-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KES2NwbpPpf/3nR1Q0Owih7Oz2ZrUaRTqen9rx3jQFEtXqNODl9dFIayeI6FxU7z x8aZ1IhcIBEX+jEFeLgSqQ== 0000920401-97-000019.txt : 19970918 0000920401-97-000019.hdr.sgml : 19970918 ACCESSION NUMBER: 0000920401-97-000019 CONFORMED SUBMISSION TYPE: DEFS14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971104 FILED AS OF DATE: 19970916 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVAL CO CENTRAL INDEX KEY: 0000860194 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 133327021 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 000-20274 FILM NUMBER: 97680964 BUSINESS ADDRESS: STREET 1: 800 E 101ST TERRACE CITY: KANSAS CITY STATE: MO ZIP: 64131 BUSINESS PHONE: 8169434100 MAIL ADDRESS: STREET 1: 800 E 101ST TERRACE CITY: KANSAS CITY STATE: MO ZIP: 64131 DEFS14A 1 THE RIVAL COMPANY 800 East 101st Terrace Kansas City, Missouri 64131 --------------------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held on November 4, 1997 ------------------------------ To Our Shareholders: The Annual Meeting of Shareholders of The Rival Company (the "Company") will be held at the Doubletree Hotel, 10100 College Boulevard, Overland Park, Kansas, at 9:00 a.m. Central Standard Time, on Tuesday, November 4, 1997 for the following purposes: 1. To elect a Board of Directors for the upcoming year; 2. To act upon a proposal to ratify the appointment of KPMG Peat Marwick as independent public accountants for the Company for the fiscal year ending June 30, 1998; and 3. To transact such other business, if any, as may properly come before the meeting or any adjournment thereof. The Board of Directors has fixed the close of business on September 5, 1997, as the record date for the determination of Shareholders entitled to notice of and to vote at the meeting. Your vote is important. Please sign and date the enclosed proxy card and return it promptly in the enclosed return envelope, whether or not you expect to attend the meeting. Sending in your Proxy now will not interfere with your rights to attend the meeting or to vote your shares personally at the meeting if you wish to do so. By Action of the Board of Directors Stanley D. Biggs, Secretary Kansas City, Missouri September 12, 1997 This page left blank intentionally. 2 PROXY STATEMENT 1997 ANNUAL MEETING OF SHAREHOLDERS OF THE RIVAL COMPANY ----------------- This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of The Rival Company for the Annual Meeting of Shareholders to be held on November 4, 1997. The close of business on September 5, 1997, has been fixed as the record date for the determination of the Shareholders entitled to notice of, and to vote at, the Annual Meeting. On that date there were 9,448,847 shares of Common Stock outstanding and entitled to vote at the meeting. Shares represented by proxies will be voted in accordance with the specifications made on the proxy card by the shareholder. Any proxy not specifying the contrary will be voted in favor of the Board of Directors' nominees for election as Directors, in favor of ratifying the selection of the accounting firm of KPMG Peat Marwick as independent auditors of The Rival Company and, as to any other matter that properly may be brought before the Annual Meeting, in accordance with the discretion and judgment of the appointed proxies. A shareholder giving a proxy has the right to revoke it at any time before it is voted by giving to the Secretary of the Company written notice of revocation bearing a later date than the proxy, by submission of a later-dated proxy, or by revoking the proxy and voting in person at the Annual Meeting. Each share of Common Stock is entitled to one non-cumulative vote as to each nominee and issue presented. Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business. In tabulating the votes cast on proposals presented to shareholders, abstentions are counted and broker non-votes are not counted for purposes of determining whether a proposal has been approved. The principal executive offices of the Company are located at 800 East 101st Terrace, Kansas City, Missouri 64131. This Proxy Statement and the enclosed proxy card are being furnished to shareholders on or about September 12, 1997. 