-----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, WOuGkpWJkZfCD87fVFkv5V3W7MVUmowUB98Cw35JmaVtE4rC0LUnb0L1qR2yveAo /Jr7sL3vYJPUjKm2NAYrDQ== 0000801898-98-000027.txt : 19980616 0000801898-98-000027.hdr.sgml : 19980616 ACCESSION NUMBER: 0000801898-98-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980615 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARNISCHFEGER INDUSTRIES INC CENTRAL INDEX KEY: 0000801898 STANDARD INDUSTRIAL CLASSIFICATION: MINING MACHINERY & EQUIP (NO OIL & GAS FIELD MACH & EQUIP) [3532] IRS NUMBER: 391566457 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09299 FILM NUMBER: 98648419 BUSINESS ADDRESS: STREET 1: 3600 SOUTH LAKE DRIVE CITY: ST FRANCIS STATE: WI ZIP: 53235-3716 BUSINESS PHONE: 4144866400 MAIL ADDRESS: STREET 1: 3600 SOUTH LAKE DRIVE CITY: ST FRANCIS STATE: WI ZIP: 53235 10-Q 1 SECURITIES AND EXCHANGE COMMISSION ---------------------------------- Washington, D.C. 20549 FORM 10-Q ---------- (MARK ONE) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) - -- OF THE SECURITIES EXCHANGE ACT OF 1934 X FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1998 - -- -------------- 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 1-9299 ----------------------------- HARNISCHFEGER INDUSTRIES, INC. ------------------------------ (Exact Name of Registrant as Specified in Its Charter) Delaware 39-1566457 - --------------------------- ---------------- (State of Incorporation) (I.R.S. Employer Identification No.) 3600 South Lake Drive, St. Francis, Wisconsin - ------------------------------------------- (Address of principal executive offices) 53235-3716 - ---------- (Zip Code) (414)486-6400 - ------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Indicate by checkmark 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at June 12, 1998 - ------------- ---------------------------------- Common Stock, $1 par value 47,770,222 shares HARNISCHFEGER INDUSTRIES, INC. ------------------------------ FORM 10-Q ----------- April 30, 1998 -------------- INDEX ------ Page No. -------- PART I. Financial Information: Consolidated Statement of Income - 1 Three and Six Months Ended April 30, 1998 and 1997 and Three Months Ended January 31, 1998 Consolidated Balance Sheet - 2-3 April 30, 1998 and October 31, 1997 Consolidated Statement of Cash Flows - 4 Six Months Ended April 30, 1998 and 1997 Consolidated Statement of Shareholders' Equity - 5 Six Months Ended April 30, 1998 and 1997 Notes to Consolidated Financial Statements 6-12 Management's Discussion and Analysis of Results of Operations and Financial Condition 13-19 PART II. Other Information 19-21 Signatures 22 PART I. FINANCIAL INFORMATION ------------------------------
HARNISCHFEGER INDUSTRIES, INC. ------------------------------ CONSOLIDATED STATEMENT OF INCOME --------------------------------- (Amounts in thousands except per share amounts) (Unaudited) Three Months Ended January 31, 1998 ------------------ Restated -------- Revenues Net Sales $557,844 Other Income 10,010 -------- 567,854 Cost of Sales, including anticipated losses on contracts 504,600 Product Development, Selling and Administrative Expenses 97,837 Restructuring Charge - -------- Operating Income (Loss) (34,583) Interest Expense - Net (18,295) --------- Income (Loss) Before (Provision) Benefit For Income Taxes and Minority Interest (52,878) (Provision) Benefit for Income Taxes 17,983 Minority Interest 9,924 --------- Income (Loss) from Continuing Operations (24,971) Income from Discontinued Operation, net of applicable income taxes 3,404 in on Sale of Discontinued Operation, net of applicable income taxes - --------- Net Income (Loss) $(21,567) ========= Earnings Per Share-Basic Income (loss) from continuing operations $ (0.53) Income from and net gain on sale of discontinued operation 0.07 --------- Net Income (Loss) $ (0.46) ========= Earnings Per Share-Diluted Income (loss) from continuing operations $ (0.53) Income from and net gain on sale of discontinued operation 0.07 --------- Net Income (Loss) $ (0.46) =========
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------- CONSOLIDATED STATEMENT OF INCOME - --------------------------------- (Amounts in thousands except per share amounts) (Unaudited) Three Months Ended April 30, --- -------------------- 1998 1997 --------- --------- Revenues Net Sales $477,839 $697,506 Other Income 750 12,190 -------- -------- 478,589 709,696 Cost of Sales, including anticipated losses on contracts 434,854 531,982 Product Development, Selling and Administrative Expenses 115,173 96,796 Restructuring Charge 65,000 - ---------- -------- Operating Income (Loss) (136,438) 80,918 Interest Expense - Net (19,802) (17,736) ---------- -------- Income (Loss) Before (Provision) Benefit For Income Taxes and Minority Interest (156,240) 63,182 (Provision) Benefit for Income Taxes 63,717 (22,093) Minority Interest 19,697 (2,961) ---------- --------- Income (Loss) from Continuing Operations (72,826) 38,128 Income from Discontinued Operation, net of applicable income taxes 972 6,843 Gain on Sale of Discontinued Operation, net of applicable income taxes 151,500 - --------- --------- Net Income (Loss) $ 79,646 $ 44,971 ========= ========= Earnings Per Share-Basic Income (loss) from continuing operations $ (1.57) $ 0.80 Income from and net gain on sale of discontinued operation 3.28 0.14 --------- -------- Net Income (Loss) $ 1.71 $ 0.94 ========= ======== Earnings Per Share-Diluted Income (loss) from continuing operations $ (1.57) $ 0.80 Income from and net gain on sale of discontinued operation 3.28 0.14 -------- -------- Net Income (Loss) $ 1.71 $ 0.93 ========= ========
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CONSOLIDATED STATEMENT OF INCOME - --------------------------------- (Amounts in thousands except per share amounts) (Unaudited) Six Months Ended April 30, ---------------------- 1998 1997 -------- ----------- Revenues Net Sales $1,035,683 $1,316,935 Other Income 10,760 19,574 ---------- -------- 1,046,443 1,336,509 Cost of Sales, including anticipated losses on contracts 939,454 998,827 Product Development, Selling and Administrative Expenses 213,010 196,460 Restructuring Charge 65,000 - ---------- -------- Operating Income (Loss) (171,021) 141,222 Interest Expense - Net (38,097) (34,012) ----------- -------- Income (Loss) Before (Provision) Benefit For Income Taxes and Minority Interest (209,118) 107,210 (Provision) Benefit for Income Taxes 81,700 (37,502) Minority Interest 29,621 (5,248) ---------- --------- Income (Loss) from Continuing Operations (97,797) 64,460 Income from Discontinued Operation, net of applicable income taxes 4,376 11,369 Gain on Sale of Discontinued Operation, net of applicable income taxes 151,500 - --------- -------- Net Income (Loss) $ 58,079 $75,829 ========= ======== Earnings Per Share-Basic Income (loss) from continuing operations $ (2.10) $ 1.35 Income from and net gain on sale of discontinued operation 3.35 0.24 --------- ------- Net Income (Loss) 1.25 $ 1.59 ========= ======= Earnings Per Share-Diluted Income (loss) from continuing operations $ (2.10) $ 1.34 Income from and net gain on sale of discontinued operation 3.35 0.23 --------- -------- Net Income (Loss) $ 1.25 $ 1.57 ========= ========
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------- CONSOLIDATED BALANCE SHEET - ------------------------------ (Dollar amounts in thousands) April 30, October 31, 1998 1997 ------------ ------------- (Unaudited) Assets Current Assets: Cash and cash equivalents $ 9,537 $ 29,383 Accounts receivable-net 779,655 836,169 Inventories 612,420 594,761 Other current assets 172,083 119,076 Businesses held for sale 10,128 9,323 ----------- ----------- 1,583,823 1,588,712 Property, Plant and Equipment: Land and improvements 57,286 60,724 Buildings 274,607 293,501 Machinery and equipment 778,934 821,479 ----------- ----------- 1,110,827 1,175,704 Accumulated depreciation (506,434) (518,604) ----------- ----------- 604,393 657,100 Investments and Other Assets: Goodwill 448,386 508,634 Intangible assets 28,162 33,027 Other assets 181,123 137,062 ------------ ----------- 657,671 678,723 ----------- ----------- $2,845,887 $2,924,535 =========== ===========
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CONSOLIDATED BALANCE SHEET - -------------------------- (Dollar amounts in thousands) April 30, October 31, 1998 1997 -------------------------- (Unaudited) Liabilities and Shareholders' Equity Current Liabilities: Short-term notes payable, including current portion of long-term obligations $ 133,905 $ 225,853 Trade accounts payable 366,847 460,689 Employee compensation and benefits 102,500 132,268 Advance payments and progress billings 104,856 85,680 Accrued warranties 52,778 47,753 Other current liabilities 342,039 228,254 ----------- ----------- 1,102,925 1,180,497 Long-term Obligations 736,004 713,466 Other Liabilities: Liability for postretirement benefits 45,412 56,202 Accrued pension costs 36,543 36,707 Other liabilities 13,025 11,608 Deferred income taxes 76,004 78,671 ---------- ----------- 170,984 183,188 Minority Interest 67,410 97,724 Shareholders' Equity: Common stock (51,629,428 and 51,607,172 shares issued, respectively) 51,629 51,607 Capital in excess of par value 612,426 625,358 Retained earnings 302,234 253,727 Cumulative translation adjustments (47,178) (41,440) Less: Stock Employee Compensation Trust (1,433,147 and 1,433,147 shares, respectively) at market (40,486) (56,430) Treasury stock ( 3,881,154 and 3,127,697 shares, respectively) at cost (110,061) (83,162) ----------- ----------- 768,564 749,660 ----------- ----------- $2,845,887 $2,924,535 =========== ===========
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CONSOLIDATED STATEMENT OF CASH FLOWS - ------------------------------------ (Dollar amounts in thousands) (Unaudited) Six Months Ended April 30, 1998 1997 -------- ----------- Operating Activities Net income $ 58,079 $ 75,829 Add (deduct) - Items not affecting cash: Income from discontinued operation (4,376) (11,369) Gain on sale of discontinued operation (151,500) - Restructuring charge 65,000 - Depreciation and amortization 41,836 45,615 Minority interest, net of dividends paid (29,621) 5,142 Prepaid/deferred income taxes-net (92,858) 14,291 Other - net (6,772) (12,404) Changes in working capital, exclusive of acquisitions and divestitures of businesses (Increase) in accounts receivable - net (41,107) (130,613) (Increase) in inventories (72,445) (46,414) (Increase) in other current assets (14,427) (19,652) (Decrease) increase in trade accounts payable (56,994) 94,725 (Decrease) in employee compensation and benefits (17,292) (17,966) Increase in advance payments and progress billings 31,943 8,317 Increase (decrease) in other current liabilities 16,534 (34,021) --------- ---------- Net cash (applied to) operating activities (274,000) (28,520) --------- ---------- Investment and Other Transactions Acquisitions, net of cash acquired (40,283) (5,325) Proceeds from sale of Material Handling 341,000 - Proceeds from sale of J&L Fiber Services 109,445 - Net proceeds from sale of non-core Dobson Park businesses - 9,585 Proceeds from sale of New Philadelphia Fan Co. - 18,051 Property, plant and equipment acquired (59,191) (79,220) Property, plant and equipment retired 12,870 22,796 Other - net (9,168) (9,297) ----------- ---------- Net cash provided by (applied to) investment and other transactions 354,673 (43,410) ----------- ---------- Financing Activities Dividends paid (9,285) (9,575) Exercise of stock options 454 3,152 Purchase of treasury stock (30,086) - Issuance of long-term obligations less discount 65,218 150,122 Redemption of long-term obligations (40,636) (43,075) (Decrease) in short-term notes payable (86,472) (18,950) ---------- ---------- Net cash (applied to) provided by financing activities (100,807) 81,674 ---------- ---------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 288 (1,302) ---------- ---------- (Decrease) Increase in Cash and Cash Equivalents (19,846) 8,442 Cash and Cash Equivalents at Beginning of Period 29,383 36,936 --------- ----------- Cash and Cash Equivalents at End of Period $ 9,537 $ 45,378 ========= =========
