-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KbmOWwjwjraZ52NA/xMA8nzxCGIHcXxnovOAmYM5+YYOTzgDOw5qQDPN+AFIh7pj QjZ4t4aX2zvqMBgKJDmtIg== 0000093542-94-000008.txt : 19940513 0000093542-94-000008.hdr.sgml : 19940513 ACCESSION NUMBER: 0000093542-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANHOME INC CENTRAL INDEX KEY: 0000093542 STANDARD INDUSTRIAL CLASSIFICATION: 5190 IRS NUMBER: 041864170 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09267 FILM NUMBER: 94527489 BUSINESS ADDRESS: STREET 1: 333 WESTERN AVE CITY: WESTFIELD STATE: MA ZIP: 01085 BUSINESS PHONE: 4135623631 FORMER COMPANY: FORMER CONFORMED NAME: STANLEY HOME PRODUCTS INC DATE OF NAME CHANGE: 19820513 10-Q 1 FORM 10-Q FOR PERIOD ENDING 03/31/94 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 ______________ 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 0-1349 Stanhome Inc. ___________________________________________________________________________ (Exact name of registrant as specified in its charter) Massachusetts 04-1864170 _______________________________ ________________________ (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 333 Western Avenue, Westfield, Massachusetts 01085 ___________________________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 413-562-3631 ___________________________________________________________________________ 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 [_] March 31, 1994 1993 ____ ____ Shares Outstanding: Common Stock with Associated Rights 19,470,555 19,798,907 Total number of pages contained herein 31 Index to Exhibits is on page 17 PART I. FINANCIAL INFORMATION ------------------------------ STANHOME INC. CONSOLIDATED CONDENSED BALANCE SHEETS MARCH 31, 1994 and DECEMBER 31, 1993 (Unaudited) (Audited)
March 31, December 31, 1994 1993 ---- ---- ASSETS CURRENT ASSETS: Cash and certificates of deposit $ 59,125,627 $ 53,333,754 Marketable securities, at cost (which approximates market value) 15,747,548 7,392,380 Notes and accounts receivable, net 117,117,858 123,018,073 Inventories 93,201,040 94,877,441 Prepaid advertising 37,883,535 30,946,289 Other prepaid expenses 10,207,673 4,783,884 ------------ ------------ Total current assets 333,283,281 314,351,821 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT, at cost 108,923,371 107,851,799 Less - Accumulated depreciation and amortization 64,509,904 63,177,270 ------------ ------------ 44,413,467 44,674,529 ------------ ------------ OTHER ASSETS: Intangibles Goodwill, net 42,580,342 43,028,884 Product lines and other, net 17,709,477 18,720,577 Other 8,907,729 8,954,915 ------------ ------------ 69,197,548 70,704,376 ------------ ------------ $446,894,296 $429,730,726 ============ ============ The accompanying notes are an integral part of these condensed financial statements.
-2- STANHOME INC. CONSOLIDATED CONDENSED BALANCE SHEETS MARCH 31, 1994 and DECEMBER 31, 1993 (Unaudited) (Audited)
March 31, December 31, 1994 1993 ---- ---- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes and loans payable $ 805,975 $ 834,197 Accounts payable 56,561,612 51,166,414 Federal, state and foreign taxes on income 27,391,924 21,598,997 Accrued expenses-- Payroll and commissions 12,351,428 12,844,332 Vacation, sick leave and retirement insurance 9,683,459 9,074,991 Acquisitions 9,451,469 9,125,000 Restructuring 7,466,653 10,840,975 Royalties 7,337,851 7,319,675 Pensions and profit sharing 5,595,957 5,094,628 Other 29,027,335 27,153,269 ------------ ------------ Total current liabilities 165,673,663 155,052,478 ------------ ------------ LONG-TERM LIABILITIES: Foreign employee severance obligations 13,519,895 12,869,999 Pensions 7,661,333 7,442,344 ------------ ------------ Total long-term liabilities 21,181,228 20,312,343 ------------ ------------ SHAREHOLDERS' EQUITY Common stock 3,153,530 3,153,530 Capital in excess of par value 35,861,059 34,015,110 Retained earnings 342,023,434 338,753,939 Cumulative translation adjustments ( 27,077,722) ( 27,405,455) ------------ ------------ 353,960,301 348,517,124 Less - Shares held in treasury, at cost 93,920,896 94,151,219 ------------ ------------ Total shareholders' equity 260,039,405 254,365,905 ------------ ------------ $446,894,296 $429,730,726 ============ ============ The accompanying notes are an integral part of these condensed financial statements.
