<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRAEGITZER INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PRAEGITZER INDUSTRIES, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 14, 1997
------------------------
TO THE SHAREHOLDERS OF PRAEGITZER INDUSTRIES, INC.:
The annual meeting of the shareholders of Praegitzer Industries, Inc., an
Oregon corporation, will be held at 2:00 p.m., Pacific Time, on November 14,
1997, at The Heathman Hotel, 1001 S.W. Broadway, Portland, Oregon 97205, for the
following purposes:
1. Electing directors to serve for the following year and until their
successors are elected; and
2. Transacting any other business that properly comes before the meeting.
Only shareholders of record at the close of business on September 5, 1997
will be entitled to vote at the annual meeting.
YOU ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. You may attend the meeting
in person even if you send in your proxy; retention of the proxy is not
necessary for admission to or identification at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Robert L. Praegitzer
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD
Dallas, Oregon
October 10, 1997
<PAGE>
PRAEGITZER INDUSTRIES, INC.
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
------------------------
The mailing address of the principal executive offices of the Company is
1270 S.E. Monmouth Cutoff, Dallas, Oregon 97338. The approximate date this proxy
statement and the accompanying proxy form are first being sent to shareholders
is October 10, 1997.
UPON WRITTEN REQUEST TO GINA O'NEILL, INVESTOR RELATIONS, ANY PERSON WHOSE
PROXY IS SOLICITED BY THIS PROXY STATEMENT WILL BE PROVIDED, WITHOUT CHARGE, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
Praegitzer Industries, Inc., an Oregon corporation, for use at the Annual
Meeting of Shareholders to be held on November 14, 1997 and at any adjournment
thereof. The Company will bear the cost of preparing and mailing the proxy,
proxy statement, and any other material furnished to shareholders by the Company
in connection with the annual meeting. Proxies will be solicited by use of the
mails, and officers and employees of the Company may also solicit proxies by
telephone or personal contact. Copies of solicitation materials will be
furnished to fiduciaries, custodians, and brokerage houses for forwarding to
beneficial owners of the stock held in their names.
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. The proxy may be revoked
by filing with the Secretary of the Company, an instrument of revocation or a
duly executed proxy bearing a later date. The proxy may also be revoked by
voting in person at the meeting. A shareholder who attends the meeting, however,
is not required to revoke the proxy and vote in person. All valid, unrevoked
proxies will be voted at the annual meeting in accordance with the instructions
given.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Common Stock is the only outstanding authorized voting security of the
Company. The record date for determining holders of Common Stock entitled to
vote at the annual meeting is September 5, 1997. On that date there were
12,659,818 shares of Common Stock outstanding, entitled to one vote per share.
The Common Stock does not have cumulative voting rights.
1
<PAGE>
The following table sets forth certain information regarding the beneficial
ownership as of September 5, 1997 of the Common Stock by (i) each person known
by the Company to own beneficially more than 5 percent of the Common Stock, (ii)
each director and each director nominee of the Company, (iii) each executive
officer of the Company named in the Summary Compensation Table, and (iv) all
executive officers and directors as a group. Except as otherwise noted, the
persons listed below have sole investment and voting power with respect to the
Common Stock owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER OWNED(1) OF SHARES
- -------------------------------------------------------------------------------- -------------------- -------------
<S> <C> <C>
Robert L. Praegitzer ........................................................... 8,076,375(2) 62.4%
1270 S.E. Monmouth
Cut-Off Road
Dallas, Oregon 97338
Robert G. Baldridge............................................................. 348,866(3) 2.7%
Charles N. Hall................................................................. 323,866(4) 2.5%
Matthew J. Bergeron............................................................. 15,650(5) *
Daniel J. Barnett............................................................... 172,004(6) 1.3%
Robert J. Versiackas............................................................ 164,442(7) 1.3%
Sally Praegitzer................................................................ 0(8) --
Theodore L. Stebbins............................................................ 6,666(9) *
Merrill A. McPeak............................................................... 0(10) --
William L. Healey............................................................... 6,666(11) *
Gordon B. Kuenster.............................................................. 0 --
All directors and executive officers as a group (12 persons).................... 9,115,285(12) 70.4%
</TABLE>
- ------------------------
* Less than 1%.
