FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________
Commission File No. 1-2189
ABBOTT LABORATORIES
An Illinois Corporation I.R.S. Employer Identification
No. 36-0698440
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
Telephone: (847) 937-6l00
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 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 ____.
As of April 30, 1997, the Corporation had 773,510,473 common shares without
par value outstanding.
PART 1 FINANCIAL INFORMATION
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
(Dollars in thousands except per share data)
THREE MONTHS ENDED MARCH 31
---------------------------
1997 1996
---------- ----------
Net Sales. . . . . . . . . . . . . . . . . . . . $2,999,814 $2,672,177
---------- ----------
Cost of products sold. . . . . . . . . . . . . . 1,327,331 1,156,217
Research and development . . . . . . . . . . . . 280,074 268,616
Selling, general and administrative. . . . . . . 656,596 572,346
---------- ----------
Total Operating Cost and Expenses. . . . . . . 2,264,001 1,997,179
---------- ----------
Operating Earnings . . . . . . . . . . . . . . . 735,813 674,998
---------- ----------
Interest expense . . . . . . . . . . . . . . . . 32,754 17,607
Interest income. . . . . . . . . . . . . . . . . (11,723) (10,490)
Other (income) expense, net. . . . . . . . . . . (43,836) (13,124)
---------- ----------
Earnings Before Taxes. . . . . . . . . . . . . . 758,618 681,005
Taxes on Earnings. . . . . . . . . . . . . . . . 223,792 200,896
---------- ----------
Net Earnings . . . . . . . . . . . . . . . . . . $ 534,826 $ 480,109
---------- ----------
---------- ----------
Net Earnings Per Common Share. . . . . . . . . . $.69 $.61
---------- ----------
---------- ----------
Cash Dividends Declared
Per Common Share . . . . . . . . . . . . . . . $.27 $.24
---------- ----------
---------- ----------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
2
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
MARCH 31 DECEMBER 31
1997 1996
----------- -----------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . $ 134,093 $ 110,209
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . . 18,138 12,875
Trade Receivables, less allowances of $160,700 in 1997
and $153,424 in 1996 . . . . . . . . . . . . . . . . . . . . . . . . 1,731,197 1,708,807
Inventories:
Finished products. . . . . . . . . . . . . . . . . . . . . . . . . . 574,409 627,449
Work in process. . . . . . . . . . . . . . . . . . . . . . . . . . . 276,849 269,443
Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348,457 341,313
----------- -----------
Total Inventories . . . . . . . . . . . . . . . . . . . . . . . . 1,199,715 1,238,205
Prepaid expenses, income taxes, and other receivables. . . . . . . . . 1,544,295 1,410,806
----------- -----------
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . 4,627,438 4,480,902
----------- -----------
Investment Securities Maturing after One Year . . . . . . . . . . . . . . 644,894 665,553
----------- -----------
Property and Equipment, at Cost . . . . . . . . . . . . . . . . . . . . . 8,355,593 8,370,283
Less: accumulated depreciation and amortization. . . . . . . . . . . . 3,932,048 3,908,740
----------- -----------
Net Property and Equipment. . . . . . . . . . . . . . . . . . . . 4,423,545 4,461,543
Deferred Charges, Intangible and Other Assets . . . . . . . . . . . . . . 1,504,517 1,517,602
----------- -----------
$11,200,394 $11,125,600
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings and current portion of long-term debt. . . . . . $ 1,201,912 $ 1,383,727
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 966,853 923,018
Salaries, income taxes, dividends payable, and other accruals. . . . . 2,208,845 2,036,972
----------- -----------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . 4,377,610 4,343,717
----------- -----------
Long-Term Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 931,227 932,898
----------- -----------
Other Liabilities and Deferrals . . . . . . . . . . . . . . . . . . . . . 1,035,389 1,028,803
----------- -----------
Shareholders' Investment:
Preferred shares, $1 par value
Authorized - 1,000,000 shares, none issued
Common shares, without par value
Authorized - 1,200,000,000 shares
Issued at stated capital amount -
Shares: 1997: 782,270,664; 1996: 784,037,858. . . . . . . . . . . 741,200 694,380
Earnings employed in the business . . . . . . . . . . . . . . . . . . . . 4,372,548 4,262,804
Cumulative translation adjustments. . . . . . . . . . . . . . . . . . . . (178,349) (78,770)
----------- -----------
4,935,399 4,878,414
Less:
Common shares held in treasury, at cost -
Shares: 1997: 9,154,632; 1996: 9,588,632 . . . . . . . . . . . . . . . 48,314 50,605
Unearned compensation - restricted stock awards . . . . . . . . . . . . . 30,917 7,627
----------- -----------
Total Shareholders' Investment. . . . . . . . . . . . . . . . . . 4,856,168 4,820,182
----------- -----------
$11,200,394 $11,125,600
----------- -----------
----------- -----------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
3
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
THREE MONTHS ENDED MARCH 31
------------------------------
1997 1996
---------- ----------
Cash Flow From (Used in) Operating Activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ 534,826 $ 480,109
Adjustments to reconcile net earnings to
net cash from operating activities -
Depreciation and amortization. . . . . . . . . . . . . . . . 176,076 163,308
Trade receivables. . . . . . . . . . . . . . . . . . . . . . (93,688) (4,861)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 4,445 (48,893)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 162,967 94,503
---------- ----------
Net Cash From Operating Activities. . . . . . . . . . . 784,626 684,166
---------- ----------
Cash Flow From (Used in) Investing Activities:
Acquisitions of property, equipment, and businesses. . . . . (220,069) (229,823)
Investment securities transactions . . . . . . . . . . . . . 15,394 14,818
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,857 5,670
---------- ----------
Net Cash (Used in) Investing Activities . . . . . . . . (198,818) (209,335)
---------- ----------
Cash Flow From (Used in) Financing Activities:
Borrowing transactions . . . . . . . . . . . . . . . . . . . (175,842) (374,476)
Common share transactions. . . . . . . . . . . . . . . . . . (189,608) (126,639)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . (185,905) (165,395)
---------- ----------
Net Cash (Used in) Financing Activities . . . . . . . . (551,355) (666,510)
---------- ----------
Effect of exchange rate changes on cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . (10,569) (1,596)
---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents . . . . . . 23,884 (193,275)
Cash and Cash Equivalents, Beginning of Year . . . . . . . . . . 110,209 281,197
---------- ----------
Cash and Cash Equivalents, End of Period . . . . . . . . . . . . $ 134,093 $ 87,922
---------- ----------
---------- ----------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
4
ABBOTT LABORATORIES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 1 - BASIS OF PREPARATION:
The accompanying unaudited, condensed consolidated financial statements have
been prepared pursuant to rules and regulations of the Securities and Exchange
Commission and, therefore, do not include all information and footnote
disclosures normally included in audited financial statements. However, in the
opinion of management, all adjustments (which include only normal adjustments)
necessary to present fairly the financial position, cash flows, and results of
operations have been made. It is suggested that these statements be read in
conjunction with the financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
NOTE 2 - EARNINGS PER COMMON SHARE:
Earnings per common share amounts are computed by using the weighted average
number of common shares outstanding. These shares averaged 773,983,000 for the
three months ended March 31, 1997 and 785,836,000 for the same period in 1996.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128 "Earnings per Share" in February 1997. The Company
will adopt the Standard beginning with the year ended 1997. The adoption of
this standard will not have a material effect on the Company's reported earnings
per share.