-3- STANHOME INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE THREE MONTHS ENDED MARCH 31, 1994 and 1993 (Unaudited)
NET SALES $171,769,005 $164,489,605 COST OF SALES 69,806,121 65,200,300 ------------ ------------ GROSS PROFIT 101,962,884 99,289,305 SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 86,982,547 87,406,634 ------------ ------------ OPERATING PROFIT 14,980,337 11,882,671 Interest expense ( 156,920) ( 376,341) Other income, net 664,328 637,928 ------------ ------------ INCOME BEFORE INCOME TAXES 15,487,745 12,144,258 Income taxes 7,354,813 5,877,230 ------------ ------------ NET INCOME 8,132,932 6,267,028 RETAINED EARNINGS, beginning of period 338,753,939 325,241,068 Cash dividends, $.25 per share in 1994 and 1993 ( 4,863,437) ( 4,949,154) ------------ ------------ RETAINED EARNINGS, end of period $342,023,434 $326,558,942 ============ ============ EARNINGS PER COMMON SHARE: Primary and fully diluted $ .41 $ .31 ===== ===== The accompanying notes are an integral part of these condensed financial statements.
-4- STANHOME INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1994 and 1993 (Unaudited)
1994 1993 ---- ---- OPERATING ACTIVITIES: Net cash provided by operating activities $17,164,172 $ 6,076,811 ----------- ----------- INVESTING ACTIVITIES: Purchase of property, plant and equipment ( 1,321,591) ( 1,113,377) Proceeds from sale of property, plant and equipment 605,699 121,938 Other, principally marketable securities ( 630) - ----------- ----------- Net cash used in investing activities ( 716,522) ( 991,439) ----------- ----------- FINANCING ACTIVITIES: Cash dividends ( 4,863,437) ( 4,949,154) Exchanges and purchases of common stock ( 108,891) ( 6,384) Notes and loans payable ( 56,515) 2,076,746 Exercise of stock options 1,954,489 286,061 Other common stock issuance 230,674 231,903 ----------- ----------- Net cash used in financing activities ( 2,843,680) ( 2,360,828) ----------- ----------- Effect of exchange rate changes on cash and cash equivalents 187,903 ( 1,181,860) ----------- ----------- Increase/(decrease) in cash and cash equivalents 13,791,873 1,542,684 Cash and cash equivalents, beginning of year 53,333,754 33,793,236 ----------- ----------- Cash and cash equivalents, end of quarter $67,125,627 $35,335,920 =========== =========== SUPPLEMENTAL CASH FLOW DATA Cash paid for: Interest $ 190,717 $ 340,564 Income taxes $ 1,709,357 $ 3,086,577 The accompanying notes are an integral part of these condensed financial statements.
-5- STANHOME INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS The consolidated condensed financial statements and related notes included herein have been prepared by the Company, without audit except for the December 31, 1993 condensed balance sheet, which was derived from the Annual Report on Form 10-K, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods. It is suggested that these condensed financial statements be read in conjunction with the financial statements and related notes to consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 1. ACCOUNTING POLICIES: The Company's financial statements for the three months ended March 31, 1994 have been prepared in accordance with the accounting policies described in Note 1 to the December 31, 1993 consolidated financial statements included in the Company's 1993 Annual Report on Form 10-K. Marketable securities with maturities of three months or less are considered to be cash equivalents and amounted to $8,000,000 at March 31, -6- 1994 versus none at December 31, 1993. Notes and accounts receivable were net of allowance for doubtful accounts of $16,813,000 at March 31, 1994 and $15,731,000 at December 31, 1993. 2. INVENTORY CLASSES: The major classes of inventories at March and December 3l were as follows (in thousands): March 31, December 31, 1994 1993 ---- ---- Raw materials and supplies $ 6,687 $ 6,710 Work in process 388 644 Finished goods in transit 8,262 8,762 Finished goods 77,864 78,761 -------- -------- $ 93,201 $ 94,877 ======== ======== 3. OTHER INCOME, NET: Other income, net for the three months ended March 31, 1994 and 1993 consists of the following (in thousands): 1994 1993 ---- ---- Interest income $ 846 $1,055 Gains on the sale of capital assets, net 437 1 Other assets amortization ( 598) ( 574) Other items, net ( 20) 156 ------ ------ $ 665 $ 638 ====== ====== -7- 4. EARNINGS PER COMMON SHARE (BASIS OF CALCULATION): Earnings per common share are based on the average number of common shares outstanding and common share equivalents for the period covered. For both years, there was no difference in earnings per share between primary and fully diluted earnings per share computations. For the first quarter fully diluted computation, the average number of shares utilized was 19,754,901 and 20,024,213 shares for 1994 and 1993, respectively, including common share equivalents of 332,288 in 1994 and 241,298 in 1993. The lower average number of shares for 1994 resulted from the repurchase of shares in the last nine months of 1993 as part of the Company's repurchase program. -8- STANHOME INC. THREE MONTHS ENDED MARCH 31, 1994 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS SEGMENTS of the Company's operations are summarized on Page 14. A discussion and analysis of the segments follows: Enesco Worldwide Giftware Group sales increased 13% primarily due to continued unit volume growth in the United States of collectible licensed lines. Delivery of products from the Far East continued to improve. International sales and operating profit decreased due to poor economic conditions and to unfavorable exchange translation rates in 1994 compared to 1993. The Australian company recorded much lower sales and losses, and as provided for in the 1993 restructuring, was sold to a distributor in April 1994. Total Group operating profit increased 32% and benefited from a lower percentage of selling, general and administrative