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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934 (FEE REQUIRED)
For fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
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Commission File Number: 1-8325
MYR GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3158643
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
2550 W. GOLF ROAD, ROLLING MEADOWS, IL 60008
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 290-1891
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, $1 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12 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
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The aggregate market value of the registrant's Common Stock, $1 par value,
held by non-affiliates of the registrant as of March 14, 1996, was $26,436,000
based on the closing price on that date on the New York Stock Exchange. As of
March 14, 1996, 3,187,443 shares of the registrant's Common Stock, $1 par value
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Those sections or portions of the definitive proxy statement of MYR Group Inc.
for use in connection with its annual meeting of stockholders to be held May
15, 1996 are incorporated by reference into Part III of this annual report.
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Table of Contents
and Cross-Reference Sheet
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Page or Reference
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PART I Item 1. Business ............................................3
Item 2. Properties...........................................6
Item 3. Legal Proceedings....................................7
Item 4. Submission of Matters to a Vote of Security
Holders..............................................7
Part II Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters..................................8
Item 6. Selected Financial Data..............................9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................10
Item 8. Financial Statements................................13
Item 9. Changes in and Disagreements with Independent
Accountants on Accounting and Financial
Disclosure..........................................29
Part III Item 10. Directors and Executive Officers of the
Registrant..........................................30
Item 11. Executive Compensation..............................30
Item 12. Security Ownership of Certain Beneficial
Owners and Management...............................30
Item 13. Certain Relationships and Related Transactions......30
Part IV Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.................................31
Signatures................................................................32
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MYR GROUP INC.
PART I
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ITEM 1. BUSINESS
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On December 14, 1995 the Certificate of Incorporation of the registrant, MYR
Group Inc. was amended to change the name of the Company to MYR Group Inc.
from The L. E. Myers Co. Group. The Company was organized under the laws of
Delaware in April 1982, to serve as a holding company. Its principal assets
consist of all of the outstanding shares of capital stock of The L. E. Myers
Co., a Delaware corporation ("Myers"), Hawkeye Construction Inc., an Oregon
corporation ("Hawkeye") and Harlan Electric Company, a Michigan corporation
("Harlan"). Myers is based in Rolling Meadows, Illinois and is the successor
to another Delaware corporation of the same name which was organized in 1914 to
succeed a business established in 1891 by Lewis E. Myers. Hawkeye was acquired
by the Company in 1991 and its principal place of business is Troutdale,
Oregon. Harlan was acquired by the Company in 1995 and is headquartered in
Southfield, Michigan. On January 3, 1995 the Company acquired all of the
common stock of Harlan, through a merger of HMM Corporation, a wholly owned
subsidiary of the Company with and into Harlan pursuant to an Agreement and
Plan of Merger dated October 5, 1994 (the "Merger"). Harlan has two
subsidiaries: Sturgeon Electric Company, Inc., a Michigan corporation
("Sturgeon") with its principal place of business in Henderson, Colorado,
acquired by Harlan in 1974 and Power Piping Company, a Pennsylvania corporation
("Power Piping") with its principal place of business in Pittsburgh,
Pennsylvania, acquired by Harlan in 1963. As used under this Item 1 and Item
2, the term "Company" refers collectively to MYR Group Inc. and its direct and
indirect subsidiaries and predecessors, unless the context otherwise requires.
The consolidated financial statements and notes thereto set forth in Part II,
Item 8 of this report contain information regarding Harlan and its subsidiaries
from January 3, 1995.
The general offices of the Company are located at 2550 West Golf Road, Rolling
Meadows, Illinois.
CONSTRUCTION SERVICES
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The Company conducts its business through its direct and indirect operating
subsidiaries. The three principal types of construction services performed by
the company are electric utility line construction, commercial and industrial
electrical construction and mechanical construction.
Myers, Harlan and Sturgeon are involved in the construction and maintenance of
electric transmission lines, substations, distribution systems and lighting
systems for electric utilities and industrial users of similar systems. These
services are frequently referred to as "outside" or "line" electrical
construction service. The Company generally serves the electric utility
industry as a prime construction contractor. Designs and specifications for a
project are usually prepared by the clients or their agents. The Company
supplies the management, labor, equipment and tools necessary to construct the
project. Construction materials are generally supplied by the clients although
the Company occasionally may be required to procure and supply the construction
materials. Most contracts undertaken by the Company are completed within
twelve months, although certain contracts may extend for longer periods.
The Company, through Sturgeon and Harlan provide electric construction and
maintenance services to the commercial and industrial marketplace and
construction services to the telecommunication market. These services are
typically referred to as "inside" electrical construction. The Company's work
in the commercial and industrial electric construction market place is most
often performed as a subcontractor to a general contractor, however, the
Company does perform certain commercial and industrial construction services as
a prime contractor. Commercial and industrial electrical maintenance services
are frequently performed by the Company as a prime contractor. The Company
generally provides the materials to be installed as a part of the scope of
these contracts which vary greatly in size and duration. The Company provides
such construction services on many varied types
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of projects including airports, hospitals, hotels and casinos, arenas
and convention centers, and manufacturing and process facilities. On occasion,
a subsidiary of the Company will enter into a joint venture with another
contractor to perform a specific project. Typically in these cases the
subsidiary and the other contractor will share in the profits or losses on the
project in the percentage determined by the joint venture agreement. The joint
venture agreement will define the obligations of the subsidiary and the other
contractor with respect to the project and the management of the venture.
The Company, through Power Piping, also provides mechanical construction and
maintenance services for the steel industry, electric utility industry,
chemical industry and other industrial customers located in the eastern half of
the United States. These services are provided by the Company both as a prime
contractor and as a subcontractor.
The Company's construction and maintenance crews are active year round in all
geographic areas in which the Company operates. Winter weather in some
northern areas and summer weather in some southern areas can adversely impact
work schedules.
The Company is subject to the authority of state and municipal regulatory
bodies concerned with the licensing of contractors. The Company has
experienced no material difficulty in complying with the requirements imposed
on it by such regulatory bodies.
The Company's operations are currently conducted exclusively in the United
States.
CUSTOMERS
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Electric utilities, in the aggregate, represent the largest customer base of
the Company. During the last five years, the Company's ten largest customers
accounted for approximately 40% of its consolidated contract revenues and its
single largest customer accounted for approximately 11% of such revenue. As a
result of the Merger, the percentage of the Company's consolidated revenues
derived from the electric utility industry has been reduced from prior years.
General contractors, as a group, constitute a significant group of customers
for the Company's commercial and industrial work. Municipal or other government
funded large projects provide the Company with significant revenues when it is
awarded all or a substantial part of the electrical construction work on such
projects.
In 1995 the Company's ten largest customers accounted for approximately 40% of
annual revenues. The Company's single largest customer during 1995 was Detroit
Edison Company, an electrical utility in Michigan, accounting for
approximately 7% of such revenue.
CONTRACTS
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The Company enters into contracts principally on the basis of competitive bids.
Although there is considerable variation in the terms of the contracts
undertaken by the Company, they will usually be either lump sum or unit price
contracts pursuant to which the Company agrees to do the work for a fixed
amount for the entire project or for the particular units of work performed.
On occasion, the Company does obtain cost-plus contracts which provide for
reimbursement of costs incurred by the Company, often within stated limits,
plus the payment of a fee in a fixed amount or equal to a percentage of
reimbursable cost. On occasion these cost-plus contracts require the Company
to include a guaranteed not-to-exceed maximum price. Lump sum or unit price
contracts have accounted for the larger portion of the Company's contract
revenues in recent years. Such contracts typically place greater risks on the
Company than do contracts of the cost-plus type. A portion of the work
performed by the Company requires performance and payment bonds at the time of
execution of the contract. Contracts generally include payment provisions
pursuant to which a 5% to 10% retainage is withheld from each progress payment
until the contract work has been completed.
The Company's backlog was $69,100,000 at December 31, 1995, compared to
$28,200,000 at December 31, 1994. The varying magnitude and duration of
projects undertaken by the Company may result in substantial fluctuations in
its backlog from time to time. Substantially all of the December 31, 1995
backlog will be completed in 1996.
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Certain of the projects which the Company undertakes are not completed in one
accounting period. Revenue on such construction contracts is recorded on the
percentage-of-completion accounting method determined by the ratio of cost
incurred to date on the contracts to management's estimates of total contract
costs. Projected losses are provided for in their entirety without reference
to percentage-of-completion.
Some projects give rise to claims by the Company against its customers for
additional compensation based upon such matters as scheduling changes, delays
and interruptions or improper or revised specifications. The resolution of
such claims often extends over several years. Management's judgment as to the
possible outcome of such claims pending at the end of a financial reporting
period is reflected in the Company's results of operations for such period and
is revised in subsequent periods if and as required by developments with
respect to such claims (see Note 1 to the Financial Statements).
COMPETITION
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The Company's business is highly competitive. Competition is primarily based
on the price of the construction services rendered and upon the reputation for
quality and reliability of the contractor rendering them.
The competition encountered by the Company varies depending upon the type of
construction services which it renders. The construction and maintenance
service provided to electric utilities and industrial owners of similar systems
often requires larger amounts of capital and more specialized equipment than
the requirements for commercial construction. Larger electric utility projects
require increased numbers of heavy duty equipment as well as stronger financial
resources to meet the cash flow requirements of these projects. These factors
reduces the number of potential competitors on these projects to the larger
competitors. The number of firms which generally compete for any electric
utility project varies greatly depending on a number of factors including, the
size of the project, its location and the bidder qualification requirements
imposed upon contractors by the customer. Many of the competitors the Company
encounters restrict their operations to one geographic area while a few operate
nationally, as does the Company.
Competition for the electrical construction services provided by the Company to
the commercial and industrial customers varies greatly. Again, size and
location of the project will impact which competitors and the number of
competitors the company will encounter on any particular project. The
individual relationships with general contractors developed over several years
by particular contractors based upon prior projects worked together will impact
the Company's and its competitors' opportunities to bid on certain projects.
The equipment requirements for this type of work are not as significant as for
the electric utility construction. Since commercial construction typically
involves the purchase of materials by the contractor the financial resources to
meet these requirements on particular projects may impact the competition the
Company encounters. The Company has principally performed such construction
services in the western half of the United States. Certain of the Company's
competitors for this type of work operate nationally, however, the
preponderance of the Company's competition operates regionally.
The Company's mechanical construction and maintenance service have been
performed principally in the eastern half of the United States. The Company's
competitors for this type of work operate regionally.
The Company's competition includes entities which operate solely as union
contractors, solely as non-union contractors, or in certain cases, through
related companies having both union and non-union contractors.
In essentially all cases involving maintenance services provided by the
Company, the Company's customers will also perform some or all of these types
of services as well.
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EMPLOYEES
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At December 31, 1995, the Company had approximately 275 salaried employees
including executive officers, district managers, project managers,
superintendents, estimators, office managers, and staff and clerical personnel.
At the same date, the Company employed approximately 2,450 hourly-rated
employees, whose number fluctuates depending upon the number and size of the
projects under construction by the Company at any particular time. At that
date, approximately 90% of the Company's hourly-rated employees were members of
the International Brotherhood of Electrical Workers ("IBEW"), AFL-CIO. Such
IBEW employees are represented by numerous local unions under various
agreements with varying terms and expiration dates. Such local agreements are
entered into by and between the IBEW local and the National Electrical
Contractors Association, of which the Company is a member. On occasion the
Company will employ employees who are members of other trade unions pursuant to
multi-employer, multi-union project agreements. A small number of the Company's
employees are represented by the United Association of Journeymen and
Apprentices of the Plumbing and Pipe Fitting Industry.
ITEM 2. PROPERTIES
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CONSTRUCTION EQUIPMENT
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The Company owns a substantial amount of construction equipment. This
equipment, which at December 31, 1995 had an aggregate cost of $51,825,000 and
a book value of $16,056,000 includes, among other items, trucks, trailers,
tractors, tension stringing machines, bulldozers, bucket trucks, digger
derricks, cranes and construction tools. Circumstances often require the
Company to lease or rent various items of equipment in connection with its work
on particular projects. The terms of these equipment leases and rental
agreements are generally related to the length of time to complete the
construction contract and sometimes include an option to purchase. The Company
generally exercises the lease-purchase options with respect to such equipment
and in such cases usually receives a credit toward the purchase price in the
amount of all or a portion of the rentals paid on the lease.
REAL ESTATE
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The general offices of the Company occupy approximately 7,500 square feet of
leased space in an office building at 2550 West Golf Road, Rolling Meadows,
Illinois. The lease on these quarters expires in September of 1996. Rental
for such property in 1995 totaled approximately $80,300.
The Company owns land which at December 31, 1995 aggregated approximately 63
acres. Buildings owned by the Company as of the same date contained
approximately 344,200 square feet of space and housed certain regional offices
and equipment centers, as well as a number of small warehouses and garages.
Certain other regional locations, which were leased on December 31, 1995,
contained approximately 125,000 square feet of enclosed space. Rentals for
such property in 1995 totaled approximately $854,000 and were under both long
and short-term leases.
The following table sets forth Company acquisitions of all property and
equipment, including acquisitions under capital leases, during each of the last
three years.
Year Amount
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1995 $4,959,000
1994 $4,449,000
1993 $3,432,000
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ITEM 3. LEGAL PROCEEDINGS
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In September 1984, the Company's umbrella insurance carrier, National
Union Fire Insurance Company of Pittsburgh (National Union) filed a lawsuit in
the Supreme Court of the State of New York seeking a declaratory judgment that
it was not obligated to defend and indemnify the Company for losses and damages
related to errors in the design of four transmission towers designed for the
City Utilities Commission of Owensboro, Kentucky (OMU) by the Company's former
engineering subsidiary, LEMCO Engineers, Inc. (LEMCO). (See Note 11 to the
Financial Statements). The case was removed to U. S. District Court for the
Southern District of New York. The Company filed a counterclaim against
National Union seeking a declaratory judgment that National Union must
indemnify the Company with respect to all claims above the primary policy
limits of $1,000,000. The Company also filed cross claims against the
insurance brokers who secured the excess insurance for the Company, the EMAR
Company, American Risk Management, Inc. and the Walsh Group, alleging breach of
contract, breach of fiduciary duty and negligence in connection with the
procurement of the policy and seeking to hold these third party defendants
liable to the Company in the event the Court holds that National Union is not
obligated to indemnify the Company under the excess insurance policy. The case
was placed on the Court's suspense docket pending the outcome of a related
Kentucky State Court lawsuit brought by OMU against LEMCO and the steel
supplier (the "Kentucky Case"). The Kentucky Case was settled in November 1993
and the U. S. District Court removed the National Union case from the suspense
docket in February 1994. A trial date of April 15, 1996 has been set by the
U.S. District Court.
The Company is also a defendant in lawsuits arising in the ordinary course of
its business. In the opinion of the Company's management, based in part upon
the advice of its counsel, these lawsuits are covered by insurance, provided
for in the consolidated financial statements of the Company, or are without
merit, and the Company's management is of the opinion that the ultimate
disposition of any of these pending lawsuits will not have a material adverse
impact on the Company in relation to the Company's consolidated financial
condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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A special meeting of stockholders of the Company was held on December 14, 1995.
The stockholders approved an amendment to Article First of the Company's
Certificate of Incorporation pursuant to which the name of the Company was
changed to MYR Group Inc. from The L. E. Myers Co. Group. The vote on the
proposal was 2,157,665 shares in favor of the amendment, 27,188 shares against
the amendment and 2,593 shares abstained. The vote in favor constitute 90.56%
of the number of shares issued and outstanding and entitled to vote at the
meeting.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
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The shares of Common Stock of the Company are listed and traded on the New York
Stock Exchange. As of March 14, 1996 there were approximately 1,087 holders of
record of the shares of Common Stock of the Company. The following table sets
forth quarterly market price and dividend information per share for the Common
Stock of the Company (see Note 18 to the Financial Statements).
Quarter Ended Stock Price Range (1) Dividends Declared (1)
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December 31, 1995 $10.00 - $11.81 $.047
September 30, 1995 9.19 - 11.91 .047
June 30, 1995 8.53 - 10.31 .047
March 31, 1995 7.97 - 9.66 .041
December 31, 1994 8.06 - 9.56 .041
September 30, 1994 7.31 - 10.22 .041
June 30, 1994 7.78 - 9.19 .041
March 31, 1994 7.78 - 9.00 .041
(1) The stock price range and dividends declared reflect a four-for-three stock
split in the form of a stock dividend on December 15, 1995.
