Back to GetFilings.com
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, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM_____TO_____
ROWAN COMPANIES, INC.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5491 75-0759420
- ------------------------------ -------------- -------------------
(State or other jurisdiction of Commission File (I.R.S. Employer
incorporation or organization) Number Identification No.)
2800 Post Oak Boulevard, Suite 5450 Houston, Texas 77056-6127
- --------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(713) 621-7800
-------------------------------------------------------
Registrant's telephone number, including area code
Inapplicable
---------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ----
The number of shares of common stock, $.125 par value, outstanding at
July 31, 2002 was 93,765,090.
ROWAN COMPANIES, INC.
INDEX
Page No.
--------
PART I. Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheet --
June 30, 2002 and December 31, 2001 2
Consolidated Statement of Operations --
Three and Six Months Ended June 30, 2002 and 2001 4
Consolidated Statement of Cash Flows --
Six Months Ended June 30, 2002 and 2001 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
Part II. Other Information:
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -------------------------------
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
June 30, December 31,
2002 2001
------------ -------------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 212,465 $ 236,989
Receivables - trade and other 112,719 120,199
Inventories - at cost:
Raw materials and supplies 124,951 121,609
Work-in-progress 25,170 20,839
Finished goods 1,388 741
Prepaid expenses 6,603 3,188
Deferred tax assets - net 1,108 3,117
------------ -------------
Total current assets 484,404 506,682
------------ -------------
PROPERTY, PLANT AND EQUIPMENT - at cost:
Drilling equipment 1,908,722 1,634,370
Aircraft and related equipment 260,942 255,600
Manufacturing plant and equipment 109,840 104,018
Construction in progress 155,197 327,032
Other property and equipment 147,226 140,706
------------ -------------
Total 2,581,927 2,461,726
Less accumulated depreciation and amortization 1,076,411 1,042,883
------------ -------------
Property, plant and equipment - net 1,505,516 1,418,843
------------ -------------
OTHER ASSETS AND DEFERRED CHARGES 18,642 13,430
------------ -------------
TOTAL $ 2,008,562 $ 1,938,955
============ =============
See Notes to Consolidated Financial Statements.
2
June 30, December 31,
2002 2001
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 42,458 $ 42,458
Accounts payable - trade 26,457 28,903
Other current liabilities 67,449 130,133
------------ ------------
Total current liabilities 136,364 201,494
------------ ------------
LONG-TERM DEBT - less current maturities 479,864 438,484
------------ ------------
OTHER LIABILITIES 65,903 62,938
------------ ------------
DEFERRED INCOME TAXES - net 151,622 127,952
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value:
Authorized 5,000,000 shares issuable in series:
Series III Preferred Stock, authorized 10,300 shares, none outstanding
Series A Preferred Stock, authorized 4,800 shares, none outstanding
Series B Preferred Stock, authorized 4,800 shares, none outstanding
Series C Preferred Stock, authorized 9,606 shares, none outstanding
Series D Preferred Stock, authorized 9,600 shares, none outstanding
Series E Preferred Stock, authorized 1,194 shares, none outstanding
Series A Junior Preferred Stock, authorized 1,500,000 shares,
none issued
Common stock, $.125 par value:
Authorized 150,000,000 shares; issued 95,220,355 shares at
June 30, 2002 and 95,002,430 shares at December 31, 2001 11,903 11,875
Additional paid-in capital 644,436 638,303
Retained earnings 550,183 494,756
Cost of 1,133,240 and 1,435,300 treasury shares, respectively (19,173) (24,307)
Accumulated other comprehensive income (loss) (12,540) (12,540)
------------ ------------
Total stockholders' equity 1,174,809 1,108,087
------------ ------------
TOTAL $ 2,008,562 $ 1,938,955
============ ============
See Notes to Consolidated Financial Statements.
3
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For The Three Months For The Six Months
Ended June 30, Ended June 30,
------------------------- -----------------------
2002 2001 2002 2001
------------ ----------- --------- ---------
(Unaudited)
REVENUES:
Drilling services $ 79,343 $ 147,259 $ 156,967 $ 287,725
Manufacturing sales and services 31,951 25,426 63,586 52,041
Aviation services 37,204 37,709 65,750 64,142
------------ ----------- --------- ---------
Total 148,498 210,394 286,303 403,908
------------ ----------- --------- ---------
COSTS AND EXPENSES:
Drilling services 74,627 77,457 150,071 147,991
Manufacturing sales and services 30,498 23,665 60,044 49,013
Aviation services 29,829 30,999 57,676 55,515
Depreciation and amortization 18,754 16,733 37,002 32,927
General and administrative 6,422 7,794 12,817 14,183
------------ ---------- --------- ---------
Total 160,130 156,648 317,610 299,629
------------ ---------- --------- ---------
INCOME (LOSS) FROM OPERATIONS (11,632) 53,746 (31,307) 104,279
------------ ---------- --------- ---------
OTHER INCOME (EXPENSE):
Net proceeds from Gorilla V
settlement 157,125
Interest expense (5,243) (5,817) (10,224) (12,505)
Less interest capitalized 1,516 2,415 3,134 5,046
Interest income 1,184 2,372 2,322 5,358
Other - net 283 29 385 124
------------ ---------- --------- ---------
Other income (expense) - net (2,260) (1,001) 152,742 (1,977)
------------ ----------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (13,892) 52,745 121,435 102,302
Provision (credit) for
income taxes (5,153) 18,433 42,497 36,274
------------ ----------- --------- ---------
NET INCOME (LOSS) $ (8,739) $ 34,312 $ 78,938 $ 66,028
============ =========== ========= =========
NET INCOME (LOSS) PER SHARE
OF COMMON STOCK (Note 6):
Basic $ (.09) $ .36 $ .84 $ .70
============ =========== ========= =========
Diluted $ (.09) $ .36 $ .83 $ .68
============ =========== ========= =========
See Notes to Consolidated Financial Statements.
4
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
For The Six Months
Ended June 30,
------------------------
2002 2001
------------ ----------
(Unaudited)
CASH PROVIDED BY (USED IN):
Operations:
Net income $ 78,938 $ 66,028
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 37,002 32,927
Deferred income taxes 25,590 15,281
Compensation expense 3,824 3,796
Provision for pension and postretirement benefits 5,815 1,716
Gain on disposals of property, plant and equipment (2,070) (1,228)
Changes in current assets and liabilities:
Receivables- trade and other 11,440 (3,261)
Inventories (7,106) (5,901)
Other current assets (3,372) (3,603)
Current liabilities (72,136) 3,157
Net changes in other noncurrent assets and liabilities (400) (753)
------------ ----------
Net cash provided by operations 77,525 108,159
------------ ----------
Investing activities:
Property, plant and equipment additions (123,364) (140,822)
Proceeds from disposals of property, plant and equipment 3,656 2,381
------------ ----------
Net cash used in investing activities (119,708) (138,441)
------------ ----------
Financing activities:
Proceeds from borrowings 62,609 42,535
Repayments of borrowings (21,229) (14,504)
Payment of cash dividend (23,511)
Payments to acquire treasury stock (2,308) (4,045)
Proceeds from stock option and convertible debenture plans 2,098 3,966
------------ ----------
Net cash provided by financing activities 17,659 27,952
------------ ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (24,524) (2,330)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 236,989 192,828
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 212,465 $ 190,498
============ ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Acquisition of net manufacturing assets through issuance of
439,560 shares of treasury stock (Note 8) $ 7,925
============
See Notes to Consolidated Financial Statements.
5
ROWAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements of Rowan included in this Form 10-Q
have been prepared without audit in accordance with accounting principles
generally accepted in the United States of America and the rules and
regulations of the Securities and Exchange Commission. Certain information
and notes have been condensed or omitted as permitted by those rules and
regulations. We believe that the disclosures included herein are adequate,
but suggest that you read these consolidated financial statements in
conjunction with the financial statements and related notes included in our
2001 Annual Report to Stockholders, which are incorporated by reference in
our Form 10-K for the year ended December 31, 2001.
2. We believe the accompanying unaudited consolidated financial statements
contain all adjustments, which are of a normal recurring nature, necessary
to prevent fairly Rowan's financial position as of June 30, 2002 and
December 31, 2001, and the results of its operations for the three months
and six months ended June 30, 2002 and 2001 and its cash flows for the six
months ended June 30, 2002 and 2001.