expenses principally due to the favorable impact of the sales increase on fixed costs. The total cost of sales percentage increased due to higher costs and product promotions. Hamilton Worldwide Direct Response Group sales and operating profit increased due to unit volume sales growth in the United States. International sales decreased and operating losses increased and were impacted by poor economic conditions. Worldwide Direct Selling Group sales decreased as results were impacted by poor economic conditions in Europe and unfavorable foreign exchange rates compared to the first quarter 1993. However, operating profit improved 18% as a result of the benefits from the restructuring -9- program, announced in 1993. Included in the benefits were reduced losses from operations that have been discontinued. First quarter sales and operating losses for 1994 and 1993 of operations that have been discontinued as a result of the restructuring were sales of $857,000 and $1,233,000, respectively, and operating losses of $1,000 and $1,102,000, respectively. European Direct Selling sales decreased 12% due to declines from all the major operations but operating profit increased 14% due to the benefits from the restructuring. First quarter 1994 European local currency sales and operating profit translated at 1993 exchange rates would have resulted in a 4% sales decrease but a 26% operating profit increase. Italian value-added sales tax and, in some cases, income tax issues concerning the Italian independent Dealers, as well as registration taxes imposed by the government which affect the Dealer force, have caused Dealers to leave and potential recruits to decline to join. These conditions still persist. The Company will continue to assist Dealers in their defense of the claims, by making payments of legal expenses, advancing amounts for tax deposits, or making payments of settlements where this is more cost effective than potential litigation costs, so as to protect its Dealer force and its ability to recruit and retain future Dealers. These payments have not been material. Latin American Direct Selling sales and operating profit increased due principally to strong results from Mexico. U.S. Direct Selling sales decreased and operating loss increased. General corporate expense increased due principally to higher compensation and benefits. -10- International operations were unfavorably impacted by lower currency translation rates in the first three months of 1994 compared to 1993 and 1993 compared to 1992. The value of the U.S. dollar versus Asian currencies has resulted in higher costs of imported products. The value of the U.S. dollar versus international currencies where the Company conducts business will continue to impact the future results of these businesses. In addition to the currency risks, the Company's international operations, including sources of imported products, are subject to the risks of doing business abroad including import or export restrictions and changes in economic and political climates. Net sales and operating profit for the first quarter of 1994 are less than the fourth quarter of 1993 due to the seasonal characteristics of the Company's sales. INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense for the first quarter of 1994 decreased compared to 1993 principally due to lower borrowings. Interest income decreased compared to 1993 principally due to lower rates. The 1994 gain on the sale of assets was from the sale of the Company's Direct Selling Zanesville, Ohio Customer Care Center. THE EFFECTIVE TAX RATE was 47% for the first quarter of 1994 compared to 48% for the first quarter of 1993. The decrease was principally due to a favorable earnings mix with a lower ratio of foreign source income to United States income, which has a lower rate despite the increase in United States taxes in 1994. FINANCIAL CONDITION. The Company has historically satisfied its capital requirements with internally generated funds and short-term loans. Working capital requirements have seasonal variations during the year and are generally greatest during the third quarter. -11- The major sources of cash from operating activities in the first quarter of 1994 were from net income as well as lower accounts receivable and inventory levels and higher levels of accounts payable and accrued taxes due generally to timing differences and seasonality. The amounts were partially reduced by increases in prepaid expenses due to seasonality and marketing efforts in support of higher sales for the Direct Response Group. The major use of cash in investing activities in the first three months of 1994 was for capital expenditures. Capital expenditure commitments for $17 million are planned for 1994. As part of the restructuring program, the Company currently has for sale two distribution centers with a total appraised value of approximately $2.7 million. The Company has an acquisition program, and may utilize funds for this purpose in the future. On April 15, 1994, the acquisition accrual amount was paid in connection with the Company's 1989 stock purchase of The Hamilton Group Limited, Inc. The major use of cash in financing activities was for dividends to shareholders. The Company has an authorized program to purchase shares of stock for the Company treasury from time to time in the open market, depending on market conditions, and may utilize funds for this purpose in the future. As of March 31, 1994, 1.4 million shares remained available for purchase under the program. The Company's earnings, cash flow, and available debt capacity have made and make stock repurchases, in the Company's view, one of its best investment alternatives. The major source of funds from financing activities continued to be from the exercise of stock options. Total stock options outstanding at the exercise price amounted to $72 million at March 31, 1994 and the Company could receive these funds