(1) Shares that the person has the right to acquire within 60 days after
September 5, 1997 are deemed to be outstanding in calculating the percentage
ownership of the person or group but are not deemed to be outstanding as to
any other person or group.
(2) Excludes options to purchase 125,000 shares of Common Stock not exercisable
within 60 days after September 5, 1997.
(3) Includes 23,166.5 shares subject to an exercisable warrant and options to
purchase 11,666 shares of Common Stock that are exercisable within 60 days
after September 5, 1997. Excludes options to purchase 63,334 shares of
Common Stock not exercisable within 60 days after September 5, 1997.
(4) Includes 23,166.5 shares subject to an exercisable warrant and options to
purchase 11,666 shares of Common Stock that are exercisable within 60 days
after September 5, 1997. Excludes options to purchase 43,334 shares of
Common Stock not exercisable within 60 days after September 5, 1997.
(5) Includes options to purchase 12,500 shares of Common Stock that are
exercisable within 60 days after September 5, 1997, and excludes options to
purchase 62,500 shares of Common Stock not exercisable within 60 days after
September 5, 1997.
(6) Includes options to purchase 4,634 shares of Common Stock that are
exercisable within 60 days after September 5, 1997, and excludes options to
purchase 45,366 shares of Common Stock not exercisable within 60 days after
September 5, 1997.
(7) Includes options to purchase 4,010 shares of Common Stock that are
exercisable within 60 days after September 5, 1997, and excludes options to
purchase 12,033 shares of Common Stock not exercisable within 60 days after
September 5, 1997.
2
<PAGE>
(8) Excludes shares owned by Robert L. Praegitzer, husband of Sally Praegitzer,
over which Ms. Praegitzer has no voting power or investment authority.
(9) Comprises options to purchase 6,666 shares of Common Stock that are
exercisable within 60 days after September 5, 1997, and excludes options to
purchase 13,334 shares of Common Stock not exercisable within 60 days after
September 5, 1997.
(10) Excludes options to purchase 20,000 shares of Common Stock not exercisable
within 60 days after September 5, 1997.
(11) Comprises options to purchase 6,666 shares of Common Stock that are
exercisable within 60 days after September 5, 1997, and excludes options to
purchase 13,334 shares of Common Stock not exercisable within 60 days after
September 5, 1997.
(12) Includes 46,333 shares subject to exercisable warrants and options to
purchase 58,558 shares of Common Stock that are exercisable within 60 days
after September 5, 1997. Excludes options to purchase 282,485 shares of
Common Stock not exercisable within 60 days after September 5, 1997.
3
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The directors of the Company are elected at the Annual Meeting to serve
until their successors are elected and qualified. Each nominee is now serving as
a director of the Company. If a quorum of shareholders is present at the annual
meeting, the six nominees for election as directors who receive the greatest
number of votes cast at the meeting will be elected directors. Abstentions and
broker non-votes will have no effect on the results of the vote. Unless
otherwise instructed, proxy holders will vote the proxies they receive for the
nominees named below. If any of the nominees for director at the annual meeting
becomes unavailable for election for any reason, the proxy holders will have
discretionary authority to vote pursuant to the proxy for a substitute or
substitutes. The following table briefly describes the Company's nominees for
directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME, PRINCIPAL OCCUPATION, AND OTHER DIRECTORSHIPS AGE SINCE
- ---------------------------------------------------------------------------------------------- --- ------------
<S> <C> <C>
ROBERT L. PRAEGITZER founded the Company in 1981 and has been its President, Chief Executive 65 1981
Officer and Chairman of the Board since that time. He was also the founder and President of
Praegitzer Design Incorporated, which merged into the Company in 1995, and Praegitzer Property
Group, the assets of which were acquired by the Company in 1996. Mr. Praegitzer is married to
Sally Praegitzer, a director and Secretary of the Company.
