UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 30, 1996
--------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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COMMISSION FILE NUMBER 1-7685
AVERY DENNISON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-1492269
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
150 NORTH ORANGE GROVE BOULEVARD, PASADENA, CALIFORNIA 91103
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (818) 304-2000
Indicate by a check X 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
--- ---
Number of shares of $1 par value common stock outstanding as of April 26,
1996: 52,786,792
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
INDEX TO FORM 10-Q
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Page No.
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Part I. Financial Information (Unaudited):
Financial Statements:
Condensed Consolidated Balance Sheet
March 30, 1996 and December 30, 1995 3
Consolidated Statement of Income
Quarters Ended March 30, 1996 and April 1, 1995 4
Condensed Consolidated Statement of Cash Flows
Quarters Ended March 30, 1996 and April 1, 1995 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information:
Submission of Matters to a Vote of Security Holders,
Exhibits and Reports on Form 8-K 10
Signatures 11
2
PART I. FINANCIAL INFORMATION
AVERY DENNISON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(Unaudited)
March 30, 1996 December 30, 1995
-------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 5.3 $ 27.0
Trade accounts receivable, net 460.0 444.1
Inventories, net 229.0 223.2
Prepaid expenses 25.0 21.9
Other current assets 77.6 83.9
-------- --------
Total current assets 796.9 800.1
Property, plant and equipment, at cost 1,665.0 1,652.1
Accumulated depreciation (755.2) (744.7)
-------- --------
909.8 907.4
Intangibles resulting from business acquisitions, net 122.6 124.3
Other assets 133.9 131.8
-------- --------
$1,963.2 $1,963.6
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $ 124.2 $ 115.4
Accounts payable 164.7 169.9
Accrued liabilities 334.9 387.2
-------- --------
Total current liabilities 623.8 672.5
Long-term debt 374.9 334.0
Deferred taxes and other long-term liabilities 146.1 141.3
Shareholders' equity:
Common stock - $1 par value
Authorized - 200,000,000 shares; Issued - 62,063,312
shares at March 30, 1996 and December 30, 1995 62.1 62.1
Capital in excess of par value 190.7 191.6
Retained earnings 861.9 837.8
Cumulative foreign currency translation adjustment 34.9 33.8
Cost of unallocated ESOP shares (27.0) (27.0)
Minimum pension liability (2.6) (2.6)
Treasury stock at cost, 9,294,930 shares at March 30,
1996 and 9,003,763 shares at December 30, 1995 (301.6) (279.9)
-------- --------
Total shareholders' equity 818.4 815.8
-------- --------
$1,963.2 $1,963.6
======== ========
See Notes to Consolidated Financial Statements
3
AVERY DENNISON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
Quarter Ended
------------------------------
March 30, 1996 April 1, 1995
-------------- -------------
Net sales $796.6 $773.2
Cost of products sold 549.9 528.4
------ ------
Gross profit 246.7 244.8
Marketing, general and
administrative expense 175.3 180.0
Interest expense 8.9 10.0
------ ------
Income before taxes 62.5 54.8
Taxes on income 22.5 20.3
------ ------
Net income $ 40.0 $ 34.5
====== ======
Weighted average number of common
shares outstanding 52.9 53.4
====== ======
PER COMMON SHARE AMOUNTS:
Net income $ .76 $ .65
====== ======
Dividends $ .30 $ .27
====== ======
See Notes to Consolidated Financial Statements
4
AVERY DENNISON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Quarter Ended
-------------------------------
March 30, 1996 April 1, 1995
-------------- -------------
OPERATING ACTIVITIES:
- --------------------
Net income $ 40.0 $ 34.5
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 24.9 26.1
Amortization 2.6 3.5
Deferred taxes 6.4 0.9
Net change in assets and liabilities net of the effect of
foreign currency translation and business divestitures (74.6) (49.3)
------ ------
Net cash (used in) provided by operating activities (.7) 15.7
------ ------
INVESTING ACTIVITIES:
- --------------------
Purchase of property, plant and equipment (38.3) (36.7)
Proceeds from sale of assets and business divestitures 3.8 0.2
Other 2.4 (6.5)
------ ------
Net cash used in investing activities (32.1) (43.0)
------ ------
FINANCING ACTIVITIES:
- --------------------
Net increase in short-term debt 8.7 7.0
Net increase in long-term debt 40.9 47.3
Dividends paid (15.9) (14.4)
Purchase of treasury stock (25.1) (14.5)
Other 2.5 2.0
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Net cash provided by financing activities 11.1 27.4
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Effect of foreign currency translation on cash balances -- 0.2
------ ------
(Decrease) increase in cash and cash equivalents (21.7) 0.3
------ ------
Cash and cash equivalents, beginning of period 27.0 3.1
------ ------
Cash and cash equivalents, end of period $ 5.3 $ 3.4
====== ======
See Notes to Consolidated Financial Statements
5
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The accompanying unaudited consolidated financial statements include normal
recurring adjustments necessary for a fair presentation of the Company's
interim results. Certain prior year amounts have been reclassified to conform
with current year presentation. The condensed financial statements and notes
in this Form 10-Q are presented as permitted by Regulation S-X, and as such,
they do not contain certain information included in the Company's 1995 annual
financial statements and notes.
The first quarters of 1996 and 1995 consisted of thirteen-week periods ending
March 30, 1996 and April 1, 1995, respectively. The interim results of
operations are not necessarily indicative of future financial results.
2. FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies and translation of financial statements of
subsidiaries operating in hyperinflationary economies during the first
quarters ended 1996 and 1995 resulted in losses of $.6 million and $.4
million, respectively.
