<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SNYDER COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7389 52-1983617
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification Number)
</TABLE>
TWO DEMOCRACY CENTER
6903 ROCKLEDGE DRIVE, 15TH FLOOR
BETHESDA, MARYLAND 20817
(301) 468-1010
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
A. CLAYTON PERFALL
CHIEF FINANCIAL OFFICER
TWO DEMOCRACY CENTER
6903 ROCKLEDGE DRIVE, 15TH FLOOR
BETHESDA, MARYLAND 20817
(301) 468-1010
(Name, address, including ZIP code, and telephone number, including area code,
of agent for service)
COPIES TO:
<TABLE>
<S> <C>
NORMAN D. CHIRITE, ESQ. MARC WEINGARTEN, ESQ.
WEIL, GOTSHAL & MANGES LLP SCHULTE ROTH & ZABEL LLP
767 FIFTH AVENUE 900 THIRD AVENUE
NEW YORK, NEW YORK 10153 NEW YORK, NEW YORK 10022
(212) 310-8000 (212) 756-2000
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement and the
effective time of the merger (the "Merger") of Snyder Z Acquisition, Inc., a
Delaware corporation and wholly-owned subsidiary of Snyder Communications, Inc.,
a Delaware corporation ("Snyder"), with and into American List Corporation, a
Delaware corporation ("American List"), as described in the Agreement and Plan
of Merger dated as of March 18, 1997 (the "Merger Agreement"), attached as
Exhibit A to the Proxy Statement/Prospectus forming part of this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.001 par value............................. $127,948,232 $38,773
==========================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(f)(1) of the Securities Act of 1933, as
amended (the "Securities Act"), based upon the market value of the shares of
common stock, par value $.01 per share, of American List (the "American List
Common Stock") to be converted into shares of common stock $.001 par value,
of Snyder (the "Snyder Common Stock") pursuant to the Merger Agreement
($29.00 per share, i.e., the average of the high and low sale prices per
share of the American List Common Stock as reported on the American Stock
Exchange on June 16, 1997, multiplied by 4,412,008 shares of American List
Common Stock outstanding as of such date).
(2) The registration fee for the Snyder Common Stock registered hereby, $38,773,
has been calculated pursuant to Section 6(b) of, and Rules 457(c), 457(f)(1)
and 457(o) under, the Securities Act, as follows: 1/33rd of 1% of the
proposed maximum aggregate offering price. The registration fee is
calculated on the basis of the proposed maximum aggregate offering price.
Accordingly, pursuant to Rule 457(o), the number of shares being registered
is not included in the table. Fees of $23,117 and $4,704 were paid on April
25, 1997 and June 2, 1997, respectively, pursuant to Rules 0-11 and
14a-6(i)(1) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in respect of the Merger upon the filing by American List
with the Commission of its preliminary proxy materials relating thereto
pursuant to Rules 14a-101, 14a-6(a) and 14a-6(e)(2)(ii) under the Exchange
Act. Pursuant to Rules 0-11(a)(2) and 14a-6(i)(1) under the Exchange Act,
the registration fee payable herewith has been reduced by the amount of the
fees previously paid upon the filing of such preliminary proxy materials.
Accordingly, an additional fee of $10,952 has been paid with the initial
filing of this Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
AMERICAN LIST CORPORATION
- --------------------------------------------------------------------------------
(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):
[ ] No fee required.
[X] 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: Common
Stock, $.01 par value, of American List Corporation ("American List
Common Stock").
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: 4,412,008
shares of American List Common Stock.
