-----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, Uq9vgTCfXQNi1S/coKU0QpHh4xMgHRboXgIod9c/a4XhtTyCpr9Qxyjm//GFs1TB Q9oOZMda454bHZBDBOIzww== 0000950134-03-011215.txt : 20030811 0000950134-03-011215.hdr.sgml : 20030811 20030808195800 ACCESSION NUMBER: 0000950134-03-011215 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REMINGTON OIL & GAS CORP CENTRAL INDEX KEY: 0000874992 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 752369148 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11516 FILM NUMBER: 03833011 BUSINESS ADDRESS: STREET 1: 8201 PRESTON RD STREET 2: SUITE 600 CITY: DALLAS STATE: TX ZIP: 75225 BUSINESS PHONE: 2148908000 MAIL ADDRESS: STREET 1: 8201 PRESTON RD STREET 2: SUITE 600 CITY: DALLAS STATE: TX ZIP: 75225-6211 FORMER COMPANY: FORMER CONFORMED NAME: BOX ENERGY CORP DATE OF NAME CHANGE: 19930328 10-Q 1 d07915e10vq.txt FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 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 1-11516 REMINGTON OIL AND GAS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 75-2369148 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.)
8201 PRESTON ROAD, SUITE 600, DALLAS, TEXAS 75225-6211 (Address of principal executive offices) (Zip code) (214) 210-2650 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] There were 26,777,031 outstanding shares of Common Stock, $0.01 par value, on August 7, 2003. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REMINGTON OIL AND GAS CORPORATION TABLE OF CONTENTS PART I, FINANCIAL INFORMATION............................... 2 Item 1. Financial Statements.............................. 2 Condensed Consolidated Balance Sheets............. 2 Condensed Consolidated Statements of Income....... 3 Condensed Consolidated Statements of Cash Flows... 4 Notes to Condensed Consolidated Financial Statements........................................ 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk............................................ 11 Item 4. Controls and Procedures........................... 11 PART II, OTHER INFORMATION.................................. 12 Item 1. Legal Proceedings................................. 12 Item 2. Changes in Securities and Use of Proceeds......... 12 Item 3. Defaults upon Senior Securities................... 12 Item 4. Submission of Matters to a Vote of Security Holders................................................ 12 Item 5. Other Information................................. 12 Item 6. Exhibits and Reports on Form 8-K.................. 12
1 PART I, FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS REMINGTON OIL AND GAS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, 2003 2002 ------------ ------------- (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) ASSETS CURRENT ASSETS Cash and cash equivalents................................. $ 14,829 $ 14,929 Accounts receivable....................................... 38,773 32,555 Prepaid expenses and other current assets................. 7,644 4,978 --------- --------- TOTAL CURRENT ASSETS................................... 61,246 52,462 --------- --------- PROPERTIES Oil and natural gas properties (successful-efforts method)................................................ 571,918 510,921 Other properties.......................................... 3,253 3,182 Accumulated depreciation, depletion and amortization...... (299,339) (279,722) --------- --------- TOTAL PROPERTIES....................................... 275,832 234,381 --------- --------- OTHER ASSETS................................................ 2,405 2,150 --------- --------- TOTAL ASSETS...................................... $ 339,483 $ 288,993 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities.................. $ 46,250 $ 47,523 Short-term notes payable and current portion of other long-term payables..................................... 2,332 1,715 --------- --------- TOTAL CURRENT LIABILITIES.............................. 48,582 49,238 --------- --------- LONG-TERM LIABILITIES Notes payable............................................. 37,400 37,400 Other long-term payables.................................. 765 1,503 Asset retirement obligation............................... 13,127 -- Deferred income tax liability............................. 18,992 7,192 --------- --------- TOTAL LONG-TERM LIABILITIES............................ 70,284 46,095 --------- --------- TOTAL LIABILITIES...................................... 118,866 95,333 --------- --------- Commitments and contingencies (Note 6) STOCKHOLDERS' EQUITY Preferred stock, $.01 par value, 25,000,000 shares authorized, no shares outstanding...................... -- -- Common stock, $.01 par value, 100,000,000 shares authorized, 26,868,417 shares issued and 26,742,672 shares outstanding in 2003, 26,327,195 shares issued and 26,236,459 shares outstanding in 2002.............. 268 263 Additional paid-in capital................................ 120,576 115,827 Restricted common stock................................... 3,505 5,468 Unearned compensation..................................... (2,323) (3,192) Retained earnings......................................... 100,222 76,271 Treasury stock............................................ (1,631) (977) --------- --------- TOTAL STOCKHOLDERS' EQUITY............................. 220,617 193,660 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $ 339,483 $ 288,993 ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements. 2 REMINGTON OIL AND GAS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------- ------------------- 2003 2002 2003 2002 --------- --------- -------- -------- (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) REVENUES Oil sales............................................ $12,584 $11,356 $26,237 $18,423 Gas sales............................................ 33,196 16,050 61,847 28,357 Gain on sale of assets............................... -- 4,087 -- 4,087 Other income......................................... 223 207 256 250 ------- ------- ------- ------- TOTAL REVENUES......................................... 46,003 31,700 88,340 51,117 ------- ------- ------- ------- COSTS AND EXPENSES Operating............................................ 5,277 4,465 9,669 7,720 Exploration.......................................... 6,366 4,958 13,464 8,622 Depreciation, depletion and amortization............. 12,792 10,250 23,549 19,818 General and administrative........................... 2,214 1,945 3,924 3,650 Interest and financing............................... 485 464 885 1,293 ------- ------- ------- ------- TOTAL COSTS AND EXPENSES............................... 27,134 22,082 51,491 41,103 ------- ------- ------- ------- INCOME BEFORE TAXES.................................... 18,869 9,618 36,849 10,014 ------- ------- ------- ------- Income tax expense................................... 6,605 3,366 12,898 3,505 ------- ------- ------- ------- NET INCOME............................................. $12,264 $ 6,252 $23,951 $ 6,509 ======= ======= ======= ======= BASIC INCOME PER SHARE................................. $ 0.46 $ 0.24 $ 0.91 $ 0.27 ======= ======= ======= ======= DILUTED INCOME PER SHARE............................... $ 0.44 $ 0.22 $ 0.86 $ 0.25 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING (BASIC)............ 26,533 25,953 26,436 24,424 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED).......... 27,844 27,889 27,910 26,316 ======= ======= ======= =======
See accompanying Notes to Condensed Consolidated Financial Statements. 3 REMINGTON OIL AND GAS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, ------------------- 2003 2002 -------- -------- (UNAUDITED) (IN THOUSANDS) CASH FLOW PROVIDED BY OPERATIONS NET INCOME................................................ $ 23,951 $ 6,509 Adjustments to reconcile net income Depreciation, depletion and amortization............... 23,549 19,818 Deferred income taxes.................................. 12,898 3,505 Amortization of deferred charges....................... 116 94 Dry hole and impairment costs.......................... 12,759 8,278 Cash paid for dismantlement costs...................... (614) (42) Stock based compensation............................... 792 853 (Gain) on sale of properties........................... -- (4,087) Changes in working capital (Increase) in accounts receivable...................... (6,223) (10,274) (Increase) in prepaid expenses and other current assets................................................ (2,739) (1,314) (Decrease) increase in accounts payable and accrued liabilities........................................... (1,273) 6,320 -------- -------- NET CASH FLOW PROVIDED BY OPERATIONS...................... 63,216 29,660 -------- -------- CASH FROM INVESTING ACTIVITIES Payments for capital expenditures...................... (63,460) (49,704) Proceeds from property sales........................... -- 7,669 -------- -------- NET CASH (USED IN) INVESTING ACTIVITIES................... (63,460) (42,035) -------- -------- CASH FROM FINANCING ACTIVITIES Proceeds from note payable............................. -- 6,600 Loan origination costs................................. (293) -- Payments on notes payable and other long-term payables.............................................. (679) (52,046) Common stock issued.................................... 1,770 53,925 Treasury stock acquired................................ (654) (977) -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES................. 144 7,502 -------- -------- NET (DECREASE) IN CASH AND CASH EQUIVALENTS................. (100) (4,873) Cash and cash equivalents at beginning of period.......... 14,929 19,377 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 14,829 $ 14,504 ======== ========
