NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
[PCD LOGO APPEARS HERE]
Dear Stockholder:
You are invited to attend the 1999 annual meeting of
stockholders of PCD Inc. This year the annual meeting will be
held at PCD's headquarters, 2 Technology Drive, Centennial Park,
Peabody, MA 01960-7977, on Friday, May 7, 1999, at 10:00 a.m.,
local time.
The attached notice and proxy statement describe the business
to be conducted at the meeting, including the election of two
directors. Nominees for three-year terms on our Board are Mr.
John L. Dwight, Jr. and Mr. Theodore C. York.
Please carefully read the descriptions included in the Proxy
Statement before completing, signing and returning the accompanying
proxy in the postage paid envelope provided for that purpose.
Thank you for your prompt attention to these important
matters.
Very truly yours,
/s/ John L. Dwight Jr.
John L. Dwight, Jr.
Chairman of the Board
<PAGE>
[PCD LOGO APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 7, 1999
To the Stockholders of
PCD Inc.:
Notice is hereby given that the annual meeting of the
stockholders of PCD Inc., a Massachusetts corporation, will be
held at PCD's Headquarters, 2 Technology Drive, Centennial Park,
Peabody, MA 01960-7977, on Friday, May 7 1999, at 10:00 a.m.,
local time, for the purpose of considering and acting upon the
following:
1. The election of two members of the Board of Directors
for a three-year term.
2. Such other matters as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on
February 26, 1999 as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting and
any adjournments thereof.
By order of the Board of Directors
PCD Inc.
/s/ John L. Dwight, Jr.
John L. Dwight, Jr.
Chairman of the Board
Peabody, Massachusetts
April 2, 1999
<PAGE>
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, MA 01960-7977
----------------------------------------
PROXY STATEMENT
----------------------------------------
FOR THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD MAY 7, 1999
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS OF PCD INC.
(THE "COMPANY"). Such proxies will be voted at the annual meeting
of stockholders of the Company to be held on Friday, May 7, 1999,
and any adjournments or postponements thereof (the "Annual
Meeting"), at the time and place and for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders
dated April 2, 1999. The address of the Company's principal
executive office is 2 Technology Drive, Centennial Park, Peabody,
MA 01960-7977. The approximate date on which this Proxy
Statement and the enclosed form of proxy are first sent or given
to stockholders is April 2, 1999. Stockholders of record at the
close of business on February 26, 1999 (the record date) are
entitled to notice of and to vote at said meeting and any
adjournments or postponements thereof, each share being entitled
to one vote.
On February 26, 1999 the Company had 8,441,182 outstanding
shares of common stock ("Common Stock"), $0.01 par value,
constituting the only class of voting securities of the Company.
A majority of the shares entitled to vote and either present in
person or represented by a properly signed and returned proxy
will constitute a quorum for the transaction of business at the
Annual Meeting. Abstentions are counted as present for purposes
of determining the existence of a quorum and have no effect on
the outcome of the election of directors.
<PAGE>
Under the rules of the National Association of Securities
Dealers ("NASD") that govern brokers using the Nasdaq National
Market, brokers who hold shares in street name generally do not
have the authority to vote on any items unless they have received
instructions from beneficial owners. If the broker is also a
member of a national securities exchange, however, NASD rules
permit the broker to vote shares held in street name in
accordance with the rules of the exchange. Under the rules of
the New York Stock Exchange, a broker who does not receive
instructions is entitled to vote on the election of directors.
When a broker returns a proxy card but indicates that the
broker does not have discretionary voting power and is not
entitled to vote with respect to a certain proposal, this results
in what is known as a "broker non-vote" on such proposal. In the
event of a broker non-vote with respect to any proposal coming
before the Annual Meeting, the proxy will be counted as present
for purposes of determining the existence of a quorum, but the
shares covered by the broker non-vote will not be considered
voted or entitled to vote as to that proposal. Brokers generally
have discretionary voting power and are entitled to vote in the
election of directors, and, accordingly, there are generally no
broker non-votes on a director election proposal. A broker non-
vote would have no effect on the outcome of the election of
directors.
With regard to the election of directors, under Massachusetts
law and the Company's by-laws, each nominee for election as a
director shall be elected if he or she receives the affirmative
vote of a plurality of the votes cast by stockholders entitled to
vote and either present in person or represented by proxy at the
Annual Meeting. Votes may be cast in favor of or withheld from
the nominees; votes that are withheld will be excluded entirely
from the vote and will have no effect. Stockholders are not
entitled to cumulative voting in the election of directors.