- --------------------------------------------------------------------------------
(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): Pursuant to
Rules 14-a 6(i)(1) and 0-11(a)(4) and (c)(1) under the Exchange Act, a
fee of $27,224 is required to be paid in connection herewith, which is
equal to 1/50th of 1% of the product of: (x) $27.063, the average of
the high and low sales prices per share of the Common Stock, $.001 par
value, of Snyder Communications, Inc. (the "Snyder Common Stock") as
reported in the New York Stock Exchange, Inc. Composite Tape on June
16, 1997 and (y) 5,029,689, representing the estimated number of shares
of Snyder Common Stock to be received by holders of American List
Common Stock in the merger (the "Merger") of Snyder Z Acquisition,
Inc., a Delaware corporation and wholly-owned subsidiary of Snyder
Communications, Inc., a Delaware corporation ("Snyder"), with and into
American List Corporation, a Delaware corporation ("American List"),
pursuant to which, among other things, each share of American List
Common Stock outstanding immediately prior to the Merger will be
converted into 1.14 shares of Snyder Common Stock (assuming an Average
Final Closing Price of $26.819, which represents the average of the
closing prices of the Snyder Common Stock between May 19, 1997 and June
16, 1997) and American List (as the surviving corporation) will become
a wholly-owned subsidiary of Snyder, upon the terms and subject to the
conditions set forth in the Agreement and Plan of Merger, dated as of
March 18, 1997, attached as Exhibit A to and incorporated by reference
in the Proxy Statement/Prospectus to which this Schedule 14A relates.
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: $136,118,473.41
- --------------------------------------------------------------------------------
(5) Total fee paid: $27,821
- --------------------------------------------------------------------------------
[X] 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> 3
[AMERICAN LIST CORPORATION LOGO]
AMERICAN LIST CORPORATION
330 OLD COUNTRY ROAD
MINEOLA, NEW YORK 11501
(516) 248-6100
June 18, 1997
TO THE STOCKHOLDERS OF
AMERICAN LIST CORPORATION:
It is my pleasure to invite you to attend a Special Meeting of Stockholders
(the "Meeting") of American List Corporation ("American List"). The Meeting will
be held at 9:00 a.m. local time, on July 11, 1997, at the Long Island Marriott
Hotel, 101 James Doolittle Boulevard, Uniondale, New York 11553.
At this important Meeting you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger, dated as of March
18, 1997 (the "Merger Agreement"), by and among American List, Snyder
Communications, Inc., a Delaware corporation ("Snyder"), and Snyder Z
Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of
Snyder ("Acquisition"). Pursuant to the Merger Agreement, Acquisition will be
merged with and into American List (the "Merger"). Following the Merger, the
separate corporate existence of Acquisition will cease, and American List, as
the surviving corporation, will become a wholly-owned subsidiary of Snyder.
Details of the proposed Merger are set forth in the accompanying Proxy Statement
and Prospectus (the "Proxy Statement/Prospectus"), which you should read
carefully. The full text of the Merger Agreement is attached to the Proxy
Statement/Prospectus as Exhibit A and should be read carefully by stockholders
in its entirety.
Subject to the terms and conditions of the Merger Agreement, and as more
fully described in the accompanying Proxy Statement/Prospectus, each share of
common stock, par value $.01 per share, of American List (the "American List
Common Stock") outstanding immediately prior to the Effective Time (as defined
in the Merger Agreement and as more fully described in the accompanying Proxy
Statement/Prospectus) will be converted into and represent the right to receive
that number of shares of common stock, par value $.001 per share, of Snyder (the
"Snyder Common Stock") equal to the exchange ratio (the "Exchange Ratio") to be
determined in the following manner: (i) if the Average Final Closing Price (as
defined below) of the Snyder Common Stock equals or exceeds $32.00, the Exchange
Ratio will be 1.00; (ii) if the Average Final Closing Price equals or exceeds
$28.00 but is less than $32.00, the Exchange Ratio will equal the quotient
(rounded to four decimal places) of $32.00 divided by the Average Final Closing
Price; (iii) if the Average Final Closing Price equals or exceeds $26.00 but is
less than $28.00, the Exchange Ratio will be 1.14; and (iv) if the Average Final
Closing Price is less than $26.00, the Exchange Ratio will equal the quotient
(rounded to four decimal places) of $29.71 divided by the Average Final Closing
Price. Snyder has the right to terminate the Merger Agreement if the Average
Final Closing Price is less than $24.00. American List has the right to
terminate the Merger Agreement if the Average Final Closing Price is less than
$20.00 (such termination rights of Snyder and American List collectively, the
"Walk-away Rights").