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ITEM 6. SELECTED FINANCIAL DATA
CONTINUING OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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YEARS ENDED DECEMBER 31 1995 1994 1993 1992 1991
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FOR THE YEAR Contract revenue $266,965 $86,842 $108,515 $110,251 $96,097
Income 3,429 2,329 1,633 3,584 3,045
Depreciation and amortization 6,189 3,191 2,892 2,287 1,701
Capital expenditures 4,959 4,449 3,432 6,160 2,648
Interest expense 1,772 99 350 324 373
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AT YEAR END Backlog $69,100 $28,200 $26,150 $31,370 $28,831
Working capital 15,490 8,595 8,636 10,404 11,082
Property (net) 23,144 14,652 13,189 12,505 8,425
Total assets 101,834 39,644 39,624 41,918 34,682
Total long-term debt 14,590 318 804 1,478 1,337
Shareholders' equity 26,618 23,622 22,046 21,813 18,196
Shares outstanding 3,182 3,172 3,193 3,297 3,289
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PER SHARE Income
DATA Primary $1.01 $.70 $.48 $1.03 $.89
Fully diluted .91 .70 .48 1.03 .89
Book value 8.37 7.45 6.91 6.62 5.54
Stock price range
Low 7.97 7.31 6.38 11.44 9.38
High 11.91 10.22 13.41 19.03 13.22
Cash dividends .1819 .1650 .1575 .1388 .1181
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NOTES: 1. Selected financial data for 1995 includes Harlan Electric
Company since the January 3, 1995 date of acquisition (see Note
2 to the Financial Statements).
2. The selected financial data excludes discontinued operations
(see Note 5 to the Financial Statements).
3. All share and per share data have been adjusted for the four-
for-three stock split in the form of a stock dividend in
December 1995.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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(all dollar amounts, except per share amounts, are in thousands)
Results of Operations
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Continuing Operations
Revenues increased by 207.4% to $266,965 in 1995 from $86,842 in 1994. The
1995 increase in revenues was due to the Harlan acquisition described in Note 2
to the Financial Statements. Revenue growth of 5% was achieved in 1995 from
1994 when considering the Harlan revenues in 1994 combined with the pre-merger
revenues of the Company on a pro forma basis (See Note 2 in the Financial
Statements).
The use of alliances by several of the Company's clients accounted for some
revenue in 1995. Clients use alliances to award some or all of their
construction requirements to one or more (generally not more than two)
preferred contractors at predetermined prices or negotiated prices without
competitive bids. The Company anticipates that alliance generated revenues
will continue to grow as a percentage of the Company's total revenues.
Revenues decreased by 20.0% to $86,842 in 1994 from $108,515 in 1993. The
decrease was due to several utility customers reducing the volume of work to be
awarded as a result of concerns over the potential impact of deregulation of
the electric utility industry.
Gross profit increased by 140.3% to $29,547 in 1995 from $12,297 in 1994 due
primarily to the acquisition of Harlan. The gross profit percentage decreased
to 11.1% in 1995 compared to 14.2% in 1994 due, in large part, to a different
mix of construction work performed by the Company. An increased percentage of
revenues in 1995 was from projects which included the supply of materials which
carry a lower markup. Increased workers compensation and other insurance costs
and related expenses also contributed to the reduction in gross margin
percentage in 1995.
Gross profit increased by 16.0% to $12,297 in 1994 from $10,602 in 1993. Gross
profit percentage increased to 14.2% in 1994 compared to 9.8% in 1993. The
increase in gross profit percentage from 1993 to 1994 resulted primarily from
reduced workers compensation costs and related expenses in 1994 and depressed
margins in 1993.
Revenue and gross profit comparisons from quarter to quarter and comparable
quarters of different periods may be impacted by variables beyond the control
of the Company. Such variables include unusual or unseasonable weather and
delays in receipt of construction materials on projects where the materials are
provided to the Company by its clients. The different mix of the Company's
work from period to period can impact gross margin percentage. As the percent
of revenue derived for projects in which the Company supplies materials
increases, the gross profit percentage will generally decrease. As the
percentage of revenue derived from cost-plus work increases, margins may also
decrease since this work involves lower financial risk. Finally, since the
Company's revenues are derived principally from providing construction labor
services, insurance costs, particularly for workers' compensation, are a
significant factor in the Company's contract cost structure. Fluctuations in
insurance reserves for claims under the retrospective rated insurance programs
can have a significant impact on gross margins, either upward or downward, in
the period in which such insurance reserve adjustments are made.
Selling, general and administrative expenses increased by 166.7% to $21,780 in
1995 from $8,165 in 1994 due to the acquisition of Harlan and increased expenses
to sustain higher levels of revenue. Selling, general and administrative
expenses as a percentage of revenues decreased to 8.2% in 1995 from 9.4% in 1994
due to higher revenue volume spread over a relatively fixed expense base.
Selling, general and administrative expenses increased by 4.1% to $8,165 in
1994 from $7,844 in 1993 due to increased compensation costs for additional
operating personnel and employee incentive awards related to improved operating
results. Offsetting the increase was a reduction in costs relating to
favorable settlements of a legal matter that were accrued in 1993. Selling,
general
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and administrative expenses as a percentage of revenue increased to
9.4% in 1994 from 7.2% in 1993 due to lower revenue volume spread over a
relatively fixed expense base.
Net interest expense was $1,707 in 1995 compared to net interest income of $49
in 1994. Interest expense increased in 1995 primarily due to long-term debt
acquired in the acquisition of Harlan and short-term borrowing used primarily
to finance the Company's increased working capital requirements.
Net interest income was $49 in 1994 compared to net interest expense of $320 in
1993. Interest expense decreased in 1994 due to lower revenues which permitted
the Company to generate sufficient cash flow from operations to fund more of
its working capital requirements.
Other expense was $565 in 1995 compared to $427 in 1994 and consisted primarily
of $260 from the amortization of non-competition agreements and $107 from the
amortization of goodwill.
Other expense was $427 in 1994 compared to $317 in 1993 and consisted primarily
of $260 for the amortization of non-competition agreements.
Income tax expense increased 53.1% to $2,286 in 1995 from $1,493 in 1994 due to
the corresponding increase in income before taxes. As a percentage of income
the effective rate was 40.0% for 1995 and 39.1% for 1994.
Income tax expense increased 155.7% to $1,493 in 1994 from $584 in 1993 due to
an increase in income before taxes and to the Company employing an interest
rate hedging transaction during 1993 which reduced the effective tax rate for
that year. As a percentage of income the effective rate was 39.1% for 1994 and
26.3% for 1993.
The Company's backlog was $69,100 at December 31, 1995, $28,200 at December 31,
1994 and $26,150 at December 31, 1993. Substantially all of the current
backlog will be completed within twelve months.
Discontinued Operations
During 1988, the Company's Board of Directors approved plans to dispose of its
engineering and telecommunications subsidiaries. As part of the sale of the
engineering subsidiary, the Company retained certain rights and obligations in
connection with two lawsuits. In 1994 the Company recorded additional amounts,
primarily legal expenses related to these lawsuits, which resulted in an
additional loss from discontinued operations of $150 (see Item 3, Legal
Proceedings and Note 11 to the Financial Statements).
Liquidity and Capital Resources
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As of December 31, 1995 the Company had working capital of $15,490 as compared
to $8,595 in 1994 and $8,636 in 1993. Working capital increased in 1995
primarily due to the acquisition of Harlan. Working capital decreased
marginally in 1994 compared to 1993 due to increased expenditures for property
and equipment in 1994.
The ratio of current assets to current liabilities was 1.27:1 at December 31,
1995.
The acquisition of Harlan was completed on January 3, 1995. The purchase price
was $19,291. Of this amount $13,612 was paid to the Harlan shareholders in cash
with the remaining $5,679 of the payment in the form of convertible subordinated
notes of the Company's. The subordinated notes are convertible into shares of
the Company's common stock at a price per share of $9.4659. The cash portion of
the purchase price was funded partly through the Company's cash balances and
partly from bank debt (see Note 2 to the Financial Statements).
The Company has a $25,000 revolving and term credit facility (see Note 8 to the
Financial Statements). As of December 31, 1995 there were $9,200 and $7,500
outstanding under the revolver and term credit facility, respectively. The
Company has outstanding letters of credit with
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banks totaling $12,366, of which $11,224 guarantees the Company's
payment obligations under its insurance programs and $1,142 which is a credit
enhancement to guarantee an industrial revenue bond. The Company anticipates
that its credit facility, cash balances and internally generated cash flows
will continue to be sufficient to fund operations, capital expenditures and
debt service requirements. The Company is also confident that its financial
condition will allow it to meet long-term capital requirements.
The Company's Board of Directors has authorized the purchase of up to 333,333
shares of its common stock. No purchases were made in 1995 and the Company has
no current plans to purchase additional shares. In 1994 and 1993, purchases
made under this program totaled 20,821 shares and 109,067 shares at a cost of
$168 and $992 respectively. At December 31, 1995 the balance available under
the Board of Directors' authorization to purchase shares was 154,645.
Capital expenditures were $4,959 in 1995, compared to $4,449 in 1994 and $3,295
in 1993. Capital expenditures during these periods were used for normal
property and equipment additions, replacements and upgrades. The Company plans
to spend approximately $5,000 on capital improvements in 1996.
Cash flows from operations were $4,161 in 1995 compared to $6,647 in 1994.
This reduction is primarily the result of increased accounts receivable and
work in process related to the increase in revenue. Cash flows from operations
increased $856 in 1994 to $6,647 from $5,791 in 1993. The increase in cash
flow in 1994 compared to 1993 resulted from improved operations after cash
flows from discontinued operations.
Cash flows used for investments in1995 included $12,995 for the acquisition of
Harlan (see Note 2 of the Financial Statements). Cash flows were generated
from the disposal of property and equipment amounting to $1,818. The increase
in cash flows used for investment in 1994 compared to 1993 is primarily due to
increased expenditures for property and equipment.
Cash flows for dividends were $575, $527 and $508 in 1995, 1994 and 1993,
respectively. Financing costs of $133 represented banking fees for the Harlan
acquisition financing.
12
13
ITEM 8. FINANCIAL STATEMENTS
- -----------------------------
Index to Financial Statements
-----------------------------
Page
Responsibility for Financial Statements 14
Independent Auditors' Report 15
Financial Statements:
Consolidated Balance Sheet -
December 31, 1995 and 1994 16
Consolidated Statement of Operations -
Years Ended December 31, 1995, 1994 and 1993 17
Consolidated Statement of Shareholders' Equity
Years Ended December 31, 1995, 1994 and 1993 18
Consolidated Statement of Cash Flows
Years Ended December 31, 1995, 1994 and 1993 19
Notes to Financial Statements 20
13
14
MYR GROUP INC.
- --------------------------------------------------------------------------------
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The financial statements, and all other information in this annual report, were
prepared by management which is responsible for their integrity and
objectivity. Management believes the financial statements, which require the
use of certain estimates and judgments, fairly and accurately reflect the
Company's financial position and operating results, in accordance with
generally accepted accounting principles. All financial information in this
annual report is consistent with the financial statements.
Management maintains a system of internal controls which it believes provides
reasonable assurance that, in all material respects, assets are maintained and
accounted for in accordance with management's authorizations and transactions
are recorded accurately in the books and records. The concept of reasonable
assurance is based on the premise that the cost of internal controls should not
exceed the benefits derived. To assure the effectiveness of the internal lines
of responsibility and delegation of authority, the Company's formally stated
and communicated policies require employees to maintain high ethical standards
in their conduct of its business. These policies address, among other things,
potential conflicts of interest; compliance with all laws, including those
related to financial disclosure; and confidentiality of proprietary
information.
The Audit Committee of the Board of Directors is comprised entirely of
directors who are not employees of the Company. The committee reviews audit
plans, internal controls, financial reports and related matters and meets
regularly with the Company's management and independent auditors. The
independent auditors have free access to the Audit Committee, without
management being present, to discuss the results of their audits or any other
matters.
Deloitte & Touche LLP, independent auditors, have audited the financial
statements of the Company. Their report is presented on page 15. Their audit
includes a study and evaluation of the Company's control environment,
accounting systems and control procedures. Deloitte & Touche LLP advises
management and the Audit Committee of significant matters resulting from their
audit of our financial statements and consideration of our internal controls.
Charles M. Brennan III
Chairman and
Chief Executive Officer
Elliott C. Robbins
Senior Vice President, Treasurer
and Chief Financial Officer
14
15
MYR GROUP INC.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
MYR Group Inc.:
We have audited the accompanying consolidated balance sheets of MYR Group Inc.
and subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of MYR Group Inc. and subsidiaries at
December 31, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Chicago, Illinois
March 20, 1996
15
16
MYR GROUP INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
- ----------------------------------------------------------------------------------------------------
DECEMBER 31 1995 1994
- ----------------------------------------------------------------------------------------------------
ASSETS Current assets:
Cash and cash equivalents $ 703 $ 6,115
Accounts receivable (Note 3) 51,114 12,687
Costs and estimated earnings in excess
of billings on uncompleted contracts (Note 4) 14,851 1,408
Deferred income taxes (Note 10) 4,602 1,622
Other current assets 1,594 532
---------- ---------
Total current assets 72,864 22,364
Property and equipment-net (Notes 6, 7 and 8) 23,144 14,652
Intangible assets - net 2,681 368
Other assets (Note 11) 3,145 2,260
---------- ---------
Total assets $ 101,834 $ 39,644
- ----------------------------------------------------------------------------------------------------
LIABILITIES Current liabilities:
Current obligations under capital leases (Note 7) $ 58 $ 267
Current maturities of long-term debt (Note 8) 9,120 240
Accounts payable 13,886 3,069
Billings in excess of costs and estimated
earnings on uncompleted contracts (Note 4) 5,042 783
Accrued liabilities (Note 9) 29,268 9,410
---------- ---------
Total current liabilities 57,374 13,769
Obligations under capital leases (Note 7) - 58
Long-term debt (Note 8) 14,590 260
Deferred compensation 391 418
Deferred income taxes (Note 10) 2,861 1,257
Other liabilities - 260
SHAREHOLDERS' Common stock - par value $1 per share;
EQUITY authorized 6,000,000 shares; issued
3,349,593 shares 3,350 2,512
Additional paid-in capital 5,898 6,757
Common stock held in Treasury, at cost:
1995 - 167,484 shares and
1994 - 177,751 shares (Note 12) (1,548) (1,643)
Retained earnings 19,326 16,472
Shareholders' notes receivable (Note 14) (408) (476)
---------- ---------
Total shareholders' equity 26,618 23,622
---------- ---------
Total liabilities and shareholders' equity $ 101,834 $ 39,644
- ----------------------------------------------------------------------------------------------------
The "Notes to Financial Statements" are an integral part of this statement.
16
17
MYR GROUP INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands except per share amounts)
- ------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31 1995 1994 1993
- ------------------------------------------------------------------------------------------------
Contract revenue $ 266,965 $ 86,842 $ 108,515
Contract cost 237,418 74,545 97,913
----------- ----------- ----------
Gross profit 29,547 12,297 10,602
Selling, general and administrative expenses 21,780 8,165 7,844
----------- ----------- ----------
Income from operations 7,767 4,132 2,758
Other income (expense)
Interest income 65 148 30
Interest expense (1,772) (99) (350)
Gain on sale of property and equipment 220 68 96
Other (565) (427) (317)
----------- ----------- ----------
Income from continuing operations
before income taxes 5,715 3,822 2,217
Income tax expense (Note 10) 2,286 1,493 584
----------- ----------- ----------
Income from continuing operations 3,429 2,329 1,633
Loss from discontinued operations (Note 5) - (150) -
----------- ----------- ----------
Net income $ 3,429 $ 2,179 $ 1,633
- ------------------------------------------------------------------------------------------------
Earnings per share (Note 13) - Primary:
Income from continuing operations $ 1.01 $ .70 $ .48
Net income $ 1.01 $ .65 $ .48
Earnings per share (Note 13) - Fully Diluted:
Income from continuing operations $ .91 $ .70 $ .48
Net income $ .91 $ .65 $ .48
- ------------------------------------------------------------------------------------------------
The "Notes to Financial Statements" are an integral part of this
statement.
