UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______to ______
Commission file number 0-6839
BRENCO, INCORPORATED
(Exact name of registrant as specified in its charter)
Virginia #54-0493835
(State of incorporation) (IRS Employer Identification No.)
One Park West Circle, Midlothian, VA 23113
(Address of principal executive offices) (Zip Code)
(804) 794-1436
(Telephone number)
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 [ ]
Common stock, par value $1.00 per share: 10,141,321 shares
outstanding as of June 30, 1995
BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q__June 30, 1995
INDEX
Part I Financial Information: Page No.
Item 1. Financial Statements.
Consolidated Statements of Income (Unaudited)
-Three Months and Six Months Ended
June 30, 1995 and 1994........................... 2
Consolidated Balance Sheets
-June 30, 1995 (Unaudited) and December 31, 1994.... 3 & 4
Consolidated Statements of Cash Flows (Unaudited)
-Three Months and Six Months Ended
June 30, 1995 and 1994........................... 5
Notes to Consolidated Financial Statements.......... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 7
Part II Other Information:
Item 4. Submission of Matters to a Vote of Security Holders. 8
Item 6. Exhibits and Reports on Form 8-K.................... 9
1
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands except per share data)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
NET SALES -------------------- $ 32,642 $ 29,741 $ 67,874 $ 57,865
-------- -------- -------- --------
Costs and expenses:
Cost of goods sold---------- 24,596 22,341 50,096 43,834
Administrative and selling
expenses------------------- 3,656 3,259 7,380 6,474
-------- -------- -------- --------
28,252 25,600 57,476 50,308
-------- -------- -------- --------
Operating income-------------- 4,390 4,141 10,398 7,557
Interest expense-------------- ( 168)( 191)( 373)( 385)
Gain (loss) on sale of
assets---------------------- ( 5) ( 6) 1,056
Special charge for
environmental expenditures-- ( 190) ( 1,490)
Other income------------------ 226 199 403 250
-------- -------- -------- --------
Income before income taxes---- 4,443 3,959 10,422 6,988
Income taxes------------------ 1,737 1,602 4,076 2,767
-------- -------- -------- --------
NET INCOME-------------------- $ 2,706 $ 2,357 $ 6,346 $ 4,221
======== ======== ======== ========
Net income per share---------- $ .27 $ .23 $ .63 $ .42
Dividends declared per share-- $ .07 $ .05 $ .13 $ .10
Average number of shares
outstanding------------------ 10,130 10,043 10,117 10,033
<FN>
See accompanying notes to Consolidated Financial Statements.
2
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of dollars)
June 30 December 31
1995 1994
ASSETS
Current Assets:
Cash and cash equivalents------------- $ 5,518 $ 6,650
Accounts receivable------------------- 21,604 18,304
Inventories:
Finished goods---------------------- 4,056 3,060
Work in process--------------------- 9,525 9,616
Raw material------------------------ 5,103 2,893
------- -------
18,684 15,569
Less: Lifo reserve----------------- 1,594 1,466
------- -------
17,090 14,103
------- -------
Prepaid expenses---------------------- 2,174 1,490
Deferred income taxes----------------- 1,746 908
Income taxes recoverable-------------- -- 513
------- -------
TOTAL CURRENT ASSETS-------------- 48,132 41,968
------- -------
Other Assets - Investments at Cost------ 55 56
------- -------
Property and Equipment:
Land and improvements----------------- 3,918 4,056
Buildings----------------------------- 11,499 11,499
Machinery and equipment--------------- 79,815 77,043
------- -------
95,232 92,598
Less: Accumulated depreciation 58,598 58,053
------- -------
TOTAL PROPERTY AND
EQUIPMENT--------------------------- 36,634 34,545
------- -------
TOTAL ASSETS------------------------ $84,821 $76,569
======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
3
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of dollars)
June 30 December 31
1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt-- $ 1,355 $ 1,354
Accounts payable---------------------- 4,516 2,665
Dividends payable--------------------- 710 605
Compensated absences------------------ 699 722
Accrued liabilities------------------- 2,947 1,706
Income taxes payable------------------ 405 438
Environmental expenditures------------ 9 41
------- -------
TOTAL CURRENT
LIABILITIES--------------------- 10,641 7,531
------- -------
