing liabilities. "Earnings Per Share" shall mean for a fiscal year consolidated net income of the Company before the after-tax effect of any special charge or gain or cumulative effect of a change in accounting, less ESOP preferred dividends, divided by the weighted average number of shares of common stock outstanding plus an equivalent number (one for one) of shares of Common Stock assuming the conversion of the Series A Preferred Stock. "Economic Value Added" means the Company's consolidated sales less its operating costs (including tax) less a capital charge based on the Company's cost of capital on assets employed in the business. "Participant" shall mean for a fiscal year each salaried employee who is designated as a Participant by the Committee prior to the commencement of such fiscal year (or such later date, if any, as permitted by Section 162(m)); provided for 1994, the Committee shall designate the Participants prior to April 1, 1994. "Performance Measures" shall mean for a fiscal year Pre-Tax Profit and Earnings Per Share; provided that the Committee may in lieu of, or in addition to, Pre-Tax Profit and/or Earnings Per Share designate one or more of the following as additional, alternative or substitute Performance Measures: Cash Flow, Economic Value Added, ROE, Return on Capital and RONA provided such designation would not subject any Incentive Award to Section 162(m). "Pre-Tax Profit" shall mean for a fiscal year the consolidated income before taxes of the Company, before any special charges or gains. "Return on Capital" shall mean consolidated net income of the Company plus after-tax interest expense and the after-tax effect of any special charge or gain and any cumulative effect of a change in accounting, divided by average Consolidated Net Assets. "ROE" shall mean consolidated net income of the Company before the after-tax effect of any special charge or gain and any cumulative effect of any change in accounting, divided by average shareholders' equity. "RONA" shall mean Pre-tax Profit before interest expense divided by average Consolidated Net Assets. "Section 162(m)" shall mean Section 162(m) of the Internal Revenue Code of 1986, and the regulations promulgated thereunder, all as amended from time to time. Section 3. Term. The Plan shall be effective as of January 1, 1994 (the "Effective Date"), and shall be applicable for all future fiscal years of the Company unless amended or terminated by the Company pursuant to Section 7. Section 4. Incentive Award. 4.1 For each fiscal year of the Company, each Participant may be entitled to receive an award payable in cash ("Incentive Award") in an amount determined by the Committee as provided in this Plan. Prior to the commencement of a fiscal year (or such later date, if any, as permitted by Section 162(m)) (but in the case of the 1994 fiscal year, prior to April 1, 1994), for the Incentive Awards for such fiscal year, the Committee will designate or approve (i) the individuals who will be Participants in the Plan, if any, (ii) the Performance Measures, (iii) if there is more than one Performance Measure, the weighting of the Performance Measures in determining the Incentive Award, (iv) the performance goals and payout matrix or formula for each Performance Measure and (v) the target Incentive Award for each Participant. Following the end of a fiscal year, the Committee shall determine the Incentive Award for each Participant by: (i) comparing actual performance for each measure against the payout matrix approved for such fiscal year, (ii) multiplying the payout percentage from the payout matrix for each Performance Measure by the appropriate weighting factor, and (iii) summing the weighted payout percentages and multiplying their overall payout percentage by the Participant's target Incentive Award. Notwithstanding anything contained in this Plan to the contrary, the Committee in its sole discretion may reduce any Incentive Award to any Participant to any amount, including zero, prior to the certification by resolution of the Committee of the amount of such Incentive Award. As a condition to the right of a Participant to receive an Incentive Award, the Committee shall first certify, by resolution of the Committee, that the Incentive Award has been determined in accordance with the provisions of this Plan. Incentive Awards for a fiscal year shall be determined as soon as practicable after such fiscal year and shall be paid no later than 75 days following such fiscal year unless deferred as provided in Section 4.4 hereof. The maximum Incentive Award paid a Participant under this Plan with respect to a fiscal year may not exceed 100% of such Participant's annual base salary in effect on December 31 of the immediately preceding fiscal year. 4.2 A Participant whose employment terminates with cause or without the Committee's written consent during a fiscal year shall forfeit such Participant's Incentive Award for such fiscal year. 4.3 Incentive Awards shall be payable in a single, lump sum. However, the Committee may in its discretion elect to defer payment of any Incentive Award until such date before or after retirement as a Participant may request upon such terms and conditions as may be approved or established by the Committee in its sole judgment; provided that deferrals in the form of phantom stock shall be paid only in the form of cash and on a fixed date or dates at least six months after the grant of the Incentive Award or incident to death, retirement, disability or termination of employment. Such terms may include the payment of interest or dividend equivalents on deferred amounts. 4.4 The Company shall withhold from any Incentive Award or payments made or to be made under this Plan any amount of withholding taxes due in respect of an Incentive Award, its deferral or payment. 