in the future if the options are exercised. -12- Fluctuations in the value of the U.S. dollar versus international currencies affect the U.S. dollar translation value of international currency denominated balance sheet items. The changes in the balance sheet dollar values due to international currency translation fluctuations are recorded as a component of shareholders' equity. International currency fluctuations of $328,000 reduced the cumulative translation component which contributed to the shareholders' equity increase in the first quarter of 1994. The translation adjustments to the March 31, 1994 balance sheet that produced the 1994 change in the cumulative translation component of shareholders' equity were increases in working capital by $339,000; net property, plant and equipment and other assets by $592,000; and long-term liabilities by $603,000. The Company depends upon its international operations to pay dividends and to make other payments to the Company. The Company's international operations are subject to the risks of doing business abroad including currency, economic and political. With the level of funds generated from operations, the level of working capital and the unused lines of credit, no liquidity problems are anticipated. -13- STANHOME INC. SALES AND OPERATING PROFIT BY BUSINESS SEGMENT FOR THE FIRST THREE MONTHS ENDED MARCH 31, 1994 AND 1993 (Unaudited) (In Thousands)
1994 1993 Percent Actual Actual Change ------ ------ ------- Net Sales: Worldwide Giftware $ 86,745 $ 76,467 13% Worldwide Direct Response 26,074 23,593 11 Worldwide Direct Selling 59,439 64,508 ( 8) Eliminations ( 489) ( 78) -------- -------- Total Net Sales $171,769 $164,490 4% ======== ======== Operating Profit: Worldwide Giftware $ 10,288 $ 7,813 32% Worldwide Direct Response 1,549 1,349 15 Worldwide Direct Selling 5,315 4,518 18 Corporate ( 2,172) ( 1,797) (21) -------- -------- Total Operating Profit $ 14,980 $ 11,883 26% ======== ========
-14- PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Annual Meeting of Stockholders was held on April 28, 1994. (c) The first matter voted upon at the meeting was the election of Directors. The members of Class II were standing for election to a three-year term expiring at the Annual Meeting in 1997. Upon motion duly made and seconded, it was voted to elect Janet M. Clarke, Alejandro Diaz, Allan G. Keirstead, and Alla O'Brien as Class II Directors for a three-year term expiring at the Annual Meeting in 1997 and until their successors are elected and qualified. The votes for each of the candidates were reported as follows: Janet M. Clarke For: 16,298,959 Withheld: 397,058 Alejandro Diaz For: 16,288,229 Withheld: 407,788 Allan G. Keirstead For: 16,312,668 Withheld: 383,349 Alla O'Brien For: 16,318,615 Withheld: 377,402 The second matter voted upon at the meeting was the ratification of the Board's appointment of Arthur Andersen & Co. as independent accountants for 1994. Upon motion duly made and seconded, it was voted that the appointment by the Board of Directors at its March 2, 1994 meeting of Arthur Andersen & Co., independent certified public accountants, as independent accountants for the Company for its fiscal year ending December 31, 1994 be ratified and approved. The votes for the independent accountants were reported as follows: Arthur Andersen & Co. For: 16,539,831 Against: 41,502 Abstain: 114,684 -15- The third matter voted upon at the meeting was the approval of the indemnification provision as amended and restated in Article V of the Company's By-Laws. Upon motion duly made and seconded, it was voted that the amendment and restatement by the Board of Directors at its January 26, 1994 meeting of Article V of the Company's By-Laws be ratified and approved. The votes for the indemnification provision amendment were reported as follows: By-Laws Amendment For: 16,285,237 Against: 74,035 Abstain: 336,745 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - By-Laws as amended. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the Quarter for which this report is filed. All other items hereunder are omitted because either such item is inapplicable or the response to it is negative. 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. STANHOME INC. (Registrant) Date: May 11, 1994 /s/G. William Seawright ________________________ G. William Seawright President and Chief Executive Officer Date: May 11, 1994 /s/Allan G. Keirstead ________________________ Allan G. Keirstead Chief Administrative and Financial Officer -16- EXHIBIT INDEX
Reg. S-K Item 601 Exhibit 10-Q Page No. 3(ii) By-Laws 18
-17- EX-3 2 COMPANY BY-LAWS BY-LAWS OF STANHOME INC. Effective on October 1, 1965 or on such later date as the new Business Corporation Law of Massachusetts (Chapter 156B) takes effect As amended through April 28, 1994 BY-LAWS OF STANHOME INC. TABLE OF CONTENTS ARTICLE PAGE I OFFICES.............................................1 Sec. 1 Principal Office............................1 Sec. 2 Other Offices...............................1 II MEETING OF STOCKHOLDERS.............................1 Sec. 1 Place of Meetings...........................1 Sec. 2 Quorum......................................1 Sec. 3 Annual Meetings.............................1 Sec. 4 Special Meetings............................2 Sec. 5 Notices.....................................2 Sec. 6 Adjournments................................2 III DIRECTORS...........................................2 Sec. 1 Number and Term.............................2 Sec. 2 Annual Meetings.............................2 Sec. 3 Regular Meetings............................2 Sec. 4 Special Meetings............................3 Sec. 5 Waiver of Notice............................3 Sec. 6 Quorum......................................3 Sec. 7 Action without Meeting......................3 Sec. 8 Powers......................................3 Sec. 9 Execution of Corporation Documents and