Pension--------------------------------- 1,285 921
Deferred Income Taxes------------------- 3,733 3,052
Long-Term Debt-------------------------- 8,263 9,567
Shareholders' Equity:
Preferred stock, par value $1 per share,
authorized 1,000,000 shares; none issued
Common stock, par value $1 per share,
authorized 15,000,000 shares; issued
10,141,321 shares (1994 - 10,085,600
shares)----------------------------- 10,141 10,085
Additional paid in capital------------ 2,037 1,722
Retained earnings--------------------- 48,721 43,691
------- -------
TOTAL SHAREHOLDERS'
EQUITY-------------------------- 60,899 55,498
------- -------
TOTAL LIABILITIES AND
EQUITY-------------------------- $84,821 $76,569
======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
4
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands except per share data)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
Cash Flows from Operations:
Net Income-------------------- $ 2,706 $ 2,357 $ 6,346 $ 4,221
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operations:
Depreciation---------------- 1,101 976 2,167 1,885
(Gain) loss on sale of
assets-------------------- 5 -- 6 ( 1,056)
Deferred income taxes------- 14 422 ( 157) 556
Pension 200 112 364 212
Other----------------------- -- -- -- --
Changes in the following:
Current assets-------------- ( 2,426) 331 ( 6,244) ( 355)
Current liabilities--------- ( 1,758) ( 1,493) 3,005 ( 861)
------ ------- ------ ------
Net cash provided by (used in)
operations------------------ ( 158) 2,705 5,487 4,602
------ ------- ------- -------
Cash Flows from Investing Activities:
Acquisition of property and
equipment------------------- ( 2,225) ( 996) ( 4,268) ( 2,014)
Proceeds from sale of property
and equipment--------------- 1 -- 7 1,098
Other investments------------- -- -- -- --
------ ------- ------ -------
Net cash used in
investing activities-------- ( 2,224) ( 996) ( 4,261) ( 916)
------ ------- ------ ------
Cash Flows from Financing Activities:
Cash dividends paid--------- ( 607) ( 502) ( 1,212) ( 1,002)
Employee stock purchases---- 126 93 157 179
Long-term debt-------------- ( 1,277) 824 ( 1,303) 974
------ ------- ------ -------
Net cash provided by (used in)
financing activities-------- ( 1,758) 415 ( 2,358) 151
------ ------- ------ -------
Net increase (decrease) in cash
and cash equivalents-------- ( 4,140) 2,124 ( 1,132) 3,837
------ ------- ------ -------
Cash and cash equivalents at
beginning of quarter-year--- 9,658 5,295 6,650 3,582
------ ------- ------- -------
Cash and cash equivalents at
end of quarter-------------- $ 5,518 $ 7,419 $ 5,518 $ 7,419
======= ======= ======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
5
BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q June 30, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1995, the consolidated
statements of income, and the consolidated statements of cash flows for the
three months and six months ended June 30, 1995 and June 30, 1994 have been
prepared by the Company, without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position at June 30, 1995 and the results of
operations and cash flows for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's December 31, 1994 annual report to shareholders. The results of
operations for the periods ended June 30, 1995 are not necessarily
indicative of the operating results for the full year.
6
BRENCO, INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS:
Net sales were $67,874,000 for the first six months of 1995, compared
to $57,865,000 for the same period last year, an increase of 17.3%. For
the second quarter, sales were $32,642,000, compared to $29,741,000, for
the same quarter in 1994, an increase of 9.8%. These were the highest
sales for a six month period in the Company's history. Sales of new
bearings for the OEM market were up 27.9% while bearing reconditioning
services were up 8.6%, compared to the first six months of 1994, accounting
for the record level of sales.
Net income was $6,346,000 or $.63 per share for the first six months,
compared to $4,221,000 or $.42 per share for the comparable period in 1994,
an increase of 50.4%. For the second quarter, net income was $2,706,000 or
$.27 per share, compared to $2,357,000 or $.23 per share for the same
quarter of 1994, an increase of 14.8%. The increased sales and earnings
over the prior year's six months were the result of the higher level of new
freight car construction in the U.S. and Canada.