17
18
MYR GROUP INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
- ----------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
- ----------------------------------------------------------------------------------------------
Common Additional Shareholders'
Stock Paid-In Treasury Retained Notes
Issued Capital Stock Earnings Receivable Total
-----------------------------------------------------------------------
Balance January 1,
1993 $2,510 $6,756 $ (493) $13,695 $(655) $21,813
Issuance of 4,270
common shares
upon exercise of
stock options 2 1 9 12
Net income 1,633 1,633
Dividends paid (508) (508)
Shareholders' note
payments 88 88
Treasury stock
purchases (992) (992)
-----------------------------------------------------------------------
Balance December 31,
1993 2,512 6,757 (1,476) 14,820 (567) 22,046
Net income 2,179 2,179
Dividends paid (527) (527)
Shareholders' note
payments 91 91
Treasury stock
purchases (167) (167)
-----------------------------------------------------------------------
Balance December 31,
1994 2,512 6,757 (1,643) 16,472 (476) 23,622
Effect a four-for-
three stock split in
a form of a stock
dividend 838 (838)
Issuance of 10,267
common shares
upon exercise of
stock options (21) 95 74
Net income 3,429 3,429
Dividends paid (575) (575)
Shareholders' note
payments 68 68
-----------------------------------------------------------------------
Balance December 31,
1995 $3,350 $5,898 $(1,548) $19,326 $(408) $26,618
- ----------------------------------------------------------------------------------------------
The "Notes to Financial Statements" are an integral part of this
statement.
18
19
MYR GROUP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
- ---------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
CASH Income from continuing operations $ 3,429 $ 2,329 $ 1,633
FLOWS Adjustments to reconcile income
FROM from continuing operations to cash
OPERATIONS flows from continuing operations:
Depreciation and amortization 5,822 2,931 2,632
Amortization of non-compete agreements 260 260 260
Amortization of goodwill 107 - -
Deferred income taxes 489 781 140
Gain on sale of property and equipment (220) (68) (95)
Changes in operating assets and
liabilities:
Accounts receivable (3,622) 1,173 2,263
Inventory - - 1,763
Costs and estimated earnings in
excess of billings on uncompleted
contracts (6,557) 395 523
Other assets 247 (421) 33
Accounts payable (4,673) 346 (3,213)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 685 (438) (414)
Insurance accruals 4,338 (937) 2,470
Other liabilities 3,856 446 (899)
------- -------- --------
Cash flows from continuing operations 4,161 6,797 7,096
Cash flows from discontinued operations - (150) (1,305)
------- -------- --------
Cash flows from operations 4,161 6,647 5,791
------- -------- --------
CASH Proceeds from disposal of property and
FLOWS equipment 1,818 123 211
FROM Expenditures for property and equipment (4,959) (4,449) (3,295)
INVESTMENTS Cash used in acquisition, net of cash acquired (12,995) - -
------- -------- --------
Cash flows from investments (16,136) (4,326) (3,084)
------- -------- --------
CASH Proceeds from issuance of long-term debt 19,500 - 719
FLOWS Repayments on long-term debt (12,344) (1,274) (1,941)
FROM Purchases of treasury stock - (167) (992)
FINANCING Decrease in deferred compensation (27) (27) (39)
Proceeds from exercise of stock options 74 - 12
Dividends paid (575) (527) (508)
Shareholders' note payments 68 91 88
Financing costs (133) - -
------- -------- --------
Cash flows from financing 6,563 (1,904) (2,661)
------- -------- --------
Increase (decrease) in cash and cash equivalents (5,412) 417 46
Cash and cash equivalents beginning of year 6,115 5,698 5,652
------- -------- --------
Cash and cash equivalents end of year $ 703 $ 6,115 $ 5,698
- ---------------------------------------------------------------------------------------------------
The "Notes to Financial Statements" are an integral part of this
statement.
19
20
MYR GROUP INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business - On December 14, 1995 the company changed it's name to MYR Group Inc.
from The L. E. Myers Co. Group. The three principal types of
construction services performed by the Company are electric utility line
construction, commercial and industrial electrical construction and mechanical
construction. Work is performed under lump sum, unit price, and cost-plus-fee
contracts. These contracts are undertaken by the Company or its subsidiaries
alone, or with subcontractors.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its subsidiaries. The Company's investment in
joint ventures is accounted for by the equity method. All material
intercompany balances and transactions have been eliminated.
Revenue Recognition - The Company recognizes revenue on construction contracts
using the percentage-of-completion accounting method determined in each case by
the ratio of cost incurred to date on the contract (excluding uninstalled
direct materials) to management's estimate of the contract's total cost.
Contract cost includes all direct material, subcontract and labor costs and
those indirect costs related to contract performance, such as supplies, tool
repairs and depreciation. The Company charges selling, general, and
administrative costs, including indirect costs associated with maintaining
district offices, to expense as incurred.
Provisions for estimated losses on uncompleted contracts are recorded in the
period in which such losses are determined. Changes in estimated revenues and
costs are recognized in the periods in which such estimates are revised.
Significant claims are included in revenue in accordance with industry
practice.
The asset, "Costs and estimated earnings in excess of billings on uncompleted
contracts," represents revenues recognized in excess of amounts billed. The
liability, "Billings in excess of costs and estimated earnings on uncompleted
contracts," represents amounts billed in excess of revenues recognized.
Classification of Current Assets and Current Liabilities - The length of the
Company's contracts varies, with some larger contracts exceeding one year. In
accordance with industry practice, the Company includes in current assets and
current liabilities amounts realizable and payable under contracts which may
extend beyond one year.
Land and Building Held for Sale - Other current assets as of December 31, 1995
includes $1,300,000 for land and a building held for sale. Such assets,
acquired in the acquisition described in Note 2, are stated at fair value at
the date of acquisition which is their estimated net realizable value.
Insurance - The Company maintains insurance coverage it believes to be adequate
for its needs. Under its insurance contracts, the Company usually accepts
self-insured retentions appropriate for the specific risks of its business.
Property and Equipment - Property and equipment are carried at cost.
Depreciation for buildings and improvements is computed using the straight line
method over estimated useful lives ranging from five years to 32 years.
Depreciation for equipment is computed using straight line and accelerated
methods over estimated useful lives ranging from three years to ten years. The
cost of maintenance and repairs is charged to income as incurred.
Intangible Assets - Intangible assets consist of non-competition agreements and
goodwill arising from acquisitions. The non-competition agreements are being
amortized over their contractual lives of five years. Goodwill represents the
excess of the purchase price over the fair value of net assets
20
21
acquired in a business combination treated as a purchase. Goodwill is
being amortized on a straight line basis over 25 years.
Income Taxes - Deferred income taxes are recorded based upon the differences
between financial statement and tax basis of assets and liabilities and
available tax credit carryforwards.
Consolidated Statement of Cash Flows - For purposes of this statement, short
term investments which have a maturity of ninety days or less are considered to
be cash equivalents. Supplemental disclosures with respect to cash flows are
as follows (in thousands):
1995 1994 1993
------------ ---------- ----------
Cash paid for interest $1,677 $105 $354
Cash paid for income taxes 1,937 452 407
Convertible subordinated notes
issued (Note 2) 5,679 - -
Capital lease obligations incurred - - 137
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the period reported. Actual
results could differ from those estimates.
Changes in Accounting Policy - In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" which the Company must adopt by
fiscal 1996. This Statement allows for, and the Company intends to, retain the
current method of accounting for employee stock-based compensation arrangements
with certain additional disclosures. Accordingly, the new standard will not
have an effect on the Company's net income or financial position.
Other - In December 1995, the Company effected a four-for-three stock split in
the form of a stock dividend. The $838,000 par value of the additional shares
issued was transferred from additional paid-in capital to common stock.
Amounts relating to number of shares and amounts per share have been adjusted
for 1995 and prior years to reflect the stock split. Certain other amounts in
prior year financial statements have been reclassified to conform to the 1995
presentation.
2. ACQUISITION
On January 3, 1995, the Company completed the acquisition of all the stock of
Harlan Electric Company ("Harlan"), pursuant to an Agreement and Plan of Merger
dated October 5, 1994. Harlan and its wholly-owned subsidiaries, Sturgeon
Electric Company, Inc. and Power Piping Company, are engaged primarily in the
installation and maintenance of electrical equipment and lighting systems for
commercial, industrial and electrical utility customers and in the erection and
maintenance of high and low pressure piping systems for electrical utilities
and steel industry customers.
All the shares of Harlan were exchanged for $13,612,000 in cash and $5,679,000
of 7% convertible subordinated notes. The principal of each note will be due
in three equal installmants on January 3, 2000, 2001 and 2002, with interest
payable semiannually each year. The notes are convertible into 600,000 shares
of the Company's common stock at a price per share of $ 9.4659. The Company
also refinanced $8,756,000 of Harlan debt. The transaction was financed
through cash on hand and borrowings under a new $25,000,000 revolving and term
credit facility with Harris Trust and Savings Bank and Comerica Bank. The
transaction has been accounted for using the purchase method of accounting.
21
22
The following table presents, on a pro forma basis, an unaudited condensed
consolidated balance sheet at December 31, 1994, giving effect to the
acquisition as if it occurred on that date (in thousands).
Assets
- ------
Current assets $ 67,069
Net property, plant and equipment 25,493
Other assets 5,898
----------
$ 98,460
==========
Liabilities and Equity
- ----------------------
Current liabilities $ 48,022
Long-term bank debt 17,526
Other long-term liabilities 3,611
Convertible subordinated notes 5,679
Shareholders' equity 23,622
----------
$ 98,460
==========
The following unaudited pro forma summary presents the consolidated results of
continuing operations as if the acquisition had occurred January 1, 1994 and
does not purport to be indicative of what would have occurred had the
acquisition actually been made as of January 1, 1994 or of results which may
occur in the future (in thousands, except per share amounts).
Contract revenue $ 253,824
Net income 5,652
Income per share
Primary 1.70
Fully diluted 1.55
Adjustments made in arriving at pro forma unaudited results of operations
include increased interest expense on acquisition debt, amortization of
goodwill and related tax adjustments.
3. ACCOUNTS RECEIVABLE (IN THOUSANDS)
1995 1994
-------------- ------------
Contract receivables $ 45,320 $ 10,518
Contract retainages 6,178 1,825
Other 164 394
-------------- -----------
51,662 12,737
Allowance for doubtful accounts 548 50
-------------- -----------
$ 51,114 $ 12,687
============== ===========
4. CONTRACTS IN PROCESS (IN THOUSANDS)
1995 1994
-------------- ------------
Costs incurred on uncompleted contracts $ 256,714 $ 43,547
Estimated earnings 31,515 5,109
-------------- ------------
288,229 48,656
Less: Billings to date 278,420 48,031
-------------- ------------
$ 9,809 $ 625
============== ============
22
23
1995 1994
------- -------
Included in the accompanying balance sheet
under the following captions:
Costs and estimated earnings in excess of
billings on uncompleted contracts $14,851 $1,408
Billings in excess of costs and estimated
earnings on uncompleted contracts 5,042 783
------- ------
$ 9,809 $ 625
======= ======
5. DISCONTINUED OPERATIONS
As part of the sale in 1988 of its former engineering subsidiary, the Company
retained certain rights and obligations in connection with the OMU lawsuits (as
defined in Note 11). In 1994, the Company recorded additional amounts,
primarily legal expenses related to the OMU lawsuits, which resulted in
additional losses of $150,000 (net of income tax benefits of $100,000) (see
Note 11).
6. PROPERTY AND EQUIPMENT (IN THOUSANDS)
1995 1994
------- -------
Land $ 1,292 $ 748
Buildings and improvements 5,292 2,824
Construction equipment 51,825 44,804
Office equipment 3,216 2,139
------- -------
61,625 50,515
Accumulated depreciation 38,481 35,863
------- -------
$23,144 $14,652
======= =======
7. LEASES AND COMMITMENTS
At December 31, 1995, the Company had outstanding irrevocable standby letters
of credit totalling $12,366,000 of which $11,224,000 guarantees the Company's
payment obligation under its insurance programs and $1,142,000 which is a
credit enhancement to guarantee an industrial revenue bond.
The Company leases construction equipment and office equipment. The net book
value of leased assets that have been capitalized in property and equipment is
$132,000 and $853,000 as of December 31, 1995 and 1994, respectively
Minimum lease payments and the present value of capital lease obligations under
capital leases in effect at December 31, 1995 are $60,000 and $58,000
respectively.
The Company also leases real estate and construction equipment under operating
leases with terms ranging from one to five years. Future minimum lease
payments as of December 31, 1995 total $3,979,000, $628,000, $554,000 and
$410,000 and $339,000 for the years ending 1996, 1997, 1998, 1999 and 2000,
respectively. Total rent expense, including both short-term and long-term
leases, for 1995, 1994, and 1993 amounted to approximately $7,417,000,
$4,299,000, and $5,654,000, respectively.
23
24
8. LONG-TERM DEBT
Long-term debt outstanding consisted of the following (in thousands):
1995 1994
-------- ------
Variable - rate term credit agreement (effective interest
rate of 7.6% at December 31, 1995), payable in quarterly
installments of $625 March 1995 through December 1998 $ 7,500 $ -
Variable - rate revolving credit agreement, (effective
interest rate of 8.0% at December 31, 1995), payable
at maturity in December 1998 9,200 -
7% convertible subordinated notes, payable in three
equal installments commencing in January 2000 5,679 -
Industrial revenue bond financing at variable rates
(weighted average of 8.5%) and due in varying annual
amounts ranging from $180 to $250 through 2000 1,070
Variable - rate notes payable (1.26% over adjusted
LIBOR), payable in monthly installments through January 1997 261 500
-------- ------
23,710 500
Less current portion 9,120 240
-------- ------
$ 14,590 $ 260
======== ======
The Company maintains a $25,000,000 revolving and term credit facility with a
bank. At the Company's option, borrowing under this line bears interest at the
bank's prime interest rate or the adjusted LIBOR commercial rate plus a spread.
The credit facility expires on December 31, 1998.
Under the credit facility, borrowings are limited to an amount equal to 75% of
eligible accounts receivable balances. The terms of the credit agreement
require, among other terms, minimum current ratios, fixed charge coverage ratio
and senior debt leverage ratios. Payments of cash dividends and repurchases of
capital stock, each quarter, are restricted to an amount not to exceed $150,000
plus 6.25% of the Company's net income for the preceding 12 months. The
Company has complied with these provisions.
The industrial revenue bond is secured by properties with a net book value of
approximately $2,140,000 at December 31, 1995. The notes payable are secured
by construction equipment with a net book value of approximately $354,000 and
$437,000 as of December 31, 1995 and 1994, respectively.
Maturities of long-term debt are $9,120,000 in 1996, $2,716,000 in 1997,
$6,195,000 in 1998 and $1,893,000 per year for 2000, 2001, and 2002. The
maturities of debt incurred under the revolving credit agreement have been
reported based on an estimate of the expected paydown in 1996 and the balance
in 1998, the current expiration date of the credit facility.
24
25
9. ACCRUED LIABILITIES (IN THOUSANDS)
1995 1994
------- ------
Insurance $13,053 $4,415
Payroll 5,301 1,735
Union dues and benefits 2,770 591
Profit sharing and thrift plan 755 511
Income taxes 1,043 323
Taxes, other than income taxes 1,451 464
Other 4,895 1,371
------- ------
$29,268 $9,410
======= ======
10. INCOME TAXES
Provision for income taxes on income from continuing operations is comprised of
the following (in thousands):
1995 1994 1993
------ ------ ----
Current
Federal $1,331 $546 $397
State 466 166 47
------ ------ ----
1,797 712 444
Deferred 489 781 140
------ ------ ----
$2,286 $1,493 $584
====== ====== ====
The differences between the U.S. federal statutory tax rate and the Company's
effective rate for the three years ended December 31, 1995 are as follows:
1995 1994 1993
----- ----- ------
U.S. federal statutory rate 34.0% 34.0% 34.0%
State income taxes, net of U.S.
federal income tax benefit 5.4 4.6 2.3
Non-deductible fines - - 3.2
Valuation allowance adjustment - - (24.7)
Other .6 .5 11.5
----- ---- ----
40.0% 39.1% 26.3%
===== ==== ====
The net deferred tax assets and liabilities arising from temporary differences
and carryforwards at December 31, 1995 and 1994 are as follows (in thousands):
1995 1994
------------------------- --------------------------
CURRENT NONCURRENT CURRENT NONCURRENT
ASSETS LIABILITIES ASSETS LIABILITIES
-------------------------------------------------------------
Employee and retiree benefit
plans $ - $ (255) $ - $ (265)
Excess tax over book
depreciation 3,116 - 1,522
Insurance accruals 2,732 - 1,068 -
Other allowances and accruals 1,870 - 217 -
Tax credit carryforwards - - 135 -
AMT credit carryforwards - - 202 -
-------- ------- --------- ---------
$ 4,602 $ 2,861 $ 1,622 $ 1,257
======== ======= ========= =========
25
26
11. CONTINGENCIES
The Company has been involved in two lawsuits as a result of errors in the
design of four transmission towers by the Company's former engineering
subsidiary for City Utilities Commission of Owensboro, Kentucky (OMU). The
engineering subsidiary has been sold (see Note 5), but the Company retained the
rights and obligations related to these lawsuits as part of the sale agreement.