3 PROPOSAL 1 ELECTION OF DIRECTORS The Board of Directors of the Company is currently composed of ten directors, whose terms of office will expire upon the election of their successors at the Annual Meeting. At the meeting, the shareholders will be asked to elect ten directors to hold office for one-year terms ending at the Company's 1998 annual meeting of Shareholders or until their successors are elected and qualified. The Company's Board of Directors has nominated each of the Company's current directors for re-election at the Annual Meeting. The Board of Directors recommends that shareholders vote FOR each of the persons nominated. The Board of Directors believes that all of the nominees are willing to serve as directors. However, if any nominee at the time of election is unable to serve or is otherwise unavailable for election, and as a result other nominees are designated by the Board of Directors, the persons named in the enclosed proxy or their substitutes intend to vote for the election of such designated nominees. The ten nominees receiving the greatest number of votes will be elected as Directors at the meeting. Nominees for Election The nominee directors and their respective ages, year first elected to the Board, positions and principal occupations are furnished below. Year First Name Age Elected Position with Company ---- --- ------- --------------------- Thomas K. Manning 55 1986 Chairman of the Board of Directors and Chief Executive Officer William L. Yager 49 1994 Director, President and Chief Operating Officer Jack J. Culberg 83 1986 Director Todd Goodwin 66 1986 Director John E. Grimm, III 75 1994 Director Lanny R. Julian 54 1994 Director Noel Thomas Patton 51 1995 Director Beatrice B. Smith 56 1994 Director William S. Endres 49 1994 Director, Senior Vice President Sales and Marketing Darrel M. Sanders 56 1994 Director, Senior Vice President Operations 4 Mr. Manning was named Chairman of the Board of Directors and Chief Executive Officer effective June 30, 1996. He was President and Chief Executive Officer from 1989 until 1996 and has been employed by the Company for over 20 years. Mr. Yager was named President and Chief Operating Officer effective June 30, 1996. He was Senior Vice President-Finance and Administration of the Company from February 1992 through June 1996 and has been employed by the Company since 1988. Mr. Culberg is an independent investor. He was Chairman of the Board of Directors from May 1988 through his resignation as Chairman on June 30, 1996. Mr. Goodwin has been a partner in Gibbons, Goodwin, van Amerongen ("GGvA"), a New York investment banking firm, for more than five years. Mr. Goodwin is also a member of the Board of Directors of Johns Manville Corporation, Schult Homes Corporation, U.S. Energy Systems and Wells Aluminum Corporation. Mr. Grimm has been Chairman and Chief Executive Officer of Midbrook, Inc., a New York business consulting firm, for more than ten years. Prior to that he was a corporate Vice President of the Colgate Palmolive Company. Mr. Julian is President of Donlan Marketing Group, L.L.C., a marketing consulting company. He was previously President of Ambassador Cards, a division of Hallmark Cards, Inc., a position which he held from 1992 through 1994. Prior to 1992, he served as President of Hallmark Marketing Corporation. Mr. Patton is an independent investor. He was the owner, Chairman and Chief Executive Officer of Patton Electric Company for more than five years prior to its acquisition by the Company in April 1995. Ms. Smith has been Dean of the College of Human Environmental Sciences at the University of Missouri in Columbia, Missouri for more than five years. Mr. Endres has been Senior Vice President-Sales and Marketing of the Company since 1992. He has been employed by the Company for over 20 years. Mr. Sanders has been Senior Vice President-Operations of the Company since 1992. He has been employed by the Company for over 30 years. Meetings of the Board of Directors and Committees The Board of Directors conducts its business through meetings of the Board and through activities of its committees and, when appropriate, by unanimous written consent in lieu of meetings of the Board or its committees. The Board of Directors met four times during the year ended June 30, 1997. The committees of the Board are the Executive Committee, the Audit Committee and the Compensation and Stock Option Committee (the "Compensation Committee"). 