MATTHEW J. BERGERON joined the Company in 1990 as Chief Financial Officer, overseeing finance, 34 1995
administration and Management Information Systems. He became Senior Vice President in 1993, a
director in November 1995 and the Executive Vice President and Chief Operating Officer in
April 1997. Prior to joining the Company, Mr. Bergeron was an accountant at Johnson & Shute
P.S., a public accounting firm. Mr. Bergeron is a certified public accountant.
DANIEL J. BARNETT joined the Company as Senior Vice President and a director in August 1996 in 47 1996
connection with the merger of Trend Circuits, Inc. ("Trend") into the Company. Prior to the
merger, Mr. Barnett was the president of Trend. Mr. Barnett served as the president of Trend
from 1992 until August 1996.
THEODORE. L. STEBBINS is the Managing Director of Adams, Harkness & Hill, an investment 56 1996
banking firm, and was appointed to the Board of Directors of the Company in May 1996.
MERRILL A. MCPEAK joined the Company as a director in April 1997. He is a retired General of 61 1997
the United States Air Force. General McPeak served as chief of Staff of the U.S. Air Force
from October 1990 until October 1994. In addition to Praegitzer Industries, Incorporated,
General McPeak serves on the board of four publicly held companies; ECC International,
Tektronix Incorporated, Thrustmaster Incorporated and Trans World Airlines. General McPeak is
a distinguished advisor for Russia Special Purpose Corporation and is President of McPeak and
Associates.
(nominee)
GORDON B. KUENSTER is founder and Chief Executive Officer of Seattle Sight Systems, 64 1997
Incorporated, a manufacturer of application-specific high resolution computer displays. He
founded Seattle Sight Systems, Incorporated in 1996 and is presently serving as Chief
Executive Officer. Mr. Kuenster was founder and Chief Executive Officer of; Virtual Vision,
Incorporated from 1991 to 1994 and Virtual Image Displays, Incorporated from 1994 to 1996. He
was General Manager of Eldec Power Supply Division, Vice President of Engineering for Pacific
Electrodynamics and Engineering Manager of Boeing Aerospace.
</TABLE>
4
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors met four times in the fiscal year ended June 30, 1997
("fiscal 1997"). No director attended fewer than 75 percent of the aggregate of
all meetings of the Board of Directors and the committees of which the director
was a member during fiscal 1997. The standing committees of the Board of
Directors are the Audit Committee and the Compensation Committee. The Company
does not have a Nominating Committee.
The Audit Committee makes recommendations concerning the engagement of the
independent public accountants, reviews with the independent public accountants
the plans and results of audits, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and nonaudit fees, and reviews
the adequacy of the Company's internal accounting controls. The Audit Committee
consists of Mr. Stebbins and Mr. Hall. The Compensation Committee determines
compensation for the Company's executive officers, and administers the Company's
1995 Stock Incentive Plan and the Company's Employee Stock Purchase Plan. The
Compensation Committee consists of Mr. Healey, Mr. Baldridge and General McPeak.