NOTE 3 - TAXES ON EARNINGS:
Taxes on earnings reflect the estimated annual effective tax rates. The
effective tax rates are less than the statutory U. S. Federal income tax rate
principally due to tax incentive grants related to subsidiaries operating in
Puerto Rico, the Dominican Republic, Italy, Ireland, and the Netherlands.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited), Continued
NOTE 4 - LITIGATION AND ENVIRONMENTAL MATTERS:
The Company is involved in various claims and legal proceedings including
numerous antitrust suits and investigations in connection with the sale and
marketing of infant formula products and the pricing of prescription
pharmaceuticals.
In addition, the Company has been identified as a potentially responsible party
for investigation and cleanup costs at a number of locations in the United
States and Puerto Rico under Federal remediation laws and is voluntarily
investigating potential contamination at a number of Company-owned locations.
The matters above are discussed more fully in Item 1, Business - Environmental
Matters, and Item 3, Legal Proceedings, in the Annual Report on Form 10-K, which
is available upon request, and in 'Part II, Item 1, Legal Proceedings, in this
Form.
The Company expects that within the next year, progress in the legal proceedings
described above may cause a change in the estimated reserves recorded by the
Company. While it is not feasible to predict the outcome of such pending
claims, proceedings, investigations and remediation activities with certainty,
management is of the opinion that their ultimate disposition should not have a
material adverse effect on the Company's financial position, cash flows, or
results of operations.
NOTE 5 - SUBSEQUENT EVENT:
On April 29, 1997, the Company signed a definitive agreement to acquire, for
approximately $200 million, certain parenteral products businesses of Sanofi
Pharmaceuticals, Inc. Had this acquisition taken place on January 1, 1996,
consolidated sales and net income would not have been significantly different
from reported amounts.
6
FINANCIAL REVIEW
RESULTS OF OPERATIONS - FIRST QUARTER 1997 COMPARED WITH FIRST QUARTER 1996
Worldwide sales for the first quarter increased 12.3 percent to $3.000 billion
from $2.672 billion in 1996. Net earnings and earnings per share increased
11.4 percent and 13.1 percent, respectively, over the prior year quarter.
Gross profit margin (sales less cost of products sold, including freight and
distribution expenses) of 55.8 percent for the first quarter was down from
56.7 percent one year ago. This decrease was primarily due to higher royalties
and project expense for new products and the effects of inflation; partially
offset by favorable product mix, especially sales of pharmaceuticals, and
productivity improvements.
Research and development expenses increased to $280.1 million in the first
quarter 1997. This represented 9.3 percent of net sales, compared to
10.1 percent in 1996. The majority of research and development expenditures
continues to be concentrated on pharmaceutical and diagnostic products.
Selling, general, and administrative expenses for the first quarter increased
14.7 percent from the prior year as the result of additional selling and
marketing to support new product launches in the pharmaceutical and nutritional
segment, and due to the acquisition of MediSense in the second quarter of 1996.
Other (income) expense, net, includes net foreign exchange gains of
$10.9 million in the 1997 first quarter, compared with net foreign exchange
losses of $9.3 million in the same quarter last year.
7
FINANCIAL REVIEW
(Continued)
INDUSTRY SEGMENTS
Industry segment sales for the first quarter 1997 and the related change from
the comparable 1996 period are shown in the table below. The Pharmaceutical and
Nutritional Products segment includes a broad line of adult and pediatric
pharmaceuticals and nutritionals, which are sold primarily on the prescription
or recommendation of physicians or other health care professionals; consumer
products; agricultural and chemical products; and bulk pharmaceuticals. The
Hospital and Laboratory Products segment includes diagnostic systems for
consumers, blood banks, hospitals, commercial laboratories and alternate-care
testing sites; intravenous and irrigation fluids and related administration
equipment; drugs and drug delivery systems; anesthetics; critical care products;
and other medical specialty products for hospitals and alternate-care sites.
Domestic and international sales for the first quarter primarily reflect unit
growth. International sales were unfavorably affected 5.5 percent by the
relatively stronger U. S. dollar in the first quarter.