One lawsuit (the Kentucky lawsuit) alleged that the engineering subsidiary
negligently designed and engineered the towers, and that OMU incurred damages
as a result of the redesign and replacement of the four towers. During 1993,
OMU agreed to a settlement of the case pursuant to which it accepted payment of
$1,300,000 from the Company.
The other lawsuit (the New York lawsuit) concerns the insurance coverage of the
engineering subsidiary related to the design errors. The Company notified its
primary and excess umbrella insurance carriers at the time of the discovery of
the design errors. The Company's excess umbrella carrier denied insurance
coverage for the damages above the primary carrier's policy limits and filed an
action against the Company seeking a declaratory judgment that the umbrella
insurance coverage did not apply to the loss on several theories. The Company
counterclaimed against the umbrella carrier and, in addition, in a third party
action, brought suit against three former insurance brokers which had procured
the insurance for the Company. The Company is seeking to recover $550,000 of
unreimbursed costs it incurred in the disassembly, redesign and replacement of
the towers, the amount of payments it made to OMU, the legal and related
expenses it incurred in the Kentucky lawsuit, legal and related expenses it has
and will incur in the New York lawsuit, and interest.
The approximately $550,000 of unreimbursed costs as well as the $1,300,000 paid
to OMU during 1993 is recorded as a non-current asset. Management is of the
opinion that the amounts will be recovered in the New York lawsuit from its
excess umbrella insurance carrier and its brokers, individually or
collectively.
The Company is also involved in various other legal matters which arise in the
ordinary course of business, none of which is expected to have a material
adverse effect.
12. TREASURY STOCK
The Company's Board of Directors has authorized the purchase of up to 333,333
shares of its common stock for future issuance to key employees under the
Company's stock option plans. The Company purchased 20,821 and 109,067 shares
on the open market at a cost of $167,813 and $991,513 in 1994 and 1993,
respectively. No shares were purchased in 1995. The company issued 10,267 and
937 shares out of treasury for options exercised in 1995 and 1993,
respectively.
13. EARNINGS PER SHARE
Primary earnings per share is based on the weighted average number of common
shares and common share equivalents outstanding during the period. Stock
options are considered to be common share equivalents. Primary earnings per
share is based upon weighted average common shares outstanding of 3,399,659 in
1995, 3,333,419 in 1994 and 3,372,929 in 1993. Fully diluted earnings per
share also reflects the potential dilution which would result from the
conversion of the convertible subordinated notes.
14. STOCK OPTION PLANS
At December 31, 1995, under the 1995, 1993, 1992 and 1990 Stock Option Plans,
313,333, 71,997, 5,996, and 20,773 shares, respectively, are available for
grant. Outstanding options granted under the 1995, 1993 and 1992 plans are
exercisable at a price equal to 100% of the fair market value at the date of
grant. Outstanding options granted under the 1990 and 1989 plans are
26
27
exercisable at a price equal to either 85% or 100% of the fair market value at
the date of grant. The 1993 options are only available for non-employee
directors.
Transactions and other information relating to the stock option plans for the
three years ended December 31, 1995 are summarized below:
Stock Options:
- --------------
1995 1994 1993
------- ------- --------
Outstanding beginning of year 584,005 546,672 507,185
Granted 224,680 40,667 179,704
Exercised (10,267) - (4,270)
Canceled (54,458) (3,333) (135,947)
Outstanding end of year ------- ------- --------
743,960 584,005 546,672
======= ======= ========
The option prices are between $4.26 and $11.81 for all options shown in the
table. Options outstanding at December 31, 1995 are summarized below:
YEAR OF EXERCISE NUMBER
EXPIRATION PRICE RANGE OF SHARES
- ---------- ------------- ---------
1999 $4.26 235,001
2000 4.26 6,667
2002 11.24-11.81 146,669
2003 7.07-7.17 123,607
2004 8.48-8.72 40,670
2005 8.11-10.87 191,346
-------
743,960
=======
Under the Company's 1992, 1990 and 1989 Stock Option Plans, a Committee of the
Board of Directors is authorized to grant loans to option holders to purchase
the shares of common stock upon the exercise of options. At December 31, 1995
and 1994, respectively, notes receivable aggregating $408,000 and $476,000 were
outstanding. The notes were collateralized by 108,333 shares of the Company's
common stock at December 31, 1995 and 1994. The note bears interest at an
annual rate of 7.7%, payable annually, with principal payments due through
December 2001. Outstanding loans are shown as a reduction of shareholders'
equity on the balance sheet.
15. EMPLOYEE BENEFIT PLANS
The Company has profit sharing and thrift employee benefit plans in effect for
all eligible salaried employees. Company contributions under such plan are
based upon a percentage of income with limitations as defined by the plan.
Contributions amounted to approximately $645,000, $528,000 and $273,000 in
1995, 1994, and 1993, respectively.
Certain employees are covered under union-sponsored collectively bargained
defined benefit plans. Expenses for these plans amounted to approximately
$10,265,000, $4,398,000 and $4,828,000 in 1995, 1994 and 1993, respectively, as
determined in accordance with negotiated labor contracts.
The Company also has a supplemental retirement and death benefit program for
certain key employees. The program provides for aggregate benefits at
retirement or death equal to approximately twice the key employee's highest
base salary. The benefits are paid out in equal monthly installments over 10
years for retirement or 15 years in the event of death. Benefits are reduced
for early retirement.
27
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16. MAJOR CUSTOMERS
The Company had one customer that accounted for 19.5% and 19.3% of the
Company's consolidated contract revenue in 1994 and 1993, respectively. No
customers accounted for more than 10% of the Company's consolidated contract
revenues in 1995.
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair values of
financial instruments:
For cash and cash equivalents, accounts receivable and payable, accrued
liabilities, and other assets and liabilities, the carrying amount approximates
the fair value because of the short maturities of those instruments.
The variable-rate borrowings under the Company's bank term and revolving credit
agreement, which is repriced frequently, approximate fair value. The fair
value of long-term debt is estimated based on quoted market prices, when
available. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar financial instruments or discounting
future cash flows. The difference between the fair value and the carrying
value of the Company's long term debt is not material.
28
29
18. SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(Dollars in thousands, except per share amounts)
1995
- ---------------------------------------------------------------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Year to Date
- ---------------------------------------------------------------------------------------------------------------------
Contract Revenue $56,051 $64,015 $66,638 $80,261 $266,965
Gross Profit 6,653 7,338 7,968 7,588 29,547
Net Income 252 1,005 1,248 924 3,429
Income Per Share:
Primary .08 .30 .37 .27 1.01
Fully diluted .08 .26 .32 .25 .91
Dividends Paid Per Share .041 .047 .047 .047 .182
Market Price:
High 9.66 10.31 11.91 11.81 11.91
Low 7.97 8.53 9.19 10.00 7.97
1994
- ---------------------------------------------------------------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Year
- ---------------------------------------------------------------------------------------------------------------------
Contract Revenue $21,548 $22,243 $21,675 $21,376 $86,842
Gross Profit 2,456 3,316 3,072 3,453 12,297
Income from Continuing
Operations 26 742 759 802 2,329
Net Income 26 742 759 652 2,179
Income Per Share:
Continuing Operations .01 .22 .23 .24 .70
Net Income .01 .22 .23 .19 .65
Dividends Paid Per Share .041 .041 .041 .041 .165
Market Price:
High 9.00 9.19 10.22 9.56 10.22
Low 7.78 7.78 7.31 8.06 7.31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The Company has no items to report under Item 9 of this report.
29
30
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
Incorporated by reference from the Company's definitive proxy statement for use
in conjunction with its annual meeting of stockholders under the caption
"Election of Directors".
(b) Identification of Executive Officers
The names and ages of the executive officers of the Company and their business
experience during the past five years are set forth below:
Charles M. Brennan III (54)
Chairman (since August 1988) and Chief Executive Officer (since October 1989)
Director (since 1986).
William S. Skibitsky (46)
Executive Vice President (since February 1996), President and Chief Operating
Officer of The L. E. Myers Co. (Since May 1994) President of ABB Combustion
Engineering Nuclear Services (1990 - January 1994)
Byron D. Nelson (49)
Senior Vice President, General Counsel and Secretary (since February 1986).
Elliott C. Robbins (49)
Senior Vice President, Treasurer and Chief Financial Officer (since February
1986)
Betty R. Johnson (37)
Controller (since June 1992); Senior Manager at Deloitte & Touche (1981 - June
1992).
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Company's definitive proxy statement for use
in connection with its annual meeting of stockholders under the caption
"Executive Compensation".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the Company's definitive proxy statement for use
in connection with its annual meeting of stockholders under the caption
"Security Ownership".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Company's definitive proxy statement for use
in connection with its annual meeting of stockholders under the captions
"Executive Compensation" and "Board of Directors Interlocks and Insider
Participation".
30
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page
(a) 1. The following documents are included in Item 8:
Responsibility for Financial Statements 14
Independent Auditors' Report 15
Financial Statements:
Consolidated Balance Sheet -
December 31, 1995 and 1994 16
Consolidated Statement of Operations -
Years Ended December 31, 1995, 1994 and 1993 17
Consolidated Statement of Shareholders' Equity
Years Ended December 31, 1995, 1994, and 1993 18
Consolidated Statement of Cash Flows
Years Ended December 31, 1995, 1994, and 1993 19
Notes to Financial Statements 20
2. All schedules are omitted because they are not applicable,
not required, or the required information is included in
the financial statements or notes thereto.
(b) No reports on Form 8-K were filed by the Company during the fourth quarter
1995.
(c) Exhibits required to be filed by Item 601 of Regulation S-K are listed in
the Exhibit Index which appear at pages 33 and 34 and which are
incorporated by reference.
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SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MYR GROUP INC.
/s/ Elliott C. Robbins
------------------------------
Elliott C. Robbins
Senior Vice President, Treasurer
and Chief Financial Officer
Dated: March 20, 1996
In accordance with the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
(i) Principal Executive Officer:
/s/ Charles M. Brennan III
- ----------------------------------- Chairman and Chief
Charles M. Brennan III Executive Officer
(ii) Principal Financial Officer:
/s/ Elliott C. Robbins
- ----------------------------------- Senior Vice President,
Elliott C. Robbins Treasurer and Chief
Financial Officer
(iii) Principal Accounting Officer
/s/ Betty R. Johnson
- ----------------------------------- Controller
Betty R. Johnson
(iv) A Majority of the Board of Directors:
/s/ Charles M. Brennan III
- -----------------------------------
Charles M. Brennan III
/s/ William G. Brown
- -----------------------------------
William G. Brown
/s/ Allan E. Bulley, Jr.
- -----------------------------------
Allan E. Bulley, Jr.
/s/ Bide L. Thomas
- -----------------------------------
Bide L. Thomas
/s/ John M. Harlan
- -----------------------------------
John M. Harlan
32
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MYR GROUP INC.
Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 1995
Exhibit Index
Page
Number Description (or Reference)
- ------ ------------------------------------------ ------------
2.1 Merger Agreement by and among the Company,
HMM Corporation and Harlan Electric Company
dated October 5, 1994, as amended (1)
3.1 Amended and Restated Certificate of Incorporation of
the Company 35
3.2 Bylaws of the Company (as amended) 46
4.1 Form of 7% Subordinated Convertible Escrow and Non-Escrow
promissory notes of the Company to certain former
stockholders of Harlan Electric Company (2)
10.1 Form of Agreement for Supplemental Retirement and Death
Benefit Programs of the Company and its subsidiaries (3)
10.2 Form of Agreement of Indemnification for Directors of
the Company and certain officers of the Company and its
subsidiaries (4)
10.3 1989 Stock Option Plan (5)
10.4 1990 Stock Option Plan (6)
10.5 1992 Stock Option Plan (7)
10.6 1993 Non-Employee Director Stock Option Plan (8)
10.7 1995 Stock Option Plan 57
10.8 Management Incentive Program 61
10.9 Amended Employment Agreement between the Company and
C. M. Brennan dated December 23, 1991. (9)
11 Schedule of Computation of Net Income per share for
years ended December 31, 1995, 1994 and 1993 64
21 Subsidiaries of the Company 65
23 Consent of Independent Auditors 66
27 Financial Data Schedules 67
33
34
(1) Filed as exhibit 2 to the Report on Form 8-K of the Company dated January
3, 1995, and incorporated herein by reference.
(2) Filed as exhibits E-1 and E-2 to the Merger Agreement by and among the
Company, HMM Corporation and Harlan Electric Company dated October 5, 1994,
as amended, which agreement and exhibits thereto were filed as exhibit 2
to the Report on Form 8-K of the Company dated January 3, 1995, and
incorporated herein by reference.
(3) Filed as exhibit 10.5 to the Annual Report on Form 10-K of the Company for
the year ended December 31, 1984, and incorporated herein by reference.
(4) Filed as exhibit 10.8 to the Annual Report on Form 10-K of the Company for
the year ended December 31, 1986, and incorporated herein by reference.
(5) Filed as exhibit 10.7 to the Annual Report on Form 10-K of the Company for
the year ended December 31, 1989, and incorporated herein by reference.
(6) Filed as exhibit 10.4 to the Annual Report on Form 10-K of the Company for
the year ended December 31, 1990, and incorporated herein by reference.
(7) Filed as exhibit 10.5 to the Annual Report on Form 10-K of the Company for
the year ended December 31, 1992, and incorporated herein by reference.
(8) Filed as exhibit 10.6 to the Report on Form 10-K of the Company for the
year ended December 31, 1993 and incorporated herein by reference.
(9) Filed as exhibit 10.5 to the Annual Report on Form 10-K of the Company for
the year ended December 31, 1991, and incorporated herein by reference.
34
1
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE L. E. MYERS CO. GROUP
We, Elliott C. Robbins, Senior Vice President, and Byron D. Nelson,
Secretary, of The L. E. Myers Co. Group, a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), do
hereby certify under the seal of the Corporation as follows:
First: That the name of the Corporation is The L. E. Myers Co.
Group.
Second: That the Certificate of Incorporation of the Corporation was
filed by the Secretary of State, Dover, Delaware, on the 15th
day of January, 1982.
Third: That the Restated Certificate of Incorporation of the
Corporation was filed by the Secretary of State, Dover,
Delaware, on the 21st day of August, 1987.
Fourth: That the amendment and restatement of the Certificate of
Incorporation to read as set forth below has been duly adopted
in accordance with Corporation law accordance with the
provisions of Sections 242 and 245 of the General Corporation
law of the State of Delaware by the board of directors of the
Corporation.
Fifth: That the amendment and restatement reflects the amendment to
Article First to change the name of the Corporation from The
L. E. Myers Co. Group to MYR Group Inc. and does not further
amend the provisions of the Corporation's Restated Certificate
of Incorporation as heretofore amended or supplemented, and
that there is no discrepancy between those provisions and the
provisions of the restated certificate.
Sixth: That the text of the Certificate of Incorporation of The
L. E. Myers Co. Group is hereby amended and restated by this
certificate, to read in full, as follows:
35
2
RESTATED CERTIFICATE OF INCORPORATION
OF
MYR GROUP INC.
FIRST: The name of the corporation is MYR Group Inc.
SECOND: The address of its registered office in the State of
Delaware is, Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation
Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of all classes of stock which
the corporation shall have authority to issue is seven million
(7,000,000), of which six million (6,000,000) shares of the par
value of $1.00 each are to be of a class designated Common Stock
and one million (1,000,000) shares of the par value of $1.00
each are to be of a class designated Preferred Stock. The
Preferred Stock shall be issuable in series.
1. Common Stock Provisions
1.1 Dividend rights. Subject to provisions of law and the
preferences of the Preferred Stock, the holders of the Common
Stock shall be entitled to receive dividends at such times and
in such amounts as may be determined by the board of directors.
1.2 Voting rights. The holders of the Common Stock shall have
one vote for each share on each matter submitted to a vote of the
stockholders of the corporation. Except as otherwise provided by
law or by the provisions of the certificate of incorporation or
any amendment thereto or by resolutions of the board of directors
providing for the issue of any series of Preferred Stock, the
holders of the Common Stock shall have sole voting power.
1.3 Liquidation rights. In the event of any liquidation,
dissolution or winding up of the corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts
and other liabilities of the corporation and the preferential
amounts to which the holders of the Preferred Stock shall be
entitled, the holders of the Common Stock shall be entitled to
share ratably in the remaining assets of the corporation.