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company are reimbursed for reasonable
out-of-pocket expenses incurred in attending meetings. In addition, each
individual who becomes a nonemployee director of the Company receives a
non-statutory option to purchase 10,000 shares of Common Stock when the
individual becomes a director, and each nonemployee director of the Company is
automatically granted an annual non-discretionary, non-statutory option to
purchase 5,000 shares of Common Stock upon re-election.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid by the Company with
respect to the last two fiscal years to the Chief Executive Officer and the
three other most highly compensated executive officers whose annual compensation
exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- ---------------------------
FISCAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS GRANTED COMPENSATION(1)
- ------------------------------------------------------ --------- ---------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Robert L. Praegitzer ................................. 1996 $ 195,972 $ 0 0 $ 29,684
President, Chief Executive Officer 1997 274,999 0 125,000 9,640
Matthew J. Bergeron .................................. 1996 118,077 31,007 50,000 0
Executive Vice President and Chief 1997 149,999 0 25,000 4,983
Operating Officer
Daniel J. Barnett .................................... 1996 -- -- -- --
Senior Vice President 1997 162,500 0 50,000 0
Robert J. Versiackas ................................. 1996 -- -- -- --
Senior Vice President 1997 141,731 0 16,043 0
</TABLE>
- ------------------------
(1) Consists of car allowances
5
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding stock options granted in
fiscal 1997 to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
NUMBER OF PERCENTAGE OF APPRECIATION FOR OPTION
SHARES OPTIONS GRANTED EXERCISE TERM(1)
UNDERLYING TO EMPLOYEES IN PRICE PER EXPIRATION ------------------------
NAME OPTIONS GRANTED FISCAL YEAR SHARE DATE 5% 10%
- ----------------------------- --------------- ------------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert Praegitzer............ 125,000(2) 25.0% $ 8.38 9/27/06 $ 658,767 $ 1,669,445
Matthew J. Bergeron.......... 25,000(2) 5.0% $ 8.38 9/27/06 $ 131,753 $ 333,889
Daniel J. Barnett............ 18,537(3) 10.0% $ 13.13 8/24/06 $ 153,067 $ 387,902
31,463(2) $ 8.38 9/27/06 $ 165,814 $ 420,206
Robert J. Versiackas......... 16,043(3) 3.2% $ 13.13 8/24/06 $ 132,473 $ 335,713
</TABLE>
- ------------------------
(1) In accordance with rules of the Securities and Exchange Commission, these
amounts are the hypothetical gains or "option spreads" that would exist for
the respective options based on assumed compounded rates of annual stock
price appreciation of 5 percent and 10 percent from the date the options
were granted over the option term.
(2) This option becomes exercisable September 27, 1997.
(3) This option becomes exercisable August 24, 1997.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table indicates for all executive officers named in the
Summary Compensation Table (i) stock options exercised during fiscal 1997,
including the value realized on the date of exercise, (ii) the number of shares
subject to exercisable (vested) and unexercisable (unvested) stock options as of
June 30, 1997, and (iii) the value of "in-the-money" options, which represents
the positive spread between the exercise price of existing stock options and the
year-end price of the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES SUBJECT UNEXERCISED
NUMBER OF TO UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Praegitzer............... -- -- 0 125,000 -- $ 343,750
Matthew J. Bergeron................ -- -- 12,500 62,500 $ 20,375 $ 129,875
Daniel J. Barnett.................. -- -- 4,634 45,366 -- $ 58,718
Robert J. Versiackas............... -- -- 4,010 12,033 -- --
</TABLE>
- ------------------------
(1) Based on last sale price of $11.13 per share on June 30, 1997.
EMPLOYMENT ARRANGEMENTS
In November 1995 the Company entered into employment agreements with each of
Robert L. Praegitzer, Charles N. Hall and Robert G. Baldridge, providing annual
base salaries of $250,000, $125,000 and $125,000, respectively, and eligibility
for bonuses and other company benefits. Mr. Praegitzer's employment agreement is
of an indefinite duration. Messrs. Hall and Baldridge each received a mandatory
bonus of $25,000 in fiscal 1997. On December 22, 1996, Mr. Baldridge's base
salary was increased by $50,000. Messrs. Hall and Baldridge are no longer
employees of the Company. Mr. Hall terminated his
6
<PAGE>
employment with the Company on January 1, 1997 and Mr. Baldridge terminated his
employment with the Company on June 14, 1997.