First Quarter
- -------------------------------------------------------------------------------
SEGMENT SALES 1997 Percent
(in millions of dollars) Sales Increase
- -------------------------------------------------------------------------------
Pharmaceutical and Nutritional Products:
Domestic $1,199.4 15.3
- -------------------------------------------------------------------------------
International 626.9 12.1
- -------------------------------------------------------------------------------
1,826.3 14.2
Hospital and Laboratory Products:
Domestic 651.8 13.3
- -------------------------------------------------------------------------------
International 521.7 4.9
- -------------------------------------------------------------------------------
1,173.5 9.4
Total All Segments:
Domestic 1,851.2 14.6
- -------------------------------------------------------------------------------
International 1,148.6 8.7
- -------------------------------------------------------------------------------
$2,999.8 12.3
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
8
FINANCIAL REVIEW
(Continued)
LIQUIDITY AND CAPITAL RESOURCES AT MARCH 31, 1997
COMPARED WITH DECEMBER 31, 1996
Net cash from operating activities for the first quarter 1997 totaled
$785 million. The Company expects annual cash flow from operating activities to
continue to approximate or exceed the Company's capital expenditures and cash
dividends.
The Company has maintained its favorable bond ratings (AAA by Standard & Poor's
Corporation and Aa1 by Moody's Investors Service) and continues to have readily
available financial resources, including unused domestic lines of credit of
$1.5 billion at March 31, 1997. These lines of credit support domestic
commercial paper borrowing arrangements.
During the first quarter 1997, the Company continued its program to purchase its
common shares. The Company purchased and retired 3,995,000 shares during this
period at a cost of $228 million. As of March 31, 1997, an additional
11,670,000 shares may be purchased in future periods under authorization granted
by the Board of Directors in October 1996.
LEGISLATIVE ISSUES
The Company's primary markets are highly competitive and subject to substantial
government regulation. The Company expects debate to continue at both the
federal and the state levels over the availability, method of delivery, and
payment for health care products and services. The Company believes that if
legislation is enacted, it could have the effect of reducing prices, or reducing
the rate of price increases for medical products and services. International
operations are also subject to a significant degree of government regulation.
It is not possible to predict the extent to which the Company or the health care
industry in general might be adversely affected by these factors in the future.
A more complete discussion of these factors is contained in Item 1, Business, in
the Annual Report on Form 10-K, which is available upon request.
9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
The Company's 10-K for the fiscal year ended December 31, 1996,
described 6 antitrust suits and 5 investigations that had been brought in
connection with the Company's marketing and sale of infant formula products.
In its 10-Q for the quarter ended March 31, 1996, the Company reported that
it had entered into a settlement agreement with plaintiffs involving 4 of
these cases and that the settlement was subject to approval by the individual
state courts. On April 29, 1997, the Michigan Court gave final approval to
the settlement. Courts have not yet given their final approval for the cases
pending in Alabama and Nevada. The Louisiana court denied final approval. The
case in Louisiana will proceed. One infant formula antitrust case is also
pending in U.S. District Court in Massachusetts. It purports to be a
statewide consumer class action. An agreement has been reached to resolve
this case for $1.5 million. This agreement is subject to court approval. On
June 19, 1995, a jury in U.S. District Court in Los Angeles, California found
in favor of the Company and the American Academy of Pediatrics in the infant
formula antitrust case brought by Nestle Food Company. The Ninth Circuit
Court of Appeals affirmed the jury's verdict on January 9, 1997, and the
verdict was entered by the U.S. District Court on March 21, 1997. On April
10, 1997, a case was filed in state court in St. Louis, Missouri. It also
purports to be a statewide consumer class action. The case seeks treble
damages, civil penalties, injunctive and other relief. As of April 29, 1997,
5 antitrust suits and 5 investigations are pending in connection with the
Company's sale and marketing of infant formula products.
The Company's 10-K for the fiscal year ended December 31, 1996,
described 142 antitrust suits and two investigations (as of January 31, 1997)
in connection with the Company's pricing of prescription pharmaceuticals.
Plaintiffs have filed two additional cases. One of the cases was filed on
January 8, 1997, in federal court. The Company was notified of its filing in
March of 1997. The other was filed on February 24, 1997, in state court in
Davidson County, Tennessee. In addition, the cases pending in Dade County,
Florida and Johnson County, Kansas were removed to the U.S. District Court
for the Northern District of Illinois. As of March 31, 1997, 121 prescription
pharmaceutical pricing antitrust cases were pending in federal court, 22 were
pending in state courts, and 1 was pending in a District of Columbia court.
The prescription pharmaceutical pricing antitrust suits allege that various
pharmaceutical manufacturers have conspired to fix prices for prescription
pharmaceuticals and/or to discriminate in pricing to retail pharmacies by
providing discounts to mail-order pharmacies, institutional pharmacies and
HMOs in violation of state and federal antitrust laws. The suits have been
brought on behalf of individuals and retail pharmacies and name both the
Company and certain other pharmaceutical manufacturers and pharmaceutical
wholesalers and at least one mail-order pharmacy company as defendants. The
cases seek treble damages, civil penalties, injunctive and other relief. The
Company has filed or intends to file a response to each of the complaints
denying all substantive allegations. The federal cases are pending in the
United States District Court for the Northern District of Illinois under the
Multidistrict Litigation Rules as IN RE: BRAND NAME PRESCRIPTION DRUG
ANTITRUST LITIGATION, MDL 997. One of the cases pending in the MDL 997
litigation has been certified as a class action on behalf of certain retail
pharmacies. The cases pending in California and the District of Columbia have
also been certified as class actions. A number of appeals to the Seventh
Circuit Court of Appeals have been filed arising out of the MDL 997
litigation. All litigation in the U.S. District Court for the Northern
District of Illinois is stayed pending the resolution of the appeals.
10
While it is not feasible to predict the outcome of such pending
claims, proceedings, and investigations with certainty, management is of the
opinion that their ultimate disposition should not have a material adverse
effect on the Company's financial position, cash flows, or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
The Company held its Annual Meeting of Shareholders on April 25, 1997.
The following is a summary of the matters voted on at that meeting.
(a) The shareholders elected the Company's entire Board of Directors.