Any proxy given pursuant to this solicitation may be revoked
in writing by the person giving it at any time before it is
exercised. Under the laws of the Commonwealth of Massachusetts,
attendance at the Annual Meeting by a stockholder who has given a
proxy does not have the effect of revoking such proxy unless the
stockholder files at any time prior to the voting of the proxy a
written notice of revocation with the corporate Clerk at the
Company's principal executive offices set forth above or at the
Annual Meeting. The timely filing of a duly executed proxy
<PAGE>
bearing a later date or the voting of the shares subject to the
proxy by written ballot cast at the Annual Meeting constitutes
such a notice of revocation. All shares represented by valid
proxies received by the Board of Directors pursuant to this
solicitation in time to be voted and not revoked will be voted.
If the proxy indicates a choice with respect to any matter to be
acted upon, the shares will be voted in accordance with the
direction made therein. Except as set forth above with respect
to brokers, IF NO DIRECTION IS MADE, THE SHARES WILL BE VOTED AS
TO EACH PROPOSAL IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS.
I. ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The Company's by-laws provide that the number of directors
shall not be less than the minimum number of individuals
permitted by law and shall be determined from time to time by
majority vote of the Board of Directors. In accordance with the
by-laws, the Board of Directors has fixed the number of directors
at five. The Board is divided into three classes, with the terms
of office of each class ending in successive years. Two
directors of the Company are to be elected at the annual meeting,
to hold office, subject to the by-laws, until the annual meeting
of stockholders in 2002 or until their respective successors have
been elected and qualified. Certain information with respect to
the nominees for election as directors proposed by the Company
and the other directors whose terms of office as directors will
continue after the annual meeting is set forth below. Should a
nominee be unable or unwilling to serve (which is not expected),
the proxies (except proxies marked to the contrary) will be voted
for such other person as the Board of Directors of the Company
may recommend.
<TABLE>
<CAPTION>
Nominees, Age, Principal Occupation or Position, Served as
Other Directorships Director Since
<S> <C>
TO CONTINUE IN OFFICE UNTIL 2002
John L. Dwight, Jr., 54 ....................................... 1980
Chairman, Chief Executive Officer and President of the Company
Theodore C. York, 56 .......................................... 1994
President, Highland Group
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Continuing Directors, Age,
Principal Occupation or Position, Other Directorships
<S> <C>
TO CONTINUE IN OFFICE UNTIL 2001
C. Wayne Griffith, 65.......................................... 1980
Senior Executive Vice President, Kessler Financial Services
John E. Stuart, 57............................................. 1998
Director of Marketing and Communications, Europay International
TO CONTINUE IN OFFICE UNTIL 2000
Harold F. Faught, 74........................................... 1983
Consultant
</TABLE>
Mr. Dwight has served as Chairman of the Board, Chief
Executive Officer, President and a director of the Company since
November 1980, when Mr. Dwight purchased a controlling interest
in PCD. Mr. Dwight was previously Vice President - International
of Burndy Company, an electronic connector manufacturer. Mr.
Dwight has over 25 years of management and operating experience
in the connector industry.
Mr. York has served as a director of the Company since 1994.
Mr. York has been President of the Highland Group, a consulting
firm, since February 1997. From 1995 through February 1997, Mr.
York was President of Saber Equipment Corporation, a
petrochemical equipment company. On February 14, 1997, Saber
Equipment Corporation filed a Chapter 11 bankruptcy petition,
which, at Saber's request, was converted into a Chapter 7
bankruptcy proceeding on February 24, 1997. A trustee was
appointed by the bankruptcy court. The trustee retained Mr. York
as a consultant and the sale of Saber's assets was concluded in
July 1997. From 1984 to 1994, Mr. York was President of Burndy
Corporation. From 1992 to 1994, he was also Executive Vice
President of Framatome Connectors International, a manufacturer
of electrical and electronic connectors and tools. Mr. York is
also a director of Robroy Industries, Inc.
Mr. Griffith has served as a director of the Company since
1980. Mr. Griffith is Senior Executive Vice President of Kessler
Financial Services and has held that position since 1994.
Previously, he held the positions of Chairman, Chief Executive
Officer and President of Digitec, Inc. and Chairman, Chief
Executive Officer and President of Xylogics, Inc.
<PAGE>
Mr. Stuart has served as a director of the Company since 1998.
Mr. Stuart is the General Manager - Communications and has served
on the Executive Committee of Europay International since 1997.
From 1995 to 1997, Mr. Stuart was Senior Vice President -
Business Development for Rural/Metro Corporation. Previously,
Mr. Stuart was employed with American Express for 15 years in the
Europe/Middle East/Africa (EMEA) Region where he served as
General Manager of Northern Europe, President and General Manager
of the United Kingdom and Ireland, and as Senior Vice President
of Marketing for EMEA region.
Mr. Faught has served as a director of the Company since 1983.
From 1973 to 1993, when he retired, Mr. Faught served as an
officer, most recently Senior Vice President - Technology, of
Emerson Electric Co. Since retiring, he has served in a
consulting capacity to Emerson.