3. Rowan's results of operations and cash flows for the six months ended
June 30, 2002 are not necessarily indicative of results to be expected
for the full year.
4. Rowan has three principal operating segments: contract drilling of oil and
gas wells, both onshore and offshore ("Drilling"), helicopter and fixed-
wing aircraft services ("Aviation") and the manufacture and sale of heavy
equipment for the mining and transportation industries, alloy steel and
steel plate and drilling products ("Manufacturing"). The following table
presents certain financial information of Rowan by operating segment as of
June 30, 2002 and 2001 and for the six month periods then ended (in
thousands).
2002 Drilling Manufacturing Aviation Consolidated
-------------------- ------------ ------------- -------- -------------
Total assets $ 1,612,921 $ 231,906 $ 163,735 $ 2,008,562
Unamortized goodwill 1,493 10,863 - 12,356
Revenues 156,967 63,586 65,750 286,303
Operating profit (loss)(1) (18,730) (26) 266 (18,490)
2001 Drilling Manufacturing Aviation Consolidated
-------------------- ------------ ------------- -------- -------------
Total assets $ 1,424,129 $ 211,713 $ 159,637 $ 1,795,479
Unamortized goodwill 1,608 6,321 - 7,929
Revenues 287,725 52,041 64,142 403,908
Operating profit (loss)(1) 117,557 (805) 1,710 118,462
---------------------------------------------------------------------
(1) Income (loss) from operations before deducting general and
administrative expenses.
Excluded from the preceding table are the effects of transactions between
segments. During the six months ended June 30, 2002 and 2001, Rowan's
manufacturing division provided approximately $57 million and $54 million,
respectively, of products and services to its drilling division and Rowan's
aviation division provided approximately $938,000 and $814,000,
respectively, of flight services to its drilling division.
5. Rowan had no items of other comprehensive income during the six months
ended June 30, 2002 and 2001.
6
6. Rowan's computation of basic and diluted income (loss) per share is as
follows (in thousands, except per share amounts):
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
2002 2001 2002 2001
------- ------ ------ ------
Weighted average shares of common
stock outstanding 93,998 94,484 93,893 94,383
Dilutive securities:
Stock options - (1) 951 731 1,012
Convertible debentures - (1) 1,060 911 1,065
------- ------ ------- ------
Weighted average shares for diluted
calculation 93,998 96,495 95,535 96,460
======= ======= ====== ======
Net income (loss) for basic and
diluted calculation $ (8,739) $ 34,312 $ 78,938 $ 66,028
======= ======= ====== ======
Net income (loss) per share:
Basic $ (.09) $ .36 $ .84 $ .70
======= ======= ====== ======
Diluted $ (.09) $ .36 $ .83 $ .68
======= ======= ====== ======
---------------------------------------------------------------------------
(1) Stock options of 730,742 and Convertible debentures of 910,741 are
excluded because they are anti-dilutive.
7. Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets", generally provides that goodwill and other intangible
assets with indefinite useful lives no longer be amortized to expense, but
rather be assessed periodically for impairment losses. Rowan's adoption of
SFAS No. 142, effective January 1, 2002, did not materially impact its
financial position or results of operations. Goodwill amortization during
the six months ended June 30, 2001 was approximately $285,000. At June
30, 2002, Rowan had approximately $1.7 million of intangible assets subject
to amortization.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets", superceded existing standards pertaining to accounting and
reporting for long-lived assets, especially those held for disposal.
Rowan's adoption of SFAS No. 144, effective January 1, 2002, did not
materially impact its financial position or results of operations.
8. On January 31, 2002, Rowan completed the purchase of certain assets of
Oilfield-Electric-Marine, Inc.(O-E-M) and Industrial Logic Systems, Inc.,
by issuing from treasury 439,560 shares of common stock valued at
approximately $8 million. The acquisition gave rise to approximately $4.7
million of goodwill. O-E-M manufactures variable speed AC motors and
variable frequency drive systems, DC motors and drive systems, and consoles
for marine boats and lay barges, the oil and gas drilling industry, and the
mining and dredging industries. Additionally, O-E-M manufactures medium
voltage switchgear from 5KV through 38 KV for the industrial and
petrochemical markets.
9. On November 16, 2001, an English Court ruled in Rowan's favor and dismissed
the plaintiff's claim that it had been entitled, in January 1999, to
terminate its drilling contract with a Rowan subsidiary for the use of the
jack-up rig Rowan Gorilla V. The Court ordered the plaintiff to pay Rowan
for all unpaid day rates, damages, interest and an interim payment for
legal costs, for which Rowan subsequently received $88.6 million. The
matter was under appeal at December 31, 2001 and such amount, along with
investment earnings, less outstanding receivables dating from contract
inception, was deferred at year end. On March 14, 2002, a settlement
agreement was reached among the parties and all litigation involving this
matter was dropped. Pursuant to such agreement, Rowan subsequently received
an additional $84.2 million. Such amounts are shown, net of final legal
costs and expenses, as Other Income on the Consolidated Statement of
Operations for the six months ended June 30, 2002.
7
ROWAN COMPANIES, INC. AND SUBSIDIARIES
--------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Six Months Ended June 30, 2002 Compared to
- -------------------------------------------------
Six Months Ended June 30, 2001
------------------------------------
Rowan generated net income of $78.9 million in the first half of 2002 compared
to $66.0 million in the same period of 2001. The current period included net
proceeds from the settlement of the Gorilla V contract dispute, which increased
net income by approximately $102 million, or $1.07 per share. Excluding the
effects of the settlement, Rowan's first half 2002 results would have been a net
loss of approximately $23 million, or $.25 per share. The decrease in operating
performance was caused largely by declines in drilling activity and day rates
between periods, primarily in the Gulf of Mexico, as a result of volatile
natural gas prices.
A comparison of the revenues and operating profit (loss) from drilling,
manufacturing, aviation and consolidated operations for the first six months of
2002 and 2001, respectively, is reflected below (dollars in thousands):
Drilling Manufacturing Aviation Consolidated
------------------- ------------------ ----------------- --------------------
2002 2001 2002 2001 2002 2001 2002 2001
--------- -------- -------- -------- -------- ------- --------- ---------
Revenues $156,967 $287,725 $63,586 $52,041 $65,750 $64,142 $286,303 $403,908
Percent of Consolidated
Revenues 55% 71% 22% 13% 23% 16% 100% 100%
Operating Profit (Loss)(1) $(18,730) $117,557 $ (26) $ (805) $ 266 $ 1,710 $(18,490) $118,462
- --------------------------------------------------------------------------------
(1) Income (loss) from operations before deducting general and
administrative expenses
As reflected above, Rowan's consolidated operating results declined by $137
million or 116% when comparing the first six months of 2002 and 2001. Drilling
revenues decreased by $130.8 million or 45% as our offshore fleet of 23 jack-ups
and one semi-submersible was 83% utilized during the first half of 2002,
compared to 93% in the first six months of 2001, and suffered a 47% decrease in
average day rates between periods. Rowan's fleet of 17 land rigs was 63%
utilized during the first half of 2002, compared to 80% in the first six months
of 2001, and experienced a 17% decrease in average day rates between periods.
Drilling expenses increased by $2.1 million between periods, primarily due to
the addition to our offshore fleet, in February 2002, of Rowan Gorilla VII.
The $0.8 million increase shown above in Rowan's manufacturing results between
periods primarily reflects the increased contributions from the division's steel
and drilling products groups, including the recent addition to the latter of
newly-acquired Oilfield-Electric-Marine, which more than offset a reduced
contribution from the equipment group. Manufacturing operations exclude
approximately $57 million of products and services provided to the drilling
division during the first half of 2002, most of which was attributable to
construction progress on Rowan Gorilla VIII, compared to about $54 million in
the same period of 2001, primarily due to Gorillas VII and VIII. The division's
external backlog was approximately $19 million at June 30, 2002.