"Average Final Closing Price" means the average of the closing prices (or,
if the Snyder Common Stock does not trade on any Trading Day (as defined below),
the average of the high bid and low asked prices therefor on such day), regular
way, per share of Snyder Common Stock, as reported on the New York Stock
Exchange, Inc. ("NYSE") Composite Tape during the twenty consecutive Trading
Days ending on (and including) the third Trading Day prior to the Effective
Time. Solely for purposes of calculating the Average Final Closing Price with
respect to the Walk-away Rights, the Effective Time shall be the date of the
Meeting. "Trading Day" means a day on which the NYSE is open for trading. Snyder
Common Stock is traded on the NYSE under the symbol "SNC." Cash will be paid in
lieu of any fractional shares of Snyder Common Stock.
<PAGE> 4
It is intended that American List stockholders will not recognize gain or
loss for federal income tax purposes on their receipt of Snyder Common Stock in
the Merger in exchange for American List Common Stock, although the receipt of
cash in lieu of fractional shares will be taxable.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS BELIEVES THAT THE
PROPOSED MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, AMERICAN LIST AND ITS
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF AMERICAN LIST HAS
UNANIMOUSLY APPROVED THE MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT ALL
AMERICAN LIST STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AND THE
MERGER AGREEMENT. The Board reached this decision after consideration of a
number of factors, including the opinion of Prudential Securities Incorporated
("Prudential Securities"), financial advisor to American List, to the effect
that, as of the date of such opinion, the Exchange Ratio is fair to the
stockholders of American List from a financial point of view. Prudential
Securities subsequently restated such opinion on June 18, 1997. The full text of
such opinion is attached to the Proxy Statement/Prospectus as Exhibit B and
should be read carefully by stockholders in its entirety.
Pursuant to a certain stockholders agreement dated as of March 18, 1997 and
entered into in connection with the Merger Agreement (the "Stockholders
Agreement"), Mr. Martin Lerner, American List's Chairman and President, and D.H.
Blair Investment Banking Corp., who hold in the aggregate approximately 20.05%
of the outstanding American List Common Stock, have agreed with Snyder, subject
to certain conditions, to vote at the Meeting all shares held of record or
beneficially owned by them for adoption of the Merger Agreement and to vote at
the Meeting against certain other actions which could impede or delay
consummation of the Merger. The full text of the Stockholders Agreement is
attached to the Proxy Statement/Prospectus as Exhibit C and should be read
carefully by stockholders in its entirety.
All American List stockholders are invited to attend the Meeting in person.
The affirmative vote of the holders of a majority of the outstanding shares of
American List Common Stock will be necessary for approval and adoption of the
Merger and the Merger Agreement. It is important to understand that, if you
abstain from voting, your shares will, in effect, be counted as being voted
against the Merger and the Merger Agreement. The vote of every stockholder of
American List is important, regardless of the number of shares you own. Your
Board of Directors appreciates your support and cooperation, and urges you to
vote FOR approval and adoption of the Merger and the Merger Agreement.
IN VIEW OF THE IMPORTANCE OF THE ACTION TO BE TAKEN AT THE MEETING, WE URGE
YOU TO READ THE ENCLOSED MATERIAL CAREFULLY. IN ORDER THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING, YOU ARE URGED PROMPTLY TO COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
IF YOU ATTEND THE MEETING IN PERSON YOU MAY, IF YOU WISH, VOTE PERSONALLY ON ALL
MATTERS BROUGHT BEFORE THE MEETING EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR
PROXY. YOUR PROMPT COOPERATION WILL BE GREATLY APPRECIATED.
Very truly yours,
/s/ MARTIN LERNER
Martin Lerner
Chairman
If you have any questions or need assistance in voting your shares, you
should contact MacKenzie Partners, Inc. at the address and telephone number
listed below.