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - ---------------------------------------------- (Dollar amounts in thousands) (Unaudited) Capital in Common Excess of Stock Par Value -------- ----------- Six Months Ended April 30, 1998 Balance at October 31, 1997 $51,607 $625,358 Net income Translation adjustments Exercise of 22,256 stock options 22 432 Dividends paid ($.20 per share) Dividends on shares held by SECT 287 Adjust SECT shares to market value (15,944) 113,043 shares purchased by employee and director benefit plans 1,944 866,500 shares acquired as treasury stock Amortization of unearned compensation on restricted stock 349 -------- ---------- Balance at April 30, 1998 $51,629 $612,426 ======== ========== Six Months Ended April 30, 1997 Balance at October 31, 1996 $51,407 $615,089 Net income Translation adjustments Exercise of 156,307 stock options 55 1,117 Dividends paid ($.20 per share) Dividends on shares held by SECT 292 Adjust SECT shares to market value 275 209,373 shares purchased by employee and director benefit plans 4,581 Amortization of unearned compensation on issuance of restricted stock 406 -------- --------- Balance at April 30, 1997 $51,462 $621,760 See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - ---------------------------------------------- (Dollar amounts in thousands) (Unaudited) Cumulative Retained Translation Earnings Adjustments --------- ------------ Six Months Ended April 30, 1998 Balance at October 31, 1997 $253,727 $(41,440) Net income 58,079 Translation adjustments (5,738) Exercise of 22,256 stock options Dividends paid ($.20 per share) (9,572) Dividends on shares held by SECT Adjust SECT shares to market value 113,043 shares purchased by employee and director benefit plans 866,500 shares acquired as treasury stock Amortization of unearned compensation on restricted stock -------- --------- Balance at April 30, 1998 $302,234 $(47,178) ======== ========= Six Months Ended April 30, 1997 - -------------------------------- Balance at October 31, $148,175 $(37,584) Net income 75,829 Translation adjustments 8,194 Exercise of 156,307 stock options Dividends paid ($.20 per share) (9,867) Dividends on shares held by SECT Adjust SECT shares to market value 209,373 shares purchased by employee and director benefit plans Amortization of unearned compensation on issuance of restricted stock --------- --------- Balance at April 30, 1997 $214,137 $(29,390) ========= =========
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - ---------------------------------------------- (Dollar amounts in thousands) (Unaudited) Treasury SECT Stock ---------- ------------- Six Months Ended April 30, 1998 Balance at October 31, 1997 $(56,430) $(83,162) Net income Translation adjustments Exercise of 22,256 stock options Dividends paid ($.20 per share) Dividends on shares held by SECT Adjust SECT shares to market value 15,944 113,043 shares purchased by employee and director benefit plans 3,187 866,500 shares acquired as treasury stock (30,086) Amortization of unearned compensation on restricted stock -------- ----------- Balance at April 30, 1998 $(40,486) $(110,061) ========= =========== Six Months Ended April 30, 1997 Balance at October 31, $(61,360) $(42,242) Net income Translation adjustments Exercise of 156,307 stock options 1,980 Dividends paid ($.20 per share) Dividends on shares held by SECT Adjust SECT shares to market value (275) 209,373 shares purchased by employee and director benefit plans 3,888 Amortization of unearned compensation on issuance of restricted stock ---------- ----------- Balance at April 30, 1997 $(59,655) $(38,354) ========== =========== See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - ---------------------------------------------- (Dollar amounts in thousands) (Unaudited) Total -------- Six Months Ended April 30, 1998 - ------------------------------- Balance at October 31, 1997 $749,660 Net income 58,079 Translation adjustments (5,738) Exercise of 22,256 stock options 454 Dividends paid ($.20 per share) (9,572) Dividends on shares held by SECT 287 Adjust SECT shares to market value - 113,043 shares purchased by employee and director benefit plans 5,131 866,500 shares acquired as treasury stock (30,086) Amortization of unearned compensation on restricted stock 349 ------- Balance at April 30, 1998 $768,564 ========= Six Months Ended April 30, 1997 Balance at October 31, $673,485 Net income 75,829 Translation adjustments 8,194 Exercise of 156,307 stock options 3,152 Dividends paid ($.20 per share) (9,867) Dividends on shares held by SECT 292 Adjust SECT shares to market value - 209,373 shares purchased by employee and director benefit plans 8,469 Amortization of unearned compensation on issuance of restricted stock 406 -------- Balance at April 30, 1997 $759,960 =========
See accompanying notes to financial statements. HARNISCHFEGER INDUSTRIES, INC. - ------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------- April 30, 1998 --------------- (Amounts in thousands unless indicated) (a)Basis of Presentation --------------------- In the opinion of management, all adjustments necessary for the fair presentation of the results of operations for the three and six months ended April 30, 1998 and 1997, cash flows for the six months ended April 30, 1998 and 1997, and financial position at April 30, 1998 have been made. All adjustments made are of a normal recurring nature except for the Company's Beloit Corporation ("Beloit") anticipated losses associated with Indonesian contracts discussed in note (k) Beloit Anticipated Losses ------------------------- on Contracts. See note (b) Aquisitions/Divestitures for ------------ ------------------------ discussions regarding acquisitions/divestitures. The results of operations for the three months ended January 31, 1998 are included for information purposes and reflect Material Handling as a discontinued operation. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Harnischfeger Industries, Inc. amended and restated Annual Report on Form 10-K/A for the year ended October 31, 1997. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. (b) Acquisitions/Divestitures -------------------------- On March 30, 1998, the Company completed the sale of approximately 80% of the common stock of the Company's P&H Material Handling ("Material Handling") segment to Chartwell Investments, Inc. in a leveraged recapitalization transaction. As such, the accompanying financial statements have been reclassified to reflect Material Handling as a discontinued operation. The Company retained approximately 20% of the outstanding common stock and 11% of the outstanding voting securities of Material Handling and will hold one Board of Director seat for Material Handling. In addition, the Company has licensed Material Handling to use the "P&H" trademark on existing Material Handling produced products on a worldwide basis for periods specified in the agreement for a royalty fee payable over a ten year period. The Company reported a $151,500 after-tax gain on the sale of this discontinued operation in the second quarter of fiscal 1998. Proceeds consisted of $341,000 in cash and $4,800 in preferred stock with a 12.25% PIK dividend; $7,200 in common stock was not reflected in the Company's balance sheet or gain calculations due to the nature of the leveraged recapitalization transaction. Taxes on the sale amounted to $45,000. Net assets disposed of in the sale aggregated $139,300. Sales and operating profit of Material Handling for the five months ended March 30, 1998 were $130,546 and $7,447, respectively. Sales and operating profit for the six months ended April 30, 1997 were $177,054 and $17,651, respectively. On March 19, 1998, the Company completed the acquisition of Horsburgh & Scott ("H&S") for a purchase price of $40,283. H&S is a manufacturer of gears and gear cases, and is also involved in the distribution of parts and service to the mining industry. The acquisition will be accounted for as a purchase transaction, with the purchase price to be allocated to the fair value of specific assets acquired and liabilities assumed. It is expected that much of the purchase price will be allocated to goodwill and to fixed assets, with resultant goodwill to be amortized over 40 years. The allocation is expected to be completed prior to the end of the fiscal year. At April 30, 1998, the purchase price was included in Other Assets in the Consolidated Balance Sheet. In 1996, the Company completed the acquisition of Dobson Park Industries plc ("Dobson") for a purchase price of approximately $330,000 including acquisition costs, plus the assumption of net debt of approximately $40,000. The Company is fully integrating Longwall's (the main subsidiary of Dobson) operations into its wholly owned subsidiary, Joy Technologies Inc. ("Joy"); thus enabling Joy to offer integrated underground longwall mining systems to the worldwide mining industry. As a result of this integration, the Company has established purchase accounting reserves to provide for the estimated costs of this effort. The reserves related primarily to the closure of selected manufacturing and service facilities, severance and relocation costs approximated $71,000. As of April 30, 1998, approximately $49,600 of these reserves had been used. It is anticipated that the remaining reserves will be substantially utilized in fiscal 1998. (c) Restructuring Charge -------------------- In the second quarter of fiscal 1998, the Company's Beloit Corporation subsidiary recorded a $65,000 restructuring charge ($31,900 after tax and minority interest). The charge includes costs related to severance for approximately 1,000 people worldwide, facility closures, and disposal of machinery and equipment. The restructuring plans call for the closure of a pulping- related manufacturing facility in Sherbrooke, Quebec, Canada. The paper-related manufacturing facility in the United Kingdom is being converted to a Center of Excellence responsible for rolls, while the Italian operation is being converted from a full-line manufacturing operation to a Millpro aftermarket center for central and southern Europe. The cash and noncash elements of the restructuring charge approximated $32,500 and $32,500, respectively. Management anticipates that the reserves will be substantially utilized during the remainder of fiscal 1998.