Although the Board of Directors contemplates that each of the
nominees for election as directors will be able to serve, if a
vacancy in the original slate of nominees is occasioned by death
or other unexpected occurrence, shares represented by proxies
(except proxies marked to the contrary) shall be voted for the
election of such other nominee as may be designated by the Board
of Directors.
THE BOARD OF DIRECTORS AND COMMITTEES
There were five meetings of the Board of Directors during
1998. All of the members of the Board of Directors attended all
of the meetings of the Board and the committees on which they
served. Directors who are employees of the Company do not
receive any compensation for service as director. Each non-
employee director is currently paid $750 for each Board meeting
or committee meeting attended (except for those committee
meetings held immediately in advance of a Board meeting) plus an
annual retainer fee in the amount of $5,000. For 1998, Mr.
Faught received a total of $8,750 for his services, Mr. Griffith
received $8,750 for his services, Mr. Stuart received $7,250 for
his services and Mr. York received $9,500 for his services.
The 1996 Eligible Directors Stock Plan of the Company (the
"Directors Stock Plan") was approved by the Board of Directors on
January 30, 1996 and thereafter by the Company's stockholders.
Under the Directors Stock Plan, commencing with the 1997 annual
meeting of stockholders, each director who is not an officer or
<PAGE>
employee of the Company or any subsidiary of the Company (an
"Outside Director") who has not previously been granted an option
to purchase shares of Common Stock will be granted, on the
thirtieth day after such meeting or any subsequent annual meeting
of stockholders, an option to purchase 3,000 shares of Common
Stock at an exercise price equal to the fair market value on the
date of grant. In addition, on the thirtieth day after re-
election, commencing with the 1997 annual meeting of
stockholders, each Outside Director will be granted an option at
each annual meeting of the stockholders to purchase 1,500 shares
of Common Stock at an exercise price equal to the fair market
value on the date of grant. A total of 36,000 shares of Common
Stock are available for awards under the Directors Stock Plan.
On February 7, 1997, the Board of Directors amended the Directors
Stock Plan to allow for each option to vest six months after, and
expire 10 years from, the date of grant of such option. No
options may be granted under the Directors Stock Plan after
January 29, 2006. A total of 22,500 shares remain available for
grant pursuant to the Directors Stock Plan.
The Board of Directors has two standing committees: the Audit
Committee and the Compensation Committee. The Audit Committee
reviews the Company's accounting practices, internal accounting
controls and financial results and oversees the engagement of the
Company's independent auditors. The members of the Audit
Committee are Mr. Stuart and Mr. York. The Compensation
Committee reviews and recommends to the Board of Directors the
salaries, bonuses and other forms of compensation for executive
officers of the Company and administers various compensation and
benefit plans, including the 1992 Stock Option Plan, the 1996
Stock Plan and the 1998 Employee Stock Purchase Plan. The
members of the Company's Compensation Committee are Mr. Faught
and Mr. Griffith.
None of the members of the Audit Committee or the Compensation
Committee is a past or current officer or employee of the
Company. The Board of Directors does not maintain a nominating
committee or a committee performing similar functions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Mr.
Faught and Mr. Griffith. Except for Mr. Dwight, the Company's
Chairman of the Board, Chief Executive Officer and President, no
<PAGE>
officer or employee of the Company has participated in
deliberations of the Board of Directors concerning executive
officer compensation. No executive officer of the Company serves
as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as
a member of the Company's Board of Directors or Compensation
Committee.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
The following report is provided by the Compensation Committee
(the "Committee") of the Board of Directors. The Committee
supervises the Company's Executive Compensation Program and is
directly responsible for compensation actions affecting the
Chairman, President and Chief Executive Officer (the "Chief
Executive Officer"), other executive officers and other senior
executives of the Company. The Committee, which consists entirely
of non-employee directors, met one time in 1998.
Executive Compensation Philosophy
The Company's Executive Compensation Program (the "Program")
is designed and administered to relate executive compensation to
four basic objectives:
COMPETITIVE POSITION: The Program is designed to pay
competitive compensation so the Company can attract and
retain highly qualified executives. To assist it in
determining competitive compensation practices, the
Committee frequently utilizes information about compensation
levels of other companies (including some, but not all, of
the companies that comprise the performance graph peer group
described below), including information provided by
qualified independent surveys.
COMPANY PERFORMANCE: The Program is designed to reflect the
overall performance of the Company, with appropriate
consideration of conditions that exist in the industry. In
determining compensation levels and compensation changes,
the Committee considers the Company's overall performance in
meeting both short-term and long-term objectives. The
<PAGE>
Committee considers achievement of operating objectives in
areas such as sales, earnings, entered orders and cash
management, as well as progress toward long-term strategic
objectives.
STOCKHOLDER RETURN: The Program has been designed to
establish a direct link between the interests of the
Company's executives and its stockholders by allocating a
portion of senior management compensation to stock option
plans.
INDIVIDUAL PERFORMANCE: In addition to the above factors,
the Committee considers the executive's individual
performance and contributions to the Company's results in
determining appropriate compensation levels.