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
<PAGE> 5
AMERICAN LIST CORPORATION
330 OLD COUNTRY ROAD
MINEOLA, NEW YORK 11501
(516) 248-6100
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 11, 1997
TO THE STOCKHOLDERS OF
AMERICAN LIST CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Meeting") of American List Corporation ("American List") will be held at the
Long Island Marriott Hotel, 101 James Doolittle Boulevard, Uniondale, New York
11553, on July 11, 1997, at 9:00 a.m. local time for the following purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of March 18, 1997 (the "Merger
Agreement"), by and among American List, Snyder Communications, Inc.
("Snyder") and Snyder Z Acquisition, Inc., a wholly-owned subsidiary of
Snyder ("Acquisition"), pursuant to which, among other things, the
following will occur:
(a) Acquisition shall be merged with and into American List (the
"Merger"), with American List surviving the Merger as a wholly-owned
subsidiary of Snyder; and
(b) Each outstanding share of common stock, par value $.01 per
share, of American List ("American List Common Stock") outstanding
immediately prior to the Effective Time (as defined in the Merger
Agreement and as more fully described in the accompanying Proxy
Statement/ Prospectus) will be converted into and represent the right to
receive that number of shares of common stock, par value $.001 per
share, of Snyder (the "Snyder Common Stock") equal to the exchange ratio
(the "Exchange Ratio") to be determined in the following manner: (i) if
the Average Final Closing Price (as defined below) of the Snyder Common
Stock equals or exceeds $32.00, the Exchange Ratio will be 1.00; (ii) if
the Average Final Closing Price equals or exceeds $28.00 but is less
than $32.00, the Exchange Ratio will equal the quotient (rounded to four
decimal places) of $32.00 divided by the Average Final Closing Price;
(iii) if the Average Final Closing Price equals or exceeds $26.00 but is
less than $28.00, the Exchange Ratio will be 1.14; and (iv) if the
Average Final Closing Price is less than $26.00, the Exchange Ratio will
equal the quotient (rounded to four decimal places) of $29.71 divided by
the Average Final Closing Price. Snyder has the right to terminate the
Merger Agreement if the Average Final Closing Price is less than $24.00.
American List has the right to terminate the Merger Agreement if the
Average Final Closing Price is less than $20.00 (such termination rights
of Snyder and American List collectively, the "Walk-away Rights").
"Average Final Closing Price" means the average of the closing prices
(or, if the Snyder Common Stock does not trade on any Trading Day (as
defined below), the average of the high bid and low asked prices
therefor on such day), regular way, per share of Snyder Common Stock, as
reported on the New York Stock Exchange, Inc. ("NYSE") Composite Tape
during the twenty consecutive Trading Days ending on (and including) the
third Trading Day prior to the Effective Time. Solely for purposes of
calculating the Average Final Closing Price with respect to the
Walk-away Rights, the Effective Time shall be the date of the Meeting.
"Trading Day" means a day on which the NYSE is open for trading.
<PAGE> 6
2. To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
Only American List stockholders of record at the close of business on June
4, 1997 are entitled to notice of, and to vote at, the Meeting or any
adjournments or postponements thereof. A list of such stockholders will be open
for examination by any stockholder for any purpose germane to the Meeting,
during ordinary business hours, for at least ten days prior to the Meeting, at
the offices of American List, 330 Old Country Road, Mineola, New York 11501, and
at the Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU
ARE REQUESTED PROMPTLY TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN
THE ADDRESSED ENVELOPE, WHICH IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED FOR MAILING IN THE UNITED STATES.
The Board of Directors of American List unanimously has determined that the
Merger is fair to, and in the best interests of, American List and its
stockholders, has approved the Merger Agreement (and the transactions
contemplated thereby), and recommends that holders of American List Common Stock
vote FOR adoption and approval of the Merger and the Merger Agreement.
By Order of the Board of Directors
/s/ MARTIN LERNER
Martin Lerner
Chairman
Mineola, New York
June 18, 1997
THE AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF
AMERICAN LIST COMMON STOCK IS REQUIRED TO APPROVE THE MERGER AND THE MERGER
AGREEMENT. WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU INTEND TO ATTEND THE MEETING IN PERSON. THE PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY STOCKHOLDER PRESENT AT THE MEETING,
INCLUDING ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF, MAY REVOKE HIS OR HER PROXY
AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING.