Details of this restructuring charge are as follows: Employee severance $25,800 Facility closures 33,300 Machinery and equipment dispositions 5,900 Pre-tax charge $65,000
In the fourth quarter of fiscal 1996, the Company's Beloit Corporation subsidiary recorded a restructuring charge involving organizing engineering and manufacturing operations into Centers of Excellence and expanding the aftermarket capabilities of the subsidiary. The total estimated cost of the restructuring activities reduced fiscal 1996 pre-tax income by $43,000 ($21,830 after tax and minority interest.) Included in the charge are costs related to severance for approximately 500 employees worldwide, the disposition of machinery and equipment, closure of certain facilities and the sale of businesses. As of April 30, 1998, $37,900 had been charged against the reserve and 497 employees had been terminated in accordance with the plan. The remaining reserves are expected to be substantially utilized during fiscal 1998. (d) Inventories -----------
Consolidated inventories consisted of the following: April 30, October 31, 1998 1997 --------- ---------- Finished goods $271,298 $ 274,391 Work in process and purchased parts 274,446 247,568 Raw materials 118,797 132,980 -------- --------- 664,541 654,939 Less excess of current cost over stated LIFO value (52,121) (60,178) -------- --------- $612,420 $594,761 ======== =========
Inventories valued using the LIFO method represented approximately 59% and 54% of consolidated inventories at April 30, 1998 and October 31, 1997, respectively. (e) Research and Development Expense -------------------------------- Research and development costs are expensed as incurred. Such costs incurred in the development of new products or significant improvements to existing products amounted to $14,119 and $10,511 for the three months and $24,224 and $20,464 for the six months ended April 30, 1998 and 1997, respectively. Certain capital expenditures used in research activities are capitalized and depreciated over their expected useful lives. (f) Interest Expense - Net ----------------------
Net interest expense consisted of the following: Three Months Ended April 30, ------------------ 1998 1997 -------- ------ Interest income $ 2,429 $ 780 Interest expense (22,231) (18,516) ---------- --------- Interest expense - net $(19,802) $(17,736) ========= ==========
Six Months Ended April 30, --------------------- 1998 1997 -------- -------- Interest income $ 3,953 $ 1,541 Interest expense (42,050) (35,553) ---------- --------- Interest expense - net $(38,097) $(34,012) ========== =========
(g) Long-Term Obligations ---------------------
Long-term obligations at April 30, 1998 and October 31, 1997 consisted of the following: April 30, 1998 ----------- 10 1/4% Senior Notes due 2003 $ 7,730 8.9% Debentures, due 2022 75,000 8.7% Debentures, due 2022 75,000 7 1/4% Debentures, due 2025 (net of discount of $1,241 and $1,247, respectively ) 148,759 6 7/8% Debentures, due 2027 (net of discount of $108 and $111) 149,892 Senior Notes, Series A through D, at interest rates of between 8.9% and 9.1%, due 1998 to 2006 71,364 Australian Term Loan Facility, due 2000 58,870 Revolving Credit Facility 110,000 Industrial Revenue Bonds, at interest rates of between 5.9% and 8.8% due 1998 to 2017 32,820 Other 18,070 --------- 747,505 Less: Amounts payable within one year 11,501 --------- $736,004 =========
Long-term obligations at April 30, 1998 and October 31, 1997 consisted of the following:
October 31, 1997 ------------- 10 1/4% Senior Notes due 2003 $ 7,730 8.9% Debentures, due 2022 75,000 8.7% Debentures, due 2022 75,000 7 1/4% Debentures, due 2025 (net of discount of $1,241 and $1,247, respectively ) 148,753 6 7/8% Debentures, due 2027 (net of discount of $108 and $111) 149,889 Senior Notes, Series A through D, at interest rates of between 8.9% and 9.1%, due 1998 to 2006 71,364 Australian Term Loan Facility, due 2000 - Revolving Credit Facility 150,000 Industrial Revenue Bonds, at interest rates of between 5.9% and 8.8% due 1998 to 2017 33,400 Other 14,057 --------- 725,193 Less: Amounts payable within one year 11,727 -------- $713,466 =========
On February 17, 1998, the Company filed a shelf registration with the Securities and Exchange Commission for $200,000 of debt securities. To date, no securities have been issued under this registration. In 1996, the Company filed a shelf registration with the Securites and Exchange Commission for the sale of up to $200,000 of debt securities. On February 25, 1997, $150,000 of 6 7/8% debentures were issued at 99.925%. Proceeds were used for repayment of short-term indebtedness. The debentures will mature on February 15, 2027, are not redeemable by the Company prior to maturity and are not subject to any sinking fund requirements. Each holder of the debentures has the right to require the Company to repay the holders, in whole or in part, on February 15, 2007, at a repayment price equal to 100% of the aggregate principal amount thereof plus accrued and unpaid interest. The Company's Australian subsidiary maintains a committed three-year $90,000 Australian dollar ($58,870 U.S. dollar) term loan facility with a group of four banks at rates expressed in relation to Australian dollar denominated Bank Bills of Exchange. A commitment fee is payable on any unused portions of the loan. As of April 30, 1998, the loan was fully utilized. Proceeds were used to repay short-term debt. The Company maintains a committed Revolving Credit Facility Agreement with certain domestic and foreign financial institutions that allows for borrowings of up to $500,000 at rates expressed in relation to LIBOR and other rates which expires in October, 2002. A facility fee is payable on the Revolving Credit Facility. At April 30, 1998, direct outstanding borrowings under the facility were $110,000 and commercial paper borrowings, considered a utilization of the facility, were $55,924. (h) Contingent Liabilities ----------------------- At April 30, 1998, the Company was contingently liable to banks, financial institutions, and others for approximately $462,000 for outstanding letters of credit securing performance of sales contracts and other guarantees in the ordinary course of business excluding the H-K System, Inc. backup bond guarantee facility. The Company may also guarantee performance of its equipment at levels specified in sales contracts without the requirement for letters of credit. On October 29, 1993, the Company completed the sale of H-K Systems, Inc. to that unit's senior management and some equity partners. The Company agreed to make available a back-up bonding guarantee facility for certain bid, performance and other contract bonds issued by H-K Systems, Inc. Outstanding contract bonds under the guarantee arrangement totaled approximately $14,700 at April 30, 1998. Under the terms of the facility, no new bonds can be issued during 1998. The Company is a party to litigation matters and claims which are normal in the course of its operations. Also, as a normal part of their operations, the Company's subsidiaries undertake certain contractual obligations, warranties and guarantees in connection with the sale of products or services. Although the outcome of these matters cannot be predicted with certainty and favorable or unfavorable resolution may affect income on a quarter- to-quarter basis, management believes that such matters will not have a materially adverse effect on the Company's consolidated financial position. In the case of Beloit Corporation, certain litigation matters and claims are currently pending in connection with its contractual undertakings. Beloit may on occasion enter into arrangements to participate in the ownership of or operate pulp or papermaking facilities in order to satisfy contractual undertakings or resolve disputes. One of the claims against Beloit involves a lawsuit brought by Potlatch Corporation that alleges pulp line washers supplied by Beloit for less than $15,000 failed to perform satisfactorily. In June, 1997, a Lewiston, Idaho jury awarded Potlatch damages in the case which, together with fees, costs and interest to date, approximate $110,000. Beloit has appealed this award to the Court. The appeal is scheduled to be heard by the Idaho Supreme Court on September 10, 1998. The Company considers the eventual outcome of the Potlatch case to not be estimable. Reserves in the April 30, 1998 Consolidated Balance Sheet are less than the sales price of the washers. The possible ultimate cost to the Company of this case could be materially higher than the reserves. The Company and its senior executives have been named as defendants in two purported class actions, entitled Great ----- Neck Capital Appreciation Investment Partnership, L.P. v. -------------------------------------------------------- Jeffery T. Grade, et al., and C. William Carter v. ------------------------ -------------------- Harnischfeger Industries, Inc. filed on June 5, 1998 and ------------------------------ June 11, 1998, respectively, in the United States District Court for the Eastern District of Wisconsin. These actions seek damages in an unspecified amount on behalf of an alleged class of purchasers of the Company's common stock, based principally on allegations that the Company's disclosures with respect to the Indonesian contracts of Beloit discussed in note (k) Beloit Anticipated Losses on Contracts to the financial statements violated the federal securities laws. The Company is also involved in a number of proceedings and potential proceedings relating to environmental matters. Although it is difficult to estimate the potential exposure to the Company related to these environmental matters, the Company believes that these matters will not have a materially adverse effect on its consolidated financial position or results of operations. (i) Earnings Per Share ------------------ In the first quarter of fiscal 1998, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 128, " Earnings Per Share". Following is the reconciliation of the numerators and denominators used to calculate the basic and diluted earnings per share from continuing operations:
For the Three Months Ended April 30, ------------------------- 1998 1997 ----- ----- Basic Earnings Per Share ------------------------ Income (loss) from continuing operations, after the 1998 restructuring charge and anticipated losses on contracts $(72,826) $38,128 Income from discontinued operation 972 6,843 Gain on sale of discontinued operation 151,500 - -------- ------- Net income $79,646 $44,971 ======== ======= Average common shares outstanding 46,416 47,937 Income (loss) from continuing operations $ (1.57) $ 0.80 Income from and net gain on sale of discontinued operation 3.28 0.14 --------- ------- Net income $ 1.71 $ 0.94 ========= ======= Diluted Earnings Per Share -------------------------- Income (loss) from continuing operations, after the 1998 restructuring charge and anticipated losses on contracts $(72,826) $38,128 Income from discontinued operation 972 6,843 Gain on sale of discontinued operation 151,500 - --------- ------- Net income $ 79,646 $44,971 ========= ======= Average common shares outstanding Common stock 46,416 47,937 Assumed exercise of stock options - 470 --------- ------- 46,416 48,407 Income (loss) from continuing operations $ (1.57) $ 0.79 Income from and net gain on sale of discontinued operation 3.28 0.14 --------- ------- Net income $ 1.71 $ 0.93 ========= =======
For the Six Months Ended April 30, ----------------------- 1998 1997 ----- ----- Basic Earnings Per Share ------------------------ Income (loss) from continuing operations, after the 1998 restructuring charge and anticipated losses on contracts $(97,797) $64,460 Income from discontinued operation 4,376 11,369 Gain on sale of discontinued operation 151,500 - --------- ------- Net income $ 58,079 $75,829 ========= ======= Average common shares outstanding 46,579 47,828 Income (loss) from continuing operations $ (2.10) $ 1.35 Income from and net gain on sale of discontinued operation 3.35 0.24 -------- ------- Net income $ 1.25 $ 1.59 ======== ======= Diluted Earnings Per Share -------------------------- Income (loss) from continuing operations, after the 1998 restructuring charge and anticipated losses on contracts $(97,797) $64,460 Income from discontinued operation 4,376 11,369 Gain on sale of discontinued operation 151,500 - --------- ------- Net income $ 58,079 $75,829 ========= ======= Average common shares outstanding Common stock 46,579 47,828 Assumed exercise of stock options - 505 --------- ------- 46,579 48,333 Income (loss) from continuing operations $ (2.10) $ 1.34 Income from and net gain on sale of discontinued operation 3.35 0.23 --------- ------- Net income $ 1.25 $ 1.57 ========= =======