FINANCIAL CONDITION:
Cash and cash equivalents were down $4,140,000 for the quarter and
$1,132,000 since the beginning of the year. Working capital at the end of
the second quarter was $37,491,000, compared to $36,874,000 at the end of
the first quarter, a slight increase of $617,000. During the second
quarter the Company paid $1,250,000 of current maturities of its long-term
debt.
During the second quarter, the quarterly dividend was increased from
$.06 to $.07 per share. Generally, the Board of Directors establishes the
Company's quarterly dividend based on its expectations of future earnings,
the capital needs of the Company and such other factors as the Board of
Directors may deem relevant. May's action represented the second increase
in the quarterly dividend in a year.
Management believes that its current cash and cash equivalents,
together with earnings, are sufficient to cover both capital and dividend
requirements for the balance of the year.
7
BRENCO, INCORPORATED AND SUBSIDIARIES
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders
(a) At the Annual Meeting of Shareholders of the Company held on
April 20, 1995, 8,842,965 of the Company's 10,108,116 outstanding shares
were present in person or by proxy and entitled to vote, which constituted
a quorum.
(b) At the Annual Meeting, the following nominees were elected to
serve until the 1996 Annual Meeting:
Jacob M. Feichtner
Steven M. Johnson
John C. Kenny
J. Craig Rice
James M. Wells III
Needham B. Whitfield
Frederic W. Yocum, Jr.
(c) At the Annual Meeting the following matters were voted upon and
received the vote set forth below:
(1) Election of Directors. Provided that a quorum is present,
the nominees receiving the greatest number of votes cast are elected as
directors and, as a result in tabulating the vote, votes withheld have no
effect upon the election of directors. Each nominee for director was
elected, having received the following vote:
FOR WITHHELD
Nominee
Jacob M. Feichtner 8,773,841 69,124
Steven M. Johnson 8,773,841 69,124
John C. Kenny 8,773,841 69,124
J. Craig Rice 8,773,924 69,041
James M. Wells III 8,773,341 69,624
Needham B. Whitfield 8,773,941 69,024
Frederic W. Yocum, Jr. 8,758,607 69,024
(2) Approval of designation of McGladrey & Pullen as independent
auditors for the current year. Provided that a quorum is present,
ratification of the auditors requires the affirmative vote of a majority of
the votes cast, and as a result, in tabulating the vote, abstentions do not
have the effect of working against ratification. Designation of the
auditors was approved, having received the following vote:
FOR: 8,746,877
AGAINST: 85,918
ABSTAIN: 10,170
8
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.2 Bylaws, as amended.
27. Financial Data Schedules.
(b) Reports on Form 8-K - none
9
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.
BRENCO, INCORPORATED
(Registrant)
DATED: August 11, 1995 BY: J. Craig Rice
-------------------------
J. Craig Rice
President
DATED: August 11, 1995 BY: Jacob M. Feichtner
-------------------------
Jacob M. Feichtner
Executive Vice President
& Secretary
10
Exhibit 3.2
BYLAWS OF
BRENCO, INCORPORATED
(As Amended June 23, 1995)
ARTICLE I
Shareholders
Section 1. Annual Meeting. A meeting of the shareholders shall be
held annually at the principal office of the Corporation, or such other
place within the State of Virginia as the Board of Directors may determine,
at 3:30 o'clock p.m., on the third Thursday in April, for the purpose of
electing directors, and for the transaction of any other business
authorized or required to be transacted by the shareholders.
Section 2. Notice. Written notice of the date, time and place of the
meeting and, in the case of a special meeting (or if required by law, the
articles of incorporation or these bylaws), the purpose or purposes for
which the meeting is called shall be given to each shareholder entitled to
vote at the meeting. Such notice shall be given either by personal
delivery or by mail, by or at the direction of the officer or persons
calling the meeting, not more than 60 days nor less than ten days before
the date of the meeting (except that such notice shall be given to each
shareholder, whether or not entitled to vote, not less than 25 days before
a meeting called to act on an amendment to the articles of incorporation, a
plan of merger or share exchange, a proposed sale, lease, exchange or other
disposition of all, or substantially all, of the property of the
Corporation other than in the usual and regular course of business, or the
dissolution of the Corporation, which notice shall be accompanied by a copy
of the proposed amendment, plan of merger or share exchange, agreement of
sale or plan of dissolution, as the case may be). Notice to a shareholder
shall be deemed given when mailed postage prepaid, correctly addressed, to
the shareholder at his address as shown in the current record of
shareholders of the Corporation.