THE EXECUTIVE COMPENSATION PROGRAM
Three general components of executive compensation are used to
achieve the principles set forth above: base salary, a management
incentive plan and a long-term incentive plan. PCD's Chief
Executive Officer, Mr. Dwight, is evaluated and his compensation
administered in the same general fashion as the other executive
officers.
BASE SALARY: The base salary of each executive officer is
reviewed annually by the Committee. Salary changes reflect
the overall performance of the Company, pay competitiveness
and the individual's performance. The targeted percentage
of cash compensation represented by base salary varies based
on the level of the position, with a target of approximately
60% for the Chief Executive Officer and approximately 70%
for the other executive officers. 1998 base salaries for
the Chief Executive Officer and the other four most highly
paid executive officers are shown in the summary
compensation table below. Effective January 1, 1999, Mr.
Dwight's annual base salary was increased 5% to $231,413.
In setting Mr. Dwight's base salary, the committee took into
account his leadership and direct contributions to the
Company which resulted in the Company's financial
performance for the year ended 1998.
<PAGE>
ANNUAL MANAGEMENT INCENTIVE PLAN: The Company's Chief
Executive Officer and other executive officers are eligible
for annual cash bonuses. Payments of bonuses are based upon
achievement of specified financial objectives determined by
the Board of Directors at the beginning of each year.
Financial objectives are based on the Company's budget and
results of operations. Mr. Dwight's bonus was determined by
comparing PCD's financial results to the financial goals
described above. Mr. Dwight was awarded a cash bonus of
$30,000, which was equal to 13.6% of his base salary for
1998.
LONG-TERM INCENTIVE PLAN: To ensure that management's
interests are closely tied to stockholder return, a portion of
senior executive total compensation is provided through
stock-based, long-term incentive plans. To place emphasis on
stockholder return, the Company has implemented two stock
option plans, the 1992 Stock Option Plan and the 1996 Stock
Plan. Both plans provide for the award of incentive stock
options and non-qualified stock options. No further shares are
available for grant pursuant to the 1992 Stock Option Plan.
Awards to executive officers under these plans are included in
the accompanying tables.
The Company does not have an employment agreement with the
Chief Executive Officer or any of its other executive officers
providing for their employment for any specific term.
No specific actions have been taken with respect to the $1
million compensation deduction limit under section 162(m) of the
Internal Revenue Code because the Company's compensation levels
have never exceeded the limits and are not expected to exceed the
limit by a material amount over the next several years.
SUMMARY
The Committee believes the Company's compensation program has
been designed and managed by the Committee to directly link the
compensation of the Company's executives to the performance of
the Company, individual performance and stockholder return. The
current levels of compensation for the Company's senior
executives are generally below market levels for similar
electronic connector companies. The Committee expects to address
these compensation levels over time, consistent with Company and
individual performance, and will continue to emphasize
<PAGE>
performance-based and stock-based compensation linking management
and stockholder interests.
By the Compensation Committee
H.F. Faught
C.W. Griffith
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
the Company's Chief Executive Officer and each of the other four
most highly compensated executive officers during the year ended
December 31, 1998 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation(2)
Number of Shares
Underlying
Annual Compensation (1) Options All-Other
Name and Principal Position Year Salary($) Bonus($)(3) Granted(#) Compensation($)(4)
- --------------------------- ---- --------- ----------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
John L. Dwight, Jr........... 1998 $219,685 $ 30,000 - $ 8,151
Chairman of the Board, 1997 204,068 100,000 - 8,189
Chief Executive Officer 1996 188,313 80,000 - 7,712
and President
Michael S. Cantor............ 1998 128,041 52,100 - 9,410
Vice President and General 1997 122,000 39,500 - 10,125
Manager, Industrial/ 1996 116,019 48,000 - 8,787
Avionics Division
Mary L. Mandarino............ 1998 100,649 35,000 - 14,394
Chief Financial Officer, 1997 92,426 40,000 - 10,996
Vice President, Finance 1996 84,584 32,000 5,000 7,850
and Administration and
Treasurer
Richard J. Mullin (5)........ 1998 190,625 10,000 - 11,767
Vice President and President, 1997 - - 50,000 -
Wells-CTI Division
Roddy J. Powers.............. 1998 115,932 13,000 - 14,404
Vice President, 1997 111,833 39,500 - 7,694
Operations 1996 106,163 45,000 - 7,029
- ----------
</TABLE>
(1) In accordance with the rules of the Securities and Exchange
Commission, other compensation in the form of perquisites and
other personal benefits has been omitted because such
perquisites and other personal benefits constituted less than
the lesser of $50,000 or ten percent of the total annual
<PAGE>
salary and bonus reported for the executive officer during
the years reported.
(2) The Company did not grant any restricted stock awards or
stock appreciation rights during the years reported. The
Company does not have any "long-term incentive plan" within
the meaning set forth in Item 402(a)(7) of Regulation S-K.