8
Rowan's aviation operating results in the first half of 2002 were impacted by
higher insurance costs, which more than offset the increase in Gulf of Mexico
revenues between periods that followed the average 30% rate increase implemented
last April. Both periods reflect the normal seasonal slowdown in helicopter
flying activity in Alaska during the first four months of the year.
Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001
- --------------------------------------------------------------------------------
Rowan incurred a net loss of $8.7 million in the second quarter of 2002 compared
to net income of $34.3 million in the same period of 2001. The decrease in
operating performance was caused largely by declines in drilling activity and
day rates between periods, primarily in the Gulf of Mexico, as a result of
volatile natural gas prices.
A comparison of the revenues and operating profit (loss) from drilling,
manufacturing, aviation and consolidated operations for the second quarters of
2002 and 2001, respectively, is reflected below (dollars in thousands):
Drilling Manufacturing Aviation Consolidated
------------------- ------------------ ----------------- --------------------
2002 2001 2002 2001 2002 2001 2002 2001
--------- -------- -------- -------- -------- ------- --------- ---------
Revenues $ 79,343 $147,259 $ 31,951 $ 25,426 $ 37,204 $37,709 $148,498 $210,394
Percent of Consolidated
Revenues 53% 70% 22% 12% 25% 18% 100% 100%
Operating Profit (Loss)(1) $ (8,298) $ 58,430 $ (360) $ (156) $ 3,448 $ 3,266 $ (5,210) $ 61,540
- --------------------------------------------------------------------------------
(1) Income (loss) from operations before deducting general and
administrative expenses
As reflected above, Rowan's consolidated operating results declined by $66.8
million or 108% when comparing the second quarters of 2002 and 2001. Drilling
revenues decreased by $67.9 million or 46% as our offshore fleet of 23 jack-ups
and one semi-submersible was 87% utilized during the second quarter of 2002,
compared to 90% in the second quarter of 2001, and suffered a 50% decrease in
average day rates between periods. Rowan's fleet of 17 land rigs was 68%
utilized during the second quarter of 2002, compared to 84% in the second
quarter of 2001, and experienced a 29% decrease in average day rates between
periods. Drilling expenses decreased by $2.8 million between periods, primarily
due to the effects of reduced land and boat operations which more than offset
the impact of the addition to our offshore fleet, in February 2002, of Rowan
Gorilla VII.
Rowan's manufacturing operating results in the second quarter of 2002 primarily
reflect the increased contributions from the division's steel and drilling
products groups, including the recent addition to the latter of newly-acquired
Oilfield-Electric-Marine, which were offset by a reduced contribution from the
equipment group. Manufacturing operations exclude approximately $33 million of
products and services provided to the drilling division during the second
quarter of 2002, most of which was attributable to construction progress on
Rowan Gorilla VIII, compared to about $34 million in the same period of 2001,
primarily due to Gorillas VII and VIII. The division's external backlog was
approximately $19 million at June 30, 2002.
Rowan's aviation operating results in the second quarter of 2002 were impacted
by higher insurance costs and a decline in Gulf of Mexico flying that combined
to offset an increase in fire control revenues between periods.
9
Expected near-term conditions in our principal drilling markets, based upon
recent bid inquiries and other indications from our energy company customers,
and the numbers of our rigs in each of those areas are as follows:
AREA RIGS EXPECTED NEAR-TERM CONDITIONS
- ----------------- ---- --------------------------------------------
Gulf of Mexico 22 Moderately improving exploration and development
activity, with increasing emphasis on potential
deep-well natural gas reserves on the Outer
Continental Shelf
North Sea 1 Moderately improving jack-up drilling
activity, fluctuating with oil prices
Eastern Canada 1 Moderately improving demand for harsh
environment equipment, fluctuating with oil
and natural gas prices
Expected near-term conditions in our principal aviation markets and the numbers
of our aircraft based in each of those markets are as follows:
AREA AIRCRAFT EXPECTED NEAR-TERM CONDITIONS
- ----------------- --------- --------------------------------------------
Alaska 65 Normal seasonal improvement
Gulf of Mexico 49 Moderately improving levels of flight
support activity
The drilling and aviation markets in which Rowan competes frequently experience
significant changes in supply and demand. Drilling utilization and day rates are
primarily a function of the demand for drilling services, as measured by the
level of exploration and development expenditures, and the supply of capable
drilling equipment. These expenditures, in turn, are affected by many factors
such as existing and newly discovered oil and natural gas reserves, political
and regulatory policies, seasonal weather patterns, contractual requirements
under leases or concessions, effects of energy company consolidations, and,
probably most influential, oil and natural gas prices. Our aviation operations
are also affected by such factors, as flying in support of offshore energy
operations remains a major source of business and Alaska operations are hampered
by weather each winter. The volatile nature of such factors prevents us from
being able to accurately predict whether existing market conditions will
continue beyond the near term. In response to fluctuating market conditions, we
can relocate our drilling rigs and aircraft from one geographic area to another,
but only when we believe such moves are economically justified. Currently,
Rowan's drilling and aviation operations are profitable, but there can be no
assurance that current operating conditions will prevail or that expected
improvements in market conditions, as reflected in the preceding tables, will
materialize. Our operations will be adversely affected should market conditions
deteriorate.
Though considerably less volatile than our drilling and aviation operations, our
manufacturing operations have continued to be adversely impacted by a prolonged
period of unfavorable world commodity prices; in particular, prices for copper,
iron ore, coal, gold and diamonds. Rowan's external manufacturing backlog
remains at a depressed level. As a result, we cannot accurately predict whether
or not our manufacturing operations will be profitable during the remainder of
2002.
10
LIQUIDITY AND CAPITAL RESOURCES
A comparison of key balance sheet figures and ratios as of June 30, 2002
and December 31, 2001 is as follows (dollars in thousands):
June 30, December 31,
2002 2001
--------- -------------
Cash and cash equivalents $ 212,465 $ 236,989
Current assets $ 484,404 $ 506,682
Current liabilities $ 136,364 $ 201,494
Current ratio 3.55 2.51
Long-term debt $ 479,864 $ 438,484
Stockholders' equity $1,174,809 $1,108,087
Long-term debt/total capitalization .29 .28
Reflected in the comparison above are the effects in the first six months of
2002 of net cash provided by operations of $77.5 million, proceeds from
borrowings of $62.6 million, capital expenditures of $123.4 million, debt
repayments of $21.2 million and a cash dividend of $23.5 million. Net cash
provided by operations during the period included approximately $73 million net
proceeds from the settlement of the Gorilla V contract dispute, which is
discussed more fully below.
Capital expenditures during the first half of 2002 were primarily related to the
construction of Rowan Gorilla VIII and the continued upgrade of our existing
offshore and land drilling fleet.
Rowan Gorilla VIII is an enhanced version of our Super Gorilla class jack-up,
designated a Super Gorilla XL. Gorilla VIII will be outfitted with 708 feet of
leg, 134 feet more than Gorillas V, VI or VII, and have 30% larger spud cans
enabling operation in the Gulf of Mexico in water depths up to 550 feet. Gorilla
VIII will also be able to operate in water depths up to 400 feet in the hostile
environments offshore eastern Canada and in the North Sea. The construction of
Gorilla VIII continues on schedule at Rowan's Vicksburg, Mississippi facility
with delivery expected during the third quarter of 2003. We are financing up to
$187 million of the cost of Gorilla VIII through an 18-year bank loan guaranteed
by the U. S. Department of Transportation's Maritime Administration ("MARAD")
under its Title XI Program. The notes require semiannual interest payments in
each January and July, with principal repayments commencing January 15, 2004,
and Gorilla VIII secures the government guarantee. At June 30, 2002, we had
drawn down about $94 million under this facility, which bore interest at
floating rates averaging approximately 2.1%.
Rowan Gorilla VII, a Super Gorilla class jack-up like Gorillas V and VI
featuring a combination drilling and production capability, was delivered in
December 2001 and mobilized to the North Sea during the first quarter. We
financed $185 million of the cost of Gorilla VII through a 12-year bank loan
guaranteed by MARAD under its Title XI Program. The notes require semiannual
payments in each April and October and Gorilla VII secures the government
guarantee. At June 30, 2002, we had fully drawn down the facility and
outstanding borrowings bore interest at floating rates averaging approximately
2.1%.