Instruments.............................3 Sec. 10 Committees of the Board of Directors...................................4 Sec. 11 Remuneration of Outside Directors...........4 IV OFFICERS............................................4 Sec. 1 Election of Officers........................4 Sec. 2 Terms of Office.............................4 Sec. 3 Compensation of Officers, Employees and Agents..................................4 Sec. 4 Vacancies...................................5 CHAIRMAN OF THE BOARD Sec. 5 .............................................5 Sec. 6 .............................................5 PRESIDENT Sec. 7 .............................................5 Sec. 8 .............................................5 VICE-PRESIDENTS Sec. 9 .............................................6 TREASURER Sec. 10 ............................................6 Sec. 11 ............................................6 Sec. 12 ............................................6 Sec. 13 ............................................6 ARTICLE PAGE ASSISTANT TREASURERS Sec. 14 ............................................6 SECRETARY Sec. 15.............................................7 ASSISTANT SECRETARIES ..............................7 Sec. 16 ............................................7 CLERK Sec. 17 ............................................7 ASSISTANT CLERKS Sec. 18 ............................................7 BONDS Sec. 19 ............................................8 V INDEMNIFICATION OF OFFICERS AND DIRECTORS ......................................8 Sec. 1 .............................................8 VI STOCK ..............................................9 Sec. 1 Holders to be Recognized....................9 Sec. 2 Form of Stock Certificates..................9 Sec. 3 Replacement of Certificates Lost, Etc.......9 Sec. 4 Fixing Date for Determination of Stockholders of Record......................9 Sec. 5 Restrictions on Transfer....................10 Sec. 6 Massachusetts Control Share Acquisition Act.............................10 VII SEAL AND FISCAL YEAR ...............................10 Sec. 1 Seal .......................................10 Sec. 2 Fiscal Year ................................10 VIII AMENDMENT OF BY-LAWS................................10 Sec. 1..............................................10 Sec. 2..............................................11 STANHOME INC ARTICLE I OFFICES Sec. 1. Principal Office. The location of the principal office of the Corporation shall be in the City of Westfield, Massachusetts, unless such location shall at any time be changed as permitted by law. Sec. 2. Other Offices. The Corporation may also have offices in such other places within and without the Commonwealth of Massachusetts as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Sec. 1. Place of Meetings. All meetings of stockholders shall be held at the principal office of the Corporation in the Commonwealth of Massachusetts, unless by order of the Board of Directors the notice of any such meeting shall designate some other place within the Commonwealth of Massachusetts. Sec. 2. Quorum. A majority of the stock issued, outstanding and entitled to vote on the matters to be presented, which is represented by the holders thereof, either in person or by proxy, shall be a quorum at any meeting of stockholders. Sec. 3. Annual Meetings. The annual meeting of the stockholders shall be held on the fourth Thursday of April in each year at l0:00 A.M. unless by order of the Board of Directors the notice of the annual meeting shall designate some other hour on such date. At each annual meeting the stockholders entitled to vote thereat on the matter shall elect the class of Directors whose term of office is expiring, in accordance with the provisions of Article 6B of the Restated Articles of Organization of the Corporation, as amended. At each annual meeting the stockholders entitled to vote thereat on the matter shall have placed before them for ratification the name of the Auditor appointed by the Board of Directors in accordance with law. -1- Sec. 4. Special Meetings. Special meetings of stockholders may be called by the President, or by the Directors, or in any other manner specifically authorized by law; provided, however, that if one or more stockholders request the special meeting, the holders of at least ninety percent in interest of the capital stock entitled to vote at the meeting must submit written application therefor. Sec. 5. Notices. Notice of any meeting of stockholders shall, at least seven days prior to the date thereof, be mailed by the Clerk or an Assistant Clerk or delivered by either to each stockholder entitled to vote on any of the matters to be presented at his address as the same appears on the stock records of the Corporation or so mailed or delivered to his residence or to his usual place of business. Sec. 6. Adjournments. Any meeting of the stockholders may be adjourned to any other time and place by the stockholders present or represented by proxy at the meeting and entitled to vote on the matters to be presented, although less than a quorum, and it shall not be necessary to notify any stockholder of any such adjournment. Any business which could have been transacted at any meeting of stockholders as originally called may be transacted at any such adjournment thereof. ARTICLE III. DIRECTORS Sec. l. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors as set forth in Article 6B of the Restated Articles of Organization of the Corporation, as amended. Each Director shall be a voting stockholder or shall become such prior to acting as a director. Sec. 2. Annual Meetings. Following each annual meeting of stockholders and at the place thereof, if a quorum of the Board of Directors is present thereat, the annual meeting of the Board of Directors shall proceed thereafter without notice; but if a quorum of the Board is not present thereat, or, if present, does not so proceed to hold such meeting, the annual meeting of such Board shall be called in the manner hereinafter provided with respect to the call of a special meeting of the Board. Sec. 3. Regular Meetings. Regular meetings of the Board of Directors may be held at such times and places within or without the Commonwealth of -2- Massachusetts as shall from time to time be fixed by the Board, and no notice need be given of regular meetings held at times and places so fixed. Sec. 4. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President, and the Secretary or an Assistant Secretary shall give notice of any special meeting so called to all Directors stating the time and place within or without the Commonwealth of Massachusetts, and such notice shall be sufficient if given either (i) by mailing the same postage prepaid forty- eight hours before the date of the meeting addressed to each Director at his usual place of business or residence, or (ii) by delivery thereof in hand or by telegram dispatched prepaid not less than twenty-four hours before the date of the meeting, or (iii) orally or by telephone not less than twenty-four hours before the date of the meeting. Sec. 5. Waiver of Notice. Any requirement of notice of any meeting of the Board of Directors shall be deemed satisfied as to any Director who waives the same or whose attendance at such meeting constitutes a waiver under the law. Sec. 6. Quorum. A majority of the Board of Directors in office shall constitute a quorum for the transaction of business, and a meeting of the Board, whether a quorum be present or not, may be adjourned by those present without the necessity of notifying any Director of any such adjournment. Any business which could legally be transacted at any meeting of the Board of Directors may be transacted at any adjournment thereof without any new notification. Sec. 7. Action without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all Directors consent in writing to such action. Such written consent shall be filed with the minutes of the Board of Directors. Sec. 8. Powers. The Board of Directors shall manage the business of the Corporation and shall have all the powers of the Corporation, except such as by law, the Articles of Organization or by the By-Laws of the Corporation are conferred upon or reserved to the stockholders. Sec. 9. Execution of Corporation Documents and Instruments. The Board of Directors shall designate the persons, in addition to those specifically authorized elsewhere in these By-Laws, who shall be empowered on behalf of the Corporation to sign checks, contracts, bids, deeds, releases, security -3- devices, notes and other documents and instruments of the Corporation, as well as the terms and conditions, if any, of such signing. Sec. 10. Committees of the Board of Directors. The Board of Directors may establish such committees, including an Executive Committee, consisting of members elected by it from among its number as it deems advisable in the conduct of the business of the Corporation and may delegate such functions and duties to such committees from time to time as may be permitted by law. Sec. 11. Remuneration of Outside Directors. Any Director who is entitled to compensation from the Corporation as an officer or employee thereof shall not receive any additional compensation for his services as a director. The Board of Directors may provide for remuneration of all other Directors in such amounts and in such manner as the Board may from time to time deem advisable. ARTICLE IV OFFICERS Sec. l. Election of Officers. The Officers of the Corporation shall be elected by the Directors and shall include a President, a Treasurer, and a Clerk, and, when deemed desirable by the Board of Directors, a Chairman of the Board, one or more Vice-Presidents, one or more Assistant Treasurers, a Secretary and one or more Assistant Secretaries, one or more Assistant Clerks and such other officers as the Board of Directors may, from time to time, deem necessary or advisable for the management of the affairs of the Corporation. The President, Treasurer and Clerk shall be elected at the Annual Meeting of Directors. All other officers may be elected at such annual meeting or at any regular or special meeting of the Board of Directors. Sec. 2. Terms of Office. The President, the Treasurer and the Clerk shall (unless sooner removed in accordance with law) hold office until the next annual meeting of the Board of Directors and until their respective successors are elected. All other officers shall (unless sooner removed in accordance with law) hold their respective offices until the next annual meeting and the election of the first mentioned officers thereat. Sec. 3. Compensation of Officers, Employees and Agents. The officers, employees and agents of the Corporation shall receive such compensation and upon such terms as the Board of Directors may from time to time determine. -4- The determination of such compensation may be delegated by the Board of Directors to (i) a Compensation Committee composed of members of the Board who are elected to that Committee by it or appointed under its authorization except that the determination of the compensation of the members of the Compensation Committee cannot be delegated to that Committee, and (ii) to such other individuals or committees to the extent and in the manner permitted by the law. Sec. 4. Vacancies. If any corporate office specified in this Article becomes vacant for any reason, including resignation, the Board of Directors may elect a successor who shall hold office for the unexpired term unless sooner removed in accordance with law. CHAIRMAN OF THE BOARD Sec. 5. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. Sec. 6. The Chairman of the Board shall have the power, on behalf of the Corporation, to sign contracts, deeds and releases and, with the Treasurer or Assistant Treasurer, to sign or endorse security devices, notes, and, when authorized by the Board of Directors, to sign or endorse such other documents and instruments as the Board of directors may specify. The Chairman of the Board shall also have such additional powers and duties as the Board of Directors may from time to time assign to him. PRESIDENT Sec. 7. In the absence or disability of the Chairman of the Board or at his request, or if his office be vacant, the President shall preside at all meetings of the stockholders and of the Board of Directors. Sec. 8. The President shall have the power on behalf of the Corporation (i) to sign contracts, deeds and releases and (ii) with the Treasurer or Assistant Treasurer, to sign or endorse certificates of stock, security devices, notes, and (iii) when authorized by the Board of Directors, to sign or endorse such other documents and instruments as the Board of Directors may specify. The President shall have also such additional powers and duties as the Board of Directors may from time to time assign to him. -5- VICE-PRESIDENTS Sec. 9. Each of the Vice-Presidents shall bear such title and shall have such powers and duties as may be assigned to him from time to time by the Board of Directors. TREASURER Sec. 10. The Treasurer shall have the custody of the money, funds and securities of the Corporation and shall have charge of its books and the keeping of its accounts. He shall make financial and accounting reports to the Board of Directors at least quarterly and more often when requested by it, and shall make a report at the annual meeting of stockholders. He shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated from time to time by the Board of Directors. Sec. 11. The Treasurer shall, with the President or a duly authorized Vice-President, sign all certificates of stock, and with the Chairman of the Board or the President or a duly authorized Vice-President, sign or endorse security devices and notes and, when authorized by the Board of Directors, sign or endorse such other documents and instruments as the Board may specify. Sec. 12. The Treasurer shall also keep books for the recording of stock and transfers thereof and the names and addresses of stockholders and shall be transfer agent of the Corporation for the transfer of all certificates of stock; provided that the Board of Directors may, with respect to the transfer of shares of any class of the capital stock of the Corporation, appoint any other person or corporation to act as transfer agent, and, when the Board deems it desirable, any person or corporation to act as registrar thereof. Sec. 13. The Treasurer also shall have such additional powers and duties as may be assigned to him from time to time by the Board of Directors. ASSISTANT TREASURERS Sec. 14. In the absence or disability of the Treasurer, or if his office be vacant, the Assistant Treasurers, in the order of the seniority of their election, shall have the powers and duties appertaining to the office of Treasurer set forth in Sections l0 and l2 above and when duly authorized by the Board of Directors shall perform all or any part of the -6- duties set forth in Sections 11 and l3 above. In addition to the foregoing, each of the Assistant Treasurers shall have such other powers and duties as may be assigned to him from time to time by the Board of Directors. SECRETARY Sec. 15. The Secretary shall attend all meetings of the Board of Directors and the Executive Committee and shall record all votes and minutes of all proceedings thereat in books to be kept for that purpose. When required by law or these By-Laws, proper notice of meetings of the Board of Directors shall be given by him. In addition to the foregoing, the Secretary shall have such other powers and duties as may be assigned to him from time to time by the Board of Directors. ASSISTANT SECRETARIES Sec. 16. In the absence or disability of the Secretary or at his request, or if his office be vacant, the Assistant Secretaries, in the order of the seniority of their elections, shall perform the duties herein assigned to the Secretary. In addition to the foregoing, each Assistant Secretary shall have such other powers and duties as may be assigned to him from time to time by the Board of Directors. CLERK Sec. 17. The Clerk shall be a resident of the Commonwealth of Massachusetts unless the Board of Directors shall appoint a Resident Agent as permitted by law. He shall attend all meetings of stockholders and act as clerk thereof and shall record all votes and minutes of all proceedings thereat in books to be kept for that purpose. Such books shall remain at the principal office of the Corporation or at the office of the Resident Agent, if any. When required by law or these By-Laws, proper notice shall be given by him of all meetings of stockholders. In addition to the foregoing, the Clerk shall have such other powers and duties as may be assigned to him from time to time by the Board of Directors. ASSISTANT CLERKS Sec. 18. In the absence or disability of the Clerk or at his request, or if his office be vacant, the Assistant Clerks, in the order of the seniority of their election, shall perform the duties herein assigned to the Clerk. In addition to the foregoing, each Assistant Clerk shall have -7- such other powers and duties as may be assigned to him from time to time by the Board of Directors. BONDS Sec. 19. Any officer of the Corporation may be required to give a bond for the faithful performance of his duties in such form and with such sureties as the Board of Directors may direct. ARTICLE V INDEMNIFICATION Sec. 1. In order to induce directors, officers, employees and other agents of the Corporation to serve as such and as partial consideration for such service, the Corporation shall, to the fullest extent and under the circumstances permitted by Massachusetts law, as amended from time to time, indemnify any person serving or who has served as a director or