(3) The Company's officers are eligible for annual cash bonuses
under the terms of the Company's Management Incentive Plan,
adopted each year. Payments of bonuses are based upon
achievement of specified individual and Company objectives
determined by the Board of Directors at the beginning of each
year. Bonus amounts for 1997 and 1996 have been restated to
reflect the year in which such amounts were earned (instead of
the year paid).
(4) Includes amounts awarded pursuant to the Company's 401(k)
Salary Savings Plan, life insurance premium remainders and
automobile allowances. For 1998, such amounts were,
respectively, Mr. Dwight, $5,000, $504 and $2,647; Mr.
Cantor, $5,000, $461 and $3,949; Ms. Mandarino, $4,522, $112
and $9,760; Mr. Mullin, $2,500, $522, and $8,745; and Mr.
Powers, $4,723, $327 and $9,354.
(5) Mr. Mullin joined the Company on December 26, 1997
following the acquisition of Wells Electronics, Inc.
OPTION GRANTS IN THE LAST YEAR
No stock options or stock appreciation rights were granted to
the Named Executive Officers during 1998.
Aggregated Option Exercises in Last Year
Shares Acquired Value Realized
Name on Exercise (#) ($)(1)
- ----------------------- --------------- --------------
John L. Dwight, Jr..... 10,000 $127,292
Michael S. Cantor...... 25,000 479,167
Mary L. Mandarino...... 17,000 267,708
Richard J. Mullin...... - -
Roddy J. Powers........ 10,000 104,792
- ----------
<PAGE>
(1) The values in this column are based on the last reported
sale price of the Company's Common Stock on the Nasdaq
National Market on the exercise date, less the respective
option exercise price.
<TABLE>
<CAPTION>
AGGREGATED YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options (#) In-the-Money Options ($)(1)
at Fiscal Year End at Fiscal Year End
------------------------- ---------------------------
Name: Exercisable Unexercisable Exercisable Unexercisable
- ----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John L. Dwight, Jr. 42,000 - $497,875 $ -
Michael S. Cantor.. 45,000 - 533,438 -
Mary L. Mandarino.. 64,750 1,250 726,854 1,250
Richard J. Mullin.. 16,668 33,332 - -
Roddy J. Powers.... 76,600 - 908,029 -
- ----------
</TABLE>
(1) Solely for purposes of this table, the values in these
columns have been calculated on the basis of the price of
$13.00 per share, the fair market value of the Common Stock
on December 31, 1998, less the option exercise price. An
"in-the-money" option is an option for which the exercise
price is less than such fair market value.
PERFORMANCE GRAPH
The graph set forth below provides comparisons of the
quarterly change in the cumulative total shareholder return on
PCD's Common Stock with the cumulative return of the Nasdaq Stock
Market and a Peer Group Index (see note (3) below) from March 26,
1996 (the effective date of PCD's initial public offering)
through December 31, 1998.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
CRSP
Measurement Period Total Return Peer
Fiscal Quarter Covered) PCD Inc. Index for Nasdaq(2) Group(3)
- ----------------------- ------- ------------------- --------
<S> <C> <C> <C>
As at 3/26/96..... 100 100 100
QE - 3/96......... 108 101 99
QE - 6/96......... 120 110 97
QE - 9/96......... 109 113 108
QE - 12/96........ 118 115 106
QE - 3/97......... 143 113 101
QE - 6/97......... 150 133 121
QE - 9/97......... 223 155 141
QE - 12/97........ 214 146 129
QE - 3/98......... 186 170 132
QE - 6/98......... 164 176 106
QE - 9/98......... 114 152 96
QE - 12/98........ 118 205 114
</TABLE>
- ----------
(1) Assumes $100 invested on March 26, 1996 in PCD Common Stock,
the Nasdaq Stock Market and the Peer Group Index, as defined
below in footnote (3), and the reinvestment of all dividends.
(2) Cumulative returns are calculated using data from the Nasdaq
Stock Market Total Return Index, maintained by the Center for
Research in Security Prices (CRSP) at the University of
Chicago.