Messrs. Hall and Baldridge also entered into agreements with the Company
restricting their ability to compete with the Company until three years after
termination of their employment and prohibiting disclosure of confidential
information and solicitation of the Company's customers or employees.
In August 1996, the Company entered into employment agreements with Daniel
J. Barnett and Robert J. Versiackas providing for annual base salaries of
$150,000 and $130,000, respectively, with eligibility for bonuses and other
Company benefits. Mr. Barnett will receive a minimum bonus of $50,000 in each of
the first two years of the agreement. If at the end of each quarter during the
first two years of this Agreement the total salary and bonus paid to Mr.
Versiackas is less than an annualized rate of $165,000, the Company shall pay
Mr. Versiackas an amount equal to the difference. Additionally, Messrs.
Versiackas and Barnett received options to acquire 16,043 and 18,537,
respectively, shares of Common Stock at the last sale price per share reported
on the Nasdaq National Market System as of the date of the execution of their
agreements. The agreement may be terminated at any time by the Company for
cause, or by Messrs. Barnett and Versiackas upon a material breach by the
Company. Upon termination, Messrs. Barnett and Versiackas are entitled to all
payments customary under Company policies. Upon termination by the Company
without cause, or termination by Messrs. Barnett and Versiackas for cause, Mr.
Barnett and Mr. Versiackas, each are also entitled to his base compensation for
the lesser of (i) one year, and (ii) the time remaining until the expiration of
two years after the date of the agreement. After an initial term ending August
26, 1998, the agreements with Mr. Barnett and Mr. Versiackas may be terminated
by either party with or without cause upon thirty (30) days written notice (or,
in the case of termination by the Company, with payment of sixty (60) days of
base compensation in lieu of thirty (30) days notice).
Messrs. Barnett and Versiackas, each have also entered into an agreement
with the Company restricting his ability to compete with the Company until two
years after termination of his employment and prohibiting disclosure of
confidential information and solicitation of the Company's customers or
employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Messrs. Praegitzer, Hall and Baldridge, each of whom is a
director of the Company, entered into a Tax Indemnification Agreement with
respect to the Company's, CTI's and Praegitzer Design, Inc.'s ("PDI") status as
S corporations in April 1996. Pursuant to that agreement, the Company is
obligated to indemnify each shareholder, including Messrs. Praegitzer, Hall and
Baldridge, for certain federal or state income tax Liability (including
penalties and interest) he may incur or any increased taxable income resulting
from a final determination of any adjustment with respect to the Company's,
CTI's or PDI's income or deductions for certain periods prior to the termination
of the Company's S corporation status (the "Termination Date"). In addition, the
Company is obligated to indemnify each shareholder, including Messrs.
Praegitzer, Hall and Baldridge, for any federal and state income taxes he must
pay as a result of receiving the indemnification payment. If there is a final
determination that the Company, CTI or PDI was not an S corporation for certain
periods prior to the S corporation Termination Date, each shareholder, including
Messrs. Praegitzer, Hall and Baldridge, is obligated to pay the Company any
federal or state income tax refund actually received by him as a result of that
determination. The agreement requires the shareholders, including Messrs.
Praegitzer, Hall and Baldridge, to file a refund claim if requested to do so by
the Company.
In November 1995 the Company acquired CTI by means of a merger of CTI with
and into the Company, pursuant to which the shareholders of CTI, Robert
G.Baldridge and Charles N. Hall, each now a director of the Company, each
received $1.0 million in cash, 350,000 shares of Company Common Stock and
warrants to purchase an additional 23,166.5 shares of Company Common Stock. As a
result of the
7
<PAGE>
merger, the Company assumed all of the liabilities of CTI, including promissory
notes payable to each of Messrs. Baldridge and Hall in the principal amount of
$1.4 million in payment of dividends of CTI reflecting previously undistributed
S corporation earnings. Total consideration for the merger was approximately $16
million. The merger agreement provides that Robert L. Praegitzer shall indemnify
the former shareholders of CTI for damages suffered by CTI in excess of $100,000
as the result of undisclosed claims, liabilities or obligations of the Company
relating to the period prior to the merger or as a result of any
misrepresentation of the Company in the merger agreement. Pursuant to the merger
agreement, Messrs. Baldridge and Hall are required to indemnify the Company for
damages suffered by the Company in excess of $100,000 as the result of
undisclosed claims, liabilities or obligations of CTI relating to the period
prior to the merger or as the result of any misrepresentations of CTI in the
merger agreement. In addition, in connection with the merger Messrs. Praegitzer,
Baldridge and Hall received certain rights with respect to the registration of
their shares of Common Stock under the Securities.