2. Preferred Stock Provisions
2.1 Authority of the board of directors to issue in series. The
Preferred Stock may be issued from time to time in one or more
series. Subject to the provisions of the certificate of
incorporation or any amendment thereto, authority is expressly
granted to the board of directors to authorize the issue of one
or more series of Preferred Stock, and to fix by resolutions
providing for the issue of each such series the voting powers
(if any), designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations
and restrictions thereof (sometime referred to as powers,
preferences and rights) to the full extent now or hereafter
permitted by law, including but not limited to the following:
36
3
(a) the number of shares of such series (which may subsequently be
increased or decreased [but not below the number of shares
thereof then outstanding] by resolutions of the board of directors)
and the distinctive designation thereof;
(b) the dividend rate of such series and any limitations,
restrictions or conditions on the payment of such dividends;
(c) the price or prices at which, and the terms and conditions on
which, the shares of such series may be redeemed;
(d) the amounts which the holders of the shares of such series are
entitled to receive upon any liquidation, dissolution or winding up of
the corporation;
(e) the terms of any purchase, retirement or sinking fund to be
provided for the shares of such series;
(f) the terms, if any, upon which the shares of such series shall
be convertible into or exchangeable for shares of any other
series, class or classes, or other securities, and the terms and
conditions of such conversion or exchange; and
(g) the voting powers, full or limited (not to exceed one vote per
share), if any, of the shares of such series.
The Preferred Stock of each series shall rank on a parity with
the Preferred Stock of every other series in priority of payment of
dividends and in the distribution of assets in the event of any
liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, to the extent of the preferential amounts to
which the Preferred Stock of the respective series shall be entitled
under the provisions of the certificate of incorporation or any
amendment thereto or the resolutions of the board of directors
providing for the issue of such series. All shares of any one
series of Preferred Stock shall be identical except as to the dates of
issue and the dates from which dividends on shares of the series
issued on different dates shall accumulate (if cumulative).
2.2 Definitions.
(a) The term "arrearages," whenever used in connection with
dividends on any share of Preferred Stock, shall refer to the
condition that exists as to dividends, to the extent that they are
cumulative (either unconditionally, or conditionally to the extent
that the conditions have been fulfilled), on such share which shall
not have been paid or declared and set apart for payment to the date
or for the period indicated; but the term shall not refer to the
condition that exists as to dividends, to the extent that they are
non-cumulative, on such share which shall not have been paid or
declared and set apart for payment.
(b) The term "stock junior to the Preferred Stock," whenever used
with reference to the Preferred Stock, shall mean the Common
Stock and other stock of the corporation over which the Preferred
Stock has preference or priority in the payment of dividends or in the
distribution of assets on any dissolution, liquidation or winding up
of the corporation.
(c) The term "subsidiary" shall mean any corporation, association
or business trust, the majority of whose outstanding shares (at
the time of determination) having voting power for the election of
directors or trustees, either at all times or only so long as no
senior class of shares has such voting power because of arrearages in
dividends or because of the existence of some default, is owned
directly or indirectly by the corporation.
2.3 Dividend rights.
(a) The holders of the Preferred Stock of each series shall be
entitled to receive, when and as declared by the board of directors,
preferential dividends in
37
4
cash payable at such rate, from such date, and on such
quarterly dividend payment dates and, if cumulative, cumulative from
such date or dates, as may be fixed by the provisions of the
certificate of incorporation or any amendment thereto or by the
resolutions of the board of directors providing for the issue of such
series. The holders of the Preferred Stock shall not be entitled to
receive any dividends thereon other than those specifically provided
for by the certificate of incorporation or any amendment thereto, or
such resolutions of the board of directors, nor shall any arrearages
in dividends on the Preferred Stock bear any interest.
(b) So long as any of the Preferred Stock is outstanding, no
dividends (other than dividends payable in stock junior to the
Preferred Stock and cash in lieu of fractional shares in connection
with any such dividend,) shall be paid or declared in cash or
otherwise, nor shall any other distribution be made, on any stock
junior to the Preferred Stock, unless
(i) there shall be no arrearages in dividends on Preferred Stock
for any past quarterly dividend period, and dividends in full
for the current quarterly dividend period shall have been paid or
declared on all Preferred Stock (cumulative and non-cumulative); and
(ii) the corporation shall have paid or set aside all amounts, if
any, then or theretofore required to be paid or set aside for
all purchase, retirement and sinking funds, if any, for the Preferred
series; and
(iii) the corporation shall not be in default on any of its obligations to
redeem any of the Preferred Stock.
(c) So long as any of the Preferred Stock is outstanding, no shares
of any stock junior to the Preferred Stock shall be purchased,
redeemed or otherwise acquired by the corporation or by any subsidiary
except in connection with a reclassification or exchange of any stock
junior to the Preferred Stock through the issuance of other stock
junior to the Preferred Stock, or the purchase, redemption or other
acquisition of any stock junior to the Preferred Stock with proceeds
of a reasonably contemporaneous sale of other stock junior to the
Preferred Stock, nor shall any funds be set as if or made available
for any sinking fund for the purchase or redemption of any stock
junior to the Preferred Stock, unless
(i) there shall be no arrearages in dividends on Preferred Stock
for any past quarterly dividend period; and
(ii) the corporation shall have paid or set aside all amounts, if
any, then or theretofore required to be paid or set aside for all
purchase, retirement and sinking funds, if any, for the Preferred Stock
of any series; and
(iii) the corporation shall not be in default on any of its obligations to
redeem any of the Preferred Stock.
(d) Subject to the foregoing provisions and not otherwise, such
dividends (payable in cash, property or stock junior to the
Preferred Stock) as may be determined by the board of directors may be
declared and paid on the shares of any stock junior to the Preferred
Stock from time to time, and in the event of the declaration and
payment of any such dividends, the holders of such junior stock shall
be entitled, to the exclusion of holders of the Preferred Stock, to
share ratably therein according to their respective interests.
(e) Dividends in full shall not be declared or paid or set apart
for payment on any series of Preferred Stock unless there shall
be no arrearages in dividends on Preferred Stock for any past
quarterly dividend period and dividends in full for the current
quarterly dividend period shall have been paid or declared on all
Preferred Stock to the extent that such dividends are cumulative and
any dividends paid or declared when dividends are not so paid or
declared in full shall be shared ratably by the holders of all series
of Preferred Stock in proportion to such respective arrearages and
unpaid and undeclared current quarterly cumulative dividends.
38
5
2.4 Liquidation rights.
(a) In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, the holders of Preferred
Stock of each series shall be entitled to receive the full preferential
amount fixed by the certificate of incorporation or any amendment
thereto, or by the resolutions of the board of directors providing for
the issue of such series, including any arrearages in dividends thereon
to the date fixed for the payment in liquidation, before any distribution
shall be made to the holders of any stock junior to the Preferred Stock.
After such payment in full to the holders of the Preferred Stock, the
remaining assets of the corporation shall then be distributed exclusively
among the holders of any stock junior to the Preferred Stock, according
to their respective interests.
(b) If the assets of the corporation are insufficient to permit the payment
of the full preferential amounts payable to the holders of the Preferred
Stock of the respective series in the event of a liquidation, dissolution
or winding up, then the assets available for distribution to holders of
the Preferred Stock shall be distributed ratably to such holders in
proportion to the full preferential amounts payable on shares.
(c) A consolidation or merger of the corporation with or into one or more
other corporations or a sale of all or substantially all of the assets of
the corporation shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary.
2.5 Redemption.
(a) The corporation may, at the option of the board of directors, redeem the
whole or any part of the Preferred Stock, or of any series thereof, at
any time or from time to time within the period during which such stock
is by its terms redeemable at the option of the board of directors, by
paying such redemption price thereof as shall have been fixed by the
certificate of incorporation or any amendment thereto or by the
resolutions of the board of directors providing for the issue of the
Preferred Stock to be redeemed, including an amount in the case of each
share so to be redeemed equal to any arrearages in dividends thereon to
the date fixed for redemption (the total amount so to be paid being
hereinafter called the "redemption price").
(b) Unless expressly provided otherwise in the certificate of incorporation
or any amendment thereto or by the resolutions of the board of directors
providing for the issue of the Preferred Stock to be redeemed, (i) notice
of each such redemption shall be mailed not less than thirty days nor
more than ninety days prior to the date fixed for redemption to each
holder of record of shares of the Preferred Stock to be redeemed, at his
address as the same may appear on the books of the corporation, and (ii)
in case of a redemption of a part only of any series of the Preferred
Stock, the shares of such series to be redeemed shall be selected pro
rata or by lot or in such other manner as the board of directors may
determine. The board of directors shall have full power and authority,
subject to the limitations and provisions contained in the certificate of
incorporation or any amendment thereto or in the resolutions of the board
of directors providing for the issue of the Preferred Stock to be
redeemed, to prescribe the manner in which and the terms and conditions
upon which the Preferred Stock may be redeemed from time to time.
(c) If any such notice of redemption shall have been duly given, then on and
after the redemption date fixed in such notice of redemption (unless
default shall be made by the corporation in the payment or deposit of the
redemption price pursuant to such notice) all arrearages in dividends, if
any, on the shares of Preferred Stock so called for redemption shall
cease to accumulate, and on such date all rights of the holders
corporation forthwith.
39
6
The corporation shall be entitled to receive from the depositary,
from time to time, the interest, if any, allowed on such funds
deposited with it, and the holders of the shares so redeemed shall
have no claim to any such interest. Any funds so deposited and
remaining unclaimed at the end of six years from the redemption date
shall, if thereafter requested by the board of directors, be repaid
to the corporation.
(e) Shares of Preferred Stock of any series may also be subject to
redemption, in the manner hereinabove prescribed under this Section
2.5, through operation of any sinking or retirement fund created
therefor, at the redemption prices and under the terms and provisions
contained in the certificate of incorporation or any amendment
thereto or resolutions of the board of directors providing for the
issue of such series.
(f) The corporation shall not be required to register a transfer of any
share of Preferred Stock (i) within fifteen days preceding a
selection for redemption of shares of the series of Preferred Stock
of which such share is a part or (ii) which has been selected for
redemption.
(g) If any obligation to retire shares of Preferred Stock is not paid in
full on all series as to which such obligation exists, the number of
shares of each such series to be retired pursuant to any such
obligation shall be in proportion to the respective amounts which
would be payable if all amounts payable for the retirement of all
such series were discharged in full.
2.6 Status of Preferred Stock purchased, redeemed or converted. Shares
of Preferred Stock purchased, redeemed or converted into or exchanged
for shares of any other class or series shall be deemed to be
authorized but unissued shares of Preferred Stock undesignated as to
series.
3. Other Provisions
3.1 Authority for issuance of shares. The board of directors shall have
authority to authorize the issuance, from time to time without any
vote or other action by the stockholders, of any or all shares of
stock of the corporation of any class at any time authorized, and any
securities convertible into or exchangeable for any such shares, in
each case to such persons and for such consideration and on such
terms as the board of directors from time to time in its discretion
lawfully may determine; provided, however, that the consideration for
the issuance of shares of stock of the corporation having par value
shall not be less than such par value. Shares so issued, for which
the consideration has been paid to the corporation, shall be full
paid stock, and the holders of such stock shall not be liable to any
further call or assessments thereon.
3.2 No preemptive rights. No holder of shares of any class of the
corporation nor of any security or obligation convertible into, nor
of any warrant, option or right to purchase, subscribe for or
otherwise acquire, shares of any class of the corporation, whether
now or hereafter authorized, shall, as such holder, have any
preemptive right whatsoever to purchase, subscribe for or otherwise
acquire, shares of any class of the corporation or any security
convertible into, or any warrant, option or right to purchase,
subscribe for or otherwise acquire, shares of any class of the
corporation, whether now or hereafter authorized.
3.3 Abandonment of dividends and distributions. Anything herein
contained to the contrary notwithstanding, any and all right, title,
interest and claim in and to any dividends declared, or other
distributions made, by the corporation, whether in cash, stock or
otherwise, which are unclaimed by the stockholder entitled thereto
for a period of six years after the close of business on the payment
date, shall be and be deemed to be extinguished
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and abandoned; and such unclaimed dividends or other distributions in
the possession of the corporation, its transfer agents or other
agents or depositories, shall at such time become the absolute
property of the corporation, free and clear of any and all claims of
any persons whatsoever.
3.4 Record date. The board of directors may set a record date in the
manner and for the purposes authorized in the bylaws of the
corporation, with respect to shares of stock of the corporation of
any class or series.
3.5 Certain amendments. Except as otherwise provided in the certificate
of incorporation or any amendment thereto or resolutions of the board
of directors providing for the issue of any series of Preferred
Stock, the number of authorized shares of any class or classes of
stock of the corporation may be increased or decreased by the
affirmative vote of the holders of a majority of the stock of the
corporation entitled to vote.
FIFTH: The original bylaws of the corporation shall be adopted by the
incorporator. Thereafter, in furtherance and not in limitation of the
powers conferred by statute, the board of directors is expressly
authorized to make, alter or repeal the bylaws of the corporation
(subject to the terms of Article Ninth).
SIXTH. Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the corporation
may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the
bylaws of the corporation. Elections of directors need not be by
written ballot unless the bylaws of the corporations shall so
provide.
SEVENTH. (a) No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after April 28, 1987 to further
limit or eliminate liability of the corporation's directors for
breach of fiduciary duty, then a director of the corporation shall
not be liable for any such breach to the fullest extent permitted by
the Delaware General Corporation Law as so amended. If the Delaware
General Corporation Law is amended after April 28, 1987 to increase
or expand liability of the corporation's directors for breach of
fiduciary duty or if the foregoing provisions of this paragraph (a)
are modified or repealed by the stockholders of the corporation, no
such amendment, modification or repeal shall apply to or have any
effect on the liability or alleged liability of any director of the
corporation for or with respect to any acts or omissions of such
director occurring prior to the time of such amendment, modification
or repeal or otherwise adversely affect any right or protection of a
director of the corporation existing at the time of such amendment,
modification or repeal.
(b) Each natural person (hereinafter referred to as a "Covered
Person") who was or is a party or is threatened to be made a party to
or is otherwise Involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter referred to
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as a "Proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the heir, executor, administrator or legal
representative, is or was a director or officer of the corporation or
is or was serving at the request of the corporation as a director,
officer or trustee of or in a comparable capacity with respect to any
other corporation, partnership, joint venture, trust or other,
enterprise (including, without limitation, service with respect to
any employee benefit plan), shall be indemnified by the corporation
to the fullest extent authorized by the Delaware General Corporation
Law as it may exist from time to time; provided, however, except as
otherwise expressly provided in any indemnification agreement between
the corporation and such Covered Person, that the corporation shall
indemnify any Covered Person seeking indemnity in connection with a
Proceeding (or part thereof) initiated by such Covered Person only if
such Proceeding (or such part thereof) was authorized by the Board of
Directors of the corporation. The right of a Covered Person to
indemnification conferred by the first sentence of this paragraph (b)
shall be a contract right and shall include the right to have the
expense incurred by such Covered Person in connection with any such
Proceeding paid by the corporation as incurred and in advance of its
final disposition, provided, however, that if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a
Covered Person in advance of the final disposition of a Proceeding
shall be made by the corporation only upon delivery to the
corporation of an undertaking, by or on behalf of such Covered
Person, to repay to the corporation all amounts so advanced if it
shall ultimately be determined that such Covered Person is not
entitled to such indemnification under this paragraph (b) or
otherwise. Any person who at any time shall serve, or shall have
served, as an employee or an agent of the corporation or of any other
enterprise at the request of the corporation (and any heir, executor,
administrator or legal representative of any such person), other than
in a capacity covered by the first sentence of this paragraph (b),
may be similarly indemnified in the specific case at the discretion
of the board of directors of the corporation.
(c) The right to indemnification (including without limitation the
payment of expenses in advance of the final disposition of any
Proceeding) conferred on any natural person by paragraph (b) of this
Article shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of this
Certificate of Incorporation, bylaw, agreement, vote of stockholders
or disinterested directors or otherwise. Without limiting the
generality of the foregoing the corporation is specifically
authorized to enter into an indemnification agreement with any such
person.
(d) The corporation may maintain insurance, at its expense, to
protect itself and any natural person serving as a director, officer,
employee or agent of this corporation or, at the request of the
corporation, of another corporation, partnership, joint venture,
trust or other enterprise (including without limitation any trustee
or person serving in a similar capacity with respect to any employee
benefit plan) against any and 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) asserted against it or him or her and incurred by it or
him or her in any such capacity, or arising out of his or her status
as such, whether or not the corporation would have the power to
indemnify such person against such expense, liability and loss under
the Delaware General Corporation Law.