(3) The Peer Group is comprised of all independent "electronic
connector" companies which are traded on the New York Stock
Exchange or listed by The Nasdaq Stock Market (six companies
excluding PCD). The electronic connector companies are:
Amphenol Company; AMP Incorporated; Methode Electronics,
Inc.; Molex Inc.; Robinson Nugent, Inc.; and Thomas & Betts
Company. The Peer Group's total return has been recalculated
back to March 26, 1996 so as to exclude Berg Electronics,
Inc., which is no longer listed on the New York Stock
Exchange and is not listed by the Nasdaq Stock Market.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of February 26, 1999,
certain information with respect to the security ownership of the
Common Stock by officers and directors of the Company:
Amount and Nature
of Beneficial
Ownership (1) Percent
Directors and Executive Officers ----------------- -------
- --------------------------------
John L. Dwight, Jr. (2)............. 924,000 10.9%
Harold F. Faught (3)................ 3,000 *
C. Wayne Griffith (4)............... 83,800 1.0
John E. Stuart (5).................. 8,000 *
Theodore C. York (6)................ 39,000 *
Michael S. Cantor (7)............... 95,000 1.1
Jeffrey A. Farnsworth (8)........... 142,000 1.7
Mary L. Mandarino (9)............... 89,450 1.0
Richard J. Mullin (10).............. 18,018 *
Roddy J. Powers (11)................ 91,000 1.1
All directors and executive officers
as a group (10 persons)(12)........ 1,493,268 16.8
- ----------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and includes
voting or investment power with respect to the shares. Stock
subject to options exercisable currently or within 60 days
following February 26, 1999 are deemed outstanding for the
purpose of completing the share ownership and percentage of
the person holding such options, but are not deemed
outstanding for the purpose of computing the percentage of
any other person.
(2) John L. Dwight, Jr.'s beneficial ownership of Common Stock
of the Company, consists of 908,500 shares over which he has
both sole voting and dispositive powers and 15,500 shares
(held by his child) over which he has shared voting and
dispositive powers. Mr. Dwight disclaims beneficial ownership
with respect to such 15,500 shares. Also includes 42,000
shares issuable upon exercise of stock options.
<PAGE>
(3) Comprised of 3,000 shares issuable upon exercise of stock
options.
(4) Includes 39,000 shares issuable upon exercise of stock
options.
(5) Includes 3,000 shares issuable upon exercise of stock
options.
(6) Comprised of 39,000 shares issuable upon exercise of stock
options.
(7) Includes 45,000 shares issuable upon exercise of stock
options.
(8) Includes 137,000 shares issuable upon exercise of stock
options.
(9) Includes 64,750 shares issuable upon exercise of stock
options.
(10) Includes 17,918 shares issuable upon exercise of stock
options.
(11) Includes 76,600 shares issuable upon exercise of stock
options.
(12) Includes 467,268 shares issuable upon exercise of stock
options.
PRINCIPAL STOCKHOLDERS
As of December 31, 1998, the only persons known to management
to own beneficially 5% or more of the outstanding Common Stock of
the Company are named below. The information in this table is
based solely on Schedules 13G filed with the Securities and
Exchange Commission by these persons.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent
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Emerson Electric Co................. 2,068,080 (2) 24.1%
8000 West Florissant Avenue
St. Louis, MO 63136
John L. Dwight, Jr................. 924,000 (3) 10.9%
c/o PCD Inc.
2 Technology Drive
Centennial Park
Peabody, MA 01960-7977
Thomson Horstmann & Bryant Inc..... 766,000 (4) 9.1%
Park 80 West Plaza Two
Saddle Brook, NJ 07663
Wasatch Advisors, Inc.............. 497,475 (5) 5.9%
150 Social Hall Avenue
Salt Lake City, UT 84111
SAFECO Asset Management Company.... 495,500 (6) 5.9%
SAFECO Plaza
Seattle, WA 98185
Fleet Financial Group Inc.......... 478,390 (7) 5.7%
One Federal Street
Boston, MA 02110
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(1) Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and includes
voting or investment power with respect to the shares. Stock
subject to options or warrants exercisable currently or
within 60 days following December 31, 1998 are deemed
outstanding for the purpose of completing the share ownership
and percentage of the person holding such options, but are
not deemed outstanding for the purpose of computing the
percentage of any other person.
(2) Includes 1,138,800 shares owned by Emerson Electric Co. and
779,280 shares owned by its wholly-owned subsidiary, InnoVen
III Company, and over which it has both sole voting and
dispositive power. Also includes 150,000 shares issuable
upon exercise of a warrant issued to Emerson in December
1997.
(3) John L. Dwight, Jr.'s beneficial ownership of Common Stock
of the Company consists of 908,500 shares over which he has
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both sole voting and dispositive powers and 15,500 shares
(held by his child) over which he is deemed to have shared
voting and dispositive powers. Mr. Dwight disclaims
beneficial ownership with respect to such 15,500 shares. Also
includes 42,000 shares issuable upon exercise of stock
options.
(4) Thomson Horstmann & Bryant Inc.'s beneficial ownership of
Common Stock of the Company consists of 503,400 shares over
which it has sole voting power and 10,400 shares over which
it has shared voting power. Thomson Horstmann & Bryant, Inc.
has sole dispositive power over all such shares. Shares of
Common Stock beneficially owned by Thomson, Horstmann &
Bryant, Inc. are owned by a variety of investment advisory
clients of Thomson, Horstmann & Bryant, Inc. No such client
is known to have an interest in more than 5% of the Common
Stock.
(5) Wasatch Advisors, Inc.'s beneficial ownership of Common
Stock of the Company consists of 497,475 shares over which it
has sole voting and dispositive power.