5 The Executive Committee may be empowered to take all actions of the full Board of Directors at all times between regularly scheduled meetings of the full Board. The Executive Committee consists of Jack J. Culberg, Todd Goodwin, Thomas K. Manning and Beatrice B. Smith. The Committee did not meet during the year ended June 30, 1997. The Compensation Committee consists of Todd Goodwin, Chairman, John E. Grimm, III, and Lanny R. Julian. This Committee administers the Company's Stock Option Plans and determines the level of executive compensation, including amounts to be allocated under the Company's incentive compensation plan for executive officers and other key managers. The Compensation Committee met once during the year ended June 30, 1997. The Audit Committee periodically reviews the Company's auditing practices and procedures and recommends independent auditors for selection by the full Board of Directors. The Audit Committee consists of Lanny R. Julian, Noel Thomas Patton and Beatrice B. Smith. This committee met once during the year ended June 30, 1997. The Company does not have a standing nominating committee of the Board or a committee performing a similar function. EXECUTIVE OFFICERS Information regarding four of the Company's executive officers is included under "Nominees for Election." An additional executive officer is W. Mark Meierhoffer, age 49, the Company's Senior Vice President, Finance and Administration. Prior to joining the Company in November 1996, Mr. Meierhoffer was Senior Vice President and Chief Operating Officer of DeMarche Associates, Inc., a national investment consulting firm, serving in such position from 1993 until 1996. Prior to 1993, Mr. Meierhoffer served in various capacities for Marion Merrell Dow, Inc. including as Vice President and International Treasurer. PROPOSAL 2 ELECTION OF INDEPENDENT AUDITORS The Company's independent auditors for fiscal 1997 were KPMG Peat Marwick, independent certified public accountants. At the Annual Meeting, the shareholders will consider and vote upon a proposal to elect independent auditors for the Company's fiscal year ending June 30, 1998. The Audit Committee of the Board of Directors has recommended that KPMG Peat Marwick be re-elected as independent auditors for that year. The Board of Directors unanimously recommends that shareholders vote FOR this proposal. Representatives of KPMG Peat Marwick will be present at the Annual Meeting to make a statement, if they wish, and to respond to appropriate questions from shareholders. 6 EXECUTIVE COMPENSATION Summary Compensation Table The table below shows all plan and non-plan compensation awarded to, earned by, or paid to the Company's Chief Executive Officer ("CEO") and its four most highly compensated executive officers other than the CEO, for services rendered to the Company and its subsidiaries during the periods indicated.
Long-Term Annual Compensation Compensation(3) ------------------- --------------- Stock All Fiscal Options Other Name and Title Year Salary Bonus Other(1) Granted(#) Compensation(4) - -------------- ---- ------ ----- -------- ---------- --------------- Thomas K. Manning 1997 $270,000 $ 28,337 $11,948 25,000 $48,346 Chairman of the Board 1996 270,000 128,253 9,989 30,000 43,213 of Directors and Chief 1995 240,000 82,320 12,031 30,000 48,690 Executive Officer William L. Yager 1997 200,000 17,992 6,402 12,000 29,163 President and Chief 1996 150,000 50,894 5,123 15,000 22,788 Operating Officer 1995 128,500 33,075 5,707 10,000 24,171 William S. Endres 1997 165,000 12,370 6,139 8,000 26,013 Sr. Vice President 1996 150,000 50,894 5,123 10,000 22,788 Sales and Marketing 1995 128,500 33,075 5,707 10,000 24,171 Darrel M. Sanders 1997 165,000 12,370 6,139 8,000 26,013 Sr. Vice President 1996 150,000 50,894 5,123 10,000 22,788 Operations 1995 128,500 33,075 5,707 10,000 24,171 W. Mark Meierhoffer (2) 1997 93,333 10,495 - 16,000 556 Sr. Vice President 1996 - - - - - Finance and Administration 1995 - - - - - 1) Other Annual Compensation consists solely of cash payments made in March of each year to reimburse participants in the Company's Secular Trust Plan for a portion of the income tax liabilities incurred as a result of participating in this non-qualified retirement plan. 2) Mr. Meierhoffer's salary and benefits reflect his compensation from the time he joined the Company in November 1996 through June 30, 1997. 3) Stock options are the only form of Long Term Compensation currently provided by the Company. 4) The majority of All Other Compensation for the executive officers represents the Company's contributions to the Secular Trust Plan. The Secular Trust Plan was designed to replace benefits under the Company's defined benefit pension plan which are no longer available to the executive officers and certain other managers. Contributions to the Secular Trust Plan for fiscal 1997 were as follows: Mr. Manning, $47,790; Mr. Yager, $28,607; Mr. Endres, $25,457; and Mr. Sanders, $25,457. The balance of the All Other Compensation represents the Company's payments for term life insurance and the Company's 401(K) matching contributions made on behalf of the executive officers.
7 Stock Option Grants in Fiscal 1997 The following table provides information concerning stock options granted during the year ended June 30, 1997 to the named executive officers.