See accompanying Notes to Condensed Consolidated Financial Statements. 4 REMINGTON OIL AND GAS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. ACCOUNTING POLICIES AND BASIS OF PRESENTATION Remington Oil and Gas Corporation is an independent oil and gas exploration and production company incorporated in Delaware. Our oil and gas properties are located in the shallow water offshore Gulf of Mexico and the onshore Gulf Coast. We prepared these financial statements according to the instructions for Form 10-Q. Therefore, the financial statements do not include all disclosures required by generally accepted accounting principles. However, we have recorded all transactions and adjustments necessary to fairly present the financial statements included in this Form 10-Q. The adjustments made are normal and recurring. The following notes describe only the material changes in accounting policies, account details or financial statement notes during the first six months of 2003. Therefore, please read these financial statements and notes to the financial statements together with the audited financial statements and notes to financial statements in our 2002 Form 10-K. The income statements for the three and six months ended June 30, 2003, cannot necessarily be used to project results for the full year. We have made certain reclassifications to prior year financial statements in order to conform to current year presentations. NOTE 2. NEW ACCOUNTING POLICIES We adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. The statement requires that we estimate the fair value for our asset retirement obligations (dismantlement and abandonment of oil and gas wells and offshore platforms) in the periods the assets are first placed in service. We then adjust the current estimated obligation for estimated inflation and market risk contingencies to the projected settlement date of the liability. The result is then discounted to a present value from the projected settlement date to the date the asset was first placed in service. We record the present value of the asset retirement obligation as an additional property cost and as an asset retirement liability. A combination of the amortization of the additional property cost (using the unit of production method) and the accretion of the discounted liability is recorded as a periodic expense in our income statement. Prior to this adoption, we accrued an estimated dismantlement, restoration and abandonment liability using the unit of production method over the life of a property and included the accrued amount in depreciation, depletion and amortization expense. The total accrued liability ($5.5 million) was reflected as additional accumulated depreciation, depletion and amortization of oil and gas properties on our balance sheet. In conformity with the new statement we recorded the cumulative effect of this accounting change as of January 1, 2003 as if we had used this method in the prior years. At January 1, 2003, we increased our oil and gas properties by $9.0 million, recorded $11.8 million as an Asset Retirement Obligation liability and reduced our accumulated depreciation by $2.8 million ($5.5 million accrued dismantlement in prior years less accumulated depreciation, depletion and amortization of $2.7 million on the increased property costs). The 5 REMINGTON OIL AND GAS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) adoption of the new standard had no material effect on our net income. The following table reflects the reconciliation of the asset retirement obligations during the first six months of 2003.
CAPITALIZED ACCUMULATED ASSET ASSET DEPRECIATION RETIREMENT RETIREMENT DEPLETION AND OBLIGATION COST AMORTIZATION LIABILITY ----------- ------------- ---------- (IN THOUSANDS) Balance January 1, 2003............................ $ 8,985 $2,692 $11,807 Property additions................................. 2,073 -- 2,073 Settlement of liabilities.......................... -- -- (614) Asset retirement expense........................... -- 644 419 ------- ------ ------- Balance June 30, 2003.............................. $11,058 $3,336 $13,685 ======= ====== =======
Of the total asset retirement obligation, $558,000 is classified as current due to the anticipated dismantlement and abandonment of East Cameron block 305 during 2003. On our balance sheets we have included the costs of contract-based drilling rights and mineral rights as part of oil and gas properties. We believe that all domestic oil and gas producing companies treat such costs as part of oil and gas properties. We have been advised that the Financial Accounting Standards Board and the staff of the Securities and Exchange Commission are engaged in a discussion on the issue of whether Statement of Financial Accounting Standards No. 141, "Business Combinations" and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangibles," which were effective June 30, 2001, would require that such costs be classified as intangible assets. Once this issue is resolved, we may be required to reclassify to intangible assets the rights mentioned in paragraph A14(d)7 of SFAS 141. NOTE 3. NET INCOME PER SHARE The following table presents our calculation of basic and diluted income per share.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------- ------------------- 2003 2002 2003 2002 --------- --------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net income available for basic income per share........................................ $12,264 $ 6,252 $23,951 $ 6,509 Basic income per share......................... $ 0.46 $ 0.24 $ 0.91 $ 0.27 ======= ======= ======= ======= Diluted income per share....................... $ 0.44 $ 0.22 $ 0.86 $ 0.25 ======= ======= ======= ======= Weighted average common stock Total common shares for basic income per share..................................... 26,536 25,953 26,436 24,424 Dilutive stock options outstanding (treasury stock method)............................. 1,019 1,486 1,144 1,442 Restricted common stock grant................ 289 450 330 450 ------- ------- ------- ------- Total common shares for diluted income per share........................................ 27,844 27,889 27,910 26,316 ======= ======= ======= =======
6 REMINGTON OIL AND GAS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 4. STOCK BASED COMPENSATION The following table summarizes relevant information as to the reported results under our intrinsic value method of accounting for stock awards, with supplemental information as if the fair value recognition provision of SFAS No. 123 had been applied:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------- ------------------- 2003 2002 2003 2002 --------- --------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) As reported: Net income................................... $12,264 $ 6,252 $23,951 $ 6,509 Basic income per share....................... $ 0.46 $ 0.24 $ 0.91 $ 0.27 Diluted income per share..................... $ 0.44 $ 0.22 $ 0.86 $ 0.25 Stock based compensation (net of tax at 35%) included in net income as reported........... $ 242 $ 257 $ 515 $ 554 Stock based compensation (net of tax at 35%) if using the fair value method as applied to all awards....................................... $ 716 $ 617 $ 1,462 $ 1,271 Proforma (if using the fair value method applied to all awards): Net income................................... $11,790 $ 5,892 $23,004 $ 5,792 Basic income per share....................... $ 0.44 $ 0.22 $ 0.87 $ 0.23 Diluted income per share..................... $ 0.42 $ 0.21 $ 0.82 $ 0.22 Weighted average shares used in computation Basic........................................ 26,536 25,953 26,436 24,424 Diluted...................................... 27,844 27,889 27,910 26,316
NOTE 5. NOTES PAYABLE Effective May 1, 2003, we agreed with our lenders to increase our borrowing base from $75.0 million to $100.0 million and to extend the maturity date of the loan facility from May 3, 2004, to May 3, 2006. As of June 30, 2003, we had $37.4 million borrowed under the facility. The banks review the borrowing base semi-annually and may decrease or propose an increase to the borrowing base relative to a redetermined estimate of proved oil and gas reserves. Our oil and gas properties are pledged as collateral for the line of credit. Additionally, we have agreed not to pay dividends. NOTE 6. COMMITMENTS AND CONTINGENCIES For the period April 1, 2003, through December 31, 2003, we have physical delivery contracts in place to sell 21,500 MMBtu of gas per day and 1,200 barrels of oil per day at the following prices:
PRICE PER -------------- PERIOD BARREL MMBTU - ------ ------ ----- April 1, 2003 through June 30, 2003......................... $30.92 $5.16 July 1, 2003 through September 30, 2003..................... $28.70 $4.89 October 1, 2003 through December 31, 2003................... $27.41 $4.95
We have no material pending legal proceedings. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion will assist in the understanding of our financial position and results of operations. The information below should be read in conjunction with the financial statements, the related notes to financial statements, and our Form 10-K for the year ended December 31, 2002. Our discussion contains both historical and forward-looking information. We assess the risks and uncertainties about our business, long-term strategy, and financial condition before we make any forward-looking statements, but we cannot guarantee that our assessment is accurate or that our goals and projections can or will be met. Statements concerning results of future exploration, exploitation, development, and acquisition expenditures as well as revenue, expense, and reserve levels are forward-looking statements. We make assumptions about commodity prices, drilling results, production costs, administrative expenses, and interest costs that we believe are reasonable based on currently available information. This discussion is primarily an update to the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 2002 Form 10-K. We recommend that you read this discussion in conjunction with the Form 10-K. Our long-term strategy is to increase our oil and gas production and reserves while keeping our operating costs and our finding and development costs competitive with our industry peers. LIQUIDITY AND CAPITAL RESOURCES The following table summarizes certain contractual obligations and commercial commitments as of June 30, 2003.