(6) SAFECO Asset Management Company's beneficial ownership of
Common Stock of the Company consists of 495,500 shares over
which it has shared voting and dispositive power.
(7) Fleet Financial Group, Inc.'s beneficial ownership of
Common Stock of the Company consists of 476,170 shares over
which it has sole voting power and 478,390 shares over which
it has sole dispositive power.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, executive officers and persons who own
beneficially ten percent or more of any class of equity security
in the Company to file with the Securities and Exchange
Commission initial reports of such ownership and reports of
changes in such ownership. Such officers, directors and
beneficial owners are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all
Section 16(a) filings made by them.
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Based solely upon a review of the copies of such filings
furnished to the Company and each executive officer's written
representation that no Form 5 was required, the Company believes
that during 1998, its executive officers, directors and ten
percent or greater beneficial owners complied with all applicable
Section 16(a) filing requirements.
EMPLOYMENT AGREEMENTS
In connection with the hiring of Richard J. Mullin as
President of Wells-CTI, Inc. and Vice President of PCD Inc., the
Company entered into a letter agreement (the "Letter Agreement")
with Mr. Mullin, effective December 26, 1997 describing the terms
of Mr. Mullin's employment. Mr. Mullin's employment is on an "at
will" basis, for no specific period. The Letter Agreement
provides for a base salary, a bonus under the Company's
Management Incentive Plan, in each case subject to annual review
by the Company's Compensation Committee, and an award of non-
qualified options to purchase Common Stock. The Letter Agreement
also provides that if Mr. Mullin's employment is terminated for
reasons of performance or Company decision to eliminate the
position for any reason, Mr. Mullin will receive a severance
payment in an amount equal to one year's base pay, payable in
semi-monthly installments. Mr. Mullin will not receive severance
pay if he resigns or if his employment is terminated by the
Company due to gross misconduct.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 26, 1997, the Company entered into a Subordinated
Debenture and Warrant Purchase Agreement (the "Purchase
Agreement") with Emerson Electric Co. ("Emerson"), the Company's
largest stockholder. Pursuant to the Purchase Agreement, the
Company issued to Emerson a Subordinated Debenture (the
"Debenture") with a principal amount of $25 million at an annual
rate of interest of 10% and a Common Stock Purchase Warrant (the
"Emerson Warrant") for the purchase of up to 525,000 shares of
PCD Common Stock at a purchase price of $1.00 per share. On April
22, 1998, the Company repaid the entire outstanding principal
amount of the Debenture using a portion of the proceeds of a
public offering of its Common Stock. Prepayment of the principal
amount under the Debenture was subject to a penalty, paid at the
time of prepayment, in an amount equal to 3.25% of the principal
sum prepaid. Because the Debenture was paid in full before
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December 31, 1998, the Emerson Warrant is exercisable only to the
extent of 150,000 shares of Common Stock. In connection with the
Purchase Agreement, the Company granted registration rights to
Emerson pursuant to a Registration Rights Agreement dated as of
December 26, 1997.
The Company has a policy that all material transactions
between the Company and its officers, directors and other
affiliates must (i) be approved by a majority of the members of
the Company's Board of Directors and by a majority of the
disinterested members of the Company's Board of Directors and
(ii) be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties. In addition, this
policy requires that any loans by the Company to its officers,
directors or other affiliates be for bona fide business purposes
only.
II. INDEPENDENT ACCOUNTANTS
The Company has reaffirmed the selection of
PricewaterhouseCoopers LLP as the independent accountants of the
Company for 1999. PricewaterhouseCoopers LLP has no financial
interest, direct or indirect, in the Company or any of its
subsidiaries.
A representative of PricewaterhouseCoopers LLP will attend the
annual meeting with the opportunity to make a statement if he or
she desires to do so and to answer questions that may be asked of
him or her by the stockholders.
III. OTHER GOVERNANCE INFORMATION
Any stockholder, whether of record or a beneficial owner,
desiring to submit a proposal for consideration to appear in the
Company's Proxy Statement for the annual meeting of stockholders
of the Company to be held in 2000 shall submit such proposal,
typewritten or printed, addressed to the Clerk of the Company on
or before December 4, 1999. Such proposal must identify the name
and address of the stockholder, the number of the Company's
shares held of record or beneficially, the dates upon which the
stockholder acquired such shares and documentary support for a
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claim of beneficial ownership. Proposals should be sent by
certified mail - return receipt requested to the attention of the
Clerk of the Company, PCD Inc., 2 Technology Drive, Centennial
Park, Peabody, MA 01960-7977.