Individual Grants ----------------------------------------------- Number of Securities % of Total Potential Realizable Value at Underlying Options Assumed Annual Rates of Stock Options Granted to Exercise Price Appreciation for Option Granted Employees in Price Expiration Term (2) Name #(l) Fiscal Year $/Share Date 5% 10% - ------------------- ------ ----------- ------- ------- -------- --------- Thomas K. Manning 25,000 12.4% $13.75 5/14/07 $216,183 $547,849 William L. Yager 12,000 5.9 13.75 5/14/07 103,768 262,968 William S. Endres 8,000 4.0 13.75 5/14/07 69,178 175,312 Darrel M. Sanders 8,000 4.0 13.75 5/14/07 69,178 175,312 W. Mark Meierhoffer 8,000 4.0 23.25 11/04/06 116,974 296,436 W. Mark Meierhoffer 8,000 4.0 13.75 5/14/07 69,178 175,312 1) The exercise price of each option was 100% of the fair market value of the Common Stock at the close of business on the date of grant. At the end of each year following the date of grant, 25% of the options become exercisable, with accumulation privileges. 2) These dollar amounts represent a hypothetical increase in the price of the Common Stock from the date the referenced options were granted until their expiration date at the rate of 5% and 10% per annum compounded.
Aggregated Option Exercises in Fiscal 1997 and 6/30/97 Option Values The table below provides information concerning stock options exercised during the year ended June 30, 1997, by the named executive officers and the number and value of unexercised options held by them as of June 30, 1997.
Number of Value of Unexercised Options Exercised Unexercised In-the-Money ------------------ Options at 6/30/97 Options at 6/30/97 Shares Value -------------------------- -------------------------- Name Acquired Realized Exercisable Unexercisable Exercisable Unexercisable - ----------------------------------------------------------------------------------------------------- Thomas K. Manning -0- -0- 133,364 70,000 $744,249 $25,000 William L. Yager -0- -0- 69,540 30,500 590,040 12,000 William S. Endres -0- -0- 41,790 22,750 204,165 8,000 Darrel M. Sanders -0- -0- 32,250 22,750 65,250 8,000 W. Mark Meierhoffer -0- -0- -0- 16,000 -0- 8,000
Retirement Plan During the year ended June 30, 1990, the accrued benefits under the Company's defined benefit pension plan of certain individuals defined under the Internal Revenue Code as "highly compensated," including all of the executive officers employed by the Company, were vested and frozen at their accrued benefit levels. Certain executive officers will receive retirement benefits under the Company's retirement plan as a result of accrued benefits available to such officers at the time their benefits were frozen. At regular retirement age, monthly benefits will be available as follows: Mr. Manning ($3,410), Mr. Endres ($1,405) and Mr. Sanders ($1,944). 8 Employment Agreements The Company has entered into Employment Agreements ("Agreements") with Messrs. Manning, Yager, Endres, Meierhoffer and Sanders. Each of the Agreements provide for severance pay equal to the executive's annual base salary in the event that the executive is discharged by the Company, other than for just cause (as defined in the Agreements). Additionally, the executive will receive severance equal to the executive's annual base salary if after a change of control (as defined in the Agreements), the executive terminates his employment with thirty days written notice to the Company within six months after he has been assigned services and responsibilities which are not substantially commensurate with the services and responsibilities which he was performing immediately prior to the change of control. Director Compensation Members of the Board of Directors, other than executive officers of the Company, receive fees of $5,000 per quarter for serving on the Board. In addition to the cash compensation, at each annual shareholders' meeting commencing with the 1995 meeting, each Outside Director elected to serve at such annual meeting receives a grant of a nonqualified stock option to purchase 1,000 shares, effective as of the date of the meeting, at an exercise price equal to the fair market value of the shares on the date of grant, and which shall become exercisable in four equal annual installments. Compensation Committee Interlocks and Insider Participation The Compensation Committee currently consists of Todd Goodwin, Chairman, John E. Grimm, III and Lanny R. Julian. There are no compensation committee interlocks involving these individuals. Related Party Transaction On April 21, 1995, the Company acquired substantially all of the assets and assumed certain liabilities of Patton Electric Company, Inc. and two of its affiliates. Patton Electric was wholly owned by Noel Thomas Patton and the two affiliates were jointly owned by Mr. Patton and his spouse. As part of the purchase price, the Company issued 850,000 shares of Rival common stock to the Selling Parties. The Company and Mr. Patton executed a two year consulting agreement, expiring in April 1997, under which the Company paid Mr. Patton $200,000 per year. Mr. Patton was elected to the Board of Directors on May 10, 1995. 