Design work continues on a new class of jack-up rig, specifically targeted for
deep drilling in water depths up to 250 feet on the Outer Continental Shelf in
the Gulf of Mexico. The Tarzan class rig will offer drilling capabilities
similar to our Gorilla class jack-ups, enabling more efficient drilling beyond
15,000 feet, but with reduced environmental criteria (wind, wave and current).
The first rig, to be named Scooter Yeargain, will be constructed at a cost of
about $90 million at Vicksburg, Mississippi with delivery expected by mid-year
2004. On July 25, 2002, our Board of Directors approved the construction of
three additional Tarzan class jack-ups, which are expected to be delivered in
2005 and 2006 and have an aggregate cost approaching $300 million. We intend to
pursue outside financing for the Tarzan construction program, but there can be
no assurance that financing will be available.
11
During 2001, we committed to purchase three Sikorsky S-92 helicopters for the
deepwater drilling market, subject to our obtaining long-term operating
contracts. The S-92 design features a 19-passenger capacity and a range of 475
nautical miles. We currently expect the helicopters to be delivered in the
second half of 2004 and that their total cost, estimated to approach $50
million, will be funded from existing working capital. However, there can be no
assurance that working capital will be adequate.
On January 31, 2002, we completed the purchase of certain assets of
Oilfield-Electric-Marine, Inc. and Industrial Logic Systems, Inc., issuing from
treasury 439,560 shares of Rowan common stock valued at approximately $8
million. Oilfield-Electric-Marine manufactures variable speed AC motors and
variable frequency drive systems, DC motors and drive systems, and consoles for
marine boats and lay barges, the oil and gas drilling industry, and the mining
and dredging industries. Additionally, Oilfield-Electric-Marine manufactures
medium voltage switchgear from 5KV through 38KV for the industrial and
petrochemical markets.
Rowan estimates remaining 2002 capital expenditures will be between $100 million
and $120 million, including approximately $60-75 million for Gorilla VIII and
Scooter Yeargain. We may also spend amounts to acquire additional aircraft as
market conditions justify and to upgrade existing rigs and manufacturing
facilities.
Based upon current and anticipated near-term operating levels, we believe that
2002 operations, together with existing working capital and available financial
resources, will generate sufficient cash flow to sustain planned capital
expenditures and debt service requirements at least through the remainder of
2002.
On November 16, 2001, an English Court ruled in Rowan's favor and dismissed the
plaintiff's claim that it had been entitled, in January 1999, to terminate its
drilling contract with a Rowan subsidiary for the use of the jack-up rig Rowan
Gorilla V. The Court ordered the plaintiff to pay Rowan for all unpaid day
rates, damages, interest and an interim payment for legal costs, for which Rowan
subsequently received $88.6 million. The matter was under appeal at December 31,
2001 and such amount, along with investment earnings, less outstanding
receivables dating from contract inception, was deferred at year end. On March
14, 2002, a settlement agreement was reached among the parties and all
litigation involving this matter was dropped. Pursuant to such agreement, Rowan
subsequently received an additional $84.2 million. Such amounts are shown, net
of final legal costs and expenses, as Other Income on the Consolidated Statement
of Operations for the six months ended June 30, 2002.
On April 26, 2002, our Board of Directors declared a special cash dividend of
$.25 per share of Common Stock that was paid on June 6, 2002 to shareholders of
record on May 16, 2002.
Critical Accounting Policies and Management Estimates.
- ------------------------------------------------------
Rowan's significant accounting policies are outlined in Note 1 to our financial
statements included in our 2001 Annual Report to Stockholders, which is
incorporated by reference in our Form 10-K for the year ended December 31, 2001.
Such policies, and management judgments, assumptions and estimates made in their
application, underlie reported amounts of assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. We believe our most critical accounting policies and
management estimates involve property and depreciation, specifically
capitalizable costs, useful lives and salvage values, as changes in such
policies and/or estimates would produce significantly different amounts from
those reported herein.
This report contains forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, without limitation,
statements as to the expectations, beliefs and future expected financial
performance of the Company that are based on current expectations and are
subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected by the Company. Among the
factors that could cause actual results to differ materially are the following:
oil, natural gas and other commodity prices; the level of offshore expenditures
by energy companies; energy demand; the general economy, including inflation;
weather conditions in the Company's principal operating areas; and environmental
and other laws and regulations. Other relevant factors have been disclosed in
the Company's filings with the U. S. Securities and Exchange Commission.
12
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Rowan believes that its exposure to risk of earnings loss due to changes in
market interest rates is not significant. In addition, virtually all of the
Company's transactions are carried out in U. S. dollars, thus Rowan's foreign
currency exposure is not material. Fluctuating commodity prices affect Rowan's
future earnings only to the extent that they influence demand for the Company's
products and services. Rowan does not hold or issue derivative financial
instruments.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the fifth paragraph on page 12 within PART I. Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of this Form 10-Q for a discussion of material developments in the
Gorilla V contract dispute.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) The following is a list of Exhibits filed with this Form 10-Q:
3a Amendment dated August 1, 2002, to the Bylaws, as Amended
3b Bylaws, as Amended, as of August 1, 2002
(b) No reports on Form 8-K were filed by the Registrant during the second
quarter of fiscal year 2002.
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.
ROWAN COMPANIES, INC.
(Registrant)
Date: August 13, 2002 /s/ E. E. THIELE
-------------------------------
E. E. Thiele
Senior Vice President- Finance,
Administration and Treasurer
(Chief Financial Officer)
Date: August 13, 2002 /s/ W. H. WELLS
-------------------------------
W. H. Wells
Controller
(Chief Accounting Officer)
13
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 Rowan Companies, Inc. (the "Company")
on Form 10-Q for the period ended June 30, 2002, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, C. R. Palmer,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the
best of my knowledge:
(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.
/s/ C. R. Palmer
-------------------------------------
C. R. Palmer
Chairman and Chief Executive Officer
August 13, 2002
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 Rowan Companies, Inc. (the "Company")
on Form 10-Q for the period ended June 30, 2002, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, E. E. Thiele,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the
best of my knowledge:
(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.
/s/ E. E. Thiele
-------------------------------------
E. E. Thiele
Senior Vice President - Finance,
Administration and Treasurer
August 13, 2002
14
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -------------
3a Amendment dated August 1, 2002, to the Bylaws, as Amended
3b Bylaws, as Amended, as of August 1, 2002
Exhibit 3a
ROWAN COMPANIES, INC.
Amendment Dated
August 1 2002 to the
Bylaws of the Company,
as Amended
Section 2. and Section 5. of Article II, Section 1. and Section 5. of
Article III, Section 5. of Article IV, Section 1. of Article VI, Section 1. of
Article VIII and Section 4. of Article IX have been amended by inserting in each
and every instance the title, "Vice Chairman of the Board," between the title,
"Chairman of the Board," and the title, "President."
Section 7. of Article II has been amended by inserting the phrase, "by the
Vice Chairman of the Board, or if he is not present," between the phrase, "or if
he is not present," and the phrase, "by the President," and inserting the title,
"the Vice Chairman of the Board," between the title, "Chairman of the Board,"
and the title, "President."
Section 8. of Article IV has been amended by inserting the phrase, "the
Vice Chairman of the Board shall preside, and in the absence of the Vice
Chairman of the Board," between the title, "Chairman of the Board," and the
title, "the President."
Section 4. of Article VI has been amended to read in entirety as follows:
"Section 4. The Chairman of the Board. The Chairman of the Board shall
preside at all meetings of stockholders and directors; in addition, he
shall be the chief executive officer of the Corporation and, subject to the
Board of Directors, he shall be in charge of the properties and operations
of the Corporation with all such powers with respect to such properties and
operations as may be reasonably incident to such responsibilities; he may
agree upon and execute all division and transfer orders, bonds, agreements,
contracts and other obligations in the name of the Corporation; and he
shall have such other powers and duties as designated in these Bylaws and
as from time to time may be assigned to him by the Board of Directors."