Section 3. Special Meetings. Except as otherwise specifically
provided by law, a special meeting of the shareholders shall be held only
upon the call of the Chairman of the Board, the President or the Board of
Directors.
Section 4. Quorum and Voting. A quorum at any meeting of
shareholders shall be a majority of the votes entitled to be cast,
represented in person or by proxy. If a quorum exists, action on a matter
is approved by a majority of the votes cast within the voting group, unless
a greater vote is required by law or the articles of incorporation (except
that in elections of directors, those receiving the greatest number of
votes shall be elected even though less than a majority).
11
Section 5. Order of Business. The order of business at all meetings
of shareholders, unless changed by the meeting, shall be as follows:
(1) Reading of Proof of Notice
(2) Appointment of Tellers
(3) Ascertained of Quorum
(A quorum being present)
(4) Reading of minutes of preceding
meeting and action thereon
(5) Reports of Officers
(6) Reports of Committees
(7) Election of Directors
(8) Unfinished Business
(9) New Business
Section 6. Adjournments. A majority of the votes entitled to be cast
at any meeting, represented in person or by proxy, even though less than a
quorum, may adjourn the meeting to a fixed time and place. If a meeting of
the shareholders is adjourned to a date more than 120 days after the date
fixed for the original meeting, notice of the adjourned meeting shall be
given as in the case of the original meeting. If a meeting is adjourned
for less than 120 days, no notice of the date, time or place of the
adjourned meeting or, in the case of a special meeting, the purpose or
purposes for which the meeting is called, need be given other than by
announcement at the meeting at which the adjournment is taken, prior to
such adjournment. If a quorum shall be present at any adjourned meeting,
any business may be transacted which might have been transacted if a quorum
had been present at the meeting as originally called.
Section 7. Organization. The Chairman of the Board or, in his
absence, the President, shall call the meeting of the shareholders to order
and shall act as Chairman of the meeting. The Chairman shall appointment
tellers for the purpose of ascertaining the representation, in person and
by proxy, of stock entitled to vote at said meeting and for the purpose of
counting the votes when ballots are taken. All reports of the tellers
shall be filed with the Secretary of the meeting.
Section 8. Secretary. The Secretary of the Corporation, or some
person appointed by the Chairman, shall act as Secretary of all meetings of
the shareholders.
12
Section 9. Voting Entitlement of Shares. At all meetings of the
shareholders, shareholders shall be entitled to vote, either in person or
by proxy duly appointed by an instrument in writing, subscribed by such
shareholder or by his authorized attorney-in-fact; at all meetings each
shareholder shall have one vote for each share of stock entitled under the
provisions of the charter to voting rights which may be registered in his
name upon the books of the Corporation on the day preceding that on which
the transfer books may be closed by order of the Board of Directors; or on
the day which may be designated by the Board of Directors as the record
date of determining the shareholders entitled to notice of and to vote at
such meeting.
ARTICLE II
Board of Directors
Section 1. Number. The business and affairs of the Corporation shall
be managed and controlled by a Board of Directors, seven in number, which
number may be altered from time to time by amendment of these Bylaws.
Section 2. Term of Office. Each director shall serve for the term of
one year and until his successor shall have been duly chosen and qualified,
unless sooner removed.
Section 3. Vacancies. Any vacancy in the Board of Directors
(including any vacancy resulting from an increase in the number of
directors) may be filled by the affirmative vote of a majority of the
remaining directors, even though less than a quorum, unless sooner filled
by the shareholders.
Section 4. Place of Meeting, Etc. The directors may hold their
meetings and may have an office at such place or places in the State of
Virginia, or outside the State of Virginia, as the Board from time to time
determine.
Section 5. First Meeting of the Board. Immediately following the
annual meeting of shareholders, the newly elected directors shall meet for
the purpose of organization, the election of officers and the transaction
of other business, and if a majority of the directors be present at such
place and time, no prior notice of such meeting shall be required to be
given to the directors.