9 Compensation Committee Report on Executive Compensation It is the Company's policy that executive officers receive total compensation designed to attract, retain, and motivate high performance managers that is appropriate in light of the Company's performance and the interests of shareholders. Total executive compensation (base salary, bonus and stock options) for the executive officers is based upon the Company's operating performance as compared to the Company's strategic plan. Base Salary The Company believes that its executives' salaries have generally been set at conservative levels when compared with salaries paid by other companies of comparable size to executives with similar skills. The base salaries are set at approximately the 25th percentile of salaries for similar positions based upon a survey of all industrial companies by a nationally recognized independent consulting organization. The Compensation Committee annually reviews the executive officers' salaries and, if warranted, approves changes. This review takes into consideration the Company's performance over the preceding year, each executive's individual performance and contribution, Committee approved merit increase guidelines, compensation levels at comparable companies and other factors. Bonuses Each year, under the Management Incentive Bonus Plan, the Committee establishes a goal relating to the Company's operating income that sets the minimum and maximum bonus pools that may be earned. No bonus is paid to the Chief Executive Officer, the President, the Chief Financial Officer or the Senior Vice Presidents if a minimum level of budgeted operating income is not achieved. The incentive pool is established as a percentage of operating income earned by the Company over the threshold. A majority of the incentive pool generated by reaching the target is distributed in cash ratably to designated executive officers and managers at year-end based on a weighing of positions and base salaries. The remaining portion of the incentive pool is distributed to outstanding performers within the eligible group based on the recommendation of the CEO to the Committee. The targeted and maximum bonuses payable to executive officers represent a significant portion of an executive's total compensation (25-30% of the total compensation derived from a combination of base salary, bonus and stock options). Stock Options Stock option grants are intended to provide long-term incentives for the achievement of the Company's strategic business plan and to tie the interests of the executive officers directly to the performance of the Company's Common Stock. Under the Company's stock option plans, the Committee may award stock options related to the individual's level of responsibility within the organization that are designed to represent 25-30% of the executive officer's total compensation. Only through maximizing shareholder wealth will the Company's executive officers and other managers receive full potential of this important part of their compensation package. Total Compensation The total compensation package consisting of base salary, bonus and stock options can fluctuate significantly based upon Company performance. If the Company meets its long term objectives which generally include average annual stock price and earnings growth of 15%, then it is contemplated that the executives' total compensation package would be at approximately the 75th percentile of compensation packages for all other industrial companies. 10 Committee's Bases for the CEO's Compensation Mr. Manning was the Chief Executive Officer throughout fiscal 1997. His compensation, like that of the other executive officers of the Company, is set in accordance with the aforementioned policies. In fiscal 1997, operating income and net earnings were below plan. As a result, Mr. Manning's bonus and total compensation were substantially below 1996 levels and below target. The issuance of additional stock options to Mr. Manning in fiscal 1997 are intended to provide incentives for continued focus on maximizing long-term shareholder wealth. Deductibility Cap on Compensation Exceeding $1,000,000 The Committee does not believe that proposed Internal Revenue Service regulations regarding non-deductibility of annual compensation in excess of $1,000,000 will have any material impact upon the Company, given the current salary and bonus levels of officers of the Company, and given the proposed treatment in the regulations of compensation under the Company's stock option plans. However, the Committee will continue to consider the effect of the new regulations upon the Company's executive compensation policies. Submitted by the Compensation and Stock Option Committee: Todd Goodwin, Chairman John E. Grimm, III Lanny R. Julian 11 Performance Graph The following line graph compares the cumulative total return to shareholders of the Company's Common Stock to the Total Return Index for the Nasdaq Stock Market and a peer group index of eight stocks from June 30,1992 through June 30, 1997. The graph assumes $100 invested at June 30, 1992 and reinvestment of dividends. The Peer Group consists of Black & Decker, General Housewares, Helen of Troy Corp., National Presto Industries, Inc., Royal Appliance Mfg. Co., Toastmaster, Inc. and Windmere Corporation. Value of $100 invested on June 30, 1992 with Dividends Reinvested * (PERFORMANCE LINE GRAPH) 6/30/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97 ---------------------------------------------------- The Rival Company 100 141 204 148 233 151 Nasdaq Stock Market 100 126 127 169 218 265 Peer Group 100 91 78 117 148 152 * $100 invested on 06/30/92 in stock or in index - including reinvestment of dividends. Fiscal year ending June 30. 