(j) Common Stock ------------- In September, 1997, the Company announced that the board of directors had authorized the purchase of up to ten million shares of the Company's common stock. As of June 12, 1998, the Company had repurchased 1,772,900 shares through open-market transactions at a cost of approximately $68,263. (k) Beloit Anticipated Losses on Contracts -------------------------------------- The Company identified $155,000 of additional estimated contract costs at Beloit related to certain contracts in Indonesia, with total contract values aggregating approximately $600,000. The additional costs primarily relate to non-proprietary equipment, installation and erection, freight and other site construction costs, and overruns due to changes in estimates of costs to complete relating to these complex, large-scale projects. Based on its review of the $155,000 charge relating to these Indonesian contracts, Harnischfeger, with the assistance of its outside auditors, has determined that $27,600 of this charge is properly allocated to the fourth quarter of fiscal 1997 and relates to isolated costs for piping which were inadvertently overlooked. Income for that period and the full fiscal year of 1997 has been restated to reflect this charge. Harnischfeger, with the assistance of its outside auditors, has determined that $82,000 of these charges are more properly allocated to the first quarter of 1998 and $45,400 to the second quarter. A detailed review ordered by the Company's Board of Directors, assisted by the Company's outside experts, confirmed the reasonableness of the $155,000 additional cost overrun estimate relating to the Indonesian projects. The actual costs may vary significantly from the estimates, up or down, based upon numerous factors including the volatility of the Indonesian political and economic situation and delivery, performance and other risks and uncertainties inherent in executing these large, complex projects. These factors cannot be predicted with certainty and may affect income on a quarter-to-quarter basis. The detailed review has not revealed the existence of any accounting irregularities. Also included in the second quarter of 1998 was a charge of $37,000 related to the resolution of a long-standing contract dispute. (l) Other ----- In its June 1, 1998 second quarter press release, the Company also reported that it is contemplating separating its two principal business units to enhance shareholder value, working with Goldman, Sachs & Co. and with Merrill Lynch & Co. These units are the Mining Group, consisting of Joy Mining Machinery and P&H Mining Equipment, and the Pulp and Papermaking Machinery Group, consisting of Beloit Corporation. Such a transaction could involve among other things the sale of the Beloit business, the spinoff of one of the business units, securities offerings or recapitalizations by one or both of the businesses, or strategic alliances involving the businesses. The determination to pursue separation of our business units is the result of an ongoing process the Company has been engaged in during the past several months. Although the Company will pursue aggressively its best options, it will not undertake any transaction that does not satisfy its objective of enhancing long-term shareholder value. Accordingly, there can be no assurance as to whether or when any transaction will take place. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION THREE AND SIX MONTHS ENDED APRIL 30, 1998 AND 1997 -------------------------------------------------- (Amounts in thousands unless indicated) The commentary in Management's Discussion and Analysis contains forward-looking statements. When used in this document, terms such as "anticipate", "believe", "estimate", "expect", "indicate", "may be", "objective", "plan", "predict", and "will be" are intended to identify such statements. Forward-looking statements are subject to certain risks, uncertainties and assumptions which could cause actual results to differ materially from those projected, including those described in Item 5. Other Information - "Cautionary Factors" in Part II of this report. Net income for the three and six months ended April 30, 1998 amounted to $79,646, or $1.71 per basic share, and $58,079, or $1.25 per basic share, as compared to net income of $44,971, or $0.94 per basic share, and $75,829, or $1.59 per basic share for the three and six months ended April 30, 1997. Net results for the six months ended April 30, 1998 included a $127,400 charge for anticipated losses associated with certain Beloit Corporation contracts in Indonesia, a $37,000 charge for settlement of a contract dispute, and a $65,000 restructuring charge for Beloit, offset by the income from and net gain on sale of discontinued operation of $155,876 or $3.35 per share. Basic earnings per share calculations for the first six months of 1998 and 1997 were based on 46,579 and 47,828 average shares outstanding, respectively, and diluted earnings per share for the first six months of 1998 and 1997 were based on 46,579 and 48,333 average shares outstanding, respectively. Significant factors contributing to the $162,257 decrease in income from continuing operations for the first six months of 1998 as compared to 1997 included: (1) a $164,400 decrease related to the anticipated losses on contracts, (2) a $65,000 restructuring charge, (3) $82,843 decrease in operating income as described in the Segment Information section which ------------------- follows, (4) a $4,085 increase in interest expense offset by (5) a $119,202 decrease in the provision for income taxes due to reduced pre-tax income and (6) a $34,869 decrease in minority interest, due to the Beloit charges. Segment Information - ------------------- Operating results of the Company's business segments for the second quarter and first six months of 1998 and 1997 are summarized as follows:
Second Quarter Net Sales - -------------- ---------- 1998 1997 ---------- ------ Mining Equipment $280,746 $365,392 Pulp and Paper Machinery 197,093 332,114 Anticipated Losses on Contracts Restructuring Charge ------------------ Total Pulp and Paper Machinery 197,093 332,114 ----------------- Total Business Segments $477,839 $697,506 ================== Six Months Net Sales - -------------- --------------------- 1998 1997 -------- ------- Mining Equipment $ 601,868 $ 715,846 Pulp and Paper Machinery 433,815 601,089 Anticipated Losses on Contracts Restructuring Charge ---------- -------- Total Pulp and Paper Machinery 433,815 601,089 ---------- ---------- Total Business Segments $1,035,683 $1,316,935 ========== ==========
(A) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $42,526. (B) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $61,172. (C) Backlog has been reduced by $2,703 due to sale of J&L Fiber Services in November, 1997.Segment Information - ------------------- Operating results of the Company's business segments for the second quarter and first six months of 1998 and 1997 are summarized as follows:
Second Quarter Operating Income - -------------- ------ -------------------- 1998 1997 ----------- -------- Mining Equipment $ 23,543 $57,057 Pulp and Paper Machinery (7,655) 29,461 Anticipated Losses on Contracts (82,400) - Restructuring Charge (65,000) - ---------- ------- Total Pulp and Paper Machinery (155,055) 29,461 ---------- ------- Total Business Segments (131,512) 86,518 Corporate Administration (4,926) (5,600) ---------- --------- Operating Income (Loss) $(136,438) $80,918 ========== ========= Six Months Operating Income - ------------- ---------------------------- 1998 1997 --------- ----------- Mining Equipment $ 62,070 $102,135 Pulp and Paper Machinery 6,852 50,335 Anticipated Losses on Contracts (164,400) - Restructuring Charge (65,000) - ---------- -------- Total Pulp and Paper Machinery (222,548) 50,335 ---------- -------- Total Business Segments (160,478) 152,470 Corporate Administration (10,543) (11,248) ---------- --------- Operating Income (Loss) $(171,021) $141,222 ========== =========
(A) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $42,526. (B) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $61,172. (C) Backlog has been reduced by $2,703 due to sale of J&L Fiber Services in November, 1997. Segment Information - ------------------- Operating results of the Company's business segments for the second quarter and first six months of 1998 and 1997 are summarized as follows:
Second Quarter Orders Booked - -------------- ------------------ 1998 1997 - ----- ------ Mining Equipment $331,003(A) $365,972 Pulp and Paper Machinery 173,958 402,049 Anticipated Losses on Contracts Restructuring Charge --------- --------- Total Pulp and Paper Machinery 173,958 402,049 --------- --------- Total Business Segments $504,961 $768,021 ========= ========= Six Months Orders Booked - ---------------- ------------------------- 1998 1997 ------ -------- Mining Equipment $ 634,343(B) $ 744,389 Pulp and Paper Machinery 477,334 805,091 Anticipated Losses on Contracts Restructuring Charge ---------- ---------- Total Pulp and Paper Machinery 477,334 805,091 ---------- ---------- Total Business Segments $1,111,677 $1,549,480 ========== ========== (A) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $42,526. (B) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $61,172. (C) Backlog has been reduced by $2,703 due to sale of J&L Fiber Services in November, 1997. Operating results of the Company's business segments for the second quarter and first six months of 1998 and 1997 are summarized as follows: Second Quarter Backlog at - -------------- -------------------- 4/98 1/98 ----------- ------- Mining Equipment $ 390,815 $ 340,558 Pulp and Paper Machinery 817,434 840,569 Anticipated Losses on Contracts Restructuring Charge ----------- ---------- Total Pulp and Paper Machinery 817,434 840,569 ----------- ---------- Total Business Segments $1,208,249 $1,181,127 =========== ========== Six Months Backlog at - ---------------- ----------------------- 4/98 10/97 ----- ------- Mining Equipment $390,815 $ 358,340 Pulp and Paper Machinery 817,434(C) 776,618 Anticipated Losses on Contracts Restructuring Charge ---------------- ------- Total Pulp and Paper Machinery 817,434 776,618 -------------- ---------- Total Business Segments $1,208,249 $1,134,958 ============== ==========
(A) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $42,526. (B) Bookings include Horsburgh & Scott backlog of $27,714 at the time of acquisition and bookings related to repair and maintenance contracts of $61,172. (C) Backlog has been reduced by $2,703 due to sale of J&L Fiber Services in November, 1997. Segment Information - Continuing Operations - ------------------------------------------- Net sales of the Mining Equipment segment amounted to $601,868 and $715,846 for the first six months of 1998 and 1997, respectively, representing a 16% decrease in 1998 as compared to 1997. Operating profit decreased to $62,070 for the first six months of 1998 as compared to $102,135 in 1997. The decrease in sales and operating profit is primarily due to lower original equipment sales resulting from ongoing weakness in the coal and copper mining markets and due to related decreases in absorption of manufacturing costs. Bookings for the first six months of 1998 amounted to $634,343 as compared to $744,389 for the same period in 1997. The Pulp and Paper Machinery segment contributed sales and operating profit of $433,815 and $6,852 before restructuring charge of $65,000 and anticipated losses on contracts of $164,400, respectively, for the first six months of 1998, as compared to net sales of $601,089 and operating profit of $50,335 for the corresponding period in 1997. Sales decreased 28% in 1998 over 1997 due primarily to a decrease in sales of original equipment caused by the weak global pulp and paper markets. Operating results were adversely impacted by the lower sales levels and due to related decreases in absorption of manufacturing costs. Results in the first quarter benefited from a $15,000 settlement of certain patent litigation, and the gain on the sale of J&L, both of which were largely offset by previously capitalized expenses related to the litigation, contract losses, and additions to warranty reserves. Bookings for the first six months of 1998 amounted to $477,334 as compared to $805,091 for the same period in 1997, as 1997 included two approximately $150,000 original equipment orders for a customer in Indonesia. In the second quarter of fiscal 1998, the Company's Beloit Corporation subsidiary ("Beloit") recorded a $65,000 restructuring charge ($31,900 after tax and minority interest). The charge includes costs related to severance for approximately 1,000 people worldwide, facility closures, and disposal of machinery and equipment. The restructuring plans call for the closure of a pulping-related manufacturing facility in Sherbrooke, Quebec, Canada. The paper-related manufacturing facility in the United Kingdom is being converted to a Center of Excellence responsible for rolls, while the Italian operation is being converted from a full-line manufacturing operation to a Millpro aftermarket center for central and southern Europe. The cash and non-cash elements of the restructuring charge approximated $32,500 and $32,500, respectively. Management anticipates that the reserves will be substantially utilized during the remainder of fiscal 1998. The Company recorded several unusual charges in the consolidated statement of income for the six months ended April 30, 1998. The restructuring charge of $65,000 pre-tax is described above and in note (c) Restructuring Charge. In -------------------- addition, $155,000 of additional estimated contract costs were identified at Beloit related to certain contracts in Indonesia. The additional costs primarily relate to non- proprietary equipment, installation and erection, freight and other site construction costs and, overruns due to changes in estimates of costs to complete relating to these complex, large-scale projects. See note (k) Beloit Anticipated Losses ------------------------- on Contracts. - ------------ Also included in the second quarter of 1998 was a charge of $37,000 related to the resolution of a long-standing contract dispute and $8,000 related to anticipated losses on several smaller contracts. Income Taxes - ------------ The Company's estimated annual effective tax rate for continuing operations for the first six months of 1998 was 39.1% compared to a 35% federal statutory tax rate. The higher rate in the second quarter reflected the resolution of various tax audits resulting in an increase to the Company's second quarter income tax benefit. Liquidity and Cash Flows