Section 5. (as renumbered) of Article VI has been added and reads in entirety as
follows:
"Section 5. The Vice Chairman of the Board. The Vice Chairman of the
Board shall be the chief administrative officer of the Corporation and
shall have such other powers and duties as from time to time may be
assigned to him by the Board of Directors. In
addition, he shall preside at all meetings of stockholders and directors in
the absence of the Chairman of the Board and shall exercise the powers of
the Chairman of the Board or the President during their absence, refusal or
inability to act. Any action taken by the Vice Chairman of the Board in the
performance of the duties of the Chairman of the Board or the President
shall be conclusive evidence of the absence, refusal or inability of the
Chairman of the Board or the President to act at the time such action was
taken."
Section 6. (as renumbered) of Article VI has been amended to read in entirety as
follows:
"Section 6. The President. The President shall be the chief operating
officer of the Corporation and, subject to the Board of Directors, he shall
manage the properties and operations of the Corporation in the ordinary
course of its business with all such powers with respect to the management
of such properties and operations as may be reasonably incident to such
responsibilities; in the absence of the Chairman of the Board, he may agree
upon and execute all division and transfer orders, bonds, agreements,
contracts and other obligations in the name of the Corporation; and he
shall have such other powers and duties as designated in these Bylaws and
as from time to time may be assigned to him by the Board of Directors."
Section 7. (as renumbered) of Article VI has been amended by removing the title,
"Chairman of the Board" each and every time it appears and by replacing the
word, "their," with the word, "his," in the pre-amended phrase, "during their
absence."
Section 7., Section 8., Section 9. and Section 10. of Article VI has been
renumbered accordingly as Section 8., Section 9., Section 10. and Section 11.
2
EXHIBIT 3B
BYLAWS
AS AMENDED
ROWAN COMPANIES, INC.
A DELAWARE CORPORATION
AUGUST 1, 2002
B Y L A W S
I N D E X
Page
ARTICLE I. OFFICES
Section 1. Principal Offices 4
Section 2. Registered Office 4
Section 3. Other Offices 4
ARTICLE II MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings 4
Section 2. Notice of Meetings 4
Section 3. Quorum 5
Section 4. Annual Meetings; Election of Directors 5
Section 5. Special Meetings 5
Section 6. Voting; Elections; Inspectors; Votes by Ballot 5
Section 7. Conduct of Stockholders' Meetings 6
Section 8. Validity of Proxies; Ballots, etc. 6
Section 9. Stock List 6
ARTICLE III BOARD OF DIRECTORS
Section 1. Number, Qualification and Nominations 7
Section 2. Classes of Directors and Term of Office 8
Section 3. Newly Created Directorships 8
Section 4. Vacancies 8
Section 5. Compensation 8
ARTICLE IV MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of Directors 8
Section 2. First Meeting 8
Section 3. Election of Officers 8
Section 4. Regular Meetings 9
Section 5. Special Meetings 9
Section 6. Notice 9
Section 7. Quorum 9
Section 8. Order of Business 9
Section 9. Presumption of Assent 9
Section 10. Action Without a Meeting or Telephone
Conference Meeting 9
2
Page
ARTICLE V. COMMITTEES
Section 1. Executive Committee and Other Committees 10
Section 2. Procedure; Meetings; Quorum 10
ARTICLE VI. OFFICERS
Section 1. Number, Titles, and Term of Office 11
Section 2. Salaries 11
Section 3. Removal of Officers 11
Section 4. The Chairman of the Board 11
Section 5 The Vice Chairman of the Board 11
Section 6. The President 11
Section 7. Vice Presidents 12
Section 8. Treasurer 12
Section 9. Assistant Treasurer 12
Section 10. Secretary 12
Section 11. Assistant Secretaries 12
ARTICLE VII INDEMNIFICATION OF DIRECTORS, OFFICERS
EMPLOYEES AND AGENTS
Section 1. Right to Indemnification 13
Section 2. Indemnification of Employees and Agents 13
Section 3. Right of Claimant to Bring Suite 13
Section 4. Nonexclusivity of Rights 14
Section 5. Insurance 14
Section 6. Savings Clause 14
Section 7. Definitions 14
ARTICLE VIII CAPITAL STOCK
Section 1. Certificates of Stock 14
Section 2. Transfer of Shares 15
Section 3. Ownership of Shares 15
Section 4. Record Date 15
Section 5. Regulations Regarding Certificates 15
Section 6. Dividends 15
Section 7. Lost or Destroyed Certificates 16
ARTICLE IX MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year 16
Section 2. Seal 16
Section 3. Notice and Waiver of Notice 16
Section 4. Resignations 16
ARTICLE X AMENDMENTS 16
3
BYLAWS
OF
ROWAN COMPANIES, INC.
AS AMENDED
Article I
Offices
Section 1. Principal Office. The principal office of the Corporation shall
be in the City of Houston, County of Harris, State of Texas.
Section 2. Registered Office. Until the Board of Directors otherwise
determines, the registered office of the Corporation required by law (meaning,
here and hereinafter, as required from time to time by the General Corporation
Law of the State of Delaware) to be maintained in the State of Delaware, shall
be in the City of Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof is The Corporation Trust Company,
or such other office and agent as may be designated from time to time by the
Board of Directors in the manner provided by law. Such registered office need
not be identical to the principal place of business of the Corporation.
Section 3. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
Article II
Meetings of Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall be
held in the City of Houston at the principal offices of the Corporation or at
such other places as may be designated by the Board of Directors or Executive
Committee and shall be specified or fixed in the notices or waivers of notices
thereof.
Section 2. Notice of Meetings. Written or printed notice stating the place,
day and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board, the
Vice Chairman of the Board, the President, the Secretary, or the officer or
person calling the meeting, to each stockholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the stockholder at his address
as it appears on the records of the Corporation, with postage thereon prepaid.
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date, and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for the original meeting, or if after the
4
adjournment a new record date is fixed for the adjourned meeting, written notice
of the place, date, and time of the adjourned meeting shall be given in
conformity herewith. At any adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
Section 3. Quorum. The holders of at least a majority of the outstanding
shares entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum at all meetings of stockholders for the transaction of
business, except as otherwise provided by law, by the Certificate of
Incorporation or by these Bylaws. If, however, such quorum shall not be present
or represented at any meeting of stockholders, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting of the time and place to which the meeting is being adjourned, to a
time when a quorum shall be present or represented. At such adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally called. A holder
of a share shall be treated as being present at a meeting if the holder of such
share is (i) present in person at the meeting or (ii) represented at the meeting
by a valid proxy, whether the proxy card granting such proxy is marked as
casting a vote or abstaining or is left blank.
Section 4. Annual Meetings; Election of Directors. An annual meeting of the
stockholders, for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting, shall be held on the fourth Friday in April of each year, at 9:00 a.m.,
local time, if not a legal holiday, at the principal offices of the Corporation
in Houston, Texas or at such other place, date, and time as the Board of
Directors or Executive Committee shall designate each year. Any business may be
transacted at the annual meeting, except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws.
Section 5. Special Meetings. In addition to any condition that may be
provided for in the Certificate of Incorporation, special meetings of the
stockholders for any purpose or purposes may be called at any time in the
interval between annual meetings by the Chairman of the Board, the Vice Chairman
of the Board, the President, the Board of Directors, or the Executive Committee.
Special meetings of the Stockholders may not be called by any other person or
persons.
Section 6. Voting; Elections; Inspectors; Votes by Ballot. Unless otherwise
provided in the Certificate of Incorporation, at all meetings of stockholders,
every stockholder of record of any class entitled to vote thereat shall have one
vote for each share of stock standing in his name on the books of the
Corporation on the date for the determination of stockholders entitled to vote
at such meeting, either in person or by proxy appointed by instrument in writing
subscribed by such stockholder or his duly authorized attorney, and bearing a
date not more than three years prior to said meeting unless said instrument
provides for a longer period.
If a quorum exists, action on a matter (including the election of
directors) shall be approved if the votes cast in favor of the matter or
election of the director exceed the votes cast opposing the matter or election
of such director. In determining the number of votes cast, shares abstaining
from voting on a matter (including elections) will not be treated as votes cast.
The provisions of this paragraph will govern with respect to all votes of
stockholders except as otherwise provided for in these Bylaws or in the
Certificate of Incorporation or by some specific
5
statutory provision superseding the provisions contained in these Bylaws or the
Certificate of Incorporation.