The Company has leased its Dallas warehouse facility from Robert L.
Praegitzer, with the lease payments totaling $90,000 for the year end June 30,
1997. The lease rates for the warehouse facility were determined by Mr.
Praegitzer, who was the sole shareholder of the Company at the time of
determination. The Board of Directors of the Company unanimously concluded that
these rates were comparable to rates that could have been obtained from an
independent party. These lease amounts, however, have been eliminated from the
financial statements.
In August 1996, the Company acquired Trend by means of a merger of Trend
with and into the Company (the Merger). In the Merger, each outstanding share of
Trend was converted into (i) 277.085 shares of Company's common stock and (ii)
the right to receive a cash payment of $1,385.43. On completion of the Merger,
the shareholders of Trend held a total of 1,000,000 shares of Praegitzer, or
approximately 8.5% of the outstanding Praegitzer Common Stock, and received a
total of $5,000,000 cash. Daniel J. Barnett, the former president of Trend and
now a senior vice president and director of the Company, and his spouse received
185,370 shares of the Company's common stock and a cash payment of $926.853.
Robert Versiackas, now a senior vice president of the Company, and his spouse
received 160,432 shares of the Company's common stock and a cash payment of
$802,163.
At the time of the Merger, each shareholder of Trend, including Messrs.
Barnett and Versiackas, entered into employment and noncompetition agreements
having terms of two years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert Baldridge, a former Senior Vice President of the Company, served on
the Compensation Committee for fiscal 1997.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation committee consists of three directors and, pursuant to
authority delegated by the Board of Directors, determines and administers the
compensation of the Company's executive officers. In setting the compensation
for the executive officers other than the President and Chief Executive Officer,
the Compensation Committee works closely with the President and Chief Executive
Officer, who makes specific recommendations to the committee concerning
compensation for each of the other executive officers. Although the Board of
Directors has granted the Compensation Committee full authority to set executive
compensation, in practice the decisions of the Compensation Committee are
usually reported as recommendations to the full Board of Directors, which has in
the past generally approved the recommendations.
Internal Revenue Code Section 162(m), as adopted in 1993, limits to
$1,000,000 per person the amount that the Company may deduct for compensation
paid to any of its most highly compensated officers in any year after 1993.
Generally the levels of salary and bonus paid by the Company do not exceed this
limit. However, upon the exercise of nonstatutory incentive stock options, the
excess of the current
8
<PAGE>
market price over the option price (option spread) is treated as compensation
and, therefore, it may be possible for option exercises by an officer in any
year to cause the officer's total compensation to exceed $1,000,000. Under
certain regulations, option spread compensation from options that meet certain
requirements will not be subject to the $1,000,000 cap on deductibility, and it
is the Company's current policy generally to grant options that meet those
requirements.
COMPENSATION PRINCIPLES
Executive compensation is based on several general principles, which are
summarized below:
- Provide competitive total compensation that enables the Company to attract
and retain key executives.
- Link corporate and individual performance to compensation.
- Encourage long-term success and align shareholder interests with
management interests by giving executives the opportunity to acquire stock
in the Company.
- Reward initiative.
COMPENSATION COMPONENTS
The primary components of the Company's executive officer compensation
program are base salary, annual incentive arrangements and long-term incentive
compensation in the form of stock options.