The Company's capital structure at April 30, 1998 and October 31, 1997 was as follows: April 30, October 31, 1998 1997 ----------- ------------ Short-term notes payable $ 122,404 $ 214,126 Long-term obligations, including current portion 747,505 725,193 ---------- ----------- 869,909 939,319 Minority interest 67,410 97,724 Shareholders' equity 768,564 749,660 ---------- ----------- Total capitalization $1,705,883 $1,786,703 ========== =========== Debt to capitalization ratio 51.0% 52.6% ==== ====
Cash Flow from Operating Activities - ----------------------------------- Cash flow used by operating activities was $274,000 for the six months ended April 30, 1998 compared to cash flows used by operating activities of $28,520 for the comparable period in 1997. The reduction in cash flows between periods is primarily the result of a decrease in operating profit and trade accounts payable, and increases in inventories. Cash Flow from Investment Activities - ------------------------------------ Cash flow provided by investment activities was $354,673 for the six months ended April 30, 1998 compared to cash flow applied to investment activities of $43,410 for the comparable period in 1997. The change is primarily due to proceeds from the sale of Material Handling during fiscal 1998. See "Acquisitions/Divestitures" below for further discussion. Cash Flow for Financing Activities - ---------------------------------- Cash flow applied to financing activities in the first six months of fiscal 1998 was $100,807 compared to cash flow provided by financing activities of $81,674 in 1997. The change was due to the 1998 purchase of treasury stock of $30,086, and the February 1997 issuance of $150,000 of 6 7/8% debentures due 2027. The Company maintains the ability to expand its borrowings in several ways, including the following: (1) A Revolving Credit Financing Facility Agreement expiring October 2002 between the Company and certain domestic and foreign financial institutions that allows for borrowings of up to $500,000 at rates expressed in relation to LIBOR and other rates. At April 30, 1998, direct outstanding borrowings related to the facility were $110,000 and commercial paper borrowings, considered a utilization of the facility, were $55,924. (2) The Company maintains various uncommitted domestic credit facilities of approximately $110,000 to further supplement short-term working capital requirements. At April 30, 1998, borrowings under these facilities were $31,000. Additionally, short-term bank credit lines of foreign subsidiaries were approximately $209,000, of which approximately $35,500 was outstanding at April 30, 1998. (3) In 1996, the Company filed a shelf registration with the Securities and Exchange Commission for the sale of up to $200,000 of debt securities. On February 25, 1997, $150,000 of 6 7/8% debentures were issued at 99.925% and the proceeds used to reduce short-term debt outstanding. To date, no other securities covered by the registration have been offered for sale. (4) On February 17, 1998, the Company filed a shelf registration with the Securities and Exchange Commission for $200,000 of debt securities. To date, no securities have been issued under this registration. The Company believes its available cash and committed credit lines provide adequate liquidity on both a short- and long- term basis. The Company has no significant capital commitments as of April 30, 1998; any future capital commitments are expected to be funded through cash flow from operations and, if necessary, available lines of credit. The Company intends to continue to expand its businesses, both internally and through acquisitions. It is expected that new acquisitions would be financed primarily by internally- generated funds or additional borrowings. Acquisitions/Divestitures - ------------------------- On March 30, 1998, the Company completed the sale of approximately 80% of the common stock of the Company's P&H Material Handling ("Material Handling") segment to Chartwell Investments, Inc. in a leveraged recapitalization transaction. As such, the accompanying financial statements have been reclassified to reflect Material Handling as a discontinued operation. The Company retained approximately 20% of the outstanding common stock and 11% of the outstanding voting securities of Material Handling and will hold one Board of Director seat for Material Handling. In addition, the Company has licensed Material Handling to use the "P&H" trademark on existing Material Handling produced products on a worldwide basis for periods specified in the agreement for a royalty fee payable over a ten year period. The Company reported a $151,500 after-tax gain on the sale of this discontinued operation in the second quarter of fiscal 1998. Proceeds consisted of $341,000 in cash and $4,800 in preferred stock with a 12.25% PIK dividend; $7,200 in common stock was not reflected in the Company's balance sheet or gain calculations due to the nature of the leveraged recapitalization transaction. Taxes on the sale amounted to $45,000. Net assets disposed of in the sale aggregated $139,300. Sales and operating profit of Material Handling for the five months ended March 30, 1998 were $130,546 and $7,447, respectively. Sales and operating profit for the six months ended April 30, 1997 were $177,054 and $17,651, respectively. On March 19, 1998, the Company completed the acquisition of Horsburgh & Scott ("H&S") for a purchase price of $40,283. H&S is a manufacturer of gears and gear cases, and is also involved in the distribution of parts and service to the mining industry. The acquisition will be accounted for as a purchase transaction, with the purchase price to be allocated to the fair value of specific assets acquired and liabilities assumed. It is expected that much of the purchase price will be allocated to goodwill and to fixed assets, with resultant goodwill to be amortized over 40 years. The allocation is expected to be completed prior to the end of the fiscal year. At April 30, 1998, the purchase price was included in Other Assets in the Consolidated Balance Sheet. In 1996, the Company completed the acquisition of Dobson Park Industries plc ("Dobson") for a purchase price of approximately $330,000 including acquisition costs, plus the assumption of net debt of approximately $40,000. The Company is fully integrating Longwall's (the main subsidiary of Dobson) operations into its wholly owned subsidiary, Joy Technologies Inc. ("Joy"); thus enabling Joy to offer integrated underground longwall mining systems to the worldwide mining industry. As a result of this integration, the Company has established purchase accounting reserves to provide for the estimated costs of this effort. The reserves related primarily to the closure of selected manufacturing and service facilities, severance and relocation costs approximated $71,000. As of April 30, 1998, approximately $49,600 of these reserves had been used. It is anticipated that the remaining reserves will be substantially utilized in fiscal 1998. Beloit Anticipated Losses on Contracts - -------------------------------------- The Company recorded several unusual charges in the consolidated statement of income for the six months ended April 30, 1998. The restructuring charge of $65,000 pre-tax is described in note (c) Restructuring Charge. In addition, -------------------- $155,000 of additional estimated contract costs were identified at Beloit related to certain contracts in Indonesia, with total contract values aggregating approximately $600,000. The additional costs primarily relate to non-proprietary equipment, installation and erection, freight and other site construction costs, and overruns due to changes in estimates of costs to complete relating to these complex, large-scale projects. Based on its review of the $155,000 charge relating to these Indonesian contracts, Harnischfeger, with the assistance of its outside auditors, has determined that $27,600 of this charge is properly allocated to the fourth quarter of fiscal 1997 and relates to isolated costs for piping which were inadvertently overlooked. Income for that period and the full fiscal year of 1997 has been restated to reflect this charge. Harnischfeger, with the assistance of its outside auditors, has determined that $82,000 of these charges are more properly allocated to the first quarter of 1998 and $45,400 to the second quarter. A detailed review ordered by the Company's Board of Directors, assisted by the Company's outside experts, confirmed the reasonableness of the $155,000 additional cost overrun estimate relating to the Indonesian projects. The actual costs may vary significantly from the estimates, up or down, based upon numerous factors including the volatility of the Indonesian political and economic situation and delivery, performance and other risks and uncertainties inherent in executing these large, complex projects. These factors cannot be predicted with certainty and may affect income on a quarter-to-quarter basis. The detailed review has not revealed the existence of any accounting irregularities. Also included in the second quarter of 1998 were $37,000 related to the resolution of a long-standing contract dispute. In total, the unusual charges related to anticipated losses on contracts, resolution of the contract dispute and a restructuring charge amounted to $229,400 ($112,656 after tax and minority interest.) Other - ----- In its June 1, 1998 second quarter press release, the Company also reported that it is contemplating separating its two principal business units to enhance shareholder value, working with Goldman, Sachs & Co. and with Merrill Lynch & Co. These units are the Mining Group, consisting of Joy Mining Machinery and P&H Mining Equipment, and the Pulp and Papermaking Machinery Group, consisting of Beloit Corporation. Such a transaction could involve among other things the sale of the Beloit business, the spinoff of one of the business units, securities offerings or recapitalizations by one or both of the businesses, or strategic alliances involving the businesses. The determination to pursue separation of our business units is the result of an ongoing process the Company has been engaged in during the past several months. Although the Company will pursue aggressively its best options, it will not undertake any transaction that does not satisfy its objective of enhancing long-term shareholder value. Accordingly, there can be no assurance as to whether or when any transaction will take place. The Company is a party to litigation matters and claims. One of the claims against Beloit involves a lawsuit brought by Potlatch Corporation that alleges pulp line washers supplied by Beloit for less than $15,000 failed to perform satisfactorily. In June, 1997, a Lewiston, Idaho jury awarded Potlatch damages in the case which, together with fees, costs and interest to date, approximate $110,000. Beloit has appealed this award to the Idaho Supreme Court. The appeal is scheduled to be heard by the Court on September 10, 1998. The Company considers the eventual outcome of the Potlatch case to not be estimable. Reserves in the April 30, 1998 Consolidated Balance Sheet are less than the sales price of the washers. The possible ultimate cost to the Company of this case could be materially higher than the reserves. PART II. OTHER INFORMATION --------------------------- Item 4 Submission of Matters to a Vote of Security Holders --------------------------------------------------- At the Annual Shareholders' Meeting held April 14, 1998, Management's nominees were elected as directors to terms ending in 2001. The number of shares of Common Stock voted for each nominee were:
For Withheld Larry D. Brady 43,654,014 562,362 Francis M. Corby, Jr. 43,632,831 583,535 John D. Correnti 43,636,524 579,842 Robert B. Hoffman 43,655,920 560,446 Jean-Pierre Labruyere 41,256,408 2,959,959
Item 5 Other Information - "Cautionary Factors" ---------------------------------------- This report and other documents or oral statements which have been and will be prepared or made in the future contain or may contain forward-looking statements by or on behalf of the Company. Such statements are based upon management's expectations at the time they are made. In addition to the assumptions and other factors referred to specifically in connection with such statements, the following factors, among others, could cause actual results to differ materially from those contemplated. The Company's principal businesses involve designing, manufacturing, marketing and servicing large, complex machines for the mining and papermaking industries. Long periods of time are necessary to plan, design and build these machines. With respect to new machines and equipment, there are risks of customer acceptances and start-up or performance problems. Large amounts of capital are required to be devoted by the Company's customers to purchase these machines and to finance the mines and paper mills that use these machines. The Company's success in obtaining and managing a relatively small number of sales opportunities, including the Company's success in securing payment for such sales and meeting the requirements of warranties and guarantees associated with such sales, can affect the Company's financial performance. In addition, many projects are located in undeveloped or developing economies where business conditions are less predictable. In recent years, more than 50% of the Company's total sales occurred outside the United States. Other factors that could cause actual results to differ materially from those contemplated include: - Factors affecting customers' purchases of new equipment, rebuilds, parts and services such as: production capacity, stockpiles and production and consumption rates of coal, copper, iron, gold, fiber, paper/paperboard, recycled paper, steel and other commodities; the cash flows of customers; the cost and availability of financing to customers and quality of financing to customers and the ability of customers to obtain regulatory approval for investments in mining and papermaking projects;consolidations among customers; work stoppages at customers or providers of transportation; and the timing, severity and duration of customer buying cycles, in the paper and mining businesses. - Factors affecting the Company's ability to capture available sales opportunities, including: customers' perceptions of the quality and value of the Company's products as compared to competitors' products; whether the Company has successful reference installations to show customers; customers' perceptions of the health and stability of the Company as compared to its competitors; the Company's ability to assist with competitive financing programs and the availability of manufacturing capacity at the Company's factories. - Factors affecting the Company's ability to successfully manage sales it obtains, such as: the accuracy of the Company's cost and time estimates for major projects; the adequacy of the Company's systems to manage major projects and its success in completing projects on time and within budget; the Company's success in recruiting and retaining managers and key employees; wage stability and cooperative labor relations; plant capacity and utilization; and whether acquisitions are assimilated and divestitures completed without notable surprises or unexpected difficulties. - Factors affecting the Company's general business, such as: unforeseen patent, tax, product, environmental, employee health or benefit or contractual liabilities; nonrecurring restructuring and other special charges; changes in accounting or tax rules or regulations; and reassessments of asset valuations such as inventories. - Factors affecting general business levels, such as: political turmoil and economic turmoil in major markets such as the United States, Canada, Europe, Asia and the Pacific Rim, South Africa, Australia and Chile; environmental and trade regulations; and the stability and ease of exchange of currencies. Item 6 Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: 3 Bylaws of Harnischfeger Industries, Inc.dated April 14, 1998. 11 Statement re: Calculation of Earnings Per Share (b) Reports on Form 8-K (1) Current Report on Form 8-K dated April 13, 1998 relating to the pro forma financial information related to the divestiture of the Material Handling Segment for the year ended October 31, 1997 and the quarter ended January 31, 1997 and 1998, respectively. (2) Current Report on Form 8-K dated April 27, 1998 relating to the Harnischfeger Industries, Inc. News Release reporting an increase in the previously announced special charge to be taken during the Company's second quarter. (3) Current Report on Form 8-K dated April 28, 1998 relating to the reclassified 1997 and first quarter 1998 quarterly income statements and 1997 and first quarter 1998 selected quarterly segment information all reclassified to reflect Material Handling as a discontinued operation. FORM 10-Q - --------- 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. HARNISCHFEGER INDUSTRIES, INC. ----------------------------- (Registrant) /s/Francis M. Corby, Jr. ------------------------ Francis M. Corby, Jr. Executive Vice President For Finance Date June 15, 1998 and Administration and Chief Financial - ------------------ Officer /s/James C. Benjamin ------------------------ James C. Benjamin Vice President and Controller Date June 15, 1998 and Chief Accounting Officer - ------------------ Exhibit 11 - ----------
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CALCULATION OF EARNINGS PER SHARE - --------------------------------- (Amounts in thousands except per share amounts) Three Months Ended April 30, ------------------- 1998 1997 ------ ------ Average Shares Outstanding Basic 46,416 47,937 ======== ====== Diluted 46,416 48,407 ======== ====== Income (Loss) from Continuing Operations, after the 1998 restructuring and unusual charges $(72,826) $ 38,128 Income from Discontinued Operation, net of applicable income taxes 972 6,843 Gain on Sale of Discontinued Operation, net of applicable income taxes 151,500 - --------- -------- Net Income $ 79,646 $ 44,971 ========= ======== Earnings Per Share-Basic Income (loss) from continuing operations $ (1.57) $ 0.80 Income from and net gain on sale of discontinued operation 3.28 0.14 --------- -------- Net Income $ 1.71 $ 0.94 ========= ========= Earnings Per Share-Diluted Income (loss) from continuing operations $ (1.57) $ 0.79 Income from and net gain on sale of discontinued operation 3.28 0.14 ---------- --------- Net Income $ 1.71 $ 0.93 ========== =========
HARNISCHFEGER INDUSTRIES, INC. - ------------------------------ CALCULATION OF EARNINGS PER SHARE - --------------------------------- (Amounts in thousands except per share amounts) Six Months Ended April 30, ---------------- 1998 1997 ------ ------ Average Shares Outstanding Basic 46,579 47,828 ====== ======= Diluted 46,579 48,333 ====== ======= Income (Loss) from Continuing Operations, after the 1998 restructuring and unusual charges $(97,797) $64,460 Income from Discontinued Operation, net of applicable income taxes 4,376 11,369 Gain on Sale of Discontinued Operation, net of applicable income taxes 151,500 - --------- -------- Net Income $ 58,079 $ 75,829 ========= ========= Earnings Per Share-Basic Income (loss) from continuing operations $ (2.10) $ 1.35 Income from and net gain on sale of discontinued operation 3.35 0.24 -------- ------- Net Income $ 1.25 $ 1.59 ======== ======== Earnings Per Share-Diluted Income (loss) from continuing operations $ (2.10) $ 1.34 Income from and net gain on sale of discontinued operation 3.35 0.23 --------- -------- Net Income $ 1.25 $ 1.57 ========= ========
Exhibit 3 4/14/98 B Y L A W S OF HARNISCHFEGER INDUSTRIES, INC. ARTICLE I OFFICES -------- The initial registered office of the corporation required by the Delaware General Corporation Law shall be 100 West Tenth Street, City of Wilmington, County of New Castle, State of Delaware, and the address of the registered office may be changed from time to time by the Board of Directors. The principal business office of the corporation shall be located in the Village of Brookfield, County of Waukesha, State of Wisconsin. The corporation may have such other offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time. The registered office of the corporation required by the Wisconsin Business Corporation Law may be, but need not be, the same as its place of business in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors. ARTICLE II STOCKHOLDERS ------------- SECTION 1. Annual Meeting. The annual -------------- meeting of stockholders shall be held at a time and on a date in the month of February designated by resolution adopted by the Board of Directors for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the state where the meeting is to be held, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for the annual meeting of the stockholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the stockholders as soon thereafter as is convenient. SECTION 2. Special Meeting. Special --------------- meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chief Executive Officer or by the Board of Directors. SECTION 3. Place of Meeting. The Board ---------------- of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal business office of the corporation in the State of Wisconsin. SECTION 4. Notice of Meeting. Written ----------------- notice stating the place, day 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 delivered not less than ten days nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the Chief Executive Officer, or the Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, addressed to the stockholder at the stockholder's address as it appears on the records of the corporation, with postage thereon prepaid. Any previously scheduled meeting of the stockholders may be postponed, and any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders. SECTION 5. Fixing of Record Date. For --------------------- the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors of the corporation may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty days and, in case of a meeting of stockholders, not less than ten days prior to the date on which the particular action, requiring such determination of stockholders, is to be taken. If no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the close of business on the date next preceding the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 6. Voting Lists. The officer ------------ or agent having charge of the stock ledger of the corporation shall make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each; which list, for a period of ten days prior to such meeting, shall be kept at the place where the meeting is to be held, or at another place within the city where the meeting is to be held, which other place shall be specified in the notice of meeting and the list shall be subject to inspection by any stockholder for any purpose germane to the meeting, at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock ledger shall be prima facie evidence as to who are the stockholders entitled to examine such list or ledger or to vote at any meeting of stockholders. Failure to comply with the requirements of this section will not affect the validity of any action taken at such meeting. SECTION 7. Quorum. A majority of the ------ shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by Delaware law, the Articles of Incorporation, or these Bylaws. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. Any stockholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the Chairman of the meeting without further notice. 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. SECTION 8. Proxies. At all meetings of ------- stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by the stockholder's duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. No proxy shall be valid after three years from the date of its execution, unless otherwise provided in the proxy. SECTION 9. Voting of Shares. Each ---------------- outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders, except to the extent that the voting rights of any class or classes are enlarged, limited or denied by the Articles of Incorporation or in the manner therein provided. SECTION 10. Voting of Shares by Certain -------------------------- Holders. Neither treasury shares nor shares of - ------- the corporation held by another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall be entitled to vote or to be counted for quorum purposes. Nothing in this paragraph shall be construed as limiting the right of the corporation to vote its own stock held by it in a fiduciary capacity. Shares standing in the name of another corporation, domestic or foreign, may be voted in the name of such corporation by its President or such other officer as the President may appoint or pursuant to any proxy executed in the name of such corporation by its President or such other officer as the President may appoint in the absence of express written notice filed with the Secretary that such President or other officer has no authority to vote such shares. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors may be voted by such administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors, either in person or by proxy, without a transfer of such shares into the name of such administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors. Shares standing in the name of a fiduciary may be voted by such fiduciary, either in person or by proxy. A stockholder whose shares are pledged shall be entitled to vote such shares unless in the transfer by the pledgor on the books of the corporation the pledgor has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or the pledgee's proxy, may represent such stock and vote thereon. SECTION 11. Stockholder Proposals. No -------------------- proposal for a stockholder vote shall be submitted by a stockholder (a "Stockholder Proposal") to the corporation's stockholders unless the stockholder submitting such proposal (the "Proponent") shall have filed a written notice setting forth with particularity (i) the names and business addresses of the Proponent and all Persons acting in concert with the Proponent (ii) the name and address of the Proponent and the Persons identified in clause (i), as they appear on the corporation's books (if they so appear), (iii) the class and number of shares of the corporation beneficially owned by the Proponent and the Persons identified in clause (i); (iv) a description of the Stockholder Proposal containing all material information relating thereto; and (v) whether the Proponent or any Person identified in clause (i) intends to solicit proxies from holders of a majority of shares of the corporation entitled to vote on the Stockholder Proposal. The Proponent shall also submit such other information as the Board of Directors reasonably determines is necessary or appropriate to enable the Board of Directors and stockholders to consider the Stockholder Proposal. As used in this Section, the term "Person" means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity. The presiding officer at any stockholders' meeting may determine that any Stockholder Proposal was not made in accordance with the procedures prescribed in these Bylaws or is otherwise not in accordance with law, and if it is so determined, such officer shall so declare at the meeting and the Stockholder Proposal shall be disregarded. The notice required by these Bylaws to be delivered by the Proponent shall be delivered to the Secretary at the principal executive office of the corporation (i) not less than ninety (90) days before the date of the previous year's annual meeting of stockholders if such Stockholder Proposal is to be submitted at an annual stockholders' meeting and (ii) no later than the close of business on the 15th day following the day on which notice of the date of a special meeting of stockholders was given if the Stockholder Proposal is to be submitted at a special stockholders' meeting (provided, however, if notice of the date of the special meeting of stockholders was given less than 20 days before the date of the special meeting of stockholders, the notice required by these Bylaws to be given by the Proponent shall be delivered no later than the close of business on the 5th day following the day on which notice of the special stockholder's meeting was given). SECTION 12. Inspectors of Election; ---------------------- Opening and Closing the Polls. The Board of - ----------------------------- Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the corporation in other capacities, including without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector shall have the duties prescribed by law. The Chairman of the meeting shall fix and announce at the meeting the date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting. SECTION 13. Stockholder Consent ------------------- Procedures. (a) Record Date for Action by Written - ---------- Consent. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days after the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in Delaware, its principal place of business or to any officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. (b) Inspectors of Written Consent. In the event of the delivery, in the manner provided by Section 13(a), to the corporation of the requisite written consent or consents to take corporate action and/or any related revocation or revocations, the corporation shall engage nationally recognized independent inspectors of elections for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. For the purpose of permitting the inspectors to perform such review, no action by written consent without a meeting shall be effective until such date as the independent inspectors certify to the corporation that the consents delivered to the corporation in accordance with Section 13(a) represent at least the minimum number of votes that would be necessary to take the corporate action. Nothing contained in this paragraph shall in any way be construed to suggest or imply that the Board of Directors or any stockholder shall not be entitled to test the validity of any consent or revocation thereof, whether before or after such certification by the independent inspectors, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation). (c) Effectiveness of Written Consent. Every written consent shall bear the signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the date the earliest dated written consent was received in accordance with Section 13(a), a written consent or consents signed by a sufficient number of holders to take such action are delivered to the Corporation in the manner prescribed in Section 13(a). ARTICLE III BOARD OF DIRECTORS ------------------ SECTION 1. General Powers. The --------------- business and affairs of the corporation shall be managed by its Board of Directors. SECTION 2. Number. Tenure and ------------------ Qualifications. The number of directors of the - -------------- corporation shall be thirteen. Two of the three classes of Directors established by the corporation's Certificate of Incorporation shall consist of four members and the third class shall consist of five members. Each director shall hold office for the term provided in the Certificate of Incorporation and until such director's successor shall have been elected and qualified, or until such director's earlier death or resignation. No director shall be or be deemed to be removed from office prior to the expiration of such director's term in office by virtue of a reduction in the number of directors. Directors need not be residents of the State of Delaware or stockholders of the corporation. SECTION 3. Annual Meetings. An annual --------------- meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the Annual Meeting of Stockholders. SECTION 4. Special Meetings. Special ---------------- meetings of the Board of Directors may be called by or at the request of the Chairman or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them. SECTION 5. Notice. Notice of any ------ special meeting shall be given at least 48 hours previous thereto by written notice delivered personally or mailed to each director at such director's business address, or by telegram. If mailed, such notice shall be deemed to be given when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be given when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because of the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. SECTION 6. Quorum. A majority of the ------ number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 7. Manner of Acting. The act ---------------- of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 8. Nomination of Directors; ----------------------- Vacancies. - --------- Candidates for director shall be nominated either (i) by the Board of Directors or a committee appointed by the Board of Directors or (ii) by nomination at any stockholders' meeting by or on behalf of any stockholder entitled to vote at such meeting provided that written notice of such stockholder'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 (1) with respect to an election to be held at an annual meeting of stockholders, ninety (90) days in advance of such meeting, and (2) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the tenth (10th) day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a director of the corporation if so elected. The presiding officer of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled for the remainder of the unexpired term by the affirmative vote of a majority of the directors then in office although less than a quorum. SECTION 9. Action by Directors Without --------------------------- a Meeting. Any action required to be taken at a - --------- meeting of directors, or at a meeting of a committee of directors, or any other action which may be taken at a meeting, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the directors or members of the committee thereof entitled to vote with respect to the subject matter thereof and such consent shall have the same force and effect as a unanimous vote. SECTION 10. Participation in a Meeting -------------------------- by Telephone. Members of the Board of Directors - ------------ or any committee of directors may participate in a meeting of such Board or committee by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other, and participating in a meeting pursuant to this section 10 shall constitute presence in person at such meeting. SECTION 11. Compensation. The Board of ------------ Directors, by majority vote of the directors then in office and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or to delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents and beneficiaries on account of prior services rendered by such directors, officers and employees to the corporation. The Board of Directors may be paid their expenses, if any, of attendance at each such meeting of the Board. SECTION 12. Presumption of Assent. A --------------------- director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless such director's dissent is entered in the minutes of the meeting or unless such director files a written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or forwards such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. SECTION 13. Validity of Contracts. No --------------------- contract or other transaction entered into by the corporation shall be affected by the fact that a director or officer of the corporation is in any way interested in or connected with any party to such contract or transaction, or is a party to such contract or transaction, even though in the case of a director the vote of the director having such interest or connection shall have been necessary to obligate the corporation upon such contract or transaction; provided, however, that in any such case (i) the material facts of such interest are known or disclosed to the directors or stockholders and the contract or transaction is authorized or approved in good faith by the stockholders or by the Board of Directors or a committee thereof through the affirmative vote of a majority of the disinterested directors (even though not a quorum), or (ii) the contract or transaction is fair to the corporation as of the time it is authorized, approved or ratified by the stockholders, or by the Board of Directors, or by a committee thereof. SECTION 14. Indemnification and ------------------- Insurance. Each person who was or is made a - --------- party or is threatened to be made a party to or is involved in any action, suit, arbitration, mediation or proceeding, whether civil, criminal, administrative or investigative, whether domestic or foreign (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent not prohibited by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, with respect to alleged action or inaction occurring prior to such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including without limitation attorneys' fees and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. Such indemnification as to such alleged action or inaction shall continue as to a person who has ceased after such alleged action or inaction to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in the following paragraph, the corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board unless such proceeding (or part thereof) is a counter claim, cross-claim, third party claim or appeal brought by such person in any proceeding. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the General - -------- ------- Corporation law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further appeal that such director or officer is not entitled to be indemnified for such expenses under this Section or otherwise. The corporation may, by action of the Board, provide indemnification to an employee or agent of the corporation or to a director, trustee, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise of which the corporation owns fifty percent or more with the same scope and effect as the foregoing indemnification of directors and officers or such lesser scope and effect as shall be determined by action of the Board. If a claim under the preceding paragraph is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part in any such claim or suit, or in a claim or suit brought by the corporation to recover an advancement of expenses under this paragraph, the claimant shall be entitled to be paid also the expense of prosecuting or defending any such claim or suit. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the applicable standard of conduct which make it permissible under the General Corporation Law of the State of Delaware for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. In any suit brought by such person to enforce a right to indemnification or to an advancement of expenses hereunder, or by the corporation to recover an advancement of expenses hereunder, the burden of proving that such person is not entitled to be indemnified, or to have or retain such advancement of expenses, shall be on the corporation. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise. The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. In the event that any of the provisions of this Section 14 (including any provision within a single section, paragraph or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions are severable and shall remain enforceable to the full extent permitted by law. SECTION 15. Committees of Directors. ----------------------- The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate committee members, who may replace any absent or disqualified member at any committee meeting. In the absence or disqualification of a committee member, the member or members present at any meeting and not disqualified from voting, whether such member or members constitute a quorum, may unanimously appoint another director to act at the meeting in place of the absent or disqualified member. Any such committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution(s) providing for the issuance of shares of stock adopted by the Board, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the Bylaws of the corporation; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock, or to adopt a certificate of ownership and merger. ARTICLE IV OFFICERS -------- SECTION 1. Number. The officers of the ------- corporation shall be a Chairman of the Board (who must be a member of the Board of Directors and who also may be an employee of the corporation), a Chief Executive Officer, a President, one or more Vice Presidents (the number thereof to be determined by the Board of Directors), a Secretary, a Treasurer and a Controller, each of whom shall be elected by the Board of Directors. The Board of Directors may also elect a Chief Operating Officer and one or more Group Presidents and may designate one or more of the Vice Presidents as Executive Vice Presidents or Senior Vice Presidents. Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary, and the offices of President and Vice President. SECTION 2. Election and Term of Office. - -------------------------- The officers of the corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Each officer shall hold office until such officer's successor shall have been duly elected or until such officer's death or until such officer shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Removal. Any officer or ------- agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. SECTION 4. Vacancies. A vacancy in any --------- office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 5. Chairman of the Board. The --------------------- Chairman of the Board shall preside at all meetings of the Board of Directors and stockholders. SECTION 6. Chief Executive Officer. ----------------------- The Chief Executive Officer shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall supervise and control all of the business and affairs of the corporation, and establish current and long-range objectives, plans and policies. The Chief Executive Officer shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the corporation as the Chief Executive Officer shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the Chief Executive Officer. The Chief Executive Officer shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the corporation's regular business or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, the Chief Executive Officer may authorize the President, an Executive Vice President, Senior Vice President, or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in the Chief Executive Officer's place and stead. In general, the Chief Executive Officer shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. In the absence of the Chairman of the Board, the Chief Executive Officer shall, when present, preside at all meetings of the stockholders and the Board of Directors. SECTION 7. President. The President --------- shall direct, administer and coordinate the activities of the corporation in accordance with policies, goals and objectives established by the Chief Executive Officer and the Board of Directors. The President shall also assist the Chief Executive Officer in the development of corporate policies and goals. In the absence of both the Chairman of the Board and the Chief Executive Officer, the President shall, when present, preside at all meetings of the stockholders and the Board of Directors. SECTION 8. The Chief Operating Officer, --------------------------- Group Presidents and the Vice Presidents. In the - ----------------------------------------- absence of the President or in the event of the President's death, inability or refusal to act, the Chief Operating Officer, the Group Presidents and the Executive Vice Presidents in the order designated at the time of their election, or, in the absence of any designation, then in the order of their election (or in the event there be no Chief Operating Officer, Group Presidents or Executive Vice Presidents or they are incapable of acting, the Senior Vice Presidents in the order designated at the time of their election, or, in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may designate certain Vice Presidents as being in charge of designated divisions, plants, or functions of the corporation's business and add appropriate description to their title. Any Chief Operating Officer, Group President or Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to such Chief Operating Officer, Group President or Vice President by the Chief Executive Officer or by the Board of Directors. SECTION 9. The Secretary. The ------------- Secretary shall: (a) keep the minutes of the stockholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents, the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep or cause to be kept a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (e) sign with the Chief Executive Officer, President, or any Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer or by the Board of Directors. SECTION 10. The Treasurer. The ------------- Treasurer shall give a bond for the faithful discharge of the Treasurer's duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for monies due and payable to the corporation from any source whatsoever, and deposit all such monies in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article VI of these Bylaws; and (b) in general, perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to the Treasurer by the Chief Executive Officer or by the Board of Directors. SECTION 11. The Controller. The -------------- Controller shall: (a) keep, or cause to be kept, correct and complete books and records of account, including full and accurate accounts of receipts and disbursements in books belonging to the corporation; and (b) in general, perform all duties incident to the office of Controller and such other duties as from time to time may be assigned to the Controller by the Chief Executive Officer or by the Board of Directors. SECTION 12. Assistant Secretaries and ------------------------- Assistant Treasurers. The Assistant Secretaries - -------------------- may sign with the President, or any Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. Assistant Treasurers shall respectively give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chief Executive Officer or the Board of Directors. SECTION 13. Salaries. The salaries of -------- the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that such officer is also a director of the corporation. ARTICLE V APPOINTED EXECUTIVES --------------------- SECTION 1. Vice Presidents. The Chief --------------- Executive Officer may appoint, from time to time, as the Chief Executive Officer may see fit, and fix the compensation of, one or more Vice Presidents whose title will include words describing the function of such Vice President's office and the group, division or other unit of the Company in which such Vice President's office is located. Each of such appointed Vice Presidents shall hold office during the pleasure of the Chief Executive Officer, shall perform such duties as the Chief Executive Officer may assign, and shall exercise the authority set forth in the Chief Executive Officer's letter appointing such Vice President. SECTION 2. Assistants. The Chief ---------- Executive Officer may appoint, from time to time, as the Chief Executive Officer may see fit, and fix the compensation of, one or more Assistants to the Chairman, one or more Assistants to the President, and one or more Assistants to the Vice Presidents, each of whom shall hold office during the pleasure of the Chief Executive Officer, and shall perform such duties as the Chief Executive Officer may assign. ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS --------------------------------------- SECTION 1. Contracts. The Board of --------- Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 2. Loans. No loans shall be ----- contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. SECTION 3. Checks, Drafts, etc. All ------------------- checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents, of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. 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 depositories as the Board of Directors may select. ARTICLE VII CERTIFICATE FOR SHARES AND THEIR TRANSFER ----------------------------------------- SECTION 1. Certificates for Shares. ----------------------- Certificates representing shares of the corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the Chief Executive Officer, President, or any Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock ledger of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in the case of a lost, destroyed or mutilated certificate, a new one may be issued therefor upon such terms and indemnity to the corporation as the Board of Directors may prescribe. SECTION 2. Transfer of Shares. ------------------ Transfer of shares of the corporation shall be made only on the stock ledger of the corporation by the holder of record thereof or by such person's legal representative, who shall, if so required, furnish proper evidence of authority to transfer, or by such person's attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ARTICLE VIII FISCAL YEAR ----------- The fiscal year of the corporation shall begin on the first day of November and end on the thirty-first day of October in each year. ARTICLE IX DIVIDENDS ---------- The Board of Directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and by the Articles of Incorporation. ARTICLE X SEAL ---- The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words "Corporate Seal". ARTICLE XI WAIVER OF NOTICE ----------------- Whenever any notice is required to be given to any stockholder or director of the corporation under the provisions of these Bylaws or under the provisions of the Articles of Incorporation or under the provisions of the Delaware General Corporation Law, a waiver thereof in writing, signed at any time by the person or persons entitled to such notice of the meeting, shall be deemed equivalent to the giving of such notice. ARTICLE XII AMENDMENTS ----------- These Bylaws may be amended or repealed and new Bylaws may be adopted by the Board of Directors at any regular or special meeting thereof only with the affirmative vote of at least 80% of the total number of Directors. EX-27 2
5 1000 6-MOS OCT-31-1998 APR-30-1998 9,537 0 785,893 6,238 612,420 1,583,828 1,110,827 506,434 2,845,887 1,102,925 736,004 0 0 51,629 716,935 2,845,887 1,035,683 1,046,443 939,454 0 65,000 0 38,097 (209,118) (81,700) (97,797) 155,876 0 0 58,079 1.25 1.25
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