Section 6. Meetings. Regular meetings of the Board may be held at
such time or times as may be fixed by the directors and special meetings
shall be held whenever called by the directors or the President or by any
two of the directors for the time being in office. Unless otherwise
specified in the notice thereof, any and all business may be transacted at
a special meeting. The Board of Directors may permit any or all directors
to participate in a meeting of the directors by, or conduct the meeting
13
through the use of, conference telephone or any other means of
communication by which all directors participating may simultaneously hear
each other during the meeting. A director participating in a meeting
by such means shall be deemed to be present in person at the meeting. When
a meeting is so conducted, a written record shall be made of the action
taken at such meeting.
Section 7. Notice of Meetings. The Secretary shall give notice to
each director of all meetings, regular or special, by mailing, telegraphing
or telephoning the same at least two days before the meeting. If every
director shall be present at any meeting, any business may be transacted
without any previous notice.
Section 8. Quorum. A majority of the directors shall constitute a
quorum for the transaction of business, but a majority of those present at
the time and place of any regular or special meeting, although less than a
quorum, may adjourn the same from time to time, without further notice,
until a quorum be had. The act of the majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors.
Section 9. Order of Business. The Board of Directors may from time
to time determine the order of business at their meetings. The usual order
of business at such meeting shall be as follows:
(1) Roll Call (a quorum being present)
(2) Reading of minutes of preceding
meeting and action thereon
(3) Reports of Officers
(4) Reports of Committees
(5) Unfinished Business
(6) New Business
Section 10. Chairman. The Chairman of the Board, or, in his absence,
the Vice-Chairman of the Board, shall preside at all meetings of the Board
of Directors. In the absence of the Chairman and Vice-Chairman, a
Chairman, chosen by the directors present, shall preside and the Chairman
shall appoint a Secretary for the meeting.
Section 11. Unanimous Consent in Lieu of Meeting. Any action
required by law or which may be taken at the meeting of the directors, may
be taken without a meeting, if a consent in writing, setting forth the
action so to be taken, shall be signed before such action by all of the
directors.
14
Section 12. Nomination of Director Candidates. The Board of
Directors or a committee appointed by the Board of Directors shall select
and recommend a slate of nominees to be voted on for election as directors
at each annual meeting. However, any shareholder entitled to vote in the
election of directors generally may nominate one or more persons for
election as directors at a meeting, but only if written notice of such
shareholder's intent to make such nomination(s) has been given, either by
personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation not later than (i) with respect to an election
to be held at annual meeting of shareholders, ninety days prior to the
anniversary date of the immediately preceding annual meeting of
shareholders and (ii) with respect to an election to be held at a special
meeting of shareholders for the election of directors, the close of
business on the tenth day following the date on which notice of
such meeting is first given to shareholders. Each such notice of a
shareholder's intention to make nomination(s) shall set forth: (a) the
name and address of the shareholder who intends to make the nomination of
the person(s) and of the person(s) to be nominated; (b) a representation
that the shareholder is the owner of stock of the Corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person(s) specified in the notice; (c) a
description of all arrangements or understandings between the shareholder
and each nominee for directors and any other person(s) (naming such
person(s)) pursuant to which the nomination(s) are to be made by the
shareholder; (d) such other information regarding such nominee proposed by
such shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by
the Board of Directors; and (e) the written consent of each nominee to
serve as a director of the Corporation, if so elected. The presiding
officer at any meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing sentence.
Section 13. Resignation. A director may resign at any time by
delivering written notice to the Board of Directors, the Chairman of the
Board of Directors, the President or the Secretary. A resignation shall be
effective when delivered, unless the notice specifies a later effective
date.
Section 14. Removal. At a meeting of shareholders called and noticed
expressly for that purpose any director may be removed, with or without
cause, if the number of votes cast to remove him constitutes a majority of
the votes entitled to be cast at an election of directors.
15
ARTICLE III
Officers
Section 1. Executive Officers. The Executive Officers of the
Corporation shall be a Chairman of the Board of Directors, a Chief
Executive Officer, a President, one or more Vice Presidents, a Secretary
and a Treasurer, all of whom shall be elected annually by the Board. The
powers and duties of any officer, other than the President and Secretary,
may be exercised and performed by the same person.