<PAGE> 7
PROXY STATEMENT/PROSPECTUS
<TABLE>
<S> <C> <C>
[AMERICAN LIST CORPORATION PROXY STATEMENT RELATING TO [SNYDER COMMUNICATIONS
LOGO] SPECIAL MEETING OF LOGO]
STOCKHOLDERS OF SNYDER COMMUNICATIONS, INC.
AMERICAN LIST AMERICAN LIST CORPORATION TWO DEMOCRACY CENTER
CORPORATION TO BE HELD 6903 ROCKLEDGE DRIVE
330 OLD COUNTRY ROAD ON JULY 11, 1997 BETHESDA, MARYLAND 20817
MINEOLA, NEW YORK 11501 PROSPECTUS RELATING TO
5,029,689 SHARES OF
SNYDER COMMON STOCK,
$.001 PAR VALUE
</TABLE>
This Proxy Statement and Prospectus (the "Proxy Statement/Prospectus") is
being furnished to the holders of common stock, par value $.01 per share (the
"American List Common Stock"), of American List Corporation, a Delaware
corporation ("American List"), in connection with the solicitation of proxies by
the Board of Directors of American List (the "American List Board") for use at a
Special Meeting of stockholders of American List to be held at 9:00 a.m. local
time, on July 11, 1997, at the Long Island Marriott Hotel, 101 James Doolittle
Boulevard, Uniondale, New York 11553, including any adjournment or postponement
thereof (the "Meeting"). This Proxy Statement/Prospectus, and the accompanying
Notice of Special Meeting of Stockholders and proxy card are first being mailed
to stockholders of American List on or about June 19, 1997.
The Meeting has been called to consider and vote upon a proposal to approve
and adopt the Agreement and Plan of Merger, dated as of March 18, 1997 (the
"Merger Agreement"), by and among American List, Snyder Communications, Inc., a
Delaware corporation ("Snyder"), and Snyder Z Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of Snyder ("Acquisition"), pursuant to
which Acquisition will be merged with and into American List (the "Merger"), the
separate corporate existence of Acquisition will cease and American List, as the
surviving corporation (the "Surviving Corporation"), will become a wholly-owned
subsidiary of Snyder. Subject to the terms and conditions of the Merger
Agreement, each share of American List Common Stock outstanding immediately
prior to the Effective Time (as defined hereinafter) will be converted into and
represent the right to receive that number of shares of common stock, par value
$.001 per share, of Snyder (the "Snyder Common Stock") equal to the Exchange
Ratio described hereinafter. A detailed description of the Merger is set forth
in this Proxy Statement/Prospectus and in the Merger Agreement, attached hereto
as Exhibit A and incorporated herein by reference.
The Snyder Common Stock is listed for trading under the symbol "SNC" on the
New York Stock Exchange, Inc. ("NYSE"). The American List Common Stock is listed
for trading under the symbol "AMZ" on the American Stock Exchange ("AMEX"). On
June 16, 1997, the most recent practicable date prior to the printing of this
Proxy Statement/ Prospectus, the closing price of Snyder Common Stock as
reported on the NYSE Composite Tape was $27.50 per share and the closing price
of the American List Common Stock as reported on the AMEX was $29.13 per share.
At the Meeting, holders of American List Common Stock will also be asked to
consider and vote upon such other business as may properly come before the
Meeting.
This Proxy Statement/Prospectus constitutes both (a) the proxy statement of
American List relating to the solicitation of proxies by the American List Board
for use at the Meeting to approve and adopt the Merger and the Merger Agreement
and (b) the prospectus of Snyder included as part of a Registration Statement on
Form S-4 filed with the Securities and Exchange Commission (the "Commission")
with respect to the issuance of shares of Snyder Common Stock to be received by
holders of American List Common Stock upon consummation of the Merger. All
information regarding American List and its affiliates in this Proxy
Statement/Prospectus has been supplied by American List, and all information
regarding Snyder and its affiliates in this Proxy Statement/Prospectus has been
supplied by Snyder.