EIGHTH: The corporation reserves the right (subject to the terms of Article
Fourteenth) to amend, alter, change or repeal any provision contained
in this certificate of incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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NINTH. The number of directors which shall constitute the whole board of
directors of the corporation shall be the number from time to time
fixed by the bylaws of the corporation, and such number of directors
so fixed in such bylaws may be changed only upon the affirmative vote
of (i) the holders of at least 80% of all the securities of the
corporation then entitled to vote on such change or (ii) two-thirds
of the directors in the office at the time of the vote. The
directors shall be divided into three classes: Class I, Class II,
and Class III. Such classes shall be as nearly equal in number as
possible. The term of office of the initial Class I directors shall
expire at the annual meeting of stockholders in 1984; the term of
office of the Initial Class II directors shall expire at the annual
meeting of stockholders in 1985; and the term of office of the
initial Class III directors shall expire at the annual meeting of
stockholders in 1983, or thereafter in each case when their
respective successors are elected and qualified. At each annual
election, the directors chosen to succeed those whose terms have
expired shall be identified as being of the same class as the
directors whom they succeed and shall be elected for a term expiring
at the third succeeding annual meeting of stockholders or thereafter
in each case when their respective successors are elected and
qualified. When the number of directors is changed, any increase or
decrease in the number of directors shall be apportioned among the
classes so as to make all classes as nearly equal in number as
possible.
TENTH. (a) For the purposes of this Article Tenth and Article Eleventh: (i)
the term "Person" shall include any individual, corporation,
partnership, trust, unincorporated organization or other entity, any
syndicate or group or any two or more of the foregoing that have any
agreement or understanding (or, with or without an agreement or
understanding, act in concert) with respect to acquiring, holding,
voting or disposing of securities of the corporation, and shall
include also any "affiliate" or "associate" (as those terms are
defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on January 1, 1982) of
any Person, (ii) any Person shall be deemed to be the beneficial
owner of any securities of the corporation which such Person has the
right to acquire pursuant to any agreement or upon exercise of
conversion rights, warrants or options, or otherwise; (iii) the term
"Substantial Part" shall mean any assets having a then fair market
value, in the aggregate, of more than $5,000,000; (iv) the term
"Subsidiary" shall mean any corporation in which the corporation
owns, directly or indirectly, more than 50% of the voting securities;
(v) the term "Business Combination" shall mean any merger or
consolidation of the corporation with or into any other corporation,
or the sale or lease of all or any Substantial Part of the assets of
the corporation to, or any sale or lease to the corporation or any
Subsidiary in exchange for securities of the corporation of any
Substantial Part of the assets of, any Person; and (vi) the
outstanding securities of any class of the corporation shall include
securities deemed owned through application of the preceding clauses
of this paragraph (a) of this Article Tenth, but shall not include
any other securities which may be issuable pursuant to any agreement
or upon exercise of conversion rights, warrants or options, or
otherwise.
(b) Except as set forth in paragraph (c) of this Article Tenth, the
affirmative vote of the holders of at least 80% of all of the
securities of the corporation then entitled to vote at a meeting of
stockholders, considered for the purposes of this Article Tenth as
one class, shall be necessary for the adoption or authorization of
any Business Combination with any Person if, as of the record date
for the determination of security holders entitled to notice thereof
and to vote thereon, such Person is the beneficial owner, directly or
indirectly, of more than 10% of the outstanding securities of the
corporation then entitled to vote at a meeting of stockholders,
considered for the
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purposes of this Article Tenth as one class. The foregoing vote
shall be in lieu of any lesser lieu of any lesser vote of the holders
of the voting securities of the corporation voting as one class
otherwise required by law or by agreement, but shall be in addition
to any class vote or other vote otherwise required by law, this
certificate of incorporation or any agreement to which party.
(c) The provisions of this Article Tenth shall not be applicable to
(i) any Business Combination on terms and conditions substantially
consistent with those set forth in a memorandum of understanding with
the Person who is a party to such Business Combination approved by
resolution of the board of directors of the corporation prior to the
time that such Person shall have become a holder of more than 10% of
the outstanding securities of the corporation then entitled to vote
at a meeting of stockholders, or (ii) any Business Combination
between any Person and the corporation or any Subsidiary thereof if a
majority of the outstanding shares of all classes of stock then
entitled to vote at a meeting of stockholders of such Person is owned
by the corporation and its Subsidiaries.
ELEVENTH. (a) For the purposes of this Article Eleventh, the definitions set
forth in paragraph (a) of Article Tenth, as the same was in effect at
the time of its adoption, shall apply.
(b) Except as set forth in paragraph (c) of this Article Eleventh,
the affirmative vote of the holders of at least 95% of all of the
securities of the corporation then entitled to vote at a meeting of
stockholders, considered for the purposes of this Article Eleventh as
one class, shall be necessary for the adoption or authorization of
any Business Combination with any Person if, as of the record date
for the determination of security holders entitled to notice thereof
and to vote thereon, such Person is the beneficial owner, directly or
indirectly, of more than 30% of the outstanding securities of the
corporation then entitled to vote at a meeting of stockholders,
considered for the purposes of this Article Eleventh as one class,
unless the cash, or fair market value or other consideration, to be
received by the holders of common stock of the corporation other than
such Person, or by the corporation on account of such holders, per
share of such common stock owned by such holders, is not less than
the highest price per share (including brokerage commissions and
soliciting dealers' fees, or both) paid by such Person in acquiring
any of its holdings of common stock of the corporation. The term
"other consideration to be received" shall mean common stock of the
corporation retained by its existing public stockholders in the event
of a merger with such Person in which the corporation is the
surviving corporation. The foregoing vote shall be in lieu of any
lesser vote of the holders of the voting securities of the
corporation voting as one class otherwise required by law or by
agreement, but shall be in addition to any class vote or other vote
otherwise required by law, this certificate of incorporation
(including Article Tenth) or any agreement to which the corporation
is a party.
(c) The provisions of this Article Eleventh shall not be applicable
to (i) any Business Combination on terms and conditions substantially
consistent with those set forth in a memorandum of understanding with
the Person who is a party to such Business Combination approved by
resolution of the board of directors of the corporation prior to the
time that such Person shall have become a holder of more than 10% of
the outstanding securities of the corporation then entitled to vote
at a meeting of stockholders, or (ii) any Business Combination
between any Person and the corporation or any Subsidiary thereof if a
majority of the outstanding shares of all classes of stock then
entitled to vote at a meeting of stockholders of such Person is owned
by the corporation and its Subsidiaries.
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TWELFTH. The corporation may voluntarily liquidate and dissolve only if the
proposed liquidation and dissolution is approved by the affirmative
vote of the holders of at least 80% of all of the securities of the
corporation then entitled to vote at a meeting of stockholders,
considered for the purposes of this lieu of any lesser vote of the
holders of the voting securities of the corporation voting as one
class otherwise required by law or by agreement, but shall be in
addition to any class vote or other vote otherwise incorporation or
any party.
THIRTEENTH. No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the corporation may be taken
without a meeting. The foregoing provision shall not apply to
consents or approvals which any provision of the certificate of
incorporation specifically authorizes to be evidenced by a writing
without a meeting.
FOURTEENTH. No amendment to this certificate of incorporation shall amend,
alter, change or repeal any of the provisions of Article Ninth,
Article Thirteenth, or this Article Fourteenth, unless the amendment
effecting such amendment, alteration, change or repeal shall have
received the affirmative vote of the holders of at least 80% of all
of the securities of the corporation then entitled to vote on such
amendment, alteration, change or repeal, considered as one class.
The foregoing vote shall be in lieu of any lesser vote of the
holders of the voting securities of the corporation voting as one
class otherwise required by law or by agreement, but shall be in
addition to any class vote or other vote otherwise required
certificate of incorporation or any agreement corporation is a
party.
IN WITNESS WHEREOF, we have signed this certificate and caused the
corporate seal of the Corporation to be hereunto affixed this 14th day of
December, 1995.
__________________________
Elliott C. Robbins
Senior Vice President
ATTEST:
________________________
Byron D. Nelson
Secretary
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EXHIBIT 3.2
BYLAWS
OF
MYR GROUP INC..
OFFICES
Section 1. Registered Office in Delaware. The registered office of the
corporation in the State of Delaware shall be in the City of
Wilmington, County of New Castle.
Section 2. 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.
MEETINGS OF STOCKHOLDERS
Section 3. Place. All meetings of the stockholders for the election of
directors shall be held in Chicago, Illinois, at such place as may
be fixed from time to time by the board of directors or at such
other place either within or without the State of Delaware as shall
be designated from time to time by the board of directors and stated
in the notice of the meeting. Meetings of stockholders for any
other purpose may be held at such time and place, within or without
duly executed waiver of notice thereof.
Section 4. Time and Purpose of Annual Meeting. Annual meetings of
stockholders, commencing with the year 1989, shall be held on the
last Tuesday in April, if not a legal holiday; and if a legal
holiday, then on the next succeeding business day, at 2:00 PM, or at
such other date and time as shall be designated from time to time by
resolution adopted by a vote of two-thirds of all the directors then
in office and stated in the notice of the meeting, at which, subject
to the provisions of the certificate of incorporation, they shall
elect directors by a plurality of the votes cast and transact such
other business as may properly be brought before the meeting.
Elections of directors may be by voice vote, rather than by written
ballot, unless by resolution adopted by the majority vote of the
stockholders represented at the meeting, the election of directors
by written ballot is required.
To be properly brought before a meeting of the stockholders,
business must be specified in the notice of meeting (or any
supplement thereto) given by, or at the direction of, the board of
directors or otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before a meeting
by a stockholder, the stockholder must have given timely notice of
the business to the corporate secretary. To be timely, a
stockholder's notice must be in writing delivered to or mailed,
postage prepaid, and received by the corporate secretary not less
than 45 days nor more than 60 days prior to the meeting; provided,
however, that if less than 50 days' notice or prior public
disclosure of the date of the meeting
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is given to stockholders, notice by the stockholder to be timely
must be received by the corporate secretary not later than the close
of business on the 7th day following the day on which notice of the
date of the meeting was mailed or public disclosure was made. For
each matter the stockholder proposes to bring before the meeting,
the notice to the corporate secretary shall include (i) a brief
description of the business desired to be brought before the meeting
and the reasons for conducting the business at the meeting, (ii) the
name and record address of the stockholder proposing the business,
(iii) the class and number of shares of the corporation which are
beneficially owned by the stockholder and (iv) any material interest
of the stockholder in such business.
Notwithstanding anything in these bylaws to the contrary, no
business shall be conducted at the meeting except in accordance with
the procedures set forth in this Section 4.
The chairman of a meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before
the meeting in accordance with the provisions of this Section 4. If
the chairman determines that business was not properly brought
before the meeting, the business shall not be transacted.
This Section 4 may be amended by the board of directors so as to
change the provisions of the first sentence hereof with respect to
the date of the annual meeting only by resolution adopted by a vote
of two-thirds of all of the directors then in office.
Section 5. Notice of Annual Meeting. Written notice of the annual meeting
stating the place, date, and hour of the meeting shall be given to
each stockholder entitled to vote at such meeting not less than ten
nor more than sixty days (or in case a vote of stockholders on a
merger or consolidation is one of the stated purposes of the annual
meeting, not less than twenty nor more than sixty days) before the
date of the meeting.
Section 6. List of Stockholders. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list arranged in
alphabetical order of the stockholders entitled to vote at the
meeting and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder during ordinary
business hours for any purpose germane to the meeting for a period
of at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at
the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder who is
present.
Section 7. Calling of Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute
or by the certificate of incorporation, may be called by the chief
executive officer and shall be called by the president or secretary
at the request in writing of a majority of the board of directors.
Such request shall state the purpose or purposes of the proposed
meeting.
Section 8. Notice of Special Meeting. Written notice of a special meeting
stating the place, date, and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less
than ten nor more than sixty days (or in case a vote of stockholders
on a merger or consolidation is one of the stated purposes of the
meeting, not less than twenty nor more than sixty days) before the
date of the meeting to each stockholder entitled to vote at such
meeting.
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Section 9. Business at Special Meeting. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in
the notice.
Section 10. Quorum. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise
provided by statute, by the certificate of incorporation or by these
bylaws. If, how-ever, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy,
shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until 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 notified. If the adjournment is for more than thirty
days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the meeting.
Section 11. Required Vote. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power, present
in person or represented by proxy, shall decide any question brought
before such meeting, unless the question is one upon which, by
express provision of the statutes or of the certificate of
incorporation or of these bylaws, a different vote is required in
which case such express provision shall govern and control the
decision of such question.
Section 12. Voting of Shares. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each
share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted or acted upon after three
years from its date unless the proxy provides for a longer period.
BOARD OF DIRECTORS
Section 13. Number, Election, and Tenure. The number of directors which shall
constitute the whole board of directors shall be five. Subject to
the provisions of the certificate of incorporation, the directors
shall be elected at the annual meeting of the stockholders, except
as provided in Section 14 of these bylaws, and each director elected
shall hold office until his successor is elected and qualified or
until his earlier death, resignation, or removal. Any director may
resign at any time upon written notice to the corporation.
Directors need not be stockholders.
Nominations for election to the board of directors of the
corporation at a meeting of stockholders may be made by the board or
on behalf of the board, by any nominating committee appointed by
that board, or by any stockholder of the corporation entitled to
vote for the election of directors at the meeting. Nominations,
other than those made by or on behalf of the board, shall be made by
notice in writing delivered to or mailed, postage prepaid, and
received by the corporate secretary not less than 45 days nor more
than 60 days prior to any meeting of stockholders called for the
election of directors; provided, however, that if less than 50 days'
notice or prior public disclosure of the date of the meeting is
given to stockholders, the nomination must be received by the
corporate secretary not later than the close of business on the 7th
day following the day on which the notice of meeting was mailed.
The notice shall set forth: (i) the name and address of the
stockholder who intends to make the nomination; (ii) the name, age,
business
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address and, if known, residence address of each nominee; (iii) the
principal occupation or employment of each nominee; (iv) the number
of shares of stock of the corporation which are beneficially owned
by each nominee and by the nominating stockholder; (v) a description
of all arrangements or understandings between the nominating
stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or
nominations are to be made; (vi) any other information concerning
the nominee that must be disclosed of nominees in proxy
solicitations pursuant to Regulation 14A of the Securities Exchange
Act of 1934; and (vii) the executed consent of each nominee to serve
as a director of the corporation if elected.
Except for the Chairman of and Chief Executive Officer of the
Company, any director who is or has been an employee of the Company
shall be required to retire from the Board of Directors as of the
annual meeting of stockholders next following such director's
sixty-fifth (65th) birthday. Non-employee directors and the Chairman
and Chief Executive Officer of the Company shall be required to
retire from the Board of Directors at the end of the term during
which such director reaches seventy (70) age. No nomination for
election as director shall be accepted if such nominee is seventy
(70) years of age or older at the commencement of the term of such
directorship.
The chairman of the meeting of stockholders may, if the facts
warrant, determine that a nomination was not made in accordance with
the foregoing procedures, and if the chairman should so determine,
the chairman shall so declare to the meeting and the defective
nomination shall be disregarded.
Section 14. Filling of Vacancies and Newly Created Directorships. Vacancies and
newly created directorships resulting from any increase in the
authorized number of directors may be filled by the stockholders or
by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and each director so chosen
shall hold office until the expiration of the term or office of the
directors of the class to which such director was elected and until
his successor is elected and qualified or until his earlier death,
resignation, or removal.
Section 15. General Powers. The business of the corporation shall be managed by
its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these bylaws
directed or required to be exercised or done by the stockholders.
Section 16. Place of Meetings. The board of directors of the corporation may
hold meetings, both regular and special, either within or without
the State of Delaware.
Section 17. Annual Meeting. An annual meeting of the board of directors shall
be held without other notice than by this bylaw immediately after
and at the same place as the annual meeting of stockholders. In the
event of the failure to hold such a meeting at such time and place,
a meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of
the board of directors or as shall be specified in a written waiver
signed by all of the directors.
Section 18. Regular Meetings. In addition to the annual meeting of the board of
directors, regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to
time be determined by the board of directors.
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Section 19. Special Meetings. Special meetings of the board of directors may be
called by the chief executive officer on not less than twenty-four
hours' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or the
secretary in like manner and on like notice on the written request
of two directors.
Section 20. Quorum. At all meetings of the board of directors a majority of the
total number of directors then constituting the whole board of
directors shall constitute a quorum for the transaction of business,
and the vote of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the board of
directors except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall
not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time
without notice other than announcement at the meeting, until a
quorum shall be present.
Section 21. Action by Unanimous Written Consent. Unless otherwise restricted by
the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the board of
directors or of any committee thereof may be taken without a meeting
if all members of the board or committee, as the case may be,
consent to such action in writing and the writing or writings are
filed with the minutes of proceedings of the board or committee.
Section 22. Telephonic Participation. Unless otherwise restricted by the
certificate of incorporation or these bylaws, any member of the
board of directors or of any committee thereof designated by such
board may participate in a meeting of such board or committee by
means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear
each other, and participation in such meeting in such manner shall
constitute presence in person at such meeting.