Section 2. Subordinate Officers. The Board may appoint such other
officers as it shall deem necessary, who shall have such authority and
shall perform such duties as, from time to time, may be prescribed by the
Board.
Section 3. Tenure of Officers; Removal. All officers and agents
shall be subject to removal at any time by the affirmative vote of a
majority of the whole Board. The Board may delegate the power of removal
of subordinate officers and agents to any officer.
Section 4. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the shareholders and of the Board of Directors,
and may execute all authorized deeds, bonds, contracts or other obligations
in the name of the Corporation. He shall perform such other duties as from
time to time may be assigned to him by the Board.
Section 5. Vice-Chairman of the Board. The Vice-Chairman of the
Board, in the absence of the Chairman, shall preside at all meetings of the
directors and shareholders and shall perform such other duties as from time
to time may be assigned to him by the Board.
Section 6. Chief Executive Officer. The Chief Executive Officer of
the Corporation shall, subject to the control of the Board of Directors, in
general supervise and control all of the business and affairs of the
Corporation. He may also execute all bonds, deeds, contracts, or other
obligations in the name of the Corporation, and perform all other duties
incident to his office and such other duties as may be prescribed by the
Board of Directors from time to time.
Section 7. The President. The President shall direct the operation
of the Corporation, being responsible to the Chief Executive Officer. He
shall, in the absence or incapacity of the Chief Executive Officer, perform
all duties and functions of that office. He may also execute all
authorized deeds, bonds, contracts or other obligations in the name of the
Corporation, and perform all other duties incident to his office.
Section 8. Vice Presidents. Each Vice-President shall have the
powers and duties incident to that office and shall have such other powers
and duties as may be prescribed from time to time by the Chief Executive
16
Officer or the President. In the event of the absence or incapacity of the
Chief Executive Officer and of the President, a Vice-President designated
by the Board of Directors shall perform such duties of the Chief Executive
Officer and of the President as the Board of Directors shall prescribe.
Any Vice-President may execute contracts in the name of the Corporation.
Section 9. The Treasurer. The Treasurer shall have the custody of
all funds and securities of the Corporation; he shall endorse, on behalf of
the Corporation for collection, checks, notes and other obligations, or
delegate the said powers and cause the same to be done, and shall cause the
same and all monies of the Corporation to be deposited to the credit of the
Corporation in such bank or banks, or depositories as the Board of
Directors may designate; he shall sign receipts and vouchers for payments
made to the Corporation, or cause the same to be done; jointly with such
other officer as may be designated by the Board, or singly, if authorized
by the Board, he shall sign checks made by the Corporation and shall pay
out and dispose of the same, under the direction of the Board; he shall
sign, with the President, or such other person or persons as may be
designated by the Board, all bills of exchange and promissory notes of the
Corporation, the execution of which may have been authorized or approved by
the Board; he shall enter, or cause to be entered, regularly in books of
the Corporation to be kept for that purpose, full and accurate accounts of
all monies received and paid by him on account of the Corporation, and
whenever required by the Board, he shall render a statement thereof; and he
shall perform all duties incident to the position of the Treasurer, subject
to the control of the Board.
Section 10. Treasurer's Bond. If and when required by the Board, the
Treasurer shall give a bond for the faithful discharge of his duties in
such sum as the Board may require.
Section 11. The Secretary. The Secretary shall keep the minutes of
all proceedings of the Board of Directors, and the minutes of all meetings
of the shareholders in books provided for that purpose; he shall attend to
the giving and serving of all notices for the Corporation; he shall sign
with the President, in the name of the Corporation, all contracts
authorized by the Board; and when so ordered by the Board, or otherwise
when appropriate, shall affix the seal of the Corporation thereto; he shall
have charge of the stock certificate books and such other books and papers
as the Board may direct; he shall sign stock certificates, have custody of
the corporate seal, and, in general, perform all the duties incident to the
office of secretary, subject to the control of the Board.
Section 12. Resignation. An officer may resign at any time by
delivering written notice to the Board of Directors, the President or the
Secretary. A resignation shall be effective when delivered unless the
notice specifies a later effective date.