The persons elected to the Company's Board of Directors and the number of shares
cast for, and the number of shares withheld, with respect to each of these
persons were as follows:
Name Votes For Votes Withheld
- ---- --------- --------------
K. Frank Austen, M.D. 667,021,293 3,242,420
Duane L. Burnham 666,168,478 4,095,235
H. Laurance Fuller 667,354,566 2,909,147
Thomas R. Hodgson 667,286,907 2,976,806
David A. Jones 665,603,563 4,660,150
The Lord Owen CH 667,082,744 3,180,969
Boone Powell, Jr. 664,477,110 5,786,603
Addison Barry Rand 667,219,169 3,044,544
W. Ann Reynolds, Ph.D. 665,797,212 4,466,501
William D. Smithburg 666,769,205 3,494,508
John R. Walter 666,366,531 3,897,182
William L. Weiss 666,578,000 3,685,713
(b) The Shareholders ratified the Appointment of Arthur Andersen LLP as
auditors of the Company.
FOR 666,880,250 AGAINST 1,665,296 ABSTAIN 1,718,167
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits
3. By-Laws of Abbott Laboratories as amended and effective
April 25, 1997.
11. Statement re: computation of per share earnings - attached
hereto.
12. Statement re: computation of ratio of earnings to fixed
charges - attached hereto.
27. Financial Data Schedule - attached hereto.
(b) Reports on Form 8-K
None
11
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABBOTT LABORATORIES
Date: May 12, 1997 /s/ Theodore A. Olson
---------------------------------
Theodore A. Olson, Vice President
and Controller (Principal
Accounting Officer)
12
BY-LAWS
OF
ABBOTT LABORATORIES
Adopted by the Board of Directors
of Abbott Laboratories at the
Annual Meeting, April 11, 1963
as amended and restated, effective April 25, 1997
BY-LAWS OF ABBOTT LABORATORIES
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Illinois shall be
located at the intersection of State Routes 43 and 137 in the County of Lake.
The Corporation may have such other offices either within or without the State
of Illinois as the business of the Corporation may require from time to time.
The registered office of the Corporation may be, but need not be,
identical with the principal office in the State of Illinois. The address of
the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING; TRANSACTION OF BUSINESS, NOMINATION OF
DIRECTORS. The annual meeting of the shareholders shall be held in the month of
April in each year on such date and at such time as the Board of Directors shall
provide. The meeting shall be held for the purpose of electing Directors and
for the transaction of such other business as is properly brought before the
meeting in accordance with these By-Laws. If the election of Directors shall
not be held on the day designated for any annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a meeting
of the shareholders as soon thereafter as conveniently may be.
To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors or (c) otherwise
properly brought before the meeting by a shareholder. In addition to any other
applicable requirements, for business to be properly brought before an annual
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal office of the Corporation,
not earlier than October 1 nor later than February 15 immediately prior to the
date of the meeting; PROVIDED, HOWEVER, that in the event that the date of such
meeting is not in the month of April and less than sixty-five days' notice or
prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the fifteenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. A shareholder's notice to the
Secretary shall set forth as to each matter the shareholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of the shareholder
proposing such business, (iii) the class and number of shares of the
BY-LAWS Page 2
Corporation which are beneficially owned by the shareholder and (iv) any
material interest of the shareholder in such business.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 1, PROVIDED, HOWEVER, that nothing in this
Section 1 shall be deemed to preclude discussion by any shareholder of any
business properly brought before the annual meeting.
The Chairman of an annual 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 1, and if he should so
determine, he shall so declare to the meeting and such business not properly
brought before the meeting shall not be transacted.
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nominations of persons
for election to the Board of Directors of the Corporation at the annual meeting
may be made at such annual meeting of shareholders by or at the direction of the
Board of Directors, by any nominating committee or person appointed by the Board
of Directors, or by any shareholder of the Corporation entitled to vote for the
election of directors at such meeting who complies with the notice procedures
set forth in this Section 1. Such nominations, other than those made by or at
the direction of the Board of Directors or by a committee or person appointed by
the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary. To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal office of the Corporation not earlier than
October 1 nor later than February 15 immediately prior to that date of the
meeting; PROVIDED, HOWEVER, that in the event that the date of such meeting is
not in the month of April and less than sixty-five days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever first
occurs. Such shareholder's notice to the Secretary shall set forth: (a) as to
each person whom the shareholder proposes to nominate for election or re-
election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the person and (iv) any other information
relating to the person that is required to be disclosed in solicitations for
proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended; and (b) as to the shareholder
giving the notice, (i) the name and record address of such shareholder and (ii)
the class and number of shares of the Corporation which are beneficially owned
by such shareholder. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the Corporation
to determine the eligibility of such proposed nominee to serve as director of
the Corporation. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
BY-LAWS Page 3
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may
be called by the Chairman of the Board, the President, the Board of Directors or
by the holders of not less than one-fifth of all the outstanding shares entitled
to vote on the matter for which the meeting is called.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Illinois, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the Corporation in
the State of Illinois.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than twenty nor more than sixty days before the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board, the
President, or the Secretary or the persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the records
of the Corporation, with postage thereon prepaid.
SECTION 5. FIXING RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors of the Corporation may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than sixty days and, for a meeting of shareholders, not less than ten days, or
in the case of a merger, consolidation, share exchange, dissolution or sale,
lease or exchange of assets not less than twenty days, immediately preceding
such meeting.
SECTION 6. VOTING LISTS. The Secretary shall make, or cause to have
made, within twenty days after the record date for a meeting of shareholders or
ten days before such meeting, whichever is earlier, a complete list of the
shareholders entitled to vote at such meeting, arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for a
period of ten days prior to such meeting, shall be kept on file at the
registered office of the Corporation and shall be subject to inspection by any
shareholder and to copying at the shareholder's expense, at any time during
usual business hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof kept in this State, shall be prima facie
evidence as to who are the shareholders entitled to examine such list or share
ledger or transfer book or to vote at any meeting of shareholders.
SECTION 7. QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote on a matter, represented in person or by proxy,
shall constitute a quorum for
BY-LAWS Page 4
consideration of such matter at a meeting of shareholders. If a quorum is
present, the affirmative vote of the majority of the shares represented at the
meeting and entited to vote on a matter shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required by The
Business Corporation Act of 1983 or the Articles of Incorporation, as in effect
on the date of such determination. If a quorum is not present, a majority of
the shares of the Corporation entitled to vote on a matter and represented in
person or by proxy at such meeting may adjourn the meeting from time to time
without further notice.