BASE SALARY. Executive officer base salaries for fiscal 1997 were
established by the Compensation Committee, to provide salary levels
appropriate for the responsibilities of the executive officers of the
Company. In determining salaries, the Compensation Committee took into
account individual experience, job responsibility and individual
performance. No specific weight was attached to these factors in
establishing base salaries. For fiscal 1998 and future years, the Company
will continue to establish base salary levels for the Company's executive
officers that are competitive with those established by companies of similar
size in the electronics industry. When determining salaries, the
Compensation Committee will also take into account individual experience
levels, job responsibility and individual performance. Each executive
officer's salary will be reviewed annually, and increases to base salary
will be made to reflect competitive market increases and the individual
factors described above.
STOCK OPTIONS. The Company's 1995 Stock Incentive Plan (the "Plan") is
intended as a long-term incentive plan for executive officers, managers and
other key employees of the Company. The objectives of the Plan are to align
employee and shareholder long-term interests by creating a direct link
between compensation and shareholder value. The Compensation Committee
administers the Plan and recommends to the full Board of Directors awards of
stock options to executive officers and other employees of the Company.
Options granted under the Plan generally have been granted at an exercise
price equal to the fair market value of the Common Stock on the date of
grant. Fair market value is established by the Board of Directors, upon
recommendation of the Compensation Committee, as the closing price as
reported on the Nasdaq National Market on the date of grant. Options
generally become exercisable over a four-year period with 25% of the options
exercisable at the end of each year from date of grant. Stock options
generally have a ten-year term, but terminate earlier if employment is
terminated. Initial option grants to executive officers depend upon the
level of responsibility and position, and subsequent grants are made based
on the Compensation Committee's subjective assessment of performance, among
other factors. In fiscal 1997 the Board of Directors, upon recommendation of
the Compensation Committee, made the following option grants of Company
Common Stock under the Plan to executive officers of the Company: Matt
Bergeron--25,000 shares, Robert G. Baldridge--40,000 shares (employment was
terminated on June 14, 1997), Daniel J. Barnett--18,537 shares, Robert J.
Versiackas--16,043 shares, Gregory L. Lucas--50,000 shares, William J.
Thale--27,000 shares. The Compensation Committee expects that in the future,
if
9
<PAGE>
additional grants are made, consideration will be given to the number of
options granted in the past and the exercise price of such grants.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Compensation Committee and the Board of Directors set Mr. Praegitzer's
compensation for fiscal 1997. They employed the same criteria that the
Compensation Committee used to set compensation for the other executive
officers. The Compensation Committee and the Board of Directors reviewed the
data within the electronics industry and similar size firms. They based Mr.
Praegitzer's salary on their findings of other executives with his level of
experience, and recognized Mr. Praegitzer's individual performance and important
contributions to the Company's increased revenue and earnings growth.
COMPENSATION COMMITTEE MEMBERS
Robert G. Baldridge
William L. Healey
Merrill A. McPeak
10
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph that compares the cumulative total stockholder
return on the Company's Common Stock with the cumulative total return on the
Nasdaq Composite U.S. Index and a peer group of companies in the Company's
industry (SIC 3672) over the period indicated (assuming the investment of $100
in the Company's Common Stock on April 4, 1996, the date of the Company's
initial public offering, and reinvestment of any dividends). In accordance with
guidelines of the SEC, the stockholder return for each entity in the peer group
index have been weighted on the basis of market capitalization as of each
monthly measurement date set forth on the graph.
INSERT
PERFORMANCE
GRAPH
HERE
INDEPENDENT ACCOUNTANTS
Representatives of Deloitte & Touche LLP will be at the Annual Meeting and
will be available to respond to appropriate questions. They do not plan to make
any statement but will have the opportunity to make a statement if they wish.