Section 13. Proxies. Unless otherwise prescribed by the Board of
Directors, the Chairman of the Board of Directors or the President may from
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time to time himself, by such proxy or proxies, attorney or attorneys,
agent or agents of the Corporation as he shall designate in the name and on
behalf of the Corporation, cast the votes to which the Corporation may be
entitled as a shareholder or otherwise in any other corporation, at
meetings, or consent in writing to any action by any such other
corporation; and he may instruct the individual or individuals so appointed
as to the manner of casting such votes or giving such consent, and execute
or cause to be executed on behalf of the Corporation such written proxies,
consents, waivers or other instruments as he may deem necessary or
desirable.
ARTICLE IV
Capital Stock
Section 1. Form and Execution of Certificates. The certificates of
shares of the capital stock of the Corporation shall be in such form as
shall be approved by the Board. The certificates shall be signed by the
President and the Secretary and sealed with the seal of the Corporation or
a facsimile thereof.
Section 2. Certificates to be Entered. All certificates shall be
consecutively numbered, and the names of the owners, the number of shares,
and the date of issue, shall be entered in the Corporation's books. The
Corporation shall be entitled to treat the holder of record of shares as
the legal and equitable owner thereof and accordingly shall not be bound to
recognize any equitable or other claim with respect thereto on the part of
any other person so far as the right to vote and to participate in
dividends is concerned.
Section 3. Old Certificates to be Cancelled. Except in case of lost
or destroyed certificates, and in that case, only after the receipt of a
satisfactory bond, no new certificate shall be issued until the former
certificate for the shares represented thereby shall be surrendered and
cancelled.
Section 4. Transfer of Shares. Shares shall be transferred only on
the books of the Corporation by the holder thereof in person or by his
attorney, upon the surrender and cancellation of certificates for a like
number of shares.
Section 5. Regulation. The Board may make such rules and regulations
as it may deem expedient concerning the issue, transfer and registration of
certificates of stock of the Corporation.
Section 6. Determination of Shareholders of Record. The share
transfer books may be closed by order of the Board of Directors for not
more than seventy days for the purpose of a meeting of the shareholders or
any adjournment thereof (or entitled to receive any distribution or in
order to make a determination of the shareholders for any other purpose).
In lieu of closing such books, the Board of Directors may fix in advance as
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the record date for any such determination a date not more than seventy
days before the date on which such meeting is to be held (or such
distribution made or other action requiring such determination is to be
taken). If the books are not thus closed or the record date is not thus
fixed, the record date shall be the close of business on the day before the
effective date of the notice to shareholders.
Section 7. Redemption of Certain Shares. In accordance with the
provisions of Section 13.1-728.7 of Article 14.1 of the Virginia Stock
Corporation Act, the Corporation may, but is not required to, redeem
shares of its common stock which have been the subject of a control share
acquisition (as defined in that Article) under the circumstances set forth
in A and B of Section 13.1-728.7.
ARTICLE V
Seal
The Board shall provide a suitable seal, containing the name of the
Corporation, and the word "seal" or other appropriate words, which seal
shall be in the custody of the Secretary who shall have to affix the seal
to all corporate instruments requiring such seal.
ARTICLE VI
Fiscal Year
The fiscal year of the Corporation shall begin on January 1 of each
year and end on December 31 of the same year.
ARTICLE VII
Notice and Waiver of Notice
Section 1. Notice. Any notice to a shareholder or a director shall
be deemed given when mailed postage prepaid, correctly addressed, to the
shareholder at his address as shown in the current record of the
shareholders of the Corporation and to a director at his address as it
appears in the records of the Corporation.
Section 2. Waiver of Notice. Notice of any meeting of the
shareholders or the directors may be waived before or after the date and
time of the meeting in a writing signed by the shareholder or the director
entitled to notice and delivered to the Secretary for inclusion in the
minutes of the meeting or filing with the corporate records.
A shareholder's attendance at a meeting waives objection to: (i) lack
of notice or defective notice of the meeting, unless at the beginning of
the meeting he objects to holding the meeting or transacting business at
the meeting; and (ii) consideration of a particular matter at the meeting
that is not within the purpose or purposes described in the notice of the
meeting, unless he objects to considering the matter when it is presented.
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A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless he at the beginning of the
meeting or promptly upon his arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or
assent to the action taken at the meeting.