3. INVENTORIES
Inventories consisted of (in millions):
March 30, 1996 December 30, 1995
-------------- -----------------
Raw materials $ 80.9 $ 78.5
Work in progress 66.7 72.4
Finished goods 118.4 109.6
LIFO adjustment (37.0) (37.3)
------ ------
$229.0 $223.2
====== ======
4. INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS
Accumulated amortization of intangible assets at March 30, 1996 and December
30, 1995 was $41.3 and $40.3 million, respectively.
5. RESEARCH AND DEVELOPMENT
Research and development expense for the first quarters of 1996 and 1995 was
$13.3 million and $12.3 million, respectively.
6
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. NEW ACCOUNTING STANDARDS
During the first quarter of 1996, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 121 on accounting for the impairment of long-
lived assets and certain identifiable intangibles to be disposed of. SFAS No.
121 establishes guidance for recognizing and measuring impairment losses. If
it is determined the carrying amount of an asset is not recoverable, the
Company is required to recognize an impairment loss. The Company's
implementation of the new standard had no effect on the first quarter 1996
financial statements.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation". The standard encourages a
fair value based method of accounting for an employee stock option or similar
equity instrument, but allows continued use of the intrinsic value based
method of accounting prescribed by Accounting Principles Board (APB) No. 25,
"Accounting for Stock Issued to Employees". The Company will continue to
follow the provisions set forth in APB No. 25 and will therefore make the pro
forma disclosures that will be required by SFAS No. 123 in its financial
statements for the year ended December 28, 1996.
7
AVERY DENNISON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Quarterly sales increased to $796.6 million, a 3 percent increase over first
quarter 1995 sales of $773.2 million. Excluding the impact of sales from the
divested label converting businesses and changes in foreign currency rates,
sales increased 4.8 percent.
The gross profit margin for the quarter was 31 percent compared to 31.7 percent
for the first quarter of 1995. The decrease was due to a shift in product mix
and startup costs for new capacity and geographic expansion.
Marketing, general and administrative expense, as a percent of sales, was 22
percent as compared to 23.3 percent for the first quarter of 1995. The
improvement was the result of cost reduction actions taken in previous years and
increased sales.
During the first quarter of 1996, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 121 on accounting for the impairment of long-
lived assets and certain identifiable intangibles to be disposed of. The
Company's implementation of the new standard had no effect on the first quarter
1996 financial statements.
Income before taxes as a percent of sales increased to 7.8 percent for the
quarter as compared to 7.1 percent for the first quarter of 1995 due to lower
marketing, general and administrative and interest expenses as a percent of
sales. Interest expense as a percent of sales was 1.1 percent for the first
quarter of 1996 compared to 1.3 percent for the first quarter of 1995. The
decrease in interest expense was due primarily to the expiration of interest
rate swap agreements during the fourth quarter of 1995. Net income increased 16
percent to $40 million compared to $34.5 million in the first quarter of 1995.
Earnings per share for the quarter were $.76 compared to $.65 in the same period
last year, a 17 percent increase.
Results of Operations by Business Sector
The pressure-sensitive adhesives and materials sector reported increased sales
for the first quarter of 1996 compared to the same period last year. Excluding
the impact of significant geographic and capacity expansion, sector
profitability was comparable to the prior year. The U.S. operations reported
sales growth for the quarter while costs associated with capacity expansion
impacted profitability. The international businesses reported increased sales.
Profitability improved modestly in the international businesses due to increased
sales volume and pricing actions, but were partially offset by continued costs
related to geographic expansion.
The office products sector reported increased sales and profitability for the
quarter. Increased sales in the U.S. operations were led by sales growth for
Avery-brand labels and indexes. Profitability improved as a result of
successful new products and the implementation of cost reduction programs,
including the consolidations of distribution warehouses and sales forces in the
United States. The European office products businesses reported higher sales
due to growth at its label businesses; however, this increase in sales was
partially offset by the Company's French operations. Profitability for these
European businesses declined primarily due to its operations in France.
8
AVERY DENNISON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Excluding the impact of divested operations, the converted products sector
reported increased sales and profitability. The U.S. operations reported
increased sales due to the growth at its stamp and battery label businesses.
Profitability also improved primarily due to increased sales volume and
operating improvements at the Company's stamp operations. Successful new
products resulted in improved sales for the international converting businesses
while an improved product mix and lower operating expenses as a percent of sales
resulted in increased profitability.
FINANCIAL CONDITION
- -------------------
During the first quarter of 1996, total debt increased $49.7 million to $499.1
million from year end 1995 as a result of increased working capital requirements
needed to fund the Company's sales growth. Total debt to total capital was 37.9
percent as of the end of the first quarter of 1996 and 35.5 percent at year end
1995.
Average working capital, excluding short-term debt, as a percentage of sales,
increased to 10 percent from 9.3 percent a year ago. The increase was primarily
the result of an increase in accounts receivable and current deferred taxes
which was partially offset by an increase in accrued liabilities and sales.
Average inventory turns for the first quarter of 1996 was 9.6 turns compared to
9.0 turns for the first quarter of 1995; the average number of days sales
outstanding in accounts receivable was 55 days compared to 54 days a year ago.
Shareholders' equity increased to $818.4 million from $815.8 million at year end
1995. During the first quarter of 1996, the Company purchased 474,000 shares of
common stock at a cost of $25.1 million. The cost of treasury stock held, net of
shares reissued under the Company's stock and incentive plans, increased during
the quarter by $21.7 million to $301.6 million from year end 1995.
Net cash flows used in operating activities totalled $700,000 for the first
quarter of 1996 compared to $15.7 million in net cash flows provided by
operating activities for the first quarter of 1995. The decrease in net cash
flows provided by operating activities is primarily due to greater reductions in
interest, tax and restructuring liabilities. In addition to cash flows from
operations, the Company has more than adequate financing arrangements to conduct
its operations.