SECTION 8. PROXIES. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder by signing an appropriate form and delivering
it to the person so appointed; provided, however, no shareholder may name more
than three persons as proxies to attend and to vote the shareholder's shares at
any meeting of shareholders. No proxy shall be valid after the expiration of
eleven months from the date thereof unless otherwise provided in the proxy.
Each proxy continues in full force and effect until revoked by the person
executing it prior to the vote pursuant thereto, except as otherwise provided by
law. Such revocation may be effected by a writing delivered to the Secretary of
the Corporation stating that the proxy is revoked or by a subsequent proxy
executed by, or by attendance at the meeting and voting in person by, the person
executing the proxy. The dates contained on the forms of proxy presumptively
determine the order of execution, regardless of the postmark dates on the
envelopes in which they were mailed.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote in each matter submitted to a vote at a
meeting of shareholders and, in all elections for Directors, every shareholder
shall have the right to vote the number of shares owned by such shareholder for
as many persons as there are Directors to be elected, or to cumulate such votes
and give one candidate as many votes as shall equal the number of Directors
multiplied by the number of such shares or to distribute such cumulative votes
in any proportion among any number of candidates; provided that, vacancies on
the Board of Directors may be filled as provided in Section 9, Article III of
these By-Laws. A shareholder may vote either in person or by proxy.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of this
Corporation held by the Corporation in a fiduciary capacity may be voted and
shall be counted in determining the total number of outstanding shares entitled
to vote at any given time.
Shares registered in the name of another corporation, domestic or
foreign, may be voted by any officer, agent, proxy or other legal representative
authorized to vote such shares under the law of incorporation of such
corporation.
Shares registered in the name of a deceased person, a minor ward or a
person under legal disability may be voted by his or her administrator,
executor, or court appointed guardian, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor, or court
appointed guardian. Shares registered in the name of a trustee may be voted by
him or her, either in person or by proxy.
Shares registered in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer
BY-LAWS Page 5
thereof into his or her name if authority so to do is contained in an
appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
SECTION 11. VOTING BY BALLOT. Voting on any question or in any election
may be viva voce unless the presiding officer shall order that voting be by
ballot.
SECTION 12. INSPECTORS OF ELECTION. The Board of Directors in advance
of any meeting of shareholders may appoint inspectors to act at such meeting or
any adjournment thereof. If inspectors of election are not so appointed, the
officer or person acting as chairman at any such meeting may, and on the request
of any shareholder or his proxy, shall make such appointment. In case any
person appointed as inspector shall fail to appear or to act, the vacancy may be
filled by appointment made by the Board of Directors in advance of the meeting
or at the meeting by the officer or person acting as chairman.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or her
or by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
ARTICLE III
DIRECTORS
SECTION l. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors
of the Corporation shall be twelve. The terms of all Directors shall expire at
the next annual meeting of shareholders following their election. Despite the
expiration of a Director's term, he or she shall continue to serve until the
next meeting of shareholders at which Directors are elected. Directors need not
be residents of Illinois or shareholders of the Corporation.
SECTION 3. REGULAR MEETINGS. A regular annual meeting of the Board of
Directors shall be held without other notice than this By-Law, immediately
after, and at the same place as, the annual meeting of shareholders. Other
regular meetings of the Board of Directors shall be held at the principal office
of the Corporation on the second Friday of every month at 9:00
BY-LAWS Page 6
a.m. without other notice than this By-Law. The Board of Directors may provide,
by resolution, for the holding of the regular monthly meetings at a different
time and place, either within or without the State of Illinois, or for the
omission of the regular monthly meeting altogether. Where the Board of
Directors has, by resolution, changed or omitted regular meetings, no other
notice than such resolution shall be given.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the Chairman of
the Executive Committee, the President, or of any four Directors. The persons
authorized to call special meetings of the Board of Directors may fix any place,
either within or without the State of Illinois, as the place for holding any
special meeting of the Board of Directors.
SECTION 5. NOTICE. Notice of any special meeting shall be given: (i) at
least one day prior thereto if the notice is given personally or by an
electronic transmission, (ii) at least two business days prior thereto if the
notice is given by having it delivered by a third party entity that provides
delivery services in the ordinary course of business and guarantees delivery of
the notice to the Director no later than the following business day, and (iii)
at least seven days prior thereto if the notice is given by mail. For this
purpose, the term "electronic transmission" may include, but shall not be
limited to, a telex, facsimile, or other electronic means. Notice shall be
delivered to the Director's business address and/or telephone number and shall
be deemed given upon electronic transmission, upon delivery to the third party
delivery service, or upon being deposited in the United States mail with postage
thereon prepaid. Any Director may waive notice of any meeting by signing a
written waiver of notice either before or after the meeting. Attendance of a
Director at any meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the number of Directors fixed by these
By-Laws shall constitute a quorum for transaction of business at any meeting of
the Board of Directors; provided, that if less than a majority of such number of
Directors are present at said meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. MANNER OF VOTING. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of the Board of Directors, or any other action which may be
taken at a meeting of the Board of Directors or a committee thereof, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the Directors entitled to vote with respect to
the subject matter thereof, or by all the members of such committee, as the case
may be.
BY-LAWS Page 7
The consent shall be evidenced by one or more written approvals, each of
which sets forth the action taken and bears the signature of one or more
Directors. All the approvals evidencing the consent shall be delivered to the
Secretary of the Corporation to be filed in the corporate records. The action
taken shall be effective when all the Directors have approved the consent unless
the consent specifies a different effective date.
Any such consent signed by all the Directors or all the members of a
committee shall have the same effect as a unanimous vote.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors
and any directorship to be filled by reason of an increase in the number of
Directors, may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A Director elected to fill a
vacancy shall serve until the next annual meeting of shareholders. A majority
of Directors then in office may also fill one or more vacancies arising between
meetings of shareholders by reason of an increase in the number of Directors or
otherwise, and any Director so selected shall serve until the next annual
meeting of shareholders, provided that at no time may the number of Directors
selected to fill vacancies in this manner during any interim period between
meetings of shareholders exceed 33-1/3 per cent of the total membership of the
Board of Directors.