officer of the Corporation or a President or Vice President of any division of the Corporation or any person serving or who has served at the Corporation's request (1) as director or officer of a direct or indirect subsidiary of the Corporation or another organization or (2) in any capacity with respect to any employee benefit plan of the Corporation, and the Board of Directors may, to the extent legally permissible, indemnify any person serving or who has served as an employee or other agent of the Corporation or as an employee or other agent or in any capacity with respect to any employee benefit plan of a direct or indirect subsidiary of the Corporation or another organization, against all liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees, reasonably incurred by him or her in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which he or she may be involved or with which he or she may be threatened, while serving or thereafter, by reason of his or her being or having been such a director, officer, trustee, partner, person serving with respect to an employee benefit plan, employee or agent, except (unless otherwise permitted by Massachusetts law) with respect to any matter as to which he or she shall have been adjudicated in any proceeding not have acted in good faith in the reasonable belief that his or her action was in the best interest of the Corporation or, to the extent such matter relates to service with respect to an employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan. Expenses, including without limitation counsel fees, reasonably incurred by any such director, officer, person serving with respect to any employee benefit plan, employee or agent in connection with the defense or disposition of any such action, suit or other proceeding may be paid from time to time by the Corporation in -8- advance of the final disposition thereof upon receipt of an undertaking by such individual to repay the amounts so paid to the Corporation if it shall be adjudicated that indemnification for such expenses is not authorized under this Article. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which any such director, officer, person serving with respect to any employee benefit plan, employee or agent may be entitled. Nothing contained in this Article shall affect any other rights to indemnification to which such directors, officers, persons serving with respect to an employee benefit plan, employees or agents may be entitled by contract or otherwise under law. The Board of Directors is authorized to enter into agreements regarding indemnification which are not inconsistent with the provisions of this Article. ARTICLE VI STOCK Sec. l. Holders to be Recognized. The Corporation shall be entitled to treat the record holder of any share or shares of stock as the holder in fact thereof and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person except as may be otherwise expressly provided by law. Sec. 2. Form of Stock Certificates. All certificates of stock shall be in such form and contain such information as shall be required by law and be signed, either manually or by facsimile, as hereinbefore provided. Sec. 3. Replacement of Certificates Lost, Etc.. In case of the alleged loss, destruction, mutilation, or wrongful taking of a certificate of stock, a new certificate may be issued in place thereof, upon such terms and conditions as the Board of Directors may prescribe. Sec. 4. Fixing Date for Determination of Stockholders of Record. The Board of Directors may fix in advance a time, which shall be not more than sixty days before the date of any meeting of stockholders or the date for the payment of any dividend or the making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting and any adjournment thereof or the right to receive such dividend or distribution or the right to give such consent or dissent, and in such case only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the Corporation after the record date; or without fixing such record date the -9- Board of Directors may for any of such purposes close the transfer books for all or any part of such period. Sec. 5. Restrictions on Transfer. The Board of Directors may impose restrictions on transfer of securities of the Corporation pursuant to the Rights Agreement dated as of September 7, 1988 by and between the Corporation and The Connecticut Bank and Trust Company, N.A. (East Hartford, Connecticut), as and to the extent required by such Rights Agreement, as amended from time to time. Sec. 6. Massachusetts Control Share Acquisition Act. Until such time as this Section 6, Article VI shall be repealed or the By-Laws otherwise shall be amended to provide otherwise, in each case in accordance with Article VIII of the By-Laws, the provisions of Chapter 110D of the Massachusetts General Laws ("Chapter 110D") shall not apply to "control share acquisitions" of the Corporation within the meaning of Chapter 110D. ARTICLE VII SEAL AND FISCAL YEAR Sec. 1. Seal. The seal of the Corporation shall have inscribed thereon the name of the Corporation and the words "INCORPORATED 1931 MASSACHUSETTS". The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed to any document. Sec. 2. Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January of each year and end on the thirty-first day of December. ARTICLE VIII AMENDMENT OF BY-LAWS Sec. 1. Any of these By-Laws may be added to, altered, amended or repealed by the stockholders of the Corporation entitled to vote on the matter at any annual or special meeting of stockholders. The nature or substance of the proposed addition, alteration, amendment or repeal shall be stated in the notice of the meeting. -10- Sec. 2. The Board of Directors shall also have the power to make, amend or repeal the By-Laws of the Corporation in whole or in part subject to amendment or repeal by stockholders as provided by law. -11- -----END PRIVACY-ENHANCED MESSAGE-----