9
PART II. OTHER INFORMATION
AVERY DENNISON CORPORATION
AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
The registrant held its annual stockholders' meeting on April 25, 1996. The
stockholders voted to re-elect three directors to the Board of Directors as
follows:
Number of Shares Voted/1/
----------------------------------------------
For Withheld
------------------- ---------------------
Charles D. Miller 43,292,503 614,094
Richard M. Ferry 43,223,225 683,372
Dwight L. Allison 43,369,117 537,480
/1/There were no abstentions or shares otherwise not voted by brokers.
The result of the voting on the following additional item was as follows:
Broker
For Opposed Abstained Non-Votes
---------- ---------- --------- ----------
Amendment to the 1990 Incentive and
Stock Option Plan for Key Employees 30,484,264 12,919,528 502,805 --
- --------------------------------------------------------------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
a. Exhibits: 3(ii) By-Laws of Avery Dennison Corporation - Amended and
Restated April 25, 1996
11 Computation of Net Income Per Share Amounts
27 Financial Data Schedule
b. Reports on Form 8-K: There were no reports on Form 8-K filed for the three
months ended March 30, 1996.
10
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.
AVERY DENNISON CORPORATION
-----------------------------------
(Registrant)
/s/ Gregory Jenkins
-----------------------------------
R. Gregory Jenkins
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
/s/ Thomas E. Miller
-----------------------------------
Thomas E. Miller
Vice President and Controller
(Chief Accounting Officer)
May 13, 1996
11
BYLAWS
OF
AVERY DENNISON CORPORATION
ARTICLE I
---------
OFFICES
Section 1. Registered Office. The registered office of Avery Dennison
Corporation (hereinafter called the "corporation") in the State of Delaware
shall be at 1013 Centre Road, City of Wilmington, County of New Castle, and the
name of the registered agent at that address shall be United States Corporation
Company.
Section 2. Principal Office. The principal executive office for the
transaction of the business of the corporation is hereby fixed and located in
Los Angeles County, California. The board of directors is hereby granted full
power and authority to change said principal executive office from one location
to another within or without the State of California.
Section 3. Other Offices. The corporation may also have offices at such
other places within or 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
----------
STOCKHOLDERS
Section 1. Place of Meetings. Meetings of stockholders shall be held at
any place within or outside the State of Delaware designated by the board of
directors. In the absence of any such designation, stockholders' meetings shall
be held at the principal executive office of the corporation.
Section 2. Annual Meetings of Stockholders. The annual meeting of
stockholders shall be held on the last Thursday in April of each year at 1:30
p.m. of said day, or on such other day, which shall not be a legal holiday, as
shall be determined by the board of directors. Any previously scheduled annual
meeting of stockholders may be postponed by resolution of the board of directors
upon public notice given prior to the date previously scheduled for such annual
meeting of stockholders.
Section 3. Special Meetings. A special meeting of the stockholders may
be called at any time by the board of directors, or by a majority of the
directors or by a committee authorized by the board to do so. Any previously
scheduled special meeting of the stockholders may be postponed by resolution of
the board of directors upon public notice given prior to the date previously
scheduled for such special meeting of the stockholders.
Exhibit 3(ii) - Page 1 of 18
Section 4. Notice of Stockholders' Meetings. All notices of meetings of
stockholders shall be sent or otherwise given in accordance with Section 5 of
this Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting being noticed. The notice shall specify the place, date and
hour of the meeting and (i) in case of a special meeting, the general nature of
the business to be transacted, or (ii) in the case of the annual meeting, those
matters which the board of directors, at the time of giving the notice, intends
to present for action by the stockholders. The notice of any meeting at which
directors are to be elected shall include the name of any nominee or nominees
who, at the time of the notice, management intends to present for election.
Section 5. Manner of Giving Notice; Affidavit of Notice. Notice of any
meeting of stockholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
stockholder at the address of such stockholder appearing on the books of the
corporation or given by the stockholder to the corporation for the purpose of
notice. If no such address appears on the corporation's books or has been so
given, notice shall be deemed to have been given if sent by first-class mail or
telegraphic or other written communication to the corporation's principal
executive office, or if published at least once in a newspaper of general
circulation in the county where such office is located. Notice shall be deemed
to have been given at the time when delivered personally or deposited in the
mail or sent by telegram or other means of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting shall be executed by the secretary, assistant secretary or
any transfer agent of the corporation giving such notice, and shall be filed and
maintained in the minute book of the corporation.
Section 6. Quorum. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting of stockholders shall
constitute a quorum for the transaction of business. The stockholders present
at a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. Adjourned Meeting and Notice Thereof. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the Chairman of the meeting, but in the absence of a
quorum, no other business may be transacted at such meeting, except as provided
in Section 6 of this Article II.
When any meeting of stockholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at a meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
fixed, or unless the adjournment is for more than thirty (30) days from the date
set for the original meeting. Notice of any such adjourned meeting, if
required, shall be given to each stockholder of record entitled to vote at the
adjourned meeting in accordance with the provisions of Sections 4 and 5 of this
Article II. At any adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting.
Section 8. Voting. The stockholders entitled to vote at any meeting of
stockholders shall be
Exhibit 3(ii) - Page 2 of 18
determined in accordance with the provisions of Section 11 of this Article II.
Such vote may be by voice vote or by ballot, at the discretion of the Chairman
of the meeting. Any stockholder entitled to vote on any matter (other than the
election of directors) may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or vote them against the proposal; but,
if the stockholder fails to specify the number of shares such stockholder is
voting affirmatively, it will be conclusively presumed that the stockholder's
approving vote is with respect to all shares such stockholder is entitled to
vote. If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on any matter shall be
the act of the stockholders, unless the vote of a greater number or voting by
classes is required by the Delaware General Corporation Law or the certificate
of incorporation or the certificate of determination of preferences as to any
preferred stock.