PAYMENTS DUE BY PERIOD -------------------------------------------------------- LESS THAN TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS AFTER 5 YEARS ------- ---------------- --------- --------- ------------- (IN THOUSANDS) Contractual obligations Bank debt.................. $37,400 $ -- $37,400 $ -- $ -- Other payables............. 2,539 1,774 765 -- -- Office lease............... 2,248 441 946 861 -- ------- ------ ------- ---- ----- Total................... $42,187 $2,215 $39,111 $861 $ -- ======= ====== ======= ==== =====
On June 30, 2003, our current assets exceeded our current liabilities by $12.7 million. Our current ratio was 1.26 to 1. Net cash flow provided by operations increased by $33.6 million, or 113%, primarily because of higher oil and gas revenues during the first half of 2003 compared to the first half of 2002. Gas sales increased by $33.5 million, or 118% because average prices increased by 102% and production increased by 8%. In addition, oil sales increased by $7.8 million, or 42%, because oil prices increased by 35% and oil production increased by 6%. During the first six months of 2003, our capital expenditures totaled $63.5 million of which $59.5 million, or 94%, was spent in the Gulf of Mexico where we incurred costs to drill and complete wells and upgrade and complete platforms and facilities. We have budgeted $96.1 million for capital expenditures during 2003. This capital and exploration budget includes $51.3 million for 30 exploratory wells, $25.8 million for offshore platforms and development drilling, and $19.0 million for workovers and property and seismic acquisitions. We expect that our cash, estimated future cash flow from operations, and available bank line of credit will be adequate to fund these expenditures for the remainder of 2003. If our exploratory drilling results in significant new discoveries, we will have to expend additional capital for the completion, development, and potential additional opportunities generated by our success. We believe that, because of the additional reserves resulting from the exploratory success and our record of reserve growth 8 in recent years, we will be able to acquire sufficient additional capital through additional bank financing and /or offerings of debt or equity securities. Effective May 1, 2003, we agreed with our lenders to increase our borrowing base from $75.0 million to $100.0 million and to extend the maturity date of the loan facility from May 3, 2004, to May 3, 2006. As of June 30, 2003, we had $37.4 million borrowed under the facility. The banks review the borrowing base semi-annually and may decrease or propose an increase to the borrowing base relative to a redetermined estimate of proved oil and gas reserves. Our oil and gas properties are pledged as collateral for the line of credit. Additionally, we have agreed not to pay dividends. On June 19, 2003, we filed a shelf registration statement to issue up to $200 million of common stock, debt securities, preferred stock, and/or warrants. We expect the registration statement to become effective during the third quarter of this year. RESULTS OF OPERATIONS We recorded net income for the three months ended June 30, 2003, of $12.3 million or $0.46 basic income per share and $0.44 diluted income per share compared to $6.3 million or $0.24 basic income per share and $0.22 diluted income per share for the three months ended June 30, 2002. For the first six months of 2003 we recorded net income of $24.0 million or $0.91 basic income per share and $0.86 diluted income per share compared to $6.5 million or $0.27 basic income per share and $0.25 diluted income per share for the first six months of 2002. Net income for the three and six months ended June 30, 2003, was higher than in the prior year primarily because of increased oil and gas revenues, partially offset by higher exploration expenses in 2003 and a $4.1 million gain from the sale of certain South Texas properties in 2002. The following table reflects the increase or decrease in oil and gas sales revenue due to the changes in prices and volumes.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------- ----------------- 2003 2002 2003 2002 -------- -------- ------- ------- (IN THOUSANDS, EXCEPT PRICES) Oil production volume (Bbls)................... 447 457 872 825 Oil sales revenue.............................. $12,584 $11,356 $26,237 $18,423 Price per barrel............................... $ 28.15 $ 24.85 $ 30.09 $ 22.33 Increase (decrease) in oil sales revenue due to: Change in prices............................. $ 1,508 $ 6,402 Change in production volume.................. (280) 1,412 ------- ------- Total increase (decrease) in oil sales revenue...................................... $ 1,228 $ 7,814 ======= ======= Gas production volume (Mcf).................... 5,855 4,832 10,360 9,587 Gas sales revenue.............................. $33,196 $16,050 $61,847 $28,357 Price per Mcf.................................. $ 5.67 $ 3.32 $ 5.97 $ 2.96 Increase in gas sales revenue due to: Change in prices............................. $11,355 $28,857 Change in production volume.................. 5,791 4,633 ------- ------- Total increase in gas sales revenue............ $17,146 $33,490 ======= ======= Total production Mcfe.......................... 8,537 7,574 15,592 14,537 Price per Mcfe................................. $ 5.36 $ 3.62 $ 5.65 $ 3.22
Oil sales revenue for the second quarter of 2003 compared to the same period in 2002 increased by $1.2 million, or 11%, primarily because oil prices increased by $3.30 per barrel, or 13%. Oil production from offshore Gulf of Mexico decreased by 25,000 barrels, or 7%, because of natural depletion from several older properties partially offset by production from new properties in the Gulf of Mexico. Oil production from the onshore gulf coast increased by 10,000 barrels primarily due to production from new discoveries, partially 9 offset by natural depletion from several older properties. Average prices increased from $24.85 during the second quarter of 2002 to $28.15 during the second quarter of 2003. Oil sales revenue for the first half of 2003 compared to the first half of 2002 increased by $7.8 million, or 42%, because oil prices increased by $7.76, or 35%, and production increased by 47,000 barrels. Oil production from offshore Gulf of Mexico increased by 57,000 barrels, or 9%, because of production from new properties. Oil production from onshore gulf coast properties decreased by 10,000 barrels because of natural depletion of the existing producing properties and the sale of certain properties in South Texas in April 2002, partially offset by production from new properties. Average prices increased from $22.33 during the first six months of 2002 to $30.09 during the first six months of 2003, which increased oil revenues by $6.4 million. Gas sales revenue for the three months ended June 30, 2003, compared to the same period in 2002 increased by $17.1 million, or 107% because production increased by 1.0 Bcf, or 21%, and average prices increased by $2.35, or 71%. Production from the Gulf of Mexico increased by 1.1 Bcf, or 26%, primarily because of gas production from new properties, partially offset by lower production from natural depletion of existing properties in the gulf coast area. Average prices increased from $3.32 during the second quarter of 2002 to $5.67 during the second quarter of 2003, increasing revenues by $11.4 million. Gas sales revenue for the first half of 2003 compared to the first half of 2002 increased by $33.5 million, or 118% because production increased by 773,000 Mcf, or 8%, and average prices increased by $3.01, or 102%. Production from the Gulf of Mexico increased by 1.3 Bcf, or 15%, primarily because of gas production from new properties, partially offset by lower production from natural depletion of existing properties in the gulf coast area. Average prices increased from $2.96 during the first six months of 2002 to $5.97 during the first six months of 2003, which increased gas revenues by $28.9 million. Other income decreased primarily because we realized a $4.1 million gain from the sale of properties in South Texas in April 2002. The following table presents certain expense items per Mcf equivalent (Mcfe) of production. (Barrels of oil are converted to Mcfe at a ratio of one barrel equals six Mcf.)
THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, --------------- --------------- 2003 2002 2003 2002 ------ ------ ------ ------ Operating costs and expenses........................... $0.62 $0.59 $0.62 $0.53 Depreciation, depletion and amortization............... $1.50 $1.35 $1.51 $1.36 General and administrative expense*.................... $0.26 $0.26 $0.25 $0.25 Interest and financing expense......................... $0.06 $0.06 $0.06 $0.09 - --------------- * Stock based compensation included in general and administrative expense............................... $0.04 $0.05 $0.05 $0.06
Operating costs and expenses for the second quarter of 2003 compared to the second quarter of 2002 increased by $708,000, or 16%, and for the first six months of 2003 compared to 2002 increased by $1.8 million, or 24% primarily because of new operated properties in the Gulf of Mexico. In addition, increases in delay rental expense for unproved properties, insurance rates, and repairs expense on existing properties also increased operating costs and expenses and were the primary reason for the increase in the rate per Mcfe. Exploration expense increased by $1.4 million during the second quarter of 2003 and by $4.8 million during the first six months of 2003 primarily because of increased dry hole expense. Dry hole expense for 2003 includes 6 wells in the Gulf of Mexico, one well in Mississippi and one well in South Texas for a total cost of $12.3 million compared to $8.3 million dry hole expense in 2002. Depreciation, depletion, and amortization expense increased by $2.5 million during the second quarter of 2003 and by $3.7 million during the first six months of 2003 compared to the same period in the prior year because of an increase in the number of producing properties. 10 General and administrative expenses have increased slightly due to employee related expense. Included in general and administrative expenses is stock based compensation expense which includes the amortized compensation cost related to the contingent stock grant and the directors fees paid in common stock. Interest and financing expenses increased slightly during the second quarter of 2003 compared to the second quarter of 2002 because of higher bank debt during the quarter partially offset by lower rates. During the first six months of 2003 interest and financing expenses decreased by 32% because of lower average bank debt and lower interest rates as compared to the six month period of 2002. In March 2002, we issued 3.0 million shares of common stock at $18.50 per share. We used $44.0 million of the net proceeds to reduce outstanding bank debt from $71.0 million to $27.0 million. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK INTEREST RATE RISK Our revolving bank line of credit is sensitive to changes in interest rates. At June 30, 2003, the unpaid principal balance under the line was $37.4 million which approximates its fair value. The interest rate on this debt is based on a premium of 150 to 225 basis points over the London Interbank Offered Rate ("Libor"). The rate is reset periodically, usually every three months. If on June 30, 2003, Libor changed by one full percentage point (100 basis points) the fair value of our revolving debt would change by approximately $93,000. We have not entered into any interest rate hedging contracts. COMMODITY PRICE RISK A vast majority of our production is sold on the spot markets. Accordingly, we are at risk for the volatility in the commodity prices inherent in the oil and gas industry. Occasionally we sell forward portions of our production under physical delivery contracts that by their terms cannot be settled in cash or other financial instruments. Such contracts are not subject to the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." Accordingly, we do not provide sensitivity analysis for such contracts. For the period January 1, 2003, through March 31, 2003, we did not have any forward sales contracts in place. For the period April 1, 2003, through December 31, 2003, we have physical delivery contracts in place to sell 21,500 MMBtu of gas per day and 1,200 barrels of oil per day at the following prices:
PRICE PER -------------- PERIOD BARREL MMBTU - ------ ------ ----- April 1, 2003 through June 30, 2003......................... $30.92 $5.16 July 1, 2003 through September 30, 2003..................... $28.70 $4.89 October 1, 2003 through December 31, 2003................... $27.41 $4.95
ITEM 4. CONTROLS AND PROCEDURES As of the end of the period covered by this report, our management, including our Chief Executive Officer and our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, our management, including the Chief Executive Officer and the Principal Financial Officer, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. Further, during the period covered by this report, there was no significant change in internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 11 PART II, OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We have no material pending legal proceedings. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 27, 2003, we held our annual stockholders meeting to elect members to the company's board of directors. The stockholders voted as follows:
FOR WITHHELD ---------- -------- Election of Directors John E. Goble, Jr. ....................................... 21,458,809 128,483 William E. Greenwood...................................... 21,458,679 128,613 Robert P. Murphy.......................................... 21,458,809 128,483 David E. Preng............................................ 21,458,709 128,583 Thomas W. Rollins......................................... 21,458,809 128,483 Alan C. Shapiro........................................... 21,458,809 128,483 James A. Watt............................................. 21,458,679 128,613
The members of the board of directors do not serve staggered terms of office. All directors elected at the meeting were already members of the board at the time of election, except Robert P. Murphy. Directors Don D. Box, David H. Hawk, and James Arthur Lyle, whose terms ended as of the annual stockholders meeting, did not stand for re-election. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 3.1# Certificate of Amendment of Certificate of Incorporation of Remington Oil and Gas Corporation. 3.3 By-Laws as amended. 10.1++ Pension Plan of Remington Oil and Gas Corporation, as Amended and Restated effective January 1, 2000. 10.2 Amendment Number One to the Pension Plan of Remington Oil ++ and Gas Corporation. 10.3*** Amendment Number Two to the Pension Plan of Remington Oil and Gas Corporation. 10.4*** Amendment Number Three to the Pension Plan of Remington Oil and Gas Corporation. 10.5* Box Energy Corporation Severance Plan. 10.6## Box Energy Corporation 1997 Stock Option Plan (as amended June 17, 1999 and May 23, 2001). 10.7* Box Energy Corporation Non-Employee Director Stock Purchase Plan. 10.8+ Form of Employment Agreement effective September 30, 1999, by and between Remington Oil and Gas Corporation and two executive officers.
12 10.9+ Form of Employment Agreement effective September 30, 1999, by and between Remington Oil and Gas Corporation and an executive officer. 10.10** Employment Agreement effective January 31, 2000, by and between Remington Oil and Gas Corporation and James A. Watt. 10.11*** Form of Employment Agreement effective April 30, 2002, by and between Remington Oil and Gas Corporation and an executive officer. 10.12** Form of Contingent Stock Grant Agreement -- Directors. 10.13** Form of Contingent Stock Grant Agreement -- Employees. 10.14** Form of Amendment to Contingent Stock Grant Agreement -- Directors. 10.15** Form of Amendment to Contingent Stock Grant Agreement -- Employees. 14.1 Code of Business Conduct and Ethics. 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification Pursuant to Section 302 of the Sarbanes-Onley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) On May 2, 2003, we filed a Form 8-K reporting our first quarter earnings press release under Item 12. Results of Operations and Financial Condition. - --------------- * Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 1997, filed with the Commission and effective on or about March 30, 1998. # Incorporated by reference to the Company's Registration Statement on Form S-4 (file number 333-61513) filed with the Commission and effective on November 27, 1998. + Incorporated by reference to the Company's Form 10-Q (file number 1-11516) for the fiscal quarter ended September 30, 1999, filed with the Commission and effective on or about November 12, 1999. ** Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 2000, filed with the Commission and effective on or about March 16, 2001. ## Incorporated by reference to the Company's Form 10-Q (file number 1-11516) for the fiscal quarter ended September 30, 2001, filed with the Commission and effective on or about November 9, 2001. ++ Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 2001, filed with the Commission and effective on or about March 21, 2002. *** Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 2002, filed with the Commission and effective on or about March 31, 2003. 13 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. REMINGTON OIL AND GAS CORPORATION By: /s/ JAMES A. WATT ------------------------------------ James A. Watt President and Chief Executive Officer Date: August 8, 2003 By: /s/ J. BURKE ASHER ------------------------------------ J. Burke Asher Vice President/Finance Date: August 8, 2003 14 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 3.1# Certificate of Amendment of Certificate of Incorporation of Remington Oil and Gas Corporation. 3.3 By-Laws as amended. 10.1++ Pension Plan of Remington Oil and Gas Corporation, as Amended and Restated effective January 1, 2000. 10.2++ Amendment Number One to the Pension Plan of Remington Oil and Gas Corporation. 10.3*** Amendment Number Two to the Pension Plan of Remington Oil and Gas Corporation. 10.4*** Amendment Number Three to the Pension Plan of Remington Oil and Gas Corporation. 10.5* Box Energy Corporation Severance Plan. 10.6## Box Energy Corporation 1997 Stock Option Plan (as amended June 17, 1999 and May 23, 2001). 10.7* Box Energy Corporation Non-Employee Director Stock Purchase Plan. 10.8+ Form of Employment Agreement effective September 30, 1999, by and between Remington Oil and Gas Corporation and two executive officers. 10.9+ Form of Employment Agreement effective September 30, 1999, by and between Remington Oil and Gas Corporation and an executive officer. 10.10** Employment Agreement effective January 31, 2000, by and between Remington Oil and Gas Corporation and James A. Watt. 10.11*** Form of Employment Agreement effective April 30, 2002, by and between Remington Oil and Gas Corporation and an executive officer. 10.12** Form of Contingent Stock Grant Agreement -- Directors. 10.13** Form of Contingent Stock Grant Agreement -- Employees. 10.14** Form of Amendment to Contingent Stock Grant Agreement -- Directors. 10.15** Form of Amendment to Contingent Stock Grant Agreement -- Employees. 14.1 Code of Business Conduct and Ethics. 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification Pursuant to Section 302 of the Sarbanes-Onley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