THE AMERICAN LIST BOARD UNANIMOUSLY HAS DETERMINED THAT THE MERGER IS FAIR
TO, AND IN THE BEST INTERESTS OF, AMERICAN LIST AND ITS STOCKHOLDERS, HAS
APPROVED THE MERGER AGREEMENT (AND THE TRANSACTIONS CONTEMPLATED THEREBY), AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AND THE MERGER
AGREEMENT.
IN REVIEWING THIS PROXY STATEMENT/PROSPECTUS, AMERICAN LIST STOCKHOLDERS
SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 17.
THE SECURITIES TO WHICH THIS PROXY STATEMENT/PROSPECTUS RELATES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS JUNE 18, 1997.
<PAGE> 8
AVAILABLE INFORMATION
Each of American List and Snyder is subject to the informational
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports, proxy statements and
other information with the Commission. Copies of such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the following Regional Offices of
the Commission: Seven World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. Materials that American List and Snyder file electronically with the
Commission are available at the Commission's website (http://www.sec.gov), which
contains reports, proxies and information statements and other information
regarding issuers that file electronically with the Commission. In addition,
materials filed by American List may be inspected at the offices of the AMEX, 86
Trinity Place, New York, New York 10006, and materials filed by Snyder may be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
If the Merger is consummated, Snyder will continue to file periodic
reports, proxy statements and other information with the Commission pursuant to
the Exchange Act and, upon application to the Commission, American List no
longer will be subject to the informational and certain other requirements of
the Exchange Act.
Snyder has filed with the Commission a Registration Statement on Form S-4
(together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Snyder Common Stock to be issued pursuant to the
Merger Agreement. This Proxy Statement/Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission. Such
additional information may be obtained from the Commission's principal office in
Washington, D.C. and the Commission's regional offices in New York and Illinois.
Statements contained in this Proxy Statement/Prospectus as to the contents of
any contract or other document referred to herein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document as filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY AMERICAN LIST OR SNYDER. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS,
OR THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM
OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR
SOLICITATION OF A PROXY IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS PROXY
STATEMENT/PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE
AFFAIRS OF AMERICAN LIST OR SNYDER SINCE THE DATE OF THIS PROXY
STATEMENT/PROSPECTUS.
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TABLE OF CONTENTS
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AVAILABLE INFORMATION................................................................. i
SUMMARY OF PROXY STATEMENT/PROSPECTUS................................................. 1
The Companies.................................................................... 1
Trading Markets and Market Price Data............................................ 2
Special Meeting.................................................................. 2
Vote Required; Proxies........................................................... 2
Stock Ownership of Management.................................................... 3
The Proposed Merger.............................................................. 3
Interests of Certain Persons in the Merger....................................... 5
Conditions to the Merger......................................................... 6
Other Acquisition Proposals...................................................... 6
Termination...................................................................... 6
Termination Fees................................................................. 7
Regulatory Approvals............................................................. 7
Accounting Treatment............................................................. 7
Certain Federal Income Tax Consequences of the Merger............................ 7
Absence of Appraisal Rights...................................................... 8
Certain Differences in the Rights of Stockholders................................ 8
Resale Restrictions.............................................................. 8
Percentage Ownership Interest of American List Stockholders After the Merger..... 8
American List Board's Recommendation; Reasons for the Transaction................ 8
Opinion of Financial Advisor..................................................... 9
SELECTED CONSOLIDATED FINANCIAL DATA OF AMERICAN LIST................................. 10
SELECTED CONSOLIDATED FINANCIAL DATA OF SNYDER........................................ 11
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA......................... 13
COMPARATIVE PER SHARE DATA............................................................ 15
COMPARATIVE MARKET PRICE DATA AND DIVIDENDS........................................... 16
RISK FACTORS.......................................................................... 17
Exchange Ratio Relative to Snyder Common Stock Price............................. 17
Dilution of Voting Power......................................................... 17
Conditions to the Consummation of the Merger..................................... 17
Rights as Holders of Snyder Common Stock......................................... 18
Reliance on AT&T................................................................. 18
Reliance on Other Major Clients.................................................. 18
Growth Through Acquisitions...................................................... 19
Integration of Acquisitions into Existing Management and Operations.............. 19
Management of Growth............................................................. 19
Risk Associated with International Operations and Expansion...................... 19
Adverse Effect of Foreign Exchange Rates on Results of Operations................ 20