ARTICLE IX
Amendments
Section 1. Directors May Amend Bylaws. The Board of Directors shall
have power to make, amend and repeal the Bylaws of the Corporation by a
vote of the majority of all of the directors at any regular or special
meeting of the Board.
Section 2. Amendment by Shareholders. All Bylaws, howsoever passed,
shall be subject to amendment, alteration and repeal by the shareholders
entitled to vote at any annual meeting and at any special meeting called
for that purpose.
ARTICLE X
Committees
Section 1. Committees: There will be a Compensation Committee, an
Audit Committee and such other committees as the Board of Directors may,
from time to time, create for such purposes and with such powers as the
Board may determine.
Section 2. Compensation Committee. The Board of Directors shall
appoint from among its members a Compensation Committee consisting of not
less than three (3) nor more than five (5) members (or such other number as
the Board may appoint). Members of the Compensation Committee shall not be
officers or employees of the Corporation or its subsidiaries ("Non-
management Members") other than the Chief Executive Officer who may, in the
Board's discretion, be appointed as a member of the Committee. The Board
shall appoint one member of the Committee as Chairman. The Compensation
Committee shall have and exercise the Board's full authority with respect
to (1) the establishment of cash compensation (salary, bonuses and
perquisites) for the executive officers of the Corporation and for such
other key employees as may be recommended by the Chief Executive Officer
and (2) the administration of and oversight responsibilities for all
employee benefit plans, including without limitation the retirement plan,
the supplemental pension plan, welfare benefit, medical and dental plans,
but excluding plans under which stock of the Corporation may be awarded to
executive officers ("Stock Incentive Plans"). The Committee shall review
management's recommendation concerning awards under the Stock Incentive
Plans, but discretion with respect to awards under such plans shall be
reserved to and exercised by the Board. It shall be the responsibility of
the Non-management Members to review and evaluate the goals and performance
of the Chief Executive Officer and his evaluation of key executives. The
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Compensation Committee shall meet at least twice a year, and otherwise upon
the call of the Chairman, and shall report at least once a year
to the Board of Directors.
Section 3. Audit Committee. The Board of Directors shall appoint
from among its Non-management Members an Audit Committee consisting of two
(2) members (or such other number as the Board may appoint). The Board
shall appoint one member of the Committee as Chairman. Management Members
of the Board shall be counted for the purpose of determining the presence
of a quorum at meetings of the Board of Directors at which the Audit
Committee members are appointed, but shall have no vote upon the membership
of the Audit Committee.
The Audit Committee shall meet each year (i) preceding the
selection of the external auditors to perform the annual audit, (ii) at
least once after these auditors have been selected and before the audit
begins or during the early stages of the audit, and (iii) at least once
after the report of the external auditors is received. Other meetings may
be held as necessary or convenient. A quorum for any meeting of the Audit
Committee shall be any two members, but there shall be an attempt to have
all members present at each meeting.
The Audit Committee shall report to the Board of Directors at
least once each year, recommending any appropriate change in operating or
accounting practice or in the auditors of the Corporation and disclosing
any acts or practices that are or may be illegal or contrary to the
interests of the Corporation or to which the attention of the Board should
be called for other reasons, and focusing particularly on the integrity and
adequacy of disclosure of financial information relating to the Corporation
and the identification of any problem areas relating thereto.
The Chairman of the Board of the Corporation may designate an
officer of the Corporation to serve as liaison between the Audit Committee
and the officers. The Audit Committee or any one or two of its members may
interview any employee, agent, customer or former or potential customer,
supplier or former or potential supplier, auditor or former or potential
auditor, or any other person, or examine any document, at any time and
without offering any reasons so long as such action is in the discharge of
the responsibilities of the Audit Committee. No officer or employee of the
Corporation shall be present at such interview or examination or seek to
learn the substance or subject of the inquiry, without the consent of the
Audit Committee or the member or members acting. The Audit Committee may
consult at any time with counsel regularly retained by the Corporation, and
may after informing the Board of Directors consult with other counsel
and other advisors, at the cost of the Corporation. In the event that the
expenses incurred in connection with the consultation of such counsel or
advisors become material, a majority of the Non-Management Members of the
Board of Directors must approve the Corporation's payment of such expenses
in advance.
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