- --------------- * Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 1997, filed with the Commission and effective on or about March 30, 1998. # Incorporated by reference to the Company's Registration Statement on Form S-4 (file number 333-61513) filed with the Commission and effective on November 27, 1998. + Incorporated by reference to the Company's Form 10-Q (file number 1-11516) for the fiscal quarter ended September 30, 1999, filed with the Commission and effective on or about November 12, 1999. ** Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 2000, filed with the Commission and effective on or about March 16, 2001. ## Incorporated by reference to the Company's Form 10-Q (file number 1-11516) for the fiscal quarter ended September 30, 2001, filed with the Commission and effective on or about November 9, 2001. ++ Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 2001, filed with the Commission and effective on or about March 21, 2002. *** Incorporated by reference to the Company's Form 10-K (file number 1-11516) for the fiscal year ended December 31, 2002, filed with the Commission and effective on or about March 31, 2003. EX-3.3 3 d07915exv3w3.txt BY-LAWS AS AMENDED EXHIBIT 3.3 BY-LAWS AS AMENDED OF REMINGTON OIL AND GAS CORPORATION PREAMBLE The By-Laws of Remington Oil and Gas Corporation ("Remington" or the "Company") ("By-Laws") is one of the core corporate documents of the Company. The Restated Certificate of Incorporation of Remington, as may from time to time be amended ("Certificate of Incorporation") and filed with the Delaware Secretary of State, is the overriding corporate governance document. Apart from the Certificate of Incorporation and these By-Laws, the Company's Board of Directors has approved other documents (the "Corporate Charter Documents") which relate to the corporate governance of the Company. These Corporate Charter Documents include Remington's Code of Business Conduct and Ethics, Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, and Executive Committee Charter. Additional documents may be adopted by the Board of Directors to be included as Corporate Charter Documents. The By-Laws may be amended by the affirmative vote of at least 2/3rds of the voting members of the Board of Directors or the Company's stockholders. The Corporate Charter Documents shall be adopted and amended by the Board of Directors; however, in the event an amendment to the By-Laws approved by the Stockholders conflicts with the Corporate Charter Documents, the Board of Directors shall amend the Corporate Charter Documents in a manner as to comply with the By-Laws amendment. ARTICLE I STOCKHOLDERS AND STOCKHOLDER MEETINGS SECTION 1.1. ANNUAL MEETINGS. An annual meeting of stockholders shall be held for the election of directors at such date, time and place either within or without the State of Delaware as may be designated by the Board of Directors from time to time. Any other proper business may be transacted at the annual meeting. SECTION 1.2. SPECIAL MEETINGS. Special meetings of stockholders may be called at any time only by the Chairperson of the Board, the Lead Non-Management Director, the Company's Chief Executive Officer (the "Senior Officer"), or by resolution adopted by the affirmative vote of a majority of the Board of Directors, to be held at such date, time and place either within or without the State of Delaware as may be stated in the notice of meeting. SECTION 1.3. NOTICE OF MEETINGS. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Company. SECTION 1.4. ADJOURNMENTS. Any meeting of stockholders, annual or special, may be adjourned from time to time, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Company may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 1.5. QUORUM. At each meeting of stockholders, except where otherwise provided by law or the Certificate of Incorporation or these By-Laws, the holders of a majority of the outstanding shares of stock entitled to vote on a matter at the meeting, present in person or represented by proxy, shall constitute a quorum. In the absence of a quorum of the holders of any class of stock entitled to vote on a matter, the holders of such class so present or represented may, by majority vote, adjourn the meeting of such class from time to time in the manner provided by Section 1.4 of these By-Laws until a quorum of such class shall be so present or represented. Shares of its own capital stock belonging on the record date for the meeting to the Company or to 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 Company, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Company to vote stock including, but not limited to, its own stock, held by it in a fiduciary capacity. SECTION 1.6. ORGANIZATION. Meetings of stockholders shall be presided over by the Chairperson of the Board or Lead Non-Management Director. If the Chairperson or Lead Non-Management Director is not present, the Company's Senior Officer shall preside. The Secretary of the Company, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the presiding officer of the meeting may appoint any person to act as secretary of the meeting. SECTION 1.7. VOTING; PROXIES. Except as otherwise provided in the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Company generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Company. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or represented by proxy at such meeting shall so determine. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. In all other matters, unless otherwise provided by law or by the Certificate of Incorporation or these By-Laws, the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. - 2 - SECTION 1.8. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, 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 record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the Company may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. SECTION 1.9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Secretary of the Company shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. - 3 - ARTICLE II BOARD OF DIRECTORS SECTION 2.1. MAKEUP OF THE BOARD OF DIRECTORS. The Board of Directors shall consist of at least five members. No more than two of the directors may be employees of the Company. A majority of the Board of Directors shall be "Independent Directors." In order to be "Independent" a director must satisfy the following requirements for independence: - The director has no direct or indirect material relationship with the Company - director's fees are the only compensation the director may receive from the Company. - The director is not an officer or other employee of the Company and has not served in such position for the previous five years. - The director is not and has not been in the previous five years a partner or employee of or otherwise affiliated with the Company's present or former outside auditor or the Company's primary accounting firm on tax related issues. - The director is not a partner, significant shareholder, officer, consultant, or employee of an entity that has a business relationship or business interest in or with the Company. - The director must comply with all rules promulgated by the SEC and NYSE regarding independence. - The director is not and has not been for the past five years part of an interlocking directorate in which an executive officer of the Company serves on the compensation committee of another company that employs the director. The dictates as to independence ascribed to a director as set forth above shall also apply to members of the director's immediate family for purposes of determining "independence." The Nominating and Corporate Governance Committee and then the Board of Directors must each find by the affirmative vote of a majority of its members that each Independent Director satisfies the above standards. In applying these standards the Nominating and Corporate Governance Committee and the Board of Directors as a whole shall consider the issue not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. Material relationships can include, among others, commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships. SECTION 2.2. TERM OF DIRECTORS Unless a director is earlier removed or resigns, the term of each member of the Board of Directors shall be from the date of election by the stockholders until the next annual meeting of stockholders at which a quorum is present. Unless a director is earlier removed or resigns, the term of a director appointed by the Board of Directors to fill a vacancy or as a result of an increase in the number of members of the Board of Directors shall be from the date of appointment until the next annual meeting of stockholders at which a quorum is present. - 4 - SECTION 2.3. STOCKHOLDER NOMINATIONS FOR DIRECTORS AND OTHER STOCKHOLDER PROPOSALS - Nominations of persons for election to the Board of Directors of the Company and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Company's notice of meeting delivered pursuant to Section 1.3 of Article I of these By-Laws, (b) by or at the direction of the Nominating and Corporate Governance Committee pursuant to Section 2.4 of these By-Laws, or (c) by any stockholder who is entitled to vote at the meeting, who has complied with the notice procedures set forth in clauses (2) and (3) of this subsection (A) and this Section 2.3 and who was a stockholder of record at the time such notice is delivered to the Secretary of the Company. - A stockholder must give timely written notice to the Secretary of the Company in order to properly bring director nominations or other business before the annual meeting of stockholders. To be timely, a stockholder's notice shall be delivered to the Secretary of the Company at the principal executive offices of the Company not less than seventy (70) days nor more than ninety (90) days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than twenty (20) days or delayed by more than seventy (70) days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the seventieth (70th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. Such stockholder's notice shall set forth (a) as to each person who the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholders propose to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such stockholder, as they appear on the Company's books, and of such beneficial owner, and (ii) the class and number of shares of the capital stock of the Company which are owned beneficially and of record by such stockholder and such beneficial owner. - Notwithstanding anything in the second sentence of the paragraph immediately above in this Section 2.3 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Company is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Company at least eighty (80) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Company at the principal executive offices of the Company not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Company. - 5 - - Only persons who are nominated in accordance with the procedures set forth