At any meeting of stockholders, the chairman of the meeting may, and upon
the request of the holders of 10% of the stock present in person or represented
by proxy and entitled to vote at such meeting, shall appoint two inspectors of
election who shall subscribe an oath or affirmation to execute faithfully the
duties of inspectors at such election with strict impartiality and according to
the best of their ability shall canvass the votes and make and sign a
certificate of the results thereof. No candidate for the office of director
shall be appointed as such inspector.
As provided in the Certificate of Incorporation of the Corporation, all
elections of directors shall be viva voce unless one or more stockholders
present at the meeting at which directors are elected shall request in writing
that such election be by ballot. The chairman of the meeting may cause a vote by
ballot to be taken upon any other matter, and such vote by ballot shall be taken
upon the request of the holders of 10% of the stock present and entitled to vote
on such other matter.
Section 7. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, or if he is
not present, by the Vice Chairman of the Board, or if he is not present, by the
President, or if he is not present, by a Vice President, or if neither the
Chairman of the Board, the Vice Chairman of the Board, President nor a Vice
President is present, by a chairman elected at the meeting. The Secretary of the
Corporation, if present, shall act as secretary of such meetings, or if he is
not present, an Assistant Secretary shall so act; if neither the Secretary nor
an Assistant Secretary is present, then a secretary shall be appointed by the
chairman of the meeting.
The chairman of any meeting of stockholders shall determine the order of
business and the procedures at the meeting, including such regulation of the
manner of voting which is not otherwise prescribed by law, the Certificate of
Incorporation or these Bylaws.
Section 8. Validity of Proxies; Ballots, etc. At every meeting of the
stockholders, all proxies shall be received and taken charge of, and all ballots
shall be received and canvassed by, the secretary of the meeting who shall
decide all questions touching the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes, unless inspectors of election
shall have been appointed by the chairman of the meeting, in which event such
inspectors of election shall decide all such questions.
Section 9. Stock List. At least ten (10) days before every meeting of
stockholders, the Secretary shall prepare (or cause to be prepared) a complete
list of stockholders entitled to vote at any meeting of stockholders, arranged
in alphabetical order for each class of stock and showing the address of each
such stockholder and the number of shares registered in his name. Such list
shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) 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 stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
6
Article III
Board of Directors
Section 1. Number, Qualification and Nominations. The business and
property of the Corporation shall be managed by the Board of Directors, and
subject to the restrictions imposed by law, the Certificate of Incorporation or
these Bylaws, they may exercise all the powers of the Corporation. Directors
need not be stockholders or residents of Delaware.
The Board of Directors shall consist of not less than one nor more than
thirty directors, as so determined from time to time by resolution of the Board
of Directors. If the Board of Directors makes no such determination, the number
of directors shall be the number set forth in the Certificate of Incorporation.
Within the above limits, the number of directors may be increased or decreased
(provided such decrease does not shorten the term of any incumbent director)
from time to time by resolution of the Board of Directors.
Nominations of candidates for election as directors of the Corporation at
any meeting of stockholders of the Corporation may be made by the Chairman of
the Board of Directors, the Vice Chairman of the Board, the President or by any
stockholder entitled to vote at such meeting who complies with the provisions of
this paragraph. Not less than 60 days prior to the date of the anniversary of
the annual meeting held in the prior year, in the case of an annual meeting, or,
in the case of a special meeting called by the Chairman of the Board, the Vice
Chairman of the Board, the President, the Board of Directors or the Executive
Committee for the purpose of electing directors, not more than 10 days following
the earlier of the date of notice of such special meeting or the date on which a
public announcement of such meeting is made, any stockholder who intends to make
a nomination at the meeting shall deliver written notice to the Secretary of the
Corporation setting forth (i) the name and address of the stockholder who
intends to make the nomination and of the person or persons to be nominated;
(ii) a representation that the stockholder (A) is a holder of record of stock of
the Corporation specified in such notice, (B) is or will be entitled to vote at
such meeting, and (C) intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; and (iii) such other
information concerning each such nominee as would be required under the rules of
the Securities and Exchange Commission in a proxy statement soliciting proxies
for the election of such nominee and in a Schedule 14B (or other comparable
required filing then in effect) under the Securities Exchange Act of 1934. In
the event that a person is validly designated as a proposed nominee in
accordance with this paragraph (including a bona fide statement that the nominee
is willing to be nominated) and shall thereafter become unable or unwilling to
stand for election to the Board of Directors, the stockholder who made such
designation may designate promptly in the manner set forth above a substitute
proposed nominee, notwithstanding the minimum time period set forth in this
paragraph. No person may be elected as a director at a meeting of stockholders
unless nominated in accordance with this paragraph, and any purported nomination
or purported election not made in accordance with the procedures as set forth in
this paragraph shall be void. In addition to any other requirements relating to
amendments to these Bylaws, no proposal by any stockholder to repeal or amend
this paragraph shall be brought before any meeting of the stockholders of the
Corporation unless written notice is given of (i) such proposed repeal or the
substance of such proposed amendment; (ii) the name and address of the
stockholder who intends to propose such repeal or amendment, and (iii) a
representation that the stockholder is a holder of record of stock of the
Corporation specified in such notice, is or will be entitled to vote at such
meeting and intends to appear in person or by proxy at such meeting to make the
proposal. Such notice shall be given in the manner and at the time specified
above in this paragraph. Any proposal to repeal or amend or any such purported
7
repeal or purported amendment of this paragraph not made or adopted in
accordance with the procedures set forth in this paragraph shall be void.
Section 2. Classes of Directors and Term of Office. As provided in the
Certificate of Incorporation, the Board of Directors shall be and is divided
into three classes, Class I, Class II and Class III, which shall be as nearly
equal in number as possible. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
class of directors of which he is a member was elected. Effective as of April
27, 2001, each class of directors, Class I, class II and Class III, shall have
three directors. Each director shall serve until his successor is elected and
qualified or until death, retirement, resignation or removal for cause.
Section 3. Newly Created Directorships. In the event of any increase or
decrease in the authorized number of directors, (i) each director then serving
as such shall nevertheless continue as a director of the class of which he is a
member until the expiration of his current term, or his prior death, retirement,
resignation, or removal for cause, and (ii) the newly created or eliminated
directorships resulting from such increase or decrease shall be apportioned by
the Board of Directors among the three classes of directors so as to maintain
such classes as nearly equal as possible.
Section 4. Vacancies. Should a vacancy occur or be created, whether arising
through death, resignation or removal of a director for cause, or through an
increase in the number of directors of any class, such vacancy shall be filled
by a majority vote of the remaining directors of the class in which such vacancy
occurs, or by the sole remaining director of that class if only one such
director remains, or by the majority vote of the remaining directors of the
other two classes if there be no remaining member of the class in which the
vacancy occurs. A director so elected to fill a vacancy shall serve for the
remainder of the then present term of office of the class to which he was
elected.
Section 5. Compensation. The Board of Directors shall have the authority to
fix the compensation of directors.
Article IV
Meetings of the Board of Directors
Section 1. Meetings of Directors. The directors may hold their meetings and
may have an office and keep the books of the corporation, except as otherwise
provided by the Certificate of Incorporation or Bylaws, in such place or places
in the State of Delaware, or outside the State of Delaware, as the Board of
Directors may from time to time determine.
Section 2. First Meeting. Each newly elected Board of Directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as the
annual meeting of the stockholders, and no notice of such meeting shall be
necessary.
Section 3. Election of Officers. At the first meeting of the Board of
Directors in each year at which a quorum shall be present, held next after the
annual meeting of stockholders, the Board of Directors shall proceed to the
election of the officers of the Corporation.
8
Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as shall be designated from time to time
by resolution of the Board of Directors. Notice of such regular meetings shall
not be required.
Section 5. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, the Vice Chairman of
the Board, the President, or by a majority of the directors in office at the
time. Each such special meeting shall be held at such time and place as shall be
designated by the officer or directors calling such meeting.
Section 6. Notice. The Secretary shall give notice of each special meeting
in person, or by mail or telegraph to each director at least twenty-four (24)
hours before the time of such meeting. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened. Notice may also be waived in writing as provided in Article
IX, Section 3 of these Bylaws. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in any written waiver of notice of such meeting.