Dependence On Trend Toward Outsourcing........................................... 20
Competitive and Fragmented Industry.............................................. 20
Dependence on Labor Force........................................................ 20
Reliance on Technology; Risk of Business Interruption............................ 21
Dependence on Key Personnel...................................................... 21
Government Regulation............................................................ 21
Potential Fluctuations in Quarterly Operating Results............................ 22
Shares Eligible for Future Sale; Registration Rights............................. 23
Control by Principal Stockholders................................................ 23
Effect of Certain Charter and Bylaw Provisions................................... 23
Volatility of Stock Price and Absence of Dividends............................... 24
THE MEETING OF AMERICAN LIST STOCKHOLDERS............................................. 25
General.......................................................................... 25
Matters to Be Considered at the Meeting.......................................... 25
Record Date...................................................................... 25
Quorum........................................................................... 25
Votes Required; Voting Rights.................................................... 25
Solicitation of Proxies.......................................................... 26
</TABLE>
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<TABLE>
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THE MERGER............................................................................ 27
General.......................................................................... 27
Background of the Merger......................................................... 27
Reasons for the Merger........................................................... 30
Recommendation of the American List Board........................................ 32
Percentage Ownership Interest of American List Stockholders After the Merger..... 32
Management of Snyder and American List After the Merger.......................... 32
Conduct of the Business of Snyder and American List if the Merger is not
Consummated..................................................................... 33
Material Contacts between Snyder and American List............................... 33
Interests of Certain Persons in the Merger....................................... 33
Accounting Treatment............................................................. 35
Certain Federal Income Tax Consequences of the Merger............................ 35
Regulatory Approvals............................................................. 36
Restrictions on Sales of Shares by Affiliates.................................... 36
Stock Exchange Listing........................................................... 37
Agreement to Vote in Favor of the Merger......................................... 37
No Rights of Dissenting Stockholders............................................. 37
OPINION OF FINANCIAL ADVISOR TO AMERICAN LIST......................................... 37
THE MERGER AGREEMENT.................................................................. 41
The Merger....................................................................... 41
Effective Time................................................................... 41
Conversion of Shares; Exchange of Stock Certificates; No Fractional Shares....... 41
Treatment of Stock Options....................................................... 43
Representations and Warranties................................................... 43
Certain Covenants................................................................ 43
Conditions to the Merger......................................................... 47
Termination...................................................................... 48
Fees and Expenses................................................................ 49
Modification or Amendment........................................................ 50
Waiver........................................................................... 50
CERTAIN INFORMATION REGARDING SNYDER.................................................. 51
General.......................................................................... 51
Marketing Programs............................................................... 52
Marketing Opportunities.......................................................... 56
Competition...................................................................... 57
Seasonality...................................................................... 58
Regulation....................................................................... 58
Employees........................................................................ 58
Properties....................................................................... 59
Legal Proceedings................................................................ 59
SNYDER MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.......................................................................... 60
Overview......................................................................... 60
Results of Operations............................................................ 61
Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996............ 62
1996 Compared to 1995............................................................ 63
1995 Compared to 1994............................................................ 64
Liquidity and Capital Resources.................................................. 65
New Accounting Pronouncement..................................................... 66
DIRECTORS AND EXECUTIVE OFFICERS OF SNYDER............................................ 67
Members of the Board of Directors................................................ 67
Board of Directors and Committees of the Board................................... 68
Executive Officers............................................................... 68
Other Senior Management Personnel................................................ 69