At a stockholders' meeting involving the election of directors, no
stockholder shall be entitled to cumulate (i.e., cast for any one or more
candidates a number of votes greater than the number of the stockholder's
shares). The candidates receiving the highest number of votes, up to the number
of directors to be elected, shall be elected.
Section 9. Waiver of Notice or Consent by Absent Stockholders. The
transactions of any meeting of stockholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, not present in person or by proxy, signs a written waiver of
notice or a consent to the holding of the meeting, or an approval of the minutes
thereof. The waiver of notice or consent need not specify either the business to
be transacted or the purpose of any annual or special meeting of stockholders.
All such waivers, consents or approvals shall be filed with the corporate
records or made part of the minutes of the meeting.
Attendance of a person at a meeting shall also constitute a waiver of
notice of such meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if such objection is expressly made at the meeting.
Section 10. No Stockholder Action by Written Consent Without a Meeting.
Stockholders may take action only at a regular or special meeting of
stockholders.
Section 11. Record Date for Stockholder Notice and Voting. For purposes
of determining the holders entitled to notice of any meeting or to vote, the
board of directors may fix, in advance, a record date, which shall not be more
than sixty (60) days nor less than ten (10) days prior to the date of any such
meeting, and in such case only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date fixed as aforesaid, except as
otherwise provided in the Delaware General Corporation Law.
Exhibit 3(ii) - Page 3 of 18
Section 11. Record Date for Stockholder Notice and Voting (continued)
If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held.
Section 12. Proxies. Every person entitled to vote for directors or on
any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and filed with
the secretary of the corporation. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney in fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, prior to the vote pursuant thereto, by a
writing delivered to the corporation stating that the proxy is revoked or by a
subsequent proxy executed by, or attendance at the meeting and voting in person
by, the person executing the proxy, or (ii) written notice of the death or
incapacity of the maker of such proxy is received by the corporation before the
vote pursuant thereto is counted; provided, however, that no such proxy shall be
valid after the expiration of eleven (11) months from the date of such proxy,
unless otherwise provided in the proxy.
Section 13. Inspectors of Election; Opening and Closing the Polls. The
board of directors by resolution shall appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives, to act at the meetings of stockholders and make a written
report thereof. One or more persons may be designated as alternate inspectors
to replace any inspector who fails to act. If no inspector or alternate has
been appointed to act or is able to act at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by law.
The chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter upon
which the stockholders will vote at a meeting.
Section 14. Nomination and Stockholder Business Bylaw.
(A) Annual Meetings of Stockholders.
(1) Nominations of persons for election to the board of directors of the
corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (a) pursuant to the
corporation's notice of meeting, (b) by or at the direction of the board of
directors or (c) by any stockholder of the corporation who was a stockholder of
record at the time of giving of notice provided for in this Bylaw, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Bylaw.
Exhibit 3(ii) - Page 4 of 18
Section 14. Nomination and Stockholder Business Bylaw (continued)
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A) (1) of
this Bylaw, the stockholder must have given timely notice thereof in writing to
the secretary of the corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice
shall be delivered to the secretary at the principal executive offices of the
corporation not later than the close of business on the 60th day nor earlier
than the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and not later than the close of business on the later of the 60th
day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made by the
corporation. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a stockholder's
notice as described above. Such stockholder's notice shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14a-11 thereunder (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2)
of this Bylaw to the contrary, in the event that the number of directors to be
elected to the board of directors of the corporation is increased and there is
no public announcement by the corporation naming all of the nominees for
director or specifying the size of the increased board of directors at least 70
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Bylaw shall also be considered timely, but
only with respect to nominees for any new positions created by such increase, if
it shall be delivered to the secretary at the principal executive offices of the
corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the corporation.
Exhibit 3(ii) - Page 5 of 18
Section 14. Nomination and Stockholder Business Bylaw (continued)
(B) Special Meetings of Stockholders. Only such business shall be conducted
at a special meeting of stockholders as shall have been brought before the
meeting pursuant to the corporation's notice of meeting. Nominations of persons
for election to the board of directors may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the corporation's
notice of meeting (a) by or at the direction of the board of directors or (b)
provided that the board of directors has determined that directors shall be
elected at such meeting, by any stockholder of the corporation who is a
stockholder of record at the time of giving of notice provided for in this
Bylaw, who shall be entitled to vote at the meeting and who complies with the
notice procedures set forth in this Bylaw. In the event the corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the board of directors, any such stockholder may nominate a person
or persons (as the case may be), for election to such position(s) as specified
in the corporation's notice of meeting, if the stockholder's notice required by
paragraph (A) (2) of this Bylaw shall be delivered to the secretary at the
principal executive offices of the corporation not earlier than the close of
business on the 90th day prior to such special meeting and not later than the
close of business on t he later of the 60th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the board of
directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a stockholder's notice as described above.
(C) General.
(1) Only such persons who are nominated in accordance with the procedures
set forth in this Bylaw shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Bylaw. Except as otherwise provided by law, the Certificate of Incorporation or
these Bylaws, the chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in this Bylaw and, if any proposed nomination or business
is not in compliance with this Bylaw, to declare that such defective proposal or
nomination shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
Bylaw. Nothing in this Bylaw shall be deemed to affect any rights (i) of
stockholders to request inclusion of proposals in the corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock, if any, to elect directors under certain
circumstances.
Exhibit 3(ii) - Page 6 of 18
ARTICLE III
-----------
DIRECTORS
Section 1. Powers. Subject to the provisions of the Delaware General
Corporation Law and any limitations in the certificate of incorporation and
these bylaws relating to action required to be approved by the stockholders or
by the outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction of
the board of directors.
Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the directors shall have the
power and authority to:
(a) Select and remove all officers, agents and employees of the
corporation, prescribe such powers and duties for them as may not be
inconsistent with law, the certificate of incorporation or these bylaws, fix
their compensation, and require from them security for faithful service.
(b) Change the principal executive office or the principal business
office in the State of California from one location to another; cause the
corporation to be qualified to do business in any other state, territory,
dependency, or foreign country and conduct business within or outside the State
of California; designate any place within or without the State of California for
the holding of any stockholders' meeting or meetings, including annual meetings;
adopt, make and use a corporate seal, and prescribe the forms of certificates of
stock, and alter the form of such seal and of such certificates from time to
time as in their judgment they may deem best, provided that such forms shall at
all times comply with the provisions of law.
(c) Authorize the issuance of shares of stock of the corporation from
time to time, upon such terms as may be lawful, in consideration of money paid,
labor done or services actually rendered, debts or securities canceled or
tangible or intangible property actually received.
(d) Borrow money and incur indebtedness for the purpose of the
corporation, and cause to be executed and delivered therefor, in the corporate
name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations, or other evidences of debt and securities therefor.
Section 2. Number and Qualification of Directors. The number of
directors of the corporation shall be ten (10) until changed by a bylaw amending
this Section 2, duly adopted by the board of directors or by the stockholders.
Exhibit 3(ii) - Page 7 of 18
Section 3. Election and Term of Office of Directors. Subject to Section
15 below, one class of the directors shall be elected at each annual meeting of
the stockholders, but if any such annual meeting is not held or the directors
are not elected thereat, the directors may be elected at any special meeting of
stockholders held for that purpose. All directors shall hold office until their
respective successors are elected. Irrespective of the provisions of Section 15
of this Article III and of the preceding sentence, a director shall
automatically be retired on the date of the expiration of the first annual
meeting following his 72nd birthday.
Section 4. Vacancies. Vacancies in the board of directors may be filled
by a majority of the remaining directors, though less than a quorum, or by a
sole remaining director. Each director elected to fill a vacancy shall hold
office for the remainder of the term of the person whom he succeeds, and until a
successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist in the case of the death, retirement, resignation or removal of any
director, or if the board of directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors be increased, or
if the stockholders fail at any meeting of stockholders at which any director or
directors are elected, to elect the full authorized number of directors to be
voted for at that meeting.
Any director may resign or voluntarily retire upon giving written
notice to the chairman of the board, the president, the secretary or the board
of directors. Such retirement or resignation shall be effective upon the giving
of the notice, unless the notice specifies a later time for its effectiveness.
If such retirement or resignation is effective at a future time, the board of
directors may elect a successor to take office when the retirement or
resignation becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
No director may be removed during his term except for cause.
Section 5. Place of Meetings and Telephonic Meetings. Regular meetings
of the board of directors may be held at any place within or without the State
of Delaware that has been designated from time to time by resolution of the
board. In the absence of such designation, regular meetings shall be held
at the principal executive office of the corporation. Special meetings of the
board shall be held at any place within or without the State of Delaware that
has been designated in the notice of the meeting or, if not stated in the notice
or there is no notice, at the principal executive office of the corporation.
Any meeting, regular or special, may be held by conference telephone or similar
communication equipment, so long as all directors participating in such meeting
can hear one another, and all such directors shall be deemed to be present in
person at such meeting.
Section 6. Annual Meetings. Immediately following each annual meeting
of stockholders, the board of directors shall hold a regular meeting for the
purpose of organization, any desired election of officers and transaction of
other business. Notice of this meeting shall not be required.
Section 7. Other Regular Meetings. Other regular meetings of the board
of directors shall be held
Exhibit 3(ii) - Page 8 of 18
at such time as shall from time to time be determined by the board of directors.
Such regular meetings may be held without notice provided that notice of any
change in the determination of time of such meeting shall be sent to all of the
directors. Notice of a change in the determination of the time shall be given
to each director in the same manner as for special meetings of the board of
directors.
Section 8. Special Meetings. Special meetings of the board of directors
for any purpose or purposes may be called at any time by the chairman of the
board or the president or any vice president or the secretary or any two
directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at his or her address as
it is shown upon the records of the corporation. In case such notice is mailed,
it shall be deposited in the United States mail at least four (4) days prior to
the time of the holding of the meeting. In case such notice is delivered
personally, or by telephone or telegram, it shall be delivered personally, or by
telephone or to the telegraph company at least forty-eight (48) hours prior to
the time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated to either the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
Section 9. Quorum. A majority of the authorized number of directors
shall constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the board of directors. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of directors, if any action taken is approved by at least a majority
of the required quorum for such meeting.
Section 10. Waiver of Notice. The transactions of any meeting of the
board of directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum be present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice, a consent to holding the
meeting or an approval of the minutes thereof. The waiver of notice or consent
need not specify the purpose of the meeting. All such waivers, consents and
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Notice of a meeting shall also be deemed given to any
director who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such director.
Section 11. Adjournment. A majority of the directors present, whether
or not constituting a quorum, may adjourn any meeting to another time and place.
Exhibit 3(ii) - Page 9 of 18
Section 12. Notice of Adjournment. Notice of the time and place of an
adjourned meeting need not be given, unless the meeting is adjourned for more
than twenty-four (24) hours, in which case notice of such time and place shall
be given prior to the time of the adjourned meeting, in the manner specified in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.
Section 13. Action Without Meeting. Any action required or permitted to
be taken by the board of directors may be taken without a meeting, if all
members of the board shall individually or collectively consent in writing to
such action. Such action by written consent shall have the same force and
effect as a unanimous vote of the board of directors. Such written consent or
consents shall be filed with the minutes of the proceedings of the board.