Section 23. Compensation. The directors shall receive such compensation as may
be fixed from time to time by the board of directors which may
include reimbursement of their expenses, if any, incurred in
attending any meeting of the board of directors. No such payment
shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor. Members of
special or standing committees, may receive such compensation as
shall be fixed from time to time by the board of directors.
Section 24. Committees of Directors. The board of directors shall have an Audit
Committee and such other committees as the board may designate by
resolution passed by a majority of the whole board. Each committee
shall consist of at least two members of the board of directors, the
number and identity of such members to be designated by resolution
adopted by a majority of the whole board. Each such committee shall
have and may exercise the authority to carry-out the duties of the
committee, such duties to be established by resolution passed by a
majority of the whole board of directors. Except as otherwise
provided in the resolution establishing the committee and/or
designating the number and identity of its members, each member of a
committee shall serve until a successor has been designated or his
earlier death, resignation or removal. Except as otherwise provided
in the resolution establishing the committee and/or designating the
number and identity of its members, any vacancy in any committee may
be filled and any member of any committee may be removed by
resolution passed by a majority of the whole board of directors.
Section 25. Meetings of Committees. Regular meetings of any committee of the
board may be held without notice at such times and places as shall
from time to time be determined by the committee. Special meetings
of any committee may be called by
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any member thereof upon not less than twenty-four hours' notice
stating the place, date, and hour of the meeting, which notice may
be written or oral and if mailed, shall be deemed to be delivered
when deposited in the United States mail addressed to the members of
such committee at their business addressees. Such notice need not
state the business proposed to be transacted at the meeting.
A majority of the members of any committee shall constitute a quorum
for the transaction of business at any meeting thereof and action by
any committee must be authorized by the affirmative vote of a
majority of the members thereof present at a meeting at which a
quorum is present. If a quorum of regular or alternate members of
any committee is not present at a meeting of the committee, the
members thereof present at any meeting and not disqualified from
voting (provided there are at least two) may unanimously appoint
another member or members of the board of directors to act at the
meeting in the place of any such absent or disqualified member in
order to make a quorum; provided that at any such meeting, the
committee shall not revise or rescind any previous action of the
committee without the affirmative vote of a majority of the regular
members present.
Each committee shall have a chairman appointed by the board of
directors who shall preside at all meetings of such committee. Each
committee may fix its own rules of procedure which shall not be
inconsistent with these bylaws. Each committee shall keep regular
minutes of its meetings and report the same to the board of
directors when required.
NOTICES
Section 26. Method of Giving Notice. Whenever, under the provisions of any
statute or of the certificate of incorporation or of these bylaws,
notice is required to be given to any director or stockholder, it
shall not be construed to require personal notice, but such notice
may be given in writing, by mail, addressed to such director or
stockholder at his address as it appears on the records of the
corporation with postage thereon prepaid and such notice shall be
deemed to be given at the time when the same shall be deposited in
the United States mail. Notice to directors may also be given by
telegram and shall be deemed to be given at the time of delivery to
the telegraph company. Notice to any member of a committee of the
board of directors as such may be given orally.
Section 27. Waiver of Notice. Whenever any notice is required to be given under
the provisions of any statute or of the certificate of incorporation
or of these bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not
lawfully called or convened.
OFFICERS
Section 28. Officers of the Corporation. The officers of the corporation shall
consist of the following: a chairman of the board; a president; one
or more vice presidents (the number thereof to be determined by the
board of directors and any one or more who may be designated by the
board of directors as an executive vice president or a senior vice
president); a secretary; a treasurer; a controller; and such
assistant vice presidents, assistant secretaries, assistant
treasurers, and other officers as the
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board of directors, in its discretion, may elect. The board of
directors shall designate either the chairman of the board or the
president as the chief executive officer of the corporation.
Any two or more offices of the corporation may be held by the same
person. No officer other than the chairman of the board and the
president need be a director of the corporation.
Section 29. Other Agents of the Corporation. The board of directors may from
time to time appoint such other agents of the corporation as it
shall deem necessary or advisable who shall hold their positions for
such terms and shall exercise and perform such duties as shall be
determined from time to time by the board of directors.
Section 30. Election and Term of Office. The officers of the corporation shall
be elected annually by the board of directors at the first meeting
of the board of directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as
conveniently may be.
Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his earlier death,
resignation or removal. Any officer may resign at any time upon
written notice to the corporation.
Section 31. Removal. Any officer or agent may be removed at any time by the
affirmative vote of a majority of 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 32. Vacancies. A vacancy in any office occurring because of death,
resignation, removal, disqualification or otherwise, may be filled
by the board of directors for the unexpired portion of the term.
Section 33. Compensation. The compensation (including bonuses and similar
supplemental payments) of the officers of the corporation (other
than, in each case, assistant vice presidents, assistant
secretaries, and assistant treasurers) and the compensation of other
agents of the corporation appointed pursuant to Section 29 hereof
shall be fixed from time to time by the board of directors. No
officer shall be prevented from receiving such compensation from the
corporation by reason of the fact that he is also a director of the
corporation.
Section 34. Chief Executive Officer. The chief executive officer of the
corporation who shall be designated from time to time by the board
of directors and who shall be either the chairman of the board or
the president (as hereinabove provided) shall, in general, supervise
and control all of the business and affairs of the corporation and
shall see that all orders and resolutions of the board of directors
are carried out, subject to the control of the board of directors.
Section 35. Chairman of the Board. The chairman of the board shall preside at
all meetings of the board of directors and at all meetings of the
stockholders of the corporation, shall consult with the other
directors and officers of the corporation and shall perform such
other duties and have such other powers as from time to time may be
assigned to him by the board of directors, including, if he has been
so designated by the board of directors, those devolving upon the
chief executive officer. He may sign with the secretary or any
other officer of the corporation
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thereunto authorized by the board of directors, certificates for
shares of the corporation and deeds, mortgages, bonds, contracts, or
other instruments which the board of directors has authorized to be
executed, except in cases where the signing and execution thereof
shall be expressly delegated by the board of directors or by these
bylaws to some other officer or agent of the corporation or shall be
required by law to be otherwise signed or executed.
Section 36. President. The president shall, in the absence of the chairman of
the board, preside at all meetings of the board of directors and of
the stockholders of the corporation, shall consult with the other
directors and officers of the corporation and shall perform all
duties incident to the office or president and such other duties and
have such other powers as from time to time may be assigned to him
by the board of directors including, if he has been so designated by
the board of directors, those devolving upon the chief executive
officer. He may sign with the secretary or any other proper officer
of the corporation thereunto authorized by the board of directors,
certificates for shares of the corporation and deeds, mortgages,
bonds, contracts, or other instruments which the board of directors
has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the board of
directors or by these bylaws to some other officer or agent of the
corporation or shall be required by law to be otherwise signed or
executed.
Section 37. Vice Presidents. In the absence of the president, or in the event
of his death, inability or refusal to act, the vice president (or if
there be more than one, the executive vice presidents, senior vice
presidents or the vice presidents in the order designated by the
board of directors, or in the absence of such designation, then in
the order of their election or in the order named for election)
shall perform 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. Each vice president shall perform such other duties
and have such other powers as from time to time may be assigned to
him by the president or the board of directors.
Section 38. Secretary. The secretary shall: (a) keep the minutes of the
proceedings of the board of directors and of the stockholders in one
or more books provided for that purpose; (b) see that all notices
are duly given in accordance with the provisions of these bylaws or
as required by law; (c) be custodian of the corporate records and of
the seal of the corporation and see that the seal of the corporation
is affixed to all documents, the execution of which, on behalf of
the corporation under its seal, is duly authorized; (d) sign with
the chairman of the board, president, or a vice president,
certificates for shares of the corporation, the issuance of which
shall have been authorized by resolution of the board of directors;
(e) have general charge of the stock transfer books of the
corporation; and (f) in general, perform all duties incident to the
office of secretary and such other duties as from time to time may
be assigned to him by the chief executive officer or by the board of
directors.
Section 39. Treasurer. The treasurer shall: (a) have charge and custody of and
be responsible for all funds and securities of the corporation; (b)
receive and give receipts for moneys due and payable to the
corporation from any source whatsoever and deposit all such moneys
in the name and to the credit of the corporation in such banks,
trust companies or other depositories as shall be selected or
approved by the board of directors; (c) disburse the funds of the
corporation as directed by the board of directors; (d) keep full and
accurate accounts of all such receipts and disbursements of funds in
books belonging to the corporation; and (e) in general, perform all
of the duties incident to the office of treasurer and other such
duties as from time to time may be assigned to him by the chief
executive officer or by the board of directors. If required by the
board of directors, the treasurer shall give a
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bond for the faithful discharge of his duties in such sum and with
such surety or sureties as the board of directors shall determine.
Section 40. Controller. The controller shall be the principal officer in charge
of the accounts of the corporation, and he shall perform such duties
as from time to time may be assigned to him by the chief executive
officer or the board of directors.
Section 41. Assistant Secretaries and Assistant Treasurers. The assistant
secretaries, when authorized by the board of directors, may sign
with the chairman of the board, president or a vice president
certificates for shares of the corporation the issuance of which
shall have been authorized by a resolution of the board of
directors. The assistant treasurers shall respectively, if required
by the board of directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the board of
directors shall determine. The assistant secretaries and assistant
treasurers, in general, shall perform such duties as shall be
assigned to them by the secretary or the treasurer, respectively, or
by the chief executive officer or the board of directors.
STOCK CERTIFICATES AND THEIR TRANSFER
Section 42. Stock Certificates. Every holder of stock in the corporation shall
be entitled to have a certificate, signed in the name of the
corporation by the chairman of the board, the president or a vice
president and by the secretary or assistant secretary, or the
treasurer or assistant treasurer of the corporation, certifying the
number of shares owned by him in the corporation and sealed with the
seal or a facsimile of the seal of the corporation. Any of or all
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 he were such officer, transfer agent or registrar
at the date of issue.
Section 43. Transfers of Stock. Upon surrender to any transfer agent of the
corporation of a certificate for shares of the corporation 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 44. Lost Certificates. The board of directors may authorize the
issuance of a new certificate or certificates in lieu of any
certificate or certificates theretofore issued by the corporation
alleged by the holder thereof to have been lost, stolen, or
destroyed, upon compliance by such holder, or his legal
representatives, with such requirements as the board of directors
may impose or authorize. Such authorization by the board of
directors may be general or confined to specific instances.
GENERAL PROVISIONS
Section 45. Fixing Record Date. In order that the corporation may determine the
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 other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other
lawful
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action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
Section 46. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends and to vote as such owner
and to hold liable such person for calls and assessments. The
corporation 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 Delaware.
Section 47. Voting and Transfer of Stock in Other Corporations. The board of
directors may by resolution designate an officer or any other person
to act for the corporation and vote its shares in any company in
which it may own or hold stock and may direct in what manner, and
for or against what propositions and in case of elections for whom
its vote shall be cast. In case, however, the board of directors
has not taken express action, the chairman of the board, the
president, any vice president, the treasurer, or the secretary may
act for this corporation on all stockholder matters connected with
any such company, including voting the shares owned or held by this
corporation and executing and delivering proxies, waivers, and
stockholder consents. Certificates of stock owned by this
corporation in any other company may be endorsed for transfer by any
one of the above-listed officers.
Section 48. Payments of Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of
incorporation, if any, may be declared by the board of directors at
any regular or special meeting pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 49. Reserves. Before payment of any dividend, there may be set aside,
out of any funds of the corporation available for dividends, such
sum or sums as the directors from time to time in their absolute
discretion think proper as a reserve or reserves to meet
contingencies or for equalizing dividends or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Section 50. Checks. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers or
such other person or persons as the board of directors may from time
to time designate.
Section 51. Fiscal Year. The fiscal year of the corporation shall begin on the
first day of January in each year unless otherwise fixed by
resolution of the board of directors.
Section 52. Seal. The corporate seal shall have inscribed thereon the name of
the corporation and the words "Corporate Seal, Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 53. Amendments to Bylaws. Subject to the provisions of the certificate
of incorporation, these bylaws may be altered, amended or repealed
or new bylaws may be adopted by the stockholders or by the board of
directors at any regular meeting of the stockholders or of the board
of directors or at any special meeting of
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the stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new bylaws be contained
in the notice of such special meeting.
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EXHIBIT 10.7
THE L. E. MYERS CO. GROUP
1995 STOCK OPTION PLAN
1. STATEMENT OF PURPOSE. The purpose of this Stock Option Plan (the "Plan")
is to benefit The L. E. Myers Co. Group (the "Company") and its
subsidiaries through the maintenance and development of management by
offering certain present and future key individuals a favorable
opportunity to become holders of stock in the Company over a period of
years, thereby giving them a permanent stake in the growth and prosperity
of the Company and encouraging them to continue their involvement with
the Company or its subsidiaries.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") of the Board of Directors of the Company (the "Board"),
consisting of not less than two members of the Board who are not
employees or officers of the Company or any of its subsidiaries. Each
member of the Committee shall be appointed from time to time by the Board
and shall serve at the pleasure of the Board. Only "disinterested
persons", as such term is defined in Section 16b-3(c)(2)(i) of the
Securities Exchange Act of 1934 (as amended), shall serve as members of
the Committee. The Board of Directors may from time to time, create a
management subcommittee consisting of officers of the Company, and
delegate to such subcommittee the authority to grant options to
non-officer employees of the Company subject to subsequent ratification
of the grants by the Committee.
Subject to the terms of the Plan, the Committee shall have the authority,
in its sole discretion, (a) to determine the individuals to whom options
are granted under the Plan; (b) to determine the number of shares subject
to each option; (c) to determine the exercise price per share of each
option (subject to Section 5 of the Plan); (d) to determine the time or
times when options are granted; (d) to determine the time or times when,
or conditions upon which, each option becomes exercisable; (e) to
accelerate the exercisability of any option granted pursuant to the Plan
including with respect to options held by employees whose employment has
been terminated by reason of death, permanent disability or retirement;
(f) to determine the term of each option (subject to Section 6 of the
Plan); (g) to prescribe the form or forms of agreements which evidence
options granted under the Plan; and (h) to interpret the Plan and to
adopt rules or regulations (consistent with the terms of the Plan) which,
in the Committee's opinion, may be necessary or advisable for the
administration of the Plan. Any action taken or decision made by the
Committee in connection with the administration and interpretation of the
Plan shall, to the extent permitted by law, be conclusive and binding
upon grantees of options under the Plan, including any transferee or
assignee of any option granted under the Plan or any person claiming
rights under or through such optionee.
3. ELIGIBILITY. Options may be granted to key employees of the Company and
its subsidiaries selected initially and from time to time thereafter by
the Committee in its sole discretion on the basis of their importance to
the business of the Company or its subsidiaries.
4. GRANTING OF OPTIONS. Options may be granted under the Plan under which a
total of not in excess of 300,000 shares of common stock of the Company,
$1.00 par value, ("Common Stock") may be purchased from the Company,
subject to adjustment as provided in Section 10. Options granted under
the Plan will not be treated as incentive stock options as defined in
Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code")
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In the event that an option expires or is terminated or canceled
unexercised as to any shares, such released shares may be made the
subject of options granted hereunder (including without limitation
options granted in substitution for canceled options). Shares subject to
options may be made available from unissued or reacquired shares of
Common Stock.
5. OPTION EXERCISE PRICE. The option exercise price of each option shall be
determined by the Committee and, subject to the provisions of Section 10
hereof, shall be not less than 100% of the fair market value, at the time
the option is granted, of the shares of Common Stock subject to the
option. Any determination of the fair market value or of the method of
computing fair market value of a share of Common Stock made by the
Committee pursuant to any provision of this Plan shall be final, binding
and conclusive on all parties.
6. DURATION OF OPTIONS, INCREMENTS, AND EXTENSIONS. (a) Subject to the
provisions of Paragraph 8, each option shall be for a term of not more
than ten years as shall be determined by the Committee at the date of the
grant. The Committee shall have the authority to determine with respect
to each option the time or times at which, or the conditions upon which,
any option, or portions thereof, shall become exercisable.
(b) The Committee, in its discretion, may accelerate the exercisability
of all or any portion of any option; or (ii) at any time prior to the
expiration or termination of any option previously granted, extend the
term of any option for such additional period as the Committee in its
discretion shall determine, except that the aggregate term of any such
option, including the original term of the option and any extensions
thereof, shall in no event exceed ten years from the date of the original
grant.