4.5 Participation in this Plan does not exclude Participants from participation in any other benefit or compensation plans or arrangements of the Company, including other bonus or incentive plans. Section 5. Administration and Interpretation. The Plan shall be administered by the Committee, which shall have the sole authority to make rules and regulations for the administration of the Plan. The interpretations and decisions of the Committee with regard to the Plan shall be final and conclusive. The Committee may request advice or assistance or employ such persons (including, without limitation, legal counsel and accountants) as it deems necessary for the proper administration of the Plan. Section 6. Administrative Expenses. Any expense incurred in the administration of the Plan shall be borne by the Company out of its general funds. Section 7. Amendment or Termination. The Committee of the Company may from time to time amend the Plan in any respect or terminate the Plan in whole or in part, provided that no such action shall increase the amount of any Incentive Award for which performance goals have been established but which has not yet been earned or paid: provided further that such action will not cause an Incentive Award to become subject to the deduction limitations contained in Section 162(m). Section 8. No Assignment. The rights hereunder, including without limitation rights to receive an Incentive Award, shall not be pledged, assigned, transferred, encumbered or hypothecated by an employee of the Company, and during the lifetime of any Participant any payment of an Incentive Award shall be payable only to such Participant. A Participant, however, may designate in writing at any time and from time to time one or more beneficiaries to receive the payment of any deferred Incentive Award in the event of the Participant's death; provided such designation is received by the Company prior to such death. Section 9. The Company. For purposes of this Plan, the "Company" shall include the successors and assigns of the Company, and this Plan shall be binding on any corporation or other person with which the Company is merged or consolidated. Section 10. Stockholder Approval. This Plan shall be subject to approval by a vote of the stockholders of the Company at the 1994 Annual Meeting, and such stockholder approval shall be a condition to the right of a Participant to receive any benefits hereunder. Section 11. No Right to Employment. The designation of an employee as a Participant or grant of an Incentive Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any affiliate or subsidiary. Section 12. Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Connecticut and applicable federal law. Section 13. No Trust. Neither the Plan nor any Incentive Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Participant. To the extent any Participant acquires a right to receive payments from the Company in respect to any Incentive Award, such right shall be no greater than the right of any unsecured general creditor of the Company. Section 14. Section 162(m). It is the intention of the Company that all payments made under the Plan be excluded from the deduction limitations contained in Section 162(m). Therefore, if any Plan provision is found not to be in compliance with the "performance-based" compensation exception contained in Section 162(m), that provision shall be deemed amended so that the Plan does so comply to the extent permitted by law and deemed advisable by the Committee, and in all events the Plan shall be construed in favor of its meeting the "performance-based" compensation exception contained in Section 162(m). EX-11 4 COMPUTATION PER SHARE EARNINGS Exhibit 11 OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Per Share Earnings (Unaudited) (In millions)
Three Months Primary earnings per share Ended March 31, - -------------------------- ---------------- 1995 1994 ---- ---- Primary earnings: Net income $38.4 $15.3 Less ESOP preferred dividend, net of (1.5) (1.7) tax benefit ----- ----- Net income $36.9 $13.6 ===== ===== Primary shares: Weighted average shares outstanding 24.3 19.2 Weighted average common share equivalents assuming the conversion of Series A Conversion Preferred Stock at the date of issuance - 2.7 ----- ----- Primary shares 24.3 21.9 ===== ===== Primary net income per common share $1.52 $0.62 ===== ===== Fully diluted earnings per share - -------------------------------- Fully diluted earnings: Net income $38.4 $15.3 Less additional ESOP contribution (0.7) (0.7) ----- ----- Net income $37.7 $14.6 ===== ===== Fully diluted shares: Weighted average number of common shares outstanding and common stock equivalents 24.3 21.9 Dilutive effect of ESOP preferred stock 1.5 1.6 ----- ----- Fully diluted shares 25.8 23.5 ===== ===== Fully diluted net income per common share $1.46 $0.62 ===== =====
EX-12.(A) 5 COMPUTATION OF RATIO Exhibit 12(a) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (Unaudited) (In millions)
Three Months Ended March 31, ------------------ 1995 1994 ---- ---- Earnings: Income before taxes $59.5 $23.9 Add (deduct): Income taxes of 50% owned affiliates 1.2 0.9 Equity in losses of less than 50% owned affiliates 0.9 1.3 Dividends received from less than 50% owned affiliates - 0.1 Interest capitalized, net of amortization 0.1 0.4 Fixed charges as described below 15.5 13.4 ----- ----- Total $77.2 $40.0 ===== ===== Fixed Charges: Interest expense $10.8 $9.4 Estimated interest factor in rent expense 4.7 4.0 ----- ----- Total $15.5 $13.4 ===== ===== Ratio of earnings to fixed charges 5.0 3.0 ===== =====
EX-12.(B) 6 COMPUTATION OF RATION Exhibit 12(b) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited) (In millions)
Three Months Ended March 31, ------------------ 1995 1994 ---- ---- Earnings: Income before taxes $59.5 $23.9 Add (deduct): Income taxes of 50% owned affiliates 1.2 0.9 Equity in losses of less than 50% owned affiliates 0.9 1.3 Dividends received from less than 50% owned affiliates - 0.1 Interest capitalized, net of amortization 0.1 0.4 Fixed charges as described below 15.5 13.4 ---- ---- Total $77.2 $40.0 ===== ===== Fixed Charges: Interest expense $10.8 $9.4 Estimated interest factor in rent expense 4.7 4.0 Preferred stock dividend requirement 6.8 7.1 --- --- Total $22.3 $20.5 ===== ===== Ratio of earnings to combined fixed charges and preferred stock dividends 3.5 2.0 === ===
EX-27 7 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Financial Statements contained in Item 1 of Form 10-Q for the period ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. Figures are rounded to the nearest 100,000 (except EPS). 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 5,400 0 508,700 0 412,400 998,000 2,539,200 (1,658,200) 2,143,100 705,600 422,700 24,300 0 84,300 661,300 2,143,100 766,100 766,100 613,000 613,000 0 0 10,300 59,500 21,100 38,400 0 0 0 38,400 1.52 1.46
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