Section 14. Fees and Compensation of Directors. Directors and members
of committees may receive such compensation, if any, for their services and such
reimbursement of expenses, as may be fixed or determined by resolution of the
board of directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation for such services.
Section 15. Classification of Directors. The board of directors shall
be and is divided into three classes, Class I, Class II and Class III. The
number of directors in each class shall be the whole number contained in the
quotient arrived at by dividing the authorized number of directors by three, and
if a fraction is also contained in such quotient then if such fraction is one-
third (1/3) the extra director shall be a member of Class III and if the
fraction is two-thirds (2/3) one of the extra directors shall be a member of
Class III and the other shall be a member of Class II. Each director shall
serve for a term ending on the date of the third annual meeting following the
annual meeting at which such director was elected.
In the event of any increase or decrease in the authorized number of
directors, (a) 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, resignation or removal, and (b) the newly
created or eliminated directorships resulting from such increase or decrease
shall be apportioned by the board of directors to such class or classes as
shall, so far as possible, bring the number of directors in the respective
classes into conformity with the formula in this Section 15, as applied to the
new authorized number of directors.
Exhibit 3(ii) - Page 10 of 18
ARTICLE IV
----------
COMMITTEES
Section 1. Committees of Directors. The board of directors may, by
resolution adopted by a majority of the authorized number of directors,
designate one or more committees, including an executive committee, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the board, shall have all
the authority of the board, except with respect to:
(a) the approval of any action which, under the General Corporation
Law of Delaware, also requires stockholders' approval or approval of the
outstanding shares;
(b) the filling of vacancies on the board of directors or in any
committee;
(c) the fixing of compensation of the directors for serving on the
board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of new bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) a distribution to the stockholders of the corporation, except at a
rate or in a periodic amount or within a price range determined by the board of
directors; or
(g) the appointment of any other committees of the board of directors
or the members thereof.
Section 2. Meetings and Action of Committees. Meetings and action of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article III of these bylaws, Sections 5 (place of meetings), 7
(regular meetings), 8 (special meetings and notice), 9 (quorum), 10 (waiver of
notice), 11 (adjournment), 12 (notice of adjournment) and 13 (action without
meetings), with such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the board of directors and its
members, except that the time of regular meetings of committees may be
determined by resolution of the board of directors as well as the committee,
special meetings of committees may also be called by resolution of the board of
directors, and notice of special meetings of committees shall also be given to
all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
Exhibit 3(ii) - Page 11 of 18
ARTICLE V
---------
OFFICERS
Section 1. Officers. The officers of the corporation shall be the
chairman of the board, the president, a vice president, a secretary and a
treasurer. The corporation may also have, at the discretion of the board of
directors, one or more additional vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 3 of this Article V. Any
number of offices may be held by the same person.
Section 2. Election of Officers. The officers of the corporation,
except such officers as may be appointed in accordance with the provisions of
Section 3 or Section 5 of this Article V, shall be chosen annually by the board
of directors, and each shall hold his office until he shall resign or be removed
or otherwise disqualified to serve or his successor shall be elected and
qualified.
Section 3. Subordinate Officers, etc. The board of directors may
appoint, and may empower the chairman of the board to appoint, such other
officers as the business of the corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in the bylaws or as the board of directors may from time to time
determine.
Section 4. Removal and Resignation of Officers. Any officer may be
removed, either with or without cause, by the board of directors, at any regular
or special meeting thereof, or, except in case of an officer chosen by the board
of directors, by any officer upon whom such power of removal may be conferred by
the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 5. Vacancies in Office. A vacancy in any office because of
death, resignation, removal, disqualification, or any other cause shall be
filled in the manner prescribed in these bylaws for regular appointments to such
office.
Section 6. Chairman of the Board. The chairman of the board shall be
the chief executive officer of the corporation and shall, subject to the control
of the board of directors, have general supervision, direction and control of
the business and affairs of the corporation.
Section 7. President. The president shall be the chief operating
officer of the corporation and shall exercise and perform such powers and duties
with respect to the administration of the business and affairs of the
corporation as may from time to time be assigned to him by the chairman of the
board or by the board of directors, or as may be prescribed by the bylaws.
Section 8. Vice Presidents. In the absence or disability of the
president, a vice president designated
Exhibit 3(ii) - Page 12 of 18
by the board of directors shall perform all the duties of the president, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors or the bylaws.
Section 9. Secretary. The secretary shall keep or cause to be kept, at
the principal executive office or such other place as the board of directors may
order, a book of minutes of all meetings and actions of directors, committees of
directors and stockholders, with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice thereof given, the names
of those present at directors' and committee meetings, the number of shares
present or represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a stock
register, or a duplicate register, showing the names of all stockholders and
their addresses, the number and classes of shares held by each, the number and
date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the board of directors or by the bylaws.
Section 10. Treasurer. The treasurer shall keep and maintain, or cause
to be kept and maintained, adequate and correct books and records of accounts of
the properties and business transactions of the corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall be open at all
reasonable times to inspection by any director.
The treasurer shall deposit all monies and other valuables in the name
and to the credit of the corporation with such depositories as may be designated
by the board of directors. He shall disburse the funds of the corporation as
may be ordered by the board of directors, shall render to the chairman of the
board and directors, whenever they request it, an account of all of his
transactions as treasurer and of the financial condition of the corporation, and
shall have other powers and perform such other duties as may be prescribed by
the board of directors or the bylaws.
Section 11. Assistant Secretaries and Assistant Treasurers. Any
assistant secretary may perform any act within the power of the secretary, and
any assistant treasurer may perform any act within the power of the treasurer,
subject to any limitations which may be imposed in these bylaws or in board
resolutions.