Section 7. Quorum. Unless the Certificate of Incorporation or these Bylaws
otherwise require, a majority of the total number of directors then in office
shall constitute a quorum for the transaction of business, but if at any meeting
of the Board of Directors there is less than a quorum present, a majority of
those present or any director solely present may adjourn the meeting from time
to time without further notice. The act of a majority of the directors present
at a meeting at which a quorum is in attendance shall be the act of the Board of
Directors, unless the act of a greater number is required by the Certificate of
Incorporation or by these Bylaws.
Section 8. Order of Business. At meetings of the Board of Directors,
business shall be transacted in such order as from time to time the Board of
Directors may determine and the Chairman of the Board shall preside. In the
absence of the Chairman of the Board, the Vice Chairman of the Board shall
preside, and in the absence of the Vice Chairman of the Board, the President
shall preside, and in the absence of the President, a chairman shall be chosen
by the Board of Directors from among the directors present. The Secretary of the
Corporation shall act as secretary of the meetings of the Board of Directors,
but in the absence of the Secretary, the presiding officer may appoint any
person to act as secretary of the meeting.
Section 9. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 10. Action Without a Meeting or Telephone Conference Meeting. Any
action permitted or required by law, the Certificate of Incorporation or these
Bylaws, to be taken at a meeting of the Board of Directors (or any committee
designated by the Board of Directors) may be taken without a meeting if a
consent in writing, setting forth the action to be taken is signed by all the
members of the Board of Directors or committee, as the case may be. Such consent
shall have the same force and effect as a unanimous vote at a meeting, and may
be stated as such in any document or instrument filed with the Secretary of
State. Subject to the
9
requirement for notice of meetings, members of the Board of Directors (or
members of any committee designated by the Board of Directors), may participate
in and hold a meeting of such Board of Directors or committee, as the case may
be, by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Article V
Committees
Section 1. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the whole Board of Directors,
may designate from among its members an Executive Committee and one or more
other committees, each of which, to the extent provided in such resolution,
shall have and may exercise all of the authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority of the Board of
Directors 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
pursuant to Article Fourth of the Restated Certificate of Incorporation of the
Corporation, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation 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
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending,
altering or repealing the bylaws of the Corporation or adopting new bylaws for
the Corporation, filling vacancies in the Board of Directors or any such
committee, electing or removing officers or members of any such committee,
fixing the compensation of any member of such committee or altering or repealing
any resolution of the Board of Directors which by its terms provided that it
shall not be so amendable or repealable and, unless such resolution expressly so
provides, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of shares of the Corporation or to adopt a
certificate of ownership and merger pursuant to 253 of the Delaware General
Corporation Law. The designation of such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed by law.
All action by any committee shall be reported to the Board of Directors at
its meeting next succeeding such action, and shall be subject to revision or
alteration by the Board of Directors; provided that no rights of third parties
shall be affected by any such revision or alteration.
Section 2. Procedure; Meetings; Quorum. The Board of Directors shall
designate the Chairman and Secretary of each committee appointed by the Board of
Directors. Each such committee shall fix its own rules or procedure, and shall
meet at such times and at such place
10
or places as may be provided by such rules, or by resolution of the
Executive Committee or of the Board of Directors. A majority of all the then
members of a committee shall be necessary to constitute a quorum and the
affirmative vote of a majority of the members present shall be necessary for the
adoption by it of any resolution. The Board of Directors shall have power at any
time to change the number, subject as aforesaid, and members of any such
committee, to fill vacancies, and to discharge any such committee.
Article VI
Officers
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a Chairman of the Board, a Vice Chairman of the Board, a
President, one or more Vice Presidents, a Secretary, a Treasurer, and such other
officers as the Board of Directors may from time to time elect or appoint. Each
officer shall hold office until his successor shall have been duly elected and
qualified or until his death or until he shall resign or shall have been removed
in the manner hereinafter provided. Any two offices may be held by the same
person. None of the officers need be a director, except that the Chairman of the
Board, Vice Chairman of the Board and the President shall be directors.
Section 2. Salaries. The salaries or other compensation of the officers
shall be fixed from time to time by the Board of Directors, and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a director of the Corporation.
Section 3. Removal of Officers. Any officer or agent elected or appointed
by the Board of Directors may be removed, either with or without cause, by the
Board of Directors whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. The Chairman of the Board. The Chairman of the Board shall
preside at all meetings of stockholders and directors; in addition, he shall be
the chief executive officer of the Corporation and, subject to the Board of
Directors, he shall be in charge of the properties and operations of the
Corporation with all such powers with respect to such properties and operations
as may be reasonably incident to such responsibilities; he may agree upon and
execute all division and transfer orders, bonds, agreements, contracts and other
obligations in the name of the Corporation; and he shall have such other powers
and duties as designated in these Bylaws and as from time to time may be
assigned to him by the Board of Directors.
Section 5. The Vice Chairman of the Board. The Vice Chairman of the Board
shall be the chief administrative officer of the Corporation and shall have such
other powers and duties as from time to time may be assigned to him by the Board
of Directors. In addition, he shall preside at all meetings of stockholders and
directors in the absence of the Chairman of the Board and shall exercise the
powers of the Chairman of the Board or the President during their absence,
refusal or inability to act. Any action taken by the Vice Chairman of the Board
in the performance of the duties of the Chairman of the Board or the President
shall be conclusive evidence of the absence, refusal or inability of the
Chairman of the Board or the President to act at the time such action was taken.
Section 6. The President. The President shall be the chief operating
officer of the Corporation and, subject to the Board of Directors, he shall
manage the properties and operations of the Corporation in the ordinary course
of its business with all such powers with
11
respect to the management of such properties and operations as may be reasonably
incident to such responsibilities; in the absence of the Chairman of the Board,
he may agree upon and execute all division and transfer orders, bonds,
agreements, contracts and other obligations in the name of the Corporation; and
he shall have such other powers and duties as designated in these Bylaws and as
from time to time may be assigned to him by the Board of Directors.
Section 7. Vice Presidents. Each Vice President shall have such powers and
duties as may be assigned to him by the Board of Directors and shall exercise
the powers of President during his absence, refusal or inability to act. Any
action taken by a Vice President in the performance of the duties of the
President shall be conclusive evidence of the absence, refusal or inability of
the President to act at the time such action was taken.
Section 8. Treasurer. The Treasurer shall have custody of all the funds and
securities of the Corporation which come into his hands. When necessary or
proper, he may endorse, on behalf of the Corporation, for collection, checks,
notes and other obligations and shall deposit the same to the credit of the
Corporation in such bank or banks or depositaries as shall be designated by, and
in the manner prescribed by, the Board of Directors; he may sign all receipts
and vouchers for payments made to the Corporation, either alone or jointly with
such other officer as is designated by the Board of Directors; he shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements. Whenever required by the Board of
Directors, he shall render a statement of his cash account; he shall enter or
cause to be entered regularly in the books of the Corporation to be kept by him
for that purpose full and accurate accounts of all monies received and paid out
on account of the Corporation; and he shall perform all acts incident to the
position of Treasurer subject to the control of the Board of Directors; he
shall, if required by the Board of Directors, give such bond for the faithful
discharge of his duties in such form as the Board of Directors may require.
Section 9. Assistant Treasurer. Each Assistant Treasurer shall have the
usual powers and duties pertaining to his office, together with such other
powers and duties as may be assigned to him by the Board of Directors. The
Assistant Treasurer shall exercise the powers of the Treasurer during the
officer's absence, refusal or inability to act.
Section 10. Secretary. The Secretary shall keep the minutes of all meetings
of the Board of Directors and the minutes of all meetings of the stockholders,
in books provided for that purpose; he shall attend to the giving and serving of
all notices; he may sign with the Chairman of the Board or the President in the
name of the Corporation all contracts of the Corporation and affix the seal of
the Corporation thereto; he may affix and attest the seal of the Corporation to
such instruments and documents as may be properly executed by the Corporation;
and he shall have charge of the certificate books, transfer books and stock
ledgers, and such other books and papers as the Board of Directors may direct,
all of which shall at all reasonable times be open to the inspection of any
director upon application at the office of the Corporation during ordinary
business hours, and he shall in general perform all duties incident to the
office of Secretary subject to the control of the Board of Directors.