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information regarding beneficial ownership of the Company's Common Stock by all present directors and the named executive officers. The table also sets forth the number of shares beneficially owned and the percentage of ownership of the Company's Common Stock by all directors and executive officers as a group and by each person who was known by the Company to own beneficially as much as five percent of the total outstanding shares of the Company's Common Stock as of the dates indicated. The table reports ownership as of August 26, 1997. Amount and Nature of Beneficial Shareholder Ownership(1) Percent Owned(9) - ----------------------------------------------------------------------------- 5% Shareholders: T. Rowe Price (2) 1,147,000 11.6 % Sanford C. Bernstein (3) 695,100 7.0 Directors and Named Executive Officers: Thomas K. Manning (4) 233,227 2.4 William L. Yager (5) 77,340 .8 William S. Endres 113,670 1.2 Darrel M. Sanders 58,304 .6 Jack J. Culberg 35,150 .4 Todd Goodwin (6) 57,488 .6 John E. Grimm, III 3,050 * Lanny R. Julian 1,950 * Noel Thomas Patton (7) 850,750 8.6 Beatrice Smith (8) 1,950 * W. Mark Meierhoffer 2,000 * All Directors and Executive Officers as a Group 1,434,879 14.5 (1) The shares beneficially owned as scheduled above include those shares the following persons have the right to acquire within sixty days from August 26, 1997 by way of option exercise: Mr. Manning - 133,664; Mr. Yager - 69,540; Mr. Endres - 41,790; Mr. Sanders - 32,250; Mr. Culberg - 250; Mr. Goodwin - 250; Mr. Grimm - 750; Mr. Julian - 750; Mr. Patton - 750; and Ms. Smith - 750. (2) T. Rowe Price Associates, Inc. (100 East Pratt Street, Baltimore, MD) ("Price Associates") is a registered investment advisor, which has sole investment power with respect to the shares indicated and sole voting power with respect to 107,000 shares. These securities are owned by various individual and institutional investors for which Price Associates serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. (3) Sanford C. Bernstein and Co. (767 Fifth Avenue, New York, NY), is a registered investment adviser, which has sole investment power with respect to the shares indicated. Sanford C. Bernstein and Co. has sole voting power over 598,000 of the shares indicated and shared voting power over 12,500 shares. (4) Includes 30,000 shares held by Mr. Manning's spouse. Mr. Manning shares voting and investment power with respect to these shares. 13 (5) Includes 1,800 shares held by members of Mr. Yager's family. Mr. Yager shares voting and investment power with respect to these shares. (6) Includes 3,000 shares held by Mr. Goodwin's spouse as to which he disclaims beneficial ownership. (7) Includes 843,948 shares held by a corporation in which Mr. Patton and his spouse each have a 50% ownership interest. (8) Includes 1,200 shares held by Ms. Smith's spouse. Ms. Smith shares voting and investment power with respect to these shares. (9) For purposes of determining this percentage, the outstanding shares of the Company include shares which such persons have the right to acquire within sixty days by way of option exercise. FINANCIAL DATA The Company's Annual Report containing financial statements of the Company for the year ended June 30, 1997, has been enclosed in the same mailing with this Proxy Statement. The Annual Report is not incorporated in this Proxy Statement and is not deemed a part of the proxy soliciting material. OTHER MATTERS No other matters are intended to be brought before the meeting by the Company, nor does the Company know of any matters to be brought before the meeting by others. If, however, any other matters properly come before the meeting, the persons named in the proxy will vote the shares represented thereby in accordance with their judgment. In addition to the solicitation of proxies from shareholders by use of the mails, proxies may be solicited by the Company's directors, officers and other employees, by personal interview, telephone or telegram. Such persons will receive no additional compensation for their services. The Company requests that brokerage houses and other custodians, nominees and fiduciaries forward the soliciting material to the beneficial owners of the shares of Company Common Stock held of record by such persons and will pay such brokers and other fiduciaries their reasonable out-of-pocket expenses incurred in connection therewith. All costs of solicitation, including the costs of preparing, assembling and mailing this Proxy Statement and all papers which now accompany or may hereafter supplement the same, will be borne by the Company. 14 SHAREHOLDER PROPOSALS Shareholders who wish to present proposals for action at the Annual Meeting of Shareholders to be held in 1998 should submit their proposals to the Company at the address of the Company set forth on the first page of this proxy statement. Proposals must be received at the Company's corporate office no later than June 1, 1998 for consideration for inclusion in the next year's proxy statement and proxy. By order of the Board of Directors Stanley D. Biggs Secretary 15 This page left blank intentionally. 16 -----END PRIVACY-ENHANCED MESSAGE-----