Exhibit 3(ii) - Page 13 of 18
ARTICLE VI
----------
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 1. Indemnification. The corporation shall indemnify, in the
manner and to the full extent permitted by law, any person (or the estate of any
person) who was or is a party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding, whether or not by
or in the right of the corporation, and whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such person is a director
or officer of the corporation, and at the discretion of the board of directors
may indemnify any person (or the estate of any person) who is such a party or
threatened to be made such a party by reason of the fact that such person is or
was an 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. Unless
otherwise permitted by law, the indemnification provided for herein shall be
made only as authorized in the specific case upon a determination, in the manner
provided by law, that indemnification of the director, officer, employee or
agent is proper in the circumstances. The corporation may, to the full extent
permitted by law, purchase and maintain insurance on behalf of any such person
against any liability which may be asserted against him. To the full extent
permitted by law, the indemnification provided herein shall include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement,
and, in the manner provided by law, any such expenses may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding. The indemnification provided herein shall not be deemed to limit
the right of the corporation to indemnify any other person for any such expenses
to the full extent permitted by law, nor shall it be deemed exclusive of any
other rights to which any person seeking indemnification from the corporation
may be entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
Section 2. Fiduciaries of Corporate Employee Benefit Plan. This Article
VI does not apply to any proceeding against any trustee, investment manager or
other fiduciary of an employee benefit plan in such person's capacity as such,
even though such person may also be an agent of the corporation as defined in
Section 1 of this Article VI. Nothing contained in this Article VI shall limit
any right to indemnification to which such a trustee, investment manager or
other fiduciary may be entitled by contract or otherwise, which shall be
enforceable to the extent permitted by Section 410 of the Employee Retirement
Income Security Act of 1974, as amended, other than this Article VI.
Exhibit 3(ii) - Page 14 of 18
ARTICLE VII
-----------
RECORDS AND REPORTS
Section 1. Maintenance and Inspection of Stock Register. The
corporation shall keep at its principal executive office, or at the office of
its transfer agent or registrar, if either be appointed, and as determined by
resolution of the board of directors, a record of its stockholders, giving the
names and addresses of all stockholders and the number and class of shares held
by each stockholder.
A stockholder or stockholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (i) inspect and copy the records of stockholders' names and
addresses and stockholders during usual business hours upon five days prior
written demand upon the corporation, and/or (ii) obtain from the transfer agent
of the corporation, upon written demand and upon the tender of such transfer
agent's usual charges for such list, a list of the stockholders' names and
addresses, who are entitled to vote for the election of directors, and their
shareholdings as of the most recent record date for which such list has been
compiled or as of a date specified by the stockholder subsequent to the date of
demand. Such list shall be made available to such stockholder or stockholders
by the transfer agent on or before the later of five (5) days after the demand
is received or the date specified therein as the date as of which the list is to
be compiled.
The record of stockholders shall be open to inspection upon the
written demand of any stockholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to such
holder's interests as a stockholder or as the holder of a voting trust
certificate. Any inspection and copying under this Section 1 may be made in
person or by an agent or attorney of the stockholder or holder of a voting trust
certificate making such demand.
Section 2. Maintenance and Inspection of Bylaws. The corporation shall
keep at its principal executive office the original or a copy of the bylaws as
amended to date, which shall be open to inspection by the stockholders at all
reasonable times during office hours.
Section 3. Maintenance and Inspection of Other Corporate Records. The
accounting books and records and minutes of proceedings of the stockholders and
the board of directors and any committee or committees of the board of directors
shall be kept at such place or places designated by the board of directors, or,
in the absence of such designation, at the principal executive office of the
corporation. The minutes shall be kept in written form and the accounting books
and records shall be kept either in written form or in any other form capable of
being converted into written form. Such minutes and accounting books and
records shall be open to inspection upon the written demand of any stockholder
or holder of a voting trust certificate, at any reasonable time during usual
business hours, for a purpose reasonably related to such holder's interests as a
stockholder or as a holder of a voting trust certificate. Such inspection may
be made in person or by an agent or attorney, and shall include the right to
copy and make extracts. The foregoing rights of inspection shall extend to the
records of each subsidiary corporation of the corporation.
Section 4. Inspection by Directors. Every director shall have the
absolute right at any reasonable time to inspect all books, records and
documents of every kind and the physical properties of the corporation and each
Exhibit 3(ii) - Page 15 of 18
of its subsidiary corporations. Such inspection by a director may be made in
person or by agent or attorney and the right of inspection includes the right to
copy and make extracts.
Section 5. Annual Report to Stockholders. The board of directors shall
cause an annual report to be sent to the stockholders not later than one hundred
twenty (120) days after the close of the fiscal year adopted by the corporation.
Such report shall be sent at least fifteen (15) days prior to the annual meeting
of stockholders to be held during the next fiscal year and in the manner
specified in Section 5 of Article II of these bylaws for giving notice to
stockholders of the corporation. The annual report shall contain a balance
sheet and statement of changes in financial position for such fiscal year,
accompanied by any report thereon of independent accountants.
Section 6. Financial Statements. A copy of any annual financial
statement and any income statement of the corporation for each quarterly period
of each fiscal year, and any accompanying balance sheet for the corporation as
of the end of each such period, that has been prepared by the corporation shall
be kept on file in the principal executive office of the corporation for twelve
(12) months and each such statement shall be exhibited at all reasonable times
to any stockholder demanding an examination of any such statement or a copy
shall be mailed to any such stockholder.
If a stockholder or stockholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation make a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days prior to the date of the request, and a balance sheet
of the corporation as of the end of such period, the treasurer shall cause such
statement to be prepared, if not already prepared, and shall deliver personally
or mail such statement or statements to the person making the request within
thirty (30) days after the receipt of such request. If the corporation has not
sent to the stockholders its annual report for the last fiscal year, this report
shall likewise be delivered or mailed to such stockholder or stockholders within
thirty (30) days after such request.