In addition to the foregoing procedure for inclusion of a
stockholder proposal in the Company's Proxy Statement, the
Company will consider other items of business and nominations for
election as director of the Company that are properly brought
before an annual meeting by a stockholder. To be properly
brought before an annual meeting, items of business must be
appropriate subjects for stockholder consideration, timely notice
thereof must be given in writing to the Clerk of the Company, and
other applicable requirements must be met. In general, such
notice is timely if it is received at the principal executive
offices of the Company at least 60 days in advance of the
anniversary date of the previous year's annual meeting (for the
2000 annual meeting, the deadline for receipt of such notice is
March 8, 2000), provided that if the annual meeting is to be held
on a date prior to the anniversary date of the previous year's
annual meeting and if less than 70 days notice is given of the
date of the meeting, a stockholder will have 10 days from the
notice of the date of the meeting to give notice of the proposals
for stockholder consideration. The by-laws of the Company
specify the information to be included in the stockholder's
notice.
Stockholders may nominate persons for election to the Board by
complying with the notice provisions set forth in the by-laws.
In general, such notice is timely if it is received by the Clerk
of the Company at least 60 days in advance of the anniversary
date of the previous year's annual meeting (for the 2000 annual
meeting, the deadline for receipt of such notice is March 8,
2000), provided that if the annual meeting is to be held on a
date prior to the anniversary date of the previous year's annual
meeting and if less than 70 days notice is given of the date of
the meeting, a stockholder will have 10 days from the notice of
the date of the meeting to give notice of the planned nomination.
The by-laws of the Company specify the information to be
included in the stockholder's notice of nomination.
Interested stockholders can obtain full copies of the by-laws
by making a written request therefor to the Clerk of the Company.
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EXPENSES OF SOLICITATION
All expenses of soliciting proxies will be paid by the
Company. Proxies may be solicited personally, or by telephone,
by employees of the Company, but the Company will not pay any
compensation for such solicitations. The Company will reimburse
brokers, banks and other persons holding shares in their names or
in the names of nominees for their expenses for sending material
to principals and obtaining their proxies.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's annual report on Form 10-K for the
year ended December 31, 1998, as filed with the Securities and
Exchange Commission, excluding exhibits thereto, may be obtained
without charge by contacting Mary L. Mandarino, PCD Inc., 2
Technology Drive, Centennial Park, Peabody, Massachusetts 01960-
7977.
The Board of Directors of
PCD Inc.
/s/ John L. Dwight, Jr.
John L. Dwight, Jr.
Chairman
Dated: April 2, 1999
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APPENDIX A
FRONT OF PROXY CARD
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, Massachusetts 01960-7977
Annual Meeting of Stockholders - May 7, 1999
Proxy Solicited on Behalf of the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints John
L. Dwight, Jr., Mary L. Mandarino and David P. Horne as Proxies,
with full power of substitution to each, to vote for and on
behalf of the undersigned all shares of stock of PCD Inc. (the
"Company") which the undersigned may be entitled to vote at the
1999 Annual Meeting of Stockholders of PCD Inc. to be held at the
offices of the Company, 2 Technology Drive, Centennial Park,
Peabody, Massachusetts 01960-7977, on Friday, May 7, 1999 at
10:00 a.m., and at any adjournment or adjournments thereof. The
undersigned hereby directs the said proxies to vote in accordance
with their judgement on any matters which may properly come
before the Annual Meeting, all as indicated in the Notice of
Annual Meeting, receipt of which is hereby acknowledged, and to
act upon the following matters set forth in such notice as
specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
Please sign exactly as your name(s) appear(s) on the books of the
Company. Joint owners should each sign personally. Trustees,
custodians, and other fiduciaries should indicate the capacity in
which they sign, and where more than one name appears, a majority
must sign. If the shareholder is a corporation, the signature
should be that of an authorized officer who should indicate his
or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________ _________________________
__________________________________ _________________________
__________________________________ ________________________
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BACK SIDE OF PROXY CARD
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
FOR all
Except Withhold Nominees:
1. Election of John L. Dwight, Jr.
Directors [ ] [ ] Theodore C. York
Note: To withhold authority to vote for any individual nominee,
strike a line through the name(s) of the nominee(s) in the line
at right.
2. In their discretion, the proxies are authorized to vote upon
any other business that may properly come before the meeting or
at any adjournment(s) thereof.
Mark box at right if an address
change or comment has been noted [ ]
on the reverse of this card
RECORD DATE SHARES:
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Please be sure to sign and date this Proxy. | Date |
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| |
| |
- ------- Stockholder sign here --- Co-owner sign here ---------
DETACH CARD DETACH CARD
PCD Inc.
Dear Stockholder,
Please take note of the important information enclosed with this
Proxy Ballot. There are a number of issues related to the
management and operation of your Corporation that require your
immediate attention and approval. These are discussed in detail
in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise
your right to vote your shares.
Please mark the boxes on this proxy card to indicate how your
shares will be voted. Then sign the card, detach it and return
your proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of
Stockholders, May 7, 1999.
Thank you in advance for your prompt consideration of these
matters.
Sincerely,
PCD Inc.
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