in this Section 2.3 and Section 2.4 of these By-Laws shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.3. Except as otherwise provided by law, the Certificate of Incorporation, these By-Laws, or the Corporate Charter Documents, the Chairperson of the meeting shall have the power and duty to determine whether a stockholder nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth by this Section 2.3 and, if any proposed nomination or business is not in compliance with this Section 2.3, to declare that such defective proposal or nomination shall be disregarded. - For purposes of this Section 2.3, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Section 13, 14, or 15 (d) of the Exchange Act. - Notwithstanding the foregoing provisions of this Section 2.3, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.3. Nothing in this Section 2.3 shall be deemed to affect any right of stockholders to request inclusion of proposals in the Company's proxy statement pursuant to rule 14a-8 under the Exchange Act. SECTION 2.4. NOMINATION OF THE COMPANY'S SLATE OF DIRECTORS. Directors to be placed on the Company's slate of Directors to be presented at the Company's annual meeting of stockholders shall be nominated for election by the Nominating and Corporate Governance Committee in accordance with the Corporate Charter Documents. Each director so nominated must be approved by the affirmative majority of the Company's Board of Directors including a majority of the independent directors. Each nominee for director upon receiving the approval of the Board of Directors in the manner specified shall be placed on the Company's slate of director nominees to be presented at the Company's annual meeting. SECTION 2.5. RESIGNATION OF DIRECTORS Any director may resign at any time upon written notice to the Board of Directors or the Company's Senior Officer or the Secretary of the Company. Such resignation shall take effect at the time specified therein, and unless otherwise required by the Corporate Charter Documents or the letter of resignation no acceptance of such resignation shall be necessary to make it effective. SECTION 2.6. REMOVAL OF DIRECTORS Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. SECTION 2.7. DIRECTOR VACANCIES Unless otherwise provided in the Certificate of Incorporation, these By-Laws, or the Corporate Charter Documents, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class or from any other cause may be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. The Board of Directors may request that the Nominating and Corporate Governance Committee make a recommendation regarding potential directors to fill vacancies. SECTION 2.8. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board may from time to time - 6 - determine. Reasonable notice of a Regular Meeting of the Board must be provided to each director and the Company's Secretary. SECTION 2.9. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairperson of the Board, Lead Non-Management Director, the Company's Senior Officer, or by any two directors. Reasonable notice thereof shall be given to each director and the Company's Secretary by the person or persons calling the meeting. SECTION 2.10. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE PERMITTED. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 2.10 shall constitute presence in person at such meeting. SECTION 2.11. QUORUM; VOTE REQUIRED FOR ACTION. At all meetings of the Board of Directors a majority of the entire Board of Directors shall constitute a quorum for the transaction of business, provided that a majority of the Independent Directors is present. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Certificate of Incorporation, these By-Laws or the Corporate Charter Documents shall require a vote of a greater number. In case at any meeting of the Board of Directors a quorum shall not be present, the members of the Board of Directors present may adjourn the meeting from time to time until a quorum shall be present. SECTION 2.12. ORGANIZATION. Meetings of the Board of Directors shall be presided over by the Chairperson of the Board, Lead Non-Management Director or the Company's Senior Officer, or in their absence by a chairperson chosen at the meeting. The Secretary of the Company, or in the absence of the Secretary an Assistant Secretary of the Company, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the Chairperson of the meeting may appoint any person to act as secretary of the meeting. SECTION 2.13. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise restricted by the Certificate of Incorporation, these By-Laws or the Corporate Charter Documents, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. SECTION 2.14. COMPENSATION OF DIRECTORS. Each non-employee director shall receive as compensation for serving as a Director: $20,000 annual retainer. $1,000 per attended meeting of the Board of Directors (The Chairperson of the Board will receive an extra $250 per meeting attended). Reimbursement of reasonable and necessary expenses related to his or her service as director. - 7 - Each non-employee director shall be entitled to receive director's fees in Company Common Stock pursuant to and in accordance with the Non-Employee Directors Stock Purchase Plan. Each non-employee director shall be eligible for equity based compensation awards. Apart from the compensation listed above and committee fees, a non-employee director may have no other financial relationship with the Company. Director compensation may be changed from time to time based on a review of the Compensation Committee and the affirmative vote of two-thirds of the Board of Directors. SECTION 2.15. ANNUAL PERFORMANCE REVIEW. Each director and the Board of Directors as a whole shall, on an annual basis, undergo a performance review. This review shall include one survey to be completed by each director which covers both the quantitative and qualitative requirements for a director as set forth in the Company's Corporate Governance Guidelines as well as the director's performance in general. The quantitative requirements will include background information to be used in determining independence. The completed survey of each director will be disseminated to every other director for review and critique, and then passed on to the nominating committee for use in the director nominations process. An additional survey will be completed by each director which focuses on the performance of the Board of Directors as a whole. Items in this survey will include the performance of the Board of Directors in relation to the Corporate Governance Documents and its oversight responsibility relating to company functions. SECTION 2.16. ADVISORY MEMBERS OF THE BOARD. By a vote of a majority of the Elected Members of the Board of Directors, the Board may from time to time designate employees of the Company as "Advisory Directors" in order to utilize the experience and expertise of the designated employee on matters (except personnel matters including compensation) before the Board. Advisory Directors shall have no right to vote or receive compensation apart from the compensation received as an employee of the Company. Once designated, an Advisory Director, and until a majority of the elected members of the Board of Directors votes to withdraw the designation, the Advisory Director shall be entitled to receive all communications, concerning the issue(s) on which the employee has been designated an Advisory Director. Designation as an Advisory Director shall neither add, nor subtract, from the employee's indemnification rights accorded him or her under the Company's Corporate Documents. In addition, the designation of an Advisory Director as to a particular issue before the Board shall in no way relieve the Elected Members of the Board of Directors as a whole or as individual elected members, of any responsibility imposed by law upon the Board of Directors or any member thereof. 2.17. EMERITUS MEMBERS OF THE BOARD. By a vote of a majority of the Elected Members of the Board of Directors, the Board may from time to time designate a former director of the Company as a "Director Emeritus" in order to utilize the experience and expertise of the former director. Emeritus Directors shall have no right to vote. Once designated a Director Emeritus, he/she shall serve in such capacity until his/her resignation or removal by the vote of the majority of the Board. In addition, the designation of a Director Emeritus as to a particular issue before the Board shall in no way relieve the Elected Members of the Board of Directors as a whole or as individual elected members, of any responsibility imposed by law upon the Board of Directors or any member thereof. - 8 - ARTICLE III COMMITTEES SECTION 3.1. COMMITTEES. The standing committees of the Board of Directors are: - The Audit Committee - The Nominating and Corporate Governance Committee - The Compensation Committee - The Executive Committee The members of the Audit, Nominating and Corporate Governance, and Compensation Committees must be Independent Directors. The above committees shall be governed by the Corporate Charter Documents and, to the extent not contradictory to the Corporate Charter Documents, these By-Laws. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more additional committees, each such committee to consist of one or more of the directors of the Company ("Special Committees"). The Board of Directors shall determine the composition of and rules governing any Special Committee at the time of the Special Committee's formation. Any committee, to the extent provided in the resolution of the Board of Directors, the Corporate Charter Documents or in these By-Laws, 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 Company, and may authorize the seal of the Company 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 or resolutions providing for the issuance of shares of stock adopted by the Board of Directors, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Company 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 Company or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Company's property and assets, recommending to the stockholders a dissolution of the Company or a revocation of a dissolution, removing or indemnifying directors or amending these By-Laws; and, unless the resolution, these By-Laws or the Certificate of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger. SECTION 3.2. COMMITTEE MEMBER COMPENSATION. Each committee member will be paid $750.00 per attended committee meeting and committee meetings can be telephonic; however, if the committee meeting is held on the same day as a general Board of Directors meeting or in connection with such meeting, no additional fees will be paid. The Chairperson of each committee and the Chairperson/Lead Non-Management Director shall receive an additional $250 for each committee meeting for which payment is to be received. SECTION 3.3. COMMITTEE RULES. Unless the Board of Directors otherwise provides in the Corporate Charter Documents, each committee designated by the Board of Directors may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board of Directors - 9 - or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II of these By-Laws. SECTION 3.4. ADVISORS TO COMMITTEES. The Standing Committees of the Board are authorized and empowered to retain such independent advisors, including counsel that the respective committee may deem necessary in order to carry out its responsibilities. No engagement shall be a valid act of the committee and no compensation for the services of such advisors shall be paid by the Company unless, prior to such engagement, the Company Secretary was advised of the decision to engage the advisor, a preliminary budget for the engagement of the advisor was submitted to the Company Secretary, the identity of the advisor was made known to the Company Secretary so that conflicts could be checked and independence verified, and the Company Secretary was provided an undertaking by the committee chairperson that any and all letters, reports, and studies prepared by the advisor will be made known and made available to the Company's Board of Directors as a whole. SECTION 3.5. ANNUAL PERFORMANCE REVIEWS. Annual performance reviews of each committee shall be required. A survey shall be completed by each member of the committee. This survey will poll how the committee has functioned in relation to its charter and with the Board of Directors as a whole. SECTION 3.6. MINUTES OF COMMITTEE MEETINGS. At all meetings of any committee of the Board of Directors, whether standing or special, a committee member shall be designated to take notes of the meetings and prepare minutes of the proceedings. Preparation and presentation of the notices, agendas, and minutes to the Board of Directors of the Company shall be required before any committee member receives payment for fees and expenses relating to the meeting. - 10 - ARTICLE IV OFFICERS, CHAIRPERSON OF THE BOARD, LEAD NON-MANAGEMENT DIRECTOR, COMMITTEE CHAIRPERSONS SECTION 4.1. CHAIRPERSON OF THE BOARD, LEAD NON-MANAGEMENT DIRECTOR, COMMITTEE MEMBERS, COMMITTEE CHAIRPERSONS, OFFICERS. At its meeting held in conjunction with the annual meeting of stockholders in each year, the Board of Directors shall elect from among its members a director to serve in the position of Chairperson of the Board and a Director to serve in the position of Lead Non-Management Director. Additionally, the Board shall appoint the members of the committees of the Board of Directors in accordance with the applicable Corporate Charter Documents. Each committee shall at such time of appointment recommend to the Board of Directors for approval one of its members as its Chairperson. No director shall concurrently serve as chairperson of more than two of the standing committees of the Board of Directors. Further, the Chairperson of the Board and the Lead Non-Management Director may not concurrently serve as chairperson of more than one standing committee of the Board, nor shall the Chairperson of the Audit Committee concurrently serve as Chairperson of the Board, Lead Non-Management Director or as chairperson of another standing committee. In addition, the Board of Directors shall make any decisions concerning the Company's officers it deems appropriate and consistent with applicable law, the Certificate of Incorporation, these By-Laws, and the Corporate Charter Documents. SECTION 4.2. OFFICERS - TERM OF OFFICE, REMOVAL, VACANCIES, RESIGNATIONS. The officers of the Company shall be appointed and serve at the pleasure of the Board of Directors. The Board of Directors shall designate the status of each officer as that of executive officer or non-executive officer. The Board of Directors may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Company, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Company by death, resignation, removal or otherwise may be filled by the Board of Directors at any regular or special meeting. Any officer may resign at any time upon written notice to the Board of Directors, the Chairperson, the Lead Non-Management Director, the Company's Senior Officer, or the Secretary of the Company. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. SECTION 4.3. POWERS AND DUTIES. The officers of the Company shall have such powers and duties in the management of the Company as shall be stated in these By-Laws or in a resolution of the Board of Directors which is not inconsistent with these By-Laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board of Directors. The Secretary of the Company shall have the duty to record the proceedings of the meetings of the stockholders, the Board of Directors and any committees in a book to be kept for that purpose. ARTICLE V STOCK SECTION 5.1. CERTIFICATES. Every holder of stock in the Company shall be entitled to have a certificate signed by or in the name of the Company by the Chairperson of the Board/Non-Management Director or the Senior Officer, President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Company, representing the - 11 - number of shares of stock in the Company owned by such holder. If such certificate is manually signed by one officer or manually countersigned by a transfer agent or by a registrar, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. So long as the Company is authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Company shall issue to represent such class or series of stock, provided that, except as otherwise provided by law, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Company shall issue to represent such class or series of stock a statement that the Company will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. SECTION 5.2. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW CERTIFICATES. The Company may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Company may require the owner of the lost, stolen or destroyed certificate, or such owner's legal representative, to give the Company a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. ARTICLE VI MISCELLANEOUS SECTION 6.1. FISCAL YEAR. The fiscal year of the Company shall be determined by the Board of Directors. SECTION 6.2. SEAL. The Company may have a corporate seal which shall have the name of the Company inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. SECTION 6.3. WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND COMMITTEES. Whenever notice is required to be given by law or under any provision of the Certificate of Incorporation or these By-Laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these By-Laws. - 12 - SECTION 6.4. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. Each person who is or was a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (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 Company or is or was serving at the request of the Company as a director, officer, employee or agent of another Company 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 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 Company to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, 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, and such indemnification shall continue as to a person who has to ceased 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 second paragraph hereof, the Company 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 of Directors of the Company. The right to indemnification conferred in this section shall be a contract right and shall include the right to be paid by the Company any expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by 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 Company of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this section or otherwise. The Company may, by action of its Board of Directors, provide indemnification to employees and agents of the Company with the same scope and effect as the foregoing indemnification of directors and officers. 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, provision of these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise. SECTION 6.5. TRANSACTIONS WITH AFFILIATES. Except as specified in the Corporate Charter Documents, the Company shall not enter into any transaction with an Affiliate of the Company which does not directly relate to an Affiliate's service as a director of the Company or as an employee of the Company. For purposes of this section and the Corporate Charter Documents, Affiliate shall mean an employee (except in the person's capacity as an employee), director (except in the person's capacity as a director), or greater than 10% stockholder of the Company and members of their immediate family. The Company shall make no loans to Affiliates nor guarantee any debt of an Affiliate. SECTION 6.6. FORM OF RECORDS. Any records maintained by the Company in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a - 13 - reasonable time. The Company shall so convert any records so kept upon the request of any person entitled to inspect the same. SECTION 6.7. AMENDMENT OF BY-LAWS. By an affirmative vote of at least 2/3rds of the Board of Directors, the Board of Directors is expressly empowered to adopt, amend, or repeal the By-Laws of the Company. By the vote of at least 2/3rds of the stockholders the stockholders shall also have power to adopt, amend, or repeal By-Laws of the Company. - 14 - EX-14.1 4 d07915exv14w1.txt CODE OF BUSINESS CONDUCT AND ETHICS EXHIBIT 14.1 CODE OF BUSINESS CONDUCT AND ETHICS OF REMINGTON OIL AND GAS CORPORATION 1. REMINGTON DIRECTORS, OFFICERS, AND EMPLOYEES SHALL AVOID ALL CONFLICTS OF INTEREST OR IMPROPER OR UNLAWFUL CONDUCT AND EVEN THE APPEARANCE THEREOF - It is the policy of Remington Oil and Gas Corporation ("Remington" or the "Company") that there shall be no conflict of interest between the interests of Remington and the personal interests of any Director, officer, or employee. The best interests of Remington must be the sole determinant in all business decisions, and no considerations of friendship or self-interest may be allowed to interfere with this principle. - Any Director, officer, employee, or any member of their respective immediate families may not accept any gift of more than nominal value from any person or entity with which Remington has a business relationship or which in any way competes with Remington. Nor may any Director, officer, employee, or any member of their respective immediate families maintain any beneficial interest of any kind (other than publicly-traded securities or securities in issuers of which no family member is a control person or an affiliate) in any entity which has a business relationship with Remington or which in any way competes with Remington. - In addition, conflicts of interest may arise, among other things, when a Director, officer, or employee, takes actions or has interests that may make it difficult to perform work for Remington objectively and effectively, or when a Director, officer, employee, or any member of their respective families receives improper personal benefits as a result of such person's position in Remington. Any such conflicts of interest are prohibited. - It is the responsibility of a Director to report the possibility of a conflict of interest to the full Board of Directors and of an officer or employee to report a conflict of interest to the Company's Senior Officer. The Company's Senior Officer shall report any conflict of interest to the Board of Directors. Only the Board of Directors may waive a conflict of interest, or any other waiver for non-compliance with this Code of Business Conduct and Ethics, and such waiver may not occur by means of a unanimous consent in lieu of meeting. In the event a conflict of interest, or any other non-compliance with this Code of Business Conduct and Ethics by a Director or officer, is waived by the Board of Directors, the Board of Directors shall cause the Company to file a periodic report on Form 8-K with the Securities and Exchange Commission within two days of the meeting in which the conflict is waived. The Form 8-K shall provide the details of the conflict and the basis for waiver. 