The corporation also shall, upon the written request of any
stockholder, mail to the stockholder a copy of the last annual, semi-annual or
quarterly income statement which it has prepared and a balance sheet as of the
end of such period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report thereon, if any, of any independent
accountants engaged by the corporation, or the certificate of an authorized
officer of the corporation that such financial statements were prepared without
audit from the books and records of the corporation.
Exhibit 3(ii) - Page 16 of 18
ARTICLE VIII
------------
GENERAL CORPORATE MATTERS
Section 1. Record Date for Purposes Other Than Notice and Voting. For
purposes of determining the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, the board of
directors may fix, in advance, a record date, which shall not be more than sixty
(60) days prior to any such action, and in such case only stockholders of record
on the date so fixed are entitled to receive the dividend, distribution or
allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date fixed as aforesaid, except as otherwise provided in the Delaware
General Corporation Law. If the board of directors does not so fix a record
date, the record date for determining stockholders for any such purpose shall be
at the close of business on the day on which the board adopts the resolution
relating thereto, or the sixtieth (60th) day prior to the date of such action,
whichever is later.
Section 2. Checks, Drafts, Evidences of Indebtedness. All checks,
drafts or other orders for payment of money, notes or other evidences of
indebtedness, issued in the name of or payable to the corporation shall be
signed or endorsed by such person or persons and in such manner as, from time to
time, shall be determined by resolution of the board of directors.
Section 3. Corporate Contracts and Instruments; How Executed. The board
of directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances; and, unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or to any amount.
Section 4. Stock Certificates. A certificate or certificates for shares
of the capital stock of the corporation shall be issued to each stockholder when
any such shares are fully paid. All certificates shall be signed in the name of
the corporation by the chairman of the board or the president or vice president
and by the treasurer or an assistant treasurer or the secretary or any assistant
secretary, certifying the number of shares and the class or series of shares
owned by the stockholder. Any or all of the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if such
person were an officer, transfer agent or registrar at the date of issue.
Exhibit 3(ii) - Page 17 of 18
Section 5. Lost Certificates. Except as hereinafter in this Section 5
provided, no new stock certificate shall be issued in lieu of an old certificate
unless the latter is surrendered to the corporation and canceled at the same
time. The board of directors may in case any stock certificate or certificate
for any other security is lost, stolen or destroyed, authorize the issuance of a
new certificate in lieu thereof, upon such terms and conditions as the board of
directors may require, including provision for indemnification of the
corporation secured by a bond or other adequate security sufficient to protect
the corporation against any claim that may be made against it, including any
expense or liability, on account of the alleged loss, theft or destruction of
such certificate or the issuance of such new certificate.
Section 6. Representation of Stock of Other Corporations. The chairman
of the board, the president, or any vice president, or any other person
authorized by resolution of the board of directors by any of the foregoing
designated officers, is authorized to vote on behalf of the corporation any and
all stock of any other corporation or corporations, foreign or domestic,
standing in the name of the corporation. The authority herein granted to said
officers to vote or represent on behalf of the corporation any and all stock by
the corporation in any other corporation or corporations may be exercised by any
such officer in person or by any person authorized to do so by proxy duly
executed by said officer.
Section 7. Construction and Definitions. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in the
Delaware General Corporation Law shall govern the construction of the bylaws.
Without limiting the generality of the foregoing, the singular number includes
the plural, the plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
Section 8. Fiscal Year. The fiscal year of the corporation shall
commence the first day of the calendar year.
Section 9. Seal. The seal of the corporation shall be round and shall
bear the name of the corporation and words and figures denoting its organization
under the laws of the State of Delaware and year thereof, and otherwise shall be
in such form as shall be approved from time to time by the board of directors.
ARTICLE IX
----------
AMENDMENTS
Section 1. Amendment by Stockholders. New bylaws may be adopted or
these bylaws may be amended or repealed by the vote of not less than 80% of the
total voting power of all shares of stock of the corporation entitled to vote in
the election of directors, considered for purposes of this Section 1 as one
class.
Section 2. Amendment by Directors. Subject to the rights of the
stockholders as provided in Section 1 of this Article IX, to adopt, amend or
repeal bylaws, bylaws may be adopted, amended or repealed by the board of
directors.
As Amended 4/25/96
Exhibit 3(ii) - Page 18 of 18
AVERY DENNISON CORPORATION
COMPUTATION OF NET INCOME PER SHARE AMOUNTS
Quarter Ended
------------------------------
March 30, 1996 April 1, 1995
-------------- -------------
(A) Weighted average number of common shares outstanding 52,901,661 53,434,552
Additional common shares issuable under employee stock
options using the treasury stock method 1,413,679 1,614,466
----------- -----------
(B) Weighted average number of common shares outstanding
assuming the exercise of stock options 54,315,340 55,049,018
=========== ===========
(C) Net income applicable to common stock $40,000,000 $34,500,000
=========== ===========
Net income per share as reported (C divided by A) $ .76 $ .65
=========== ===========
Net income per share giving effect to the exercise of outstanding
stock options (C divided by B) $ .74 $ .63
=========== ===========
Exhibit 11
5
3-MOS
DEC-28-1996
DEC-31-1996
MAR-30-1996
5,300
0
460,000
0
229,000
796,900
1,665,000
755,200
1,963,200
623,800
374,900
0
0
62,100
756,300
1,963,200
796,600
796,600
549,900
549,900
175,300
0
8,900
62,500
22,500
40,000
0
0
0
40,000
.76
0
Accounts receivable are shown net of any allowances.