Section 11. Assistant Secretaries. Each Assistant Secretary shall have the
usual powers and duties pertaining to his office, together with such other
powers and duties as may be assigned to him by the Board of Directors or the
Secretary. The Assistant Secretaries shall exercise the powers of the Secretary
during the officer's absence, refusal or inability to act.
12
Article VII
Indemnification of Directors,
Officers, Employees and Agents
Section 1. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is the legal
representative, is or was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any other
capacity while serving or having agreed to serve as a director or officer, shall
be indemnified and held harmless by the Corporation 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 Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) against all expense, liability and loss (including without
limitation, attorneys' fees, 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 ceased to serve in the capacity which initially entitled
such person to indemnity hereunder and shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article VII shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if the Delaware General Corporation Law requires, the
payment of such expenses incurred by a current, former or proposed director or
officer in his or her capacity as a director or officer or proposed director or
officer (and not in any other capacity in which service was or is or has been
agreed to be rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such indemnified person, to repay all
amounts so advanced if it shall ultimately be determined that such indemnified
person is not entitled to be indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation may, by
action of its Board of Directors, provide indemnification to employees and
agents of the Corporation, individually or as a group, with the same scope and
effect as the indemnification of directors and officers provided for in this
Article.
Section 3. Right of Claimant to Bring Suit. If a written claim received by
the Corporation from or on behalf of an indemnified party under this Article VII
is not paid in full by the Corporation within ninety days after such receipt,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that
13
the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
Section 4. Nonexclusivity of Rights. The right to indemnification and the
advancement and payment of expenses conferred in this Article VII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Section 6. Savings Clause. If this Article VII or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify and hold harmless each director and
officer of the Corporation, as to costs, charges and expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VII that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Section 7. Definitions. For purposes of this Article, reference to the
"Corporation" shall include, in addition to the Corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger prior to (or, in the case of an entity specifically
designated in a resolution of the Board of Directors, after) the adoption hereof
and which, if its separate existence had continued, would have had the power and
authority to indemnify its directors, officers and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Article VIII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
statutory provisions and the Certificate of Incorporation, as shall be approved
by the Board of Directors. The Chairman of the Board,
14
the Vice Chairman of the Board, President or a Vice President shall cause to be
issued to each stockholder one or more certificates under the seal of the
Corporation and signed by the Chairman of the Board, the Vice Chairman of the
Board, President or Vice President and the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer certifying the number of shares (and,
if the stock of the Corporation shall be divided into classes or series, the
class and series of such shares) owned by such stockholder in the Corporation;
provided, however, that any or all of the signatures on the certificate may be
facsimile. The stock record books and the blank stock certificate books shall be
kept by the Secretary, or at the office of such transfer agent or transfer
agents as the Board of Directors or the Executive Committee may from time to
time by resolution determine. In case any officer, transfer agent or registrar
who shall have signed or whose facsimile signature or signatures shall have been
used on, any such certificate or certificates shall cease to be such officer,
transfer agent or registrar, whether because of death, resignation or otherwise,
before such certificate or certificates shall have been issued by the
Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the officer, transfer agent or registrar
who signed such certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such officer,
transfer agent or registrar.
Section 2. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to treat
the holder of record of any share or shares as the holder in fact thereof and,
accordingly, 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, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Delaware.
Section 4. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of stockholders for any other proper purpose, the Board
of Directors of the Corporation may fix, in advance, a date as record date for
any such determination of stockholders, such date in any case not to be more
than sixty (60) days (unless a shorter period is provided for in the Certificate
of Incorporation) and, in case of a meeting of stockholders, not less than ten
(10) days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders or either (a) to notice of or to vote at a meeting of stockholders
or (b) to receive payment of a dividend, the close of business on the day next
preceding the date on which the notice of the meeting is mailed or on the date
on which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
stockholders.
Section 5. Regulations Regarding Certificates. The Board of Directors shall
have the power and authority to make all such rules and regulations as they may
deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 6. Dividends. The Board of Directors may, from time to time,
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Certificate of
Incorporation.
15
Section 7. Lost or Destroyed Certificates. The Board of Directors or the
Executive Committee may determine the conditions upon which a new certificate of
stock may be issued in place of a certificate which is alleged to have been lost
or destroyed; and may, in their discretion, require the owner of such
certificate or his legal representative to give bond, with sufficient surety, to
indemnify the Corporation and each transfer agent against any and all losses or
claims which may arise by reason of the issue of a new certificate in the place
of the one so lost or destroyed.
Article IX
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year or such other period as shall be established by the Board of
Directors from time to time.
Section 2. Seal. The seal of the Corporation shall be such as from time to
time may be approved by the Board of Directors.
Section 3. Notice and Waiver of Notice. Whenever any notice whatever is
required to be given under the provisions of these Bylaws, said notice shall be
deemed to be sufficient if given by depositing the same in a post office box in
a sealed postpaid wrapper addressed to the person entitled thereto at his post
office address, as it appears on the books of the Corporation, and such notice
shall be deemed to have been given on the day of such mailing. A waiver of
notice, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.
Section 4. Resignations. Any director or officer may resign at any time.
Such resignations shall be made in writing and shall take effect at the time
specified therein, or, if no time be specified, at the time of its receipt by
the Chairman of the Board, the Vice Chairman of the Board, the President or
Secretary. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
Article X
Amendments
As provided in the Certificate of Incorporation of the Corporation, the
Board of Directors shall have the power to make, adopt, alter, amend and repeal
from time to time bylaws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to adopt, alter, amend and
repeal such bylaws as adopted, altered or amended by the Board of Directors;
provided, however, that bylaws shall not be adopted, altered, amended or
repealed by the stockholders of the Corporation except by the vote of the
holders of not less than eighty percent (80%) of the outstanding shares of
capital stock of the Corporation normally entitled to vote in the election of
directors.
16
Amendment No. 1 herein: Article III Section 2. Classes of Directors
and Term of Office, October 26, 1984.
Amendment No. 2 herein: Article II Section 4. Annual Meetings;
Election of Directors, July 26, 1985.
Amendment No. 3 herein: Article V Section 1. Executive Committee
and Other Committees, June 30, 1986.
Amendment No. 4 herein: Article VII (in entirety) Indemnification of
Directors, Officers, Employees and Agents, April 23, 1987.
Amendment No. 5 herein: Article III Section 2. Classes of Directors
and Term of Office, October 23, 1987.
Amendment No. 6 herein: Article III Section 2. Classes of Directors
and Term of Office, April 28, 1989.
Amendment No. 7 herein: Article III Section 2. Classes of Directors
and Term of Office, January 25, 1990.
Amendment No. 8 herein: Article II Section 5. Special Meetings,
February 25, 1992.
Amendment No. 9 herein: Article III Section 2. Classes of Directors
and Term of Office, April 24, 1992.
Amendment No. 10 herein: Article II Section 3. Quorum and Section
6. Voting; Elections; Inspectors; Votes by Ballot, December 21, 1992.
Amendment No. 11 herein: Article III Section 2. Classes of
Directors and Term of Office, April 23, 1993.
Amendment No. 12 herein: Article III Section 2. Classes of
Directors and Term of Office, April 26, 1996.
Amendment No. 13 herein: Article III Section 1. Number, Qualifications
and Nominations, September 1, 1996.
Amendment No. 14 herein: Article III Section 2. Classes of Directors
and Term of Office, April 25, 1997
Amendment No. 15 herein: Article III Section 2. Classes of Directors
and Term of Office, January 22, 1998
Amendment No. 16 herein: Article III Section 2. Classes of Directors
and Term of Office, July 14, 1998
Amendment No. 17 herein: Article III Section 2. Classes of Directors
and Term of Office, April 28, 2000
17
Amendment No. 18 herein: Article III Section 2. Classes of Directors
and Term of Office, April 27, 2001
Amendment No. 19 herein: Various, but principally Article VI Section 4.
The Chairman of the Board and (as renumbered) Section 5. The Vice Chairman of
the Board (new), Section 6. The President and Section 7. Vice Presidents, August
1, 2002
18