SECTION 10. PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a meeting of the Board of Directors or any committee thereof at which
action on any corporate matter is taken is conclusively presumed to have
assented to the action taken unless his or her dissent is entered in the minutes
of the meeting or unless he or she files his or her written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or forwards such dissent by registered or certified mail to
the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in favor
of such action.
SECTION 11. APPOINTMENT OF AUDITORS. Upon the recommendation of the
Audit Committee, the Board of Directors shall appoint annually a firm of
independent public accountants as auditors of the Corporation. Such appointment
shall be submitted to the shareholders for ratification at the Annual Meeting
next following such appointment. Should the holders of a majority of the shares
represented at the meeting fail to ratify the appointment of any firm as
auditors of the Corporation, or should the Board of Directors for any reason
determine that such appointment be terminated, the Board of Directors shall
appoint another firm of independent public accountants to act as auditors of the
Corporation and such appointment shall be submitted to the shareholders for
ratification at the Annual or Special Shareholders Meeting next following such
appointment.
ARTICLE IV
COMMITTEES
SECTION 1. APPOINTMENT. A majority of the Board of Directors may create
one or more committees and appoint members of the Board to serve on the
committee or committees.
BY-LAWS Page 8
Each committee shall have three or more members, who serve at the pleasure of
the Board. The Board shall designate one member of each committee to be
chairman of the committee. The Board shall designate a secretary of each
committee who may be, but need not be, a member of the committee or the Board.
SECTION 2. COMMITTEE MEETINGS. A majority of any committee shall
constitute a quorum and a majority of the committee is necessary for committee
action. A committee may act by unanimous consent in writing without a meeting.
Committee meetings may be called by the Chairman of the Board, the chairman of
the committee, or any two of the committee's members. The time and place of
committee meetings shall be designated in the notice of such meeting. Notice of
each committee meeting shall be given to each committee member. Each Committee
shall keep minutes of its proceedings and such minutes shall be distributed to
the Board of Directors.
SECTION 3. EXECUTIVE COMMITTEE. The Board shall appoint an Executive
Committee. A majority of the members of the Committee shall be selected from
those Directors who are not then serving as full-time employees of the
Corporation or any of its subsidiaries.
SECTION 4. DUTIES OF THE EXECUTIVE COMMITTEE. The Executive Committee
may, when the Board of Directors is not in session, exercise the authority of
the Board in the management of the business and affairs of the Corporation;
provided, however, the Committee may not:
(1) authorize distributions;
(2) approve or recommend to shareholders any act the Business
Corporation Act of 1983 requires to be approved by shareholders;
(3) fill vacancies on the Board or on any of its committees;
(4) elect or remove Officers or fix the compensation of any member of
the Committee;
(5) adopt, amend or repeal the By-Laws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares, except according to
a general formula or method prescribed by the Board;
(8) authorize or approve the issuance or sale, or contract for sale,
of shares or determine the designation and relative rights, preferences, and
limitations of a series of shares, except that the Board may direct the
Committee to fix the specific terms of the issuance or sale or contract for sale
or the number of shares to be allocated to particular employees under an
employee benefit plan; or
BY-LAWS Page 9
(9) amend, alter, repeal, or take action inconsistent with any
resolution or action of the Board of Directors when the resolution or action of
the Board of Directors provides by its terms that it shall not be amended,
altered or repealed by action of the Committee.
SECTION 5. AUDIT COMMITTEE. The Board of Directors shall appoint an
Audit Committee. All of the members of the Committee shall be selected from
those Directors who are not then serving as full-time employees of the
Corporation or any of its subsidiaries.
SECTION 6. DUTIES OF THE AUDIT COMMITTEE. The Audit Committee shall:
(1) recommend to the Board of Directors annually a firm of independent
public accountants to act as auditors of the Corporation;
(2) review with the auditors in advance the scope of and fees for their
annual audit;
(3) review with the auditors and the management, from time to time, the
Corporation's accounting principles, policies, and practices and its reporting
policies and practices;
(4) review with the auditors annually the results of their audit; and
(5) review from time to time with the auditors and the Corporation's
financial personnel the adequacy of the Corporation's accounting, financial and
operating controls.
SECTION 7. COMPENSATION COMMITTEE. The Board of Directors shall appoint
a Compensation Committee. The members of the Committee shall be selected from
those Directors who are not then serving as full-time employees of the
Corporation or any of its subsidiaries and who are "non-employee directors"
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, or any
similar successor rule.
SECTION 8. DUTIES OF THE COMPENSATION COMMITTEE. The Compensation
Committee shall:
(1) administer the stock option plans of the Corporation;
(2) review, at least annually, the compensation of Directors who are not
then serving as full-time employees of the Corporation or any of its
subsidiaries and recommend for approval by the Board any change in the
compensation of such Directors;
(3) review at least annually, the compensation of all Officers of the
Corporation. The committee shall have the authority to approve changes in the
base compensation, and any proposed special separation arrangements of Officers,
except the Chairman of the Board of Directors and the President, whose base
compensation, and any special separation arrangements, shall be subject to
approval by the Board of Directors.
SECTION 9. NOMINATIONS AND BOARD AFFAIRS COMMITTEE. The Board of
Directors shall appoint a Nominations and Board Affairs Committee. A majority
of the members of the
BY-LAWS Page 10
Committee shall be selected from those Directors who are not then serving as
full-time employees of the Corporation or any of its subsidiaries.