2. DIRECTORS, OFFICERS, AND EMPLOYEES SHALL KEEP COMPANY INFORMATION CONFIDENTIAL - In carrying out its business, Remington maintains confidential information. Confidential information means information maintained by Remington regarding its operational, financial, legal, and administrative activities, which has not been released by Remington to the public through press releases, annual reports or periodic filings with the Securities and Exchange Commission. The above categories are very broad as to the information encompassed and would include, but not be limited to, Company procedures, personnel or customers. The presumption should thus be in favor of particular information being confidential. Generally, confidential information includes all non-public information that may be of use to competitors, or harmful to the Company or its customers, if disclosed. Moreover, federal securities laws impose strict obligations on Remington regarding disclosure of information to the public. - The policies outlined below have been implemented in order to preserve Remington's confidential information. Any questions regarding these policies should be addressed to the Company's Senior Officer. - The Company's Senior Officer or his designee is the designated spokesman for Remington for the dissemination of Company information to the public. No other person is authorized to disclose Company information or speak on such matters with the public. The public includes, but is not limited to, stockholders, analysts and members of the media. Any inquires for information must be referred to the Company's Senior Officer. - Unauthorized disclosure of Company information, whether confidential or not, is forbidden. Authorization for release must be obtained prior to release from the Company's Senior Officer or his designee. - Under no circumstances is a Director, officer or employee to respond to rumors regarding Remington that may appear on the Internet or any other medium. - A Director's, officer's or employee's obligation to preserve confidential Company information survives the Director's, officer's or employee's separation from Remington. 3. TRADING IN COMPANY SECURITIES Directors, officers, and employees of the Company are generally prohibited from trading in Company securities (including the exercise of stock options) during the last month of any financial quarter through the expiration of three days following the public dissemination of the Company's financial results for that quarter. The Company's Senior Officer may upon written request allow trading in Company Securities during generally prohibited times if in his sole discretion there is no material non-public information in the possession of the Director, officer or employee. In addition: - Company policy also prohibits Directors, officers, and employees from providing a third party with material non-public information that may lead to the third party trading in Remington's securities. This "tipping" is also a violation of federal and state law. 2 - Periodically, the Company's Senior Officer will designate a "black out period" during which time Directors, officers, and employees are prohibited from trading in Remington's securities. Only two exceptions will be granted during "black out periods." These exceptions are the acquisition of shares pursuant to a stockholder approved stock option plan where the shares are acquired with cash or where a sufficient number of shares of Company stock are withheld or tendered to pay for the shares acquired, and in both instances the shares are held for at least six months. These "black out periods" may occur during generally open trading periods. These periods will usually be declared prior to the issuance of a significant Company press release or the filing of a significant document with the Securities and Exchange Commission. In no case should Directors, officers, or employees trade in Remington's securities within 72 hours of the issuance of any significant Company press release even if a "black out period" was not designated prior to the issuance of the press release. - It shall also be improper for any director or executive officer to trade in Company securities by any means, including the exceptions to blackout periods discussed in the paragraph above, during a period when trading in Company securities is banned in connection with the Company's 401(k) Plan or any other Company defined benefit plan. - Directors and officers of Remington are required to inform the Corporate Secretary of every transaction they make in Remington's securities. This notification should be made prior to the transaction, as Directors and officers are burdened with certain restrictions as to the timing of purchases and sales of securities. In addition, such notification must come prior to a transaction by a Director or officer because the transaction must be reported to the Securities and Exchange Commission within two business days of the transaction. The only exception to the rules regarding trading periods is if the Director, officer or employee has properly prepared a trading plan in accordance with Rule 10b5-1 promulgated pursuant to the Securities Exchange Act of 1934, as amended. 4. LOANS TO DIRECTORS, OFFICERS, AND EMPLOYEES Effective July 30, 2002, the Company is prohibited from, directly or indirectly, making any loan to a Director, officer, or employee of the Company or guaranteeing any loan or obligation on behalf of a Director, officer or employee, except upon the recommendation of the Company's Senior Officer with approval of the Compensation Committee in connection with the relocation of an employee. 5. THE COMPANY ENCOURAGES THE REPORTING OF ILLEGAL OR UNETHICAL BEHAVIOR Employees are encouraged to talk to their supervisors, managers or other appropriate personnel when in doubt about the best course of action in a particular situation. In addition, employees should report any violations of law, rules, regulations or this Code of Business Conduct and Ethics to appropriate personnel. The Company will not allow retaliation against employees for such reports made in good faith. 3 6. IT IS THE COMPANY'S POLICY TO PROHIBIT ALL FORMS OF HARASSMENT OR OTHER IMPROPER CONDUCT The Company expects proper, professional conduct from each Director, officer, and employee with other Directors, officers, employees, and business associates at all times, in the workplace or in any Company business environment. Harassment and other improper conduct, regardless of the form or activity, will not be tolerated and will subject the person engaging in such behavior to sanctions which may include termination "for cause." 7. CORPORATE OPPORTUNITIES Directors, officers, and employees owe a duty to the Company to advance the Company's legitimate interests when the opportunity to do so arises. It is the Company's policy that Directors, officers, and employees shall be prohibited from: - Taking for themselves personally opportunities that are discovered through the use of corporate property, information or position - Using corporate property, information or position for personal gain - Competing with the Company 8. FAIR DEALING Each employee should endeavor to deal fairly with the Company's joint interest owners, joint venture partners, product purchasers, vendors, competitors, and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice. 9. PROTECTION AND PROPER USE OF COMPANY ASSETS All employees should protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability. All Company assets should be used for legitimate business purposes. 10. COMPLIANCE WITH LAWS, RULES AND REGULATIONS In addition to the insider trading laws discussed in paragraph 3 above, Directors, officers and employees shall strive to comply with all laws, rules and regulations which govern the conduct of the Company's business matters. The requirements and opportunities provided in paragraphs 5 and 6 above should be heeded by all Directors, officers and employees. 4 EX-31.1 5 d07915exv31w1.txt CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.1 CERTIFICATIONS I, James A. Watt, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Remington Oil and Gas Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 8, 2003 /s/ JAMES A. WATT - -------------------------------------- James A. Watt President and Chief Executive Officer EX-31.2 6 d07915exv31w2.txt CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.2 CERTIFICATIONS I, J. Burke Asher, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Remington Oil and Gas Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 8, 2003 /s/ J. BURKE ASHER - -------------------------------------- J. Burke Asher Vice President/Finance (Principal Financial Officer) EX-32.1 7 d07915exv32w1.txt CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Remington Oil and Gas Corporation (the "Company") on Form 10-Q for the period ending June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James A. Watt, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. sec.1350, as adopted pursuant to sec.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is made solely for the purpose of U.S.C. Section 1350, and not for any other purpose. /s/ JAMES A. WATT -------------------------------------- James A. Watt President and Chief Executive Officer August 8, 2003 A signed original of this written statement required by Section 906 has been provided to Remington Oil and Gas Corporation and will be retained by Remington Oil and Gas Corporation and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 8 d07915exv32w2.txt CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Remington Oil and Gas Corporation (the "Company") on Form 10-Q for the period ending June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J. Burke Asher, Vice President/Finance (Principal Financial Officer) of the Company, certify pursuant to 18 U.S.C. sec.1350, as adopted pursuant to sec.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is made solely for the purpose of 18 U.S. C. Section 1350, and not for any other purpose. /s/ J. BURKE ASHER -------------------------------------- J. Burke Asher Vice President/Finance (Principal Financial Officer) August 8, 2003 A signed original of this written statement required by Section 906 has been provided to Remington Oil and Gas Corporation and will be retained by Remington Oil and Gas Corporation and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----