7. EXERCISE OF OPTIONS. (a) An option may be exercised by giving written
notice to the Company, attention of the Secretary, specifying the number
of shares to be purchased, accompanied by the full purchase price for the
shares to be purchased in cash or by check, except that the Committee may
permit, in its discretion, the purchase price to be paid in any other
manner, including but not limited to, payment, in whole or in part, by
the delivery to the Company of shares of Common Stock in such manner as
the Committee may specify. Shares of the Common Stock delivered upon
exercise of an option shall be valued at their fair market value as of
the close of business on the date preceding the date of exercise as
determined by the Committee.
(b) At the time of any exercise of any option, the Company may, if it
shall determine it necessary or desirable for any reason, require the
optionee (or his heirs, legatees, or legal representative, as the case
may be) as a condition upon the exercise thereof, to deliver to the
Company a written representation of present intention to purchase the
shares for investment and not for distribution. In the event such
representation is required to be delivered, an appropriate legend may be
placed upon each certificate delivered to the optionee upon his exercise
of part or all of the option and a stop transfer order may be placed with
the transfer agent.
(c) Each option shall also be subject to the requirement that, if at any
time the Company determines, in its discretion, that the listing,
registration or qualification of the shares subject to the option upon
any securities exchange or under any state or federal law or approval of
any regulatory body is necessary or desirable as a condition of or in
connection with, the issue or purchase of shares thereunder, the option
may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Company.
(d) At the time of the exercise of any option, the Company may require,
as a condition of the exercise of such option, that the optionee pay to
the Company, in such manner and under such conditions as the Committee
may specify, an amount equal to the amount of
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the tax the Company may be required to withhold as a result of the
exercise of such option by the optionee.
8. EXERCISE AFTER TERMINATION OF EMPLOYMENT. (a) Any optionee whose
employment is terminated for any reason other than death, permanent
disability, or retirement may exercise his or her option to the extent
exercisable at the date of such termination at any time during its
specified term prior to the 90th day after the date of such termination,
provided, however, that if the optionee's employment is terminated for
cause such optionee's option shall expire and all rights to purchase
shares pursuant thereto shall terminate immediately. Temporary absence
from employment because of illness, vacation, approved leaves of absence,
and transfers of employment among the Company and its subsidiaries, shall
not be considered to terminate employment or to interrupt continuous
employment.
(b) In the event of termination of employment because of death, permanent
disability (as that term is defined in Section 22(e)(3) of the Code, as
now in effect or as subsequently amended) or retirement (as hereinafter
defined), the option may be exercised to the extent exercisable at the
date of such termination (or to the extent exercisability has been
accelerated by the Committee in its sole discretion) by the optionee or,
if the optionee is not living, by the optionee's heirs, legatees, or
legal representative, as the case may be, at any time during its
specified term prior to the third anniversary of the date of death,
permanent disability or retirement (as hereinafter defined). Retirement
as used herein shall mean termination of employment (other than for death
or disability) at any date after (i) the employee reaches age 60 and (ii)
the sum of the terminated employee's age added to the number of years
such employee was employed by the Company or any of its subsidiaries is
equal to or greater than 75.
(c) Notwithstanding the provisions of 8(a) and 8(b) above, the Committee
may specify other provisions in the form of agreement evidencing an
option with respect to the exercise of such option after the optionee's
termination of employment.
9. NON-TRANSFERABILITY OF OPTIONS. Except as provided below, no option
shall be transferable by the optionee otherwise than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986 (as amended), and
each option shall be exercisable during an optionee's lifetime only by
such optionee.
Notwithstanding the above, the Committee may, in its discretion, grant an
option which would permit the optionee, at any time prior to his or her
death, to transfer or assign all or any portion of such option to: (i)
his or her spouse or lineal descendants or the spouse or spouses of his
or her lineal descendants; (ii) the trustee of a trust established for
the benefit of his or her spouse or lineal descendants or the spouse or
spouses of his or her lineal descendants; or (iii) a partnership whose
only partners are the spouse and/or lineal descendants and/or the spouse
or spouses of the lineal descendants of the optionee; provided that the
form of agreement evidencing such option specifically sets forth the
transfer limitations, the optionee receives no consideration from the
transferee or assignee, and the transferee or assignee is subject to all
the conditions applicable to the option prior to the grant. Any such
transfer or assignment shall be evidenced by an appropriate written
document executed by the optionee and a copy of such document shall be
delivered to the Committee on or prior to the effective date of the
transfer or assignment.
10. ADJUSTMENT. (a) In the event that the Company's outstanding Common
Stock is changed by any stock dividend, stock split or combination of
shares, the number of shares subject to this Plan and to options under
this Plan shall be proportionately adjusted.
(b) In case of any capital reorganization, or of any reclassification of
the Common Stock or in case of a consolidation of the Company with or the
merger of the Company with or into any other corporation (other than a
consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification of
outstanding
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shares of Common Stock) or of the sale of the properties and assets of the
Company as, or substantially as, an entirety to any other corporation, the
Company, or the corporation resulting from such consolidation or surviving
such merger or to which such sale shall be made, as the case may be, shall
determine that upon exercise of options granted under the Plan after such
capital reorganization, reclassification, consolidation, merger or sale
there shall be issuable upon exercise of an option a kind and amount of
shares of stock or other securities or property (which may, as an example,
be a fixed amount of cash equal to the consideration paid to stockholders
of the Company for shares transferred or sold by them) which the holders of
the Common Stock (immediately prior to the time of such capital
reorganization, reclassification, consolidation, merger or sale) are
entitled to receive in such transaction as in the judgement of the Board of
Directors is required to compensate equitably for the effect of such event
upon the exercise rights of the optionees. The above provisions of this
paragraph shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers and sales.
(c) In the event of any such adjustment the purchase price per
share shall be appropriately adjusted.
11. DIVIDEND EQUIVALENT PAYMENTS. The Committee, in its sole discretion, may
provide with respect any option granted under the Plan that, on each date
on which cash dividends are paid on shares of Common Stock the Company will
pay to the optionee holding such option an amount in cash equal to the
amount of the dividends that would have been paid to such optionee had the
optionee owned that number of shares of Common Stock for which such option
is then currently exercisable or for that number of shares for which such
option was granted regardless of whether or not such option is currently
exercisable.
12. AMENDMENT OF PLAN. The Board may amend or discontinue the Plan at any
time. However, no such amendment or discontinuance shall change or impair
any option previously granted without the consent of the optionee, increase
the maximum number of shares which may be purchased by all optionees,
change the minimum purchase price, or permit granting of options to the
members of the Committee.
13. CONTINUED EMPLOYMENT. Nothing contained in the Plan or in any option
granted pursuant thereto shall confer upon any optionee any right to
continue to be employed by the Company or any subsidiary of the Company, or
interfere in any way with the right of the Company or its subsidiaries to
terminate such optionee's employment at any time.
14. EFFECTIVE DATE. On March 22, 1995, the Plan as previously authorized was
approved, effective January 3, 1995, by the Board of Directors who directed
that the Plan be submitted to the stockholders of the Company for approval.
If the Plan is approved by the affirmative vote of the holders of a
majority of the shares of Common Stock of the Company voting in person or
by proxy at a duly held stockholders' meeting, the Plan shall be deemed to
have become effective on January 3, 1995. Options may be granted under the
Plan prior to approval by stockholders of the Company and, in each such
case, the date of grant shall be determined without reference to the date
of approval of the Plan by stockholders of the Company; provided, however,
that if the Plan has not been approved by stockholders at or prior to the
1995 annual meeting of stockholders of the Company (or any adjournments
thereof), then all options granted hereunder shall be canceled and void.
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EXHIBIT 10.8
THE L. E. MYERS GROUP
MANAGEMENT INCENTIVE PLAN
(Board Approved - 2/23/95)
1. PURPOSE. The L. E. Myers Group Management Incentive Plan ('MIP') is
established as a discretionary incentive plan which provides an
opportunity for key management to be awarded a substantial discretionary
incentive payment when business is strong.
2. ELIGIBILITY. At the Discretion of the Board of Directors, awards
under the MIP may be granted to key management of the Company
recommended by the Executive Management Committee and approved by
the Board of Directors in its sole discretion (hereinafter
"Participant" or "Participants"). To be eligible for an award, a
Participant must be a full-time employee of the Company or one of
its affiliates on the date the award is paid. For purposes of this
section, the term "affiliate" shall mean a person or entity which
directly or indirectly, is controlled by, or is under common
control, with the Company.
3. AWARDS.
3.1 THRESHOLD FOR AWARDS. Before any incentive compensation award
("MIP award") can be made, the Company must achieve 75% of its
approved business plan's earnings per share goal. If this threshold
is not achieved, only special awards at the sole discretion of the
Board of Directors, may be made.
3.2 GROUPING OF PARTICIPANTS. Awards will vary by groups of key
employees. The Executive Management Committee will maintain a list
of eligible employee in each group which list shall be approved by
the Board of Directors.
3.3 AWARD LEVELS. Each participant shall be eligible to receive an
award for each calendar year of service (a "Plan Year"), for which
the earnings per share threshold is achieved. The following matrix
shows the MIP award levels to be paid as a percentage of salary for
various performance ratings as set forth in Section 4.4 below:
Performance Rating
GROUP 75% 100% 125% 150%
I 25% 55% 85% 115%
II 25% 50% 75% 100%
III 20% 35% 50% 65%
IV 10% 15% 20%
V non-overtime 5% 10% 15% 20%
V overtime eligible 1 week 2 weeks 3 weeks 4 weeks
3.4 GRANT OF AWARDS. MIP awards will be paid during the first quarter
of each year.
4.0 ADMINISTRATION.
4.1 COMMITTEE. The MIP shall be administered by the Executive
Management Committee appointed by the Board of Directors.
4.2 ANNUAL GOALS. Prior to each December 31st, each Group I, II, III,
and IV Participant must submit a completed annual goals form to the
Executive Management Committee. The annual goals form must be
approved by the Participant's immediate supervisor prior to
submission. Prior to January 31st following the year being
evaluated, each Participant must submit a copy of his or her annual
goals form with (a) actual performance against goals under a heading
"Actual Performance" and (b) rating of performance and comments, if
any, under a heading "Self Rating."
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2
4.3 REVIEW BY COMMITTEE. The Executive Management Committee shall review
each Group I, II, III and IV Participant's performance and give a final
rating recommendation for each goal. The Executive Management Committee
shall then weigh the individual goal ratings to determine the
Participant's performance rating upon which his or her MIP award
recommendation is based. The Executive Management Committee shall
recommend to the Board of Directors the amount of the MIP award for each
Participant prior to February 28 of each year. Each Vice President shall
submit to the Executive Management Committee his or her recommendation
for rating and awards for his or her Group V Participants. The Executive
Management Committee shall review each such recommendation with the
respective Vice President and following such review will make a
determination of a rating and award level to be given to each such
participant and recommend to the Board of Directors the amount of the MIP
award for each Participant prior to February 28 of each year. The Board
of Directors, in its sole discretion, shall determine awards to be made,
if any.
4.4 CRITERIA. In evaluating and rating each Participant's performance, the
Executive Management Committee shall use the following criteria:
4.4.1 PERFORMANCE AGAINST ANNUAL PLAN. The principal criteria will be actual
revenue, contract margins, property income, operating income, cash flow
and return on net assets performance versus plan. Corporate officers and
staff will be measured against the consolidated corporate plan and other
Participants will be measured against their respective annual plans.
4.4.2 PERFORMANCE AGAINST NON-FINANCIAL GOALS. Each Group I, II, III and IV
Participant will set three non-financial goals annually such as
increasing market share with current clients, capturing a new client,
penetrating a new geographic region or integrating an acquisition. The
determinant will be the evaluation of Participant's achievement of each
non-financial goal.
4.4.3 SAFETY. Each operation's record in terms of incidence rate (total and
lost time) and actual costs, among other things, will be evaluated in
determining the final incentive award recommendation.
The Executive Management Committee rating is made as a percentage of goal
achievement. For example, if a Participant's performance on a particular
goal was determined to have exactly met plan, the rating for this goal
would be 100%. If performance does not achieve at least 75 % of the
goal, the rating will be zero. Exceptional achievement can be given a
performance rating up to 150% of the goal. The individual goal ratings
are then weighted to determine a Participant's Performance Rating.
4.5 COMMITTEE'S POWERS. The Executive Management Committee shall have such
powers as may be delegated to it by the Board of Directors from time to
time as may be necessary to discharge its duties hereunder, including,
but not in the way of limitation, the following powers, rights and
duties:
4.5. INTERPRETATION OF MIP. The Executive Management Committee shall have the
power, right and duty to construe and interpret the plan provisions and
to determine all questions arising under the MIP.
4.5.2 MIP PROCEDURES. The Executive Management Committee shall have the power,
right and duty to adopt and promulgate procedures, rules, regulations and
forms as it considers necessary and appropriate for the implementation,
management and administration of the MIP.
5. CONTINUED EMPLOYMENT. Nothing contained in this MIP shall give any
Participant the right to be retained in the employment of the Company or
affect the right of the Company to dismiss any Participant. The adoption
of this MIP shall not constitute a contract between
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the Company and any Participant. No Participant shall receive any right
to be granted an award hereunder nor shall any such award be considered
as compensation under any employee benefit plan of the Company, except as
otherwise determined by the Company.
6. AMENDMENT OF MIP. The Board of Directors or the Executive Management
Committee may amend or discontinue the MIP at any time. However, no such
amendment or discontinuance shall change or impair any MIP award
previously given under the MIP without the consent of the Participant.
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EXHIBIT 11
MYR GROUP INC.
SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Year Ended December 31
-------------------------------------
1995 1994 1993
-------- -------- --------
Primary income per share
- ------------------------
Income from continuing operations $ 3,429 $ 2,329 $ 1,633
-------- -------- --------
Weighted average number of common shares
outstanding during the period 3,174 3,179 3,237
Add - common equivalent shares (determined using the
"treasury stock" method) representing shares
issuable upon exercise of the common stock equivalents 226 155 136
-------- -------- --------
Weighted average number of shares for income per common share 3,400 3,334 3,373
-------- -------- --------
Primary income per share before discontinued operations $ 1.01 $ .70 $ .48
======== ======== ========
Loss from discontinued operations $ - $ (150) $ -
======== ======== ========
Net income $ 3,429 $ 2,179 $ 1,633
======== ======== ========
Primary income per common share $ 1.01 $ .65 $ .48
======== ======== ========
Fully Diluted income per share
- ------------------------------
Income from continuing operations $ 3,429 $ 2,329 $ 1,633
Add interest on convertible subordinated notes, net of tax 237 N/A N/A
-------- -------- --------
$ 3,666 $ 2,329 $ 1,633
-------- -------- --------
Weighted average number of common
shares outstanding during the year 3,174 3,179 3,237
Add
- - Common equivalent shares (determined using the "treasury stock"
method) representing shares issuable upon exercise of common
stock equivalents 244 155 136
- - Shares assumed converted from
convertible subordinated notes 600 N/A N/A
-------- -------- --------
Weighted average number of shares for fully diluted
income per common share 4,018 3,334 3,373
-------- -------- --------
Fully diluted earnings before discontinued operation per
common share $ .91 $ .70 $ .48
======== ======== ========
Loss from discontinued operations $ - $ (150) $ -
======== ======== ========
Net income $ 3,666 $ 2,179 $ 1,633
======== ======== ========
Fully diluted income per common share $ .91 $ .65 $ .48
======== ======== ========
Note: All shares and per share data have been adjusted for the four-for-three
stock split in the form of a stock dividend in December 1995.
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Exhibit 21
MYR GROUP INC.
LIST OF SUBSIDIARIES
The Company's significant subsidiaries are:
Name of Corporation State or Jurisdiction Percentage of
or other entity of Organization Interest
- ------------------- --------------------- -------------
The L. E. Myers Co. Delaware 100%
Hawkeye Construction, Inc. Oregon 100%
Harlan Electric Company Michigan 100%
Sturgeon Electric Company, Inc. Michigan 100%(1)
Power Piping Company Pennsylvania 100%(1)
(1) wholly owned subsidiary of Harlan Electric Company
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EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Shareholders
MYR Group Inc.
We consent to the incorporation by reference in Registration Statement Nos.
33-31305, 33-36557, 33-53628, 33-76722 of The L.E. Myers Co. Group on Form S-8
of our report dated March 20, 1996, appearing in the Annual Report on Form 10-K
of MYR Group Inc. for the year ended December 31, 1995.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Chicago, Illinois
March 22, 1996
66
5
0000700923
MYR GROUP INC.
YEAR
DEC-31-1995
JAN-01-1995
DEC-31-1995
703
0
51,662
548
0
72,864
61,625
38,481
101,834
57,374
14,590
0
0
3,350
26,618
101,834
266,965
266,965
237,418
259,198
564
0
1,772
5,715
2,286
3,429
0
0
0
3,429
1.01
.91