11
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors, and persons who own more than 10 percent of the
Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Executive officers, directors, and
beneficial owners of more than 10 percent of the Common Stock are required by
the SEC regulation to furnish the Company with copies of all section 16(a)
reports they file. Based solely on a review of such reports received by the
Company and on written representations from certain reporting persons that they
have complied with the relevant filing requirements, the Company believes that
all section 16(a) filing requirements applicable to its executive officers and
directors have been complied with except a Form 3 was not timely filed by
Merrill A. McPeak.
DISCRETIONARY AUTHORITY
Although the Notice of Annual Meeting of Shareholders provides for
transaction of any other business that properly comes before the meeting, the
Board of Directors has no knowledge of any matters to be presented at the
meeting other than the matters described in this proxy statement. The enclosed
proxy, however, gives discretionary authority to the proxy holders to vote in
accordance with their judgment if any other matters are presented.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be considered for inclusion in proxy material
for the Company's next annual meeting in November 1998 must be received at the
principal executive office of the Company no later than July 14, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Robert L. Praegitzer
President, Chief Executive Officer
and Chairman of the Board
Dallas, Oregon
October 10, 1997
12
<PAGE>
PRAEGITZER INDUSTRIES, INC.
Annual Meeting, November 14, 1997
PROXY SOLICITED BY BOARD OF DIRECTORS
PLEASE SIGN AND RETURN THIS PROXY
The undersigned hereby appoints Robert L. Praegitzer and Matthew J. Bergeron,
and each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares that the undersigned may be entitled to vote at the
annual meeting of shareholders of Praegitzer Industries, Inc. (the "Company")
on November 14, 1997 and any adjournments thereof, with all powers that the
undersigned would possess if personally present, with respect to the
following:
The shares represented by this proxy will be voted as specified on the
reverse hereof, but if no specification is made, this proxy will be voted for
the election of directors. THE PROXIES MAY VOTE IN THEIR DISCRETION AS TO
OTHER MATTERS THAT MAY COME BEFORE THIS MEETING.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE.)
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<PAGE>
Please mark
your votes as
indicated in /X/
this example
<TABLE>
<CAPTION>
FOR all nominees WITHHOLD AUTHORITY
except as marked to to vote for all
the contrary below. nominees listed below.
<S> <C> <C> <C>
1. Election of Directors: / / / / 2. Transaction of any business that properly
comes before the meeting or any adjournments
thereof. A majority of the proxies or
substitutes at the meeting may exercise
all the powers granted hereby.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A
LINE THROUGH THE NOMINEE'S NAME BELOW.)
Robert L. Praegitzer, Matthew J. Bergeron, Daniel J. Barnett
Theodore L. Stebbins, Merrill A. McPeak, Gordon B. Kuenster
Date: , 1997
----------------------
----------------------------------
Signature or Signatures
_____ PLEASE DATE AND SIGN AS NAME IS
| IMPRINTED HEREON, INCLUDING
| DESIGNATION AS EXECUTOR, TRUSTEE,
| ETC., IF APPLICABLE. A
CORPORATION MUST SIGN ITS NAME BY
THE PRESIDENT OR OTHER AUTHORIZED
OFFICER.
The Annual Meeting of
Shareholders of Praegitzer
Industries, Inc. will be held on
November 14, 1997 at 2:00 p.m.,
Pacific Time, at The Heathman
Hotel, 1001 S.W. Broadway,
Portland, Oregon.
Please Note: Any shares of stock
of the Company held in the name
of fiduciaries, custodians or
brokerage houses for the benefit
of their clients may only be
voted by the fiduciary, custodian
or brokerage house itself; the
beneficial owner may not directly
vote or appoint a proxy to vote
the shares and must instruct the
person or entity in whose name
the shares are held how to vote
the shares held for the
beneficial owner. Therefore, if
any shares of stock of the
Company are held in "street name"
by a brokerage house, only the
brokerage house, at the
instructions of its client, may
vote or appoint a proxy to vote
the shares.
</TABLE>
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