SECTION 10. DUTIES OF THE NOMINATIONS AND BOARD AFFAIRS COMMITTEE. The
Nominations and Board Affairs Committee shall:
(1) develop general criteria for selection of and qualifications
desirable in members of the Board of Directors and Officers of the Corporation
and aid the Board in identifying and attracting qualified candidates to stand
for election to such positions;
(2) recommend to the Board annually a slate of nominees to be proposed
by the Board to the shareholders as nominees for election as Directors, and,
from time to time, recommend persons to fill any vacancy on the Board;
(3) review annually, or more often if appropriate, the performance of
individual members of the management of the Corporation and the membership and
performance of committees of the Board and make recommendations deemed necessary
or appropriate to the Board;
(4) recommend to the Board persons to be elected as Officers of the
Corporation; and
(5) serve in an advisory capacity to the Board of Directors and Chairman
of the Board on matters of organization, management succession plans, major
changes in the organizational structure of the Corporation, and the conduct of
Board activities, including assisting in the evaluation of the Board's own
performance.
ARTICLE V
OFFICERS
SECTION 1. NUMBER. The Officers of the Corporation shall be the
Chairman of the Board, the President, one or more Executive, Group or Senior
Vice Presidents, one or more Vice Presidents, a Treasurer, a Secretary, a
Controller, a General Counsel and such Assistant Treasurers and Assistant
Secretaries as the Board of Directors may elect. Any two or more offices may be
held by the same person.
SECTION 2. 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 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. Vacancies or new offices may be
filled at any meeting of the Board of Directors. Each Officer shall hold office
until his or her successor shall have been duly elected and shall have qualified
or until his or her death or until he or she shall resign or shall have been
removed in the manner hereinafter provided.
BY-LAWS Page 11
SECTION 3. REMOVAL OF OFFICERS. Any Officer may be removed by the Board
of Directors whenever in its judgment the best interests of the Corporation will
be served thereby.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall be the Chief Executive Officer of the Corporation. The
Chairman shall be responsible for the overall management of the Corporation
subject to the direction of the Board of Directors. The Chairman shall preside
at all meetings of the Board of Directors and the shareholders.
SECTION 6. PRESIDENT. The President shall be the Chief Operating
Officer. The President shall perform such duties as may be prescribed by the
Board of Directors or by the Chairman.
SECTION 7. EXECUTIVE, GROUP AND SENIOR VICE PRESIDENTS. Each Executive,
Group, or Senior Vice President shall be responsible for supervising and
coordinating a major area of the Corporation's activities subject to the
direction of the Chairman of the Board or the President.
SECTION 8. VICE PRESIDENTS. Each of the Vice Presidents shall be
responsible for those activities designated by an Executive, Group, or Senior
Vice President, the President, the Chairman of the Board or by the Board of
Directors.
SECTION 9. TREASURER. The Treasurer shall administer the investment,
financing, insurance and credit activities of the Corporation.
SECTION 10. SECRETARY. The Secretary will be the custodian of the
corporate records and of the seal of the Corporation, will countersign
certificates for shares of the Corporation, and in general will perform all
duties incident to the office of Secretary. The Secretary shall have the
authority to certify the By-Laws, resolutions of the shareholders and the Board
of Directors and committees thereof, and other documents of the Corporation as
true and correct copies thereof.
SECTION 11. CONTROLLER. The Controller will conduct the accounting
activities of the Corporation, including the maintenance of the Corporation's
general and supporting ledgers and books of account, operating budgets, and the
preparation and consolidation of financial statements.
SECTION 12. GENERAL COUNSEL. The General Counsel will be the chief
consultant of the Corporation on legal matters. He or she will supervise all
matters of legal import concerning the interests of the Corporation.
BY-LAWS Page 12
SECTION 13. ASSISTANT TREASURER. The Assistant Treasurer shall, in the
absence or incapacity of the Treasurer, perform the duties and exercise the
powers of the Treasurer, and shall perform such other duties as shall from time
to time be given to him or her by the Treasurer.
SECTION 14. ASSISTANT SECRETARY. The Assistant Secretary shall, in the
absence or incapacity of the Secretary, perform the duties and exercise the
powers of the Secretary, and shall perform such other duties as shall from time
to time be given to him or her by the Secretary. The Assistant Secretary shall
be, with the Secretary, keeper of the books, records, and the seal of the
Corporation, and shall have the authority to certify the By-Laws, resolutions
and other documents of the Corporation.
SECTION 15. GENERAL POWERS OF OFFICERS. The Chairman of the Board, the
President, and any Executive, Group or Senior Vice President, may sign without
countersignature any deeds, mortgages, bonds, contracts, reports to public
agencies, or other instruments whether or not the Board of Directors has
expressly authorized execution of such instruments, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-Laws solely to some other Officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed.
Any other Officer of this Corporation may sign contracts, reports to public
agencies, or other instruments which are in the regular course of business and
within the scope of his or her authority, except where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other Officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by any one of the Chairman of the
Board, the President or an Executive Vice President, and shall be countersigned
by the Secretary or an Assistant Secretary and shall be sealed with the seal, or
a facsimile of the seal, of the Corporation. If a certificate is countersigned
by a Transfer Agent or Registrar, other than the Corporation itself or its
employee, any other signatures or countersignature on the certificate may be
facsimiles. In case any Officer of the Corporation, or any officer or employee
of the Transfer Agent or Registrar who has signed or whose facsimile signature
has been placed upon such certificate ceases to be an Officer of the
Corporation, or an officer or employee of the Transfer Agent or Registrar before
such certificate is issued, the certificate may be issued by the Corporation
with the same effect as if the Officer of the Corporation, or the officer or
employee of the Transfer Agent or Registrar had not ceased to be such at the
date of its issue. Each certificate representing shares shall state: that the
Corporation is organized under the laws of the State of Illinois; the name of
the person to whom issued; the number and class of shares; and the designation
of the series, if any, which such certificate represents. Each certificate
shall be consecutively numbered or otherwise identified. The name of the person
to whom the shares
BY-LAWS Page 13
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the books of the Corporation. All certificates surrendered
to the Corporation for transfer shall be canceled, and no new certificate shall
be issued in replacement until the former certificate for a like number of
shares shall have been surrendered and canceled, except in the case of lost,
destroyed or mutilated certificates.
SECTION 2. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
from time to time appoint such Transfer Agents and Registrars in such locations
as it shall determine, and may, in its discretion, appoint a single entity to
act in the capacity of both Transfer Agent and Registrar in any one location.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares of the Corporation
shall be made only on the books of the Corporation at the request of the holder
of record thereof or of his attorney, lawfully constituted in writing, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
SECTION 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case of lost,
destroyed or mutilated certificates, duplicate certificates shall be issued to
the person claiming the loss, destruction or mutilation, provided:
(a) that the claimant furnishes an affidavit stating the facts of such
loss, destruction or mutilation so far as known to him or her and further
stating that the affidavit is made to induce the Corporation to issue a
duplicate certificate or certificates; and that issuance of the duplicate
certificate or certificates is approved:
(i) in a case involving a certificate or certificates for more
than l,000 shares, by the Chairman of the Board, the President,
an Executive Vice President, or the Secretary; or
(ii) in a case involving a certificate or certificates for l,000
shares or less, by the Transfer Agent appointed by the Board of
Directors for the transfer of the shares represented by such
certificate or certificates,
upon receipt of a bond, with one or more sureties, in the amount to be
determined by the party giving such approval; or
(b) that issuance of the said duplicate certificate or certificates is
approved by the Board of Directors upon such terms and conditions as it
shall determine.
BY-LAWS Page 14
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
January in each year and end on the last day of December in each year.
ARTICLE VIII
VOTING SHARES OR INTERESTS IN OTHER CORPORATIONS
The Chairman of the Board, the President, an Executive, Group, or Senior
Vice President and each of them, shall have the authority to act for the
Corporation by voting any shares or exercising any other interest owned by the
Corporation in any other corporation or other business association, including
wholly or partially owned subsidiaries of the Corporation, such authority to
include, but not be limited to, power to attend any meeting of any such
corporation or other business association, to vote shares in the election of
directors and upon any other matter coming before any such meeting, to waive
notice of any such meeting and to consent to the holding thereof without notice,
and to appoint a proxy or proxies to represent the Corporation at any such
meeting with all the powers that the said Officer would have under this section
if personally present.
ARTICLE IX
DISTRIBUTIONS TO SHAREHOLDERS
The Board of Directors may authorize, and the Corporation may make,
distributions to its shareholders, subject to any restriction in the Articles of
Incorporation and subject also to the limitations prescribed by law.
ARTICLE X
SEAL
The Corporate Seal of the Corporation shall be in the form of a circle in
the center of which is the insignia [LOGO] and shall have inscribed thereon the
name of the Corporation and the words "an Illinois Corporation."
BY-LAWS Page 15
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the provisions
of these By-Laws or under the provisions of the Articles of Incorporation or
under the provisions of The Business Corporation Act of 1983, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance at any meeting shall constitute waiver of
notice thereof unless the person at the meeting objects to the holding of the
meeting because proper notice was not given.
ARTICLE XII
AMENDMENTS
These By-Laws may be made, altered, amended or repealed by the
shareholders or the Board of Directors.
EXHIBIT 11
ABBOTT LABORATORIES AND SUBSIDIARIES
CALCULATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars and Shares in Millions Except Per Share Amounts)
THREE MONTHS ENDED MARCH 31
---------------------------
1997 1996
-------- ---------
1. Net earnings $ 534.8 $ 480.1
-------- --------
2. Average number of shares outstanding 774.0 785.8
-------- --------
3. Earnings per share based upon average
outstanding shares (1 divided by 2) $ .69 $ .61
-------- --------
-------- --------
4. Fully diluted earnings per share:
a. Stock options granted and outstanding for
which the market price at quarter-end
exceeds the option price 27.8 27.8
-------- --------
-------- --------
b. Aggregate proceeds to the Company from
the exercise of options in 4.a. $ 926.6 $ 786.6
-------- --------
-------- --------
c. Market price of the Company's common
stock at quarter-end $ 56.13 $ 40.75
-------- --------
-------- --------
d. Shares which could be repurchased
under the treasury stock
method (4.b. divided by 4.c.) 16.5 19.3
-------- --------
-------- --------
e. Addition to average outstanding shares
(4.a. - 4.d.) 11.3 8.5
-------- --------
-------- --------
f. Shares for fully diluted earnings per
share calculation (2. + 4.e.) 785.3 794.3
-------- --------
-------- --------
g. Fully diluted earnings per share
(1. divided by 4.f.) $ .68 $ .60
-------- --------
-------- --------
EXHIBIT 12
ABBOTT LABORATORIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Millions of Dollars)
THREE MONTHS ENDED
MARCH 31, 1997
------------------
Net Earnings $ 535
Add (deduct):
Income taxes 224
Minority interest 4
--------
Net earnings as adjusted $ 763
--------
Fixed Charges:
Interest on long-term and
short-term debt $ 33
Capitalized interest cost 3
Rental expense representative
of an interest factor 7
--------
Total Fixed Charges 43
--------
Total adjusted earnings available for
payment of fixed charges $ 806
--------
--------
Ratio of earnings to fixed charges 18.7
--------
--------
NOTE: For the purpose of calculating this ratio, (i) earnings have been
calculated by adjusting net earnings for taxes on earnings; interest
expense; capitalized interest cost, net of amortization; minority
interest; and the portion of rentals representative of the interest
factor, (ii) the Company considers one-third of rental expense to be
the amount representing return on capital, and (iii) fixed charges
comprise total interest expense, including capitalized interest and
such portion of rentals.
5
1,000
3-MOS
DEC-31-1997
JAN-01-1997
MAR-31-1997
134,093
18,138
1,891,897
160,700
1,199,715
4,627,438
8,355,593
3,932,048
11,200,394
4,377,610
931,227
0
0
741,200
4,114,968
11,200,394
2,999,814
2,999,814
1,327,331
1,327,331
280,074
9,322
32,754
758,618
223,792
534,826
0
0
0
534,826
.69
.68
OTHER EXPENSES CONSIST OF RESEARCH AND DEVELOPMENT EXPENSES