SNYDER -- EXECUTIVE COMPENSATION...................................................... 70
Summary Compensation Table....................................................... 70
Stock Option Grants in 1996...................................................... 71
Executive Employment Contracts................................................... 71
Compensation Committee Interlocks and Insider Participation...................... 72
</TABLE>
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<TABLE>
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REPORT OF THE BOARD OF DIRECTORS OF SNYDER ON EXECUTIVE COMPENSATION.................. 72
Executive Compensation Policy.................................................... 72
1996 Executive Officer Compensation.............................................. 72
1996 Chief Executive Officer Compensation........................................ 73
SNYDER -- CERTAIN TRANSACTIONS........................................................ 73
CERTAIN INFORMATION REGARDING AMERICAN LIST........................................... 75
General.......................................................................... 75
Products and Services............................................................ 75
Customers........................................................................ 76
Sales and Marketing.............................................................. 77
Competition...................................................................... 77
Rights to Data................................................................... 77
Privacy Legislation.............................................................. 77
Employees........................................................................ 78
Properties....................................................................... 78
Legal Proceedings................................................................ 78
AMERICAN LIST MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS....................................................................... 79
Liquidity and Capital Resources.................................................. 79
Results of Operations............................................................ 80
Fiscal 1997 Compared to Fiscal 1996.............................................. 80
Fiscal 1996 Compared to Fiscal 1995.............................................. 81
Fiscal 1995 Compared to Fiscal 1994.............................................. 81
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA........................................... 83
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA.................................. 86
DESCRIPTION OF SNYDER CAPITAL STOCK................................................... 87
Common Stock..................................................................... 87
Preferred Stock.................................................................. 87
Certain Charter Provisions....................................................... 87
Transfer Agent and Register...................................................... 87
COMPARATIVE RIGHTS OF STOCKHOLDERS.................................................... 88
Directors........................................................................ 88
Amendment of Bylaws.............................................................. 89
Stockholder Vote Required for Action............................................. 89
Power to Call Special Stockholders' Meeting...................................... 90
Interested Directors............................................................. 90
Preferred Stock.................................................................. 90
SHARES ELIGIBLE FOR FUTURE SALE....................................................... 90
SECURITY OWNERSHIP OF AMERICAN LIST................................................... 93
SECURITY OWNERSHIP OF SNYDER.......................................................... 94
LEGAL MATTERS......................................................................... 95
EXPERTS............................................................................... 95
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING OF AMERICAN LIST STOCKHOLDERS....... 95
INDEX TO FINANCIAL STATEMENTS......................................................... F-1
EXHIBIT A The Merger Agreement
EXHIBIT B Fairness Opinion of Prudential Securities Incorporated
EXHIBIT C Stockholders Agreement
</TABLE>
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<PAGE> 12
SUMMARY OF PROXY STATEMENT/PROSPECTUS
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. This summary is not intended to be complete and
is subject to and qualified in its entirety by reference to the more detailed
information and financial statements contained elsewhere in this Proxy
Statement/Prospectus, including the Exhibits hereto. Stockholders are urged to
read carefully the entire Proxy Statement/Prospectus, including the Exhibits. As
used in this Proxy Statement/Prospectus, "American List" refers to American List
Corporation and "Snyder" refers to Snyder Communications, Inc., and, unless the
context otherwise requires, their respective subsidiaries. Certain capitalized
terms which are used but not defined in this summary are defined elsewhere in
this Proxy Statement/Prospectus.
STOCKHOLDERS OF AMERICAN LIST ARE URGED TO READ THIS PROXY
STATEMENT/PROSPECTUS AND THE EXHIBITS HERETO IN THEIR ENTIRETY AND SHOULD
CAREFULLY CONSIDER THE INFORMATION SET FORTH BELOW UNDER THE HEADING "RISK
FACTORS" BEGINNING ON PAGE 17.
THE COMPANIES
American List. American List, through its wholly-owned subsidiary,
American Student List Co., Inc., develops, maintains and markets one of the
largest and most comprehensive databases of high school, college and pre-school
through junior high school students in the United States, currently containing
information on approximately 30 million individuals. American List rents lists
derived from its database for use primarily in direct mail and telemarketing
programs. During the fiscal year ended February 28, 1997, American List rented
its lists to approximately 3,840 customers, including financial institutions,
list brokers and advertising agencies, retailers and educational institutions.
American List's principal executive offices are located at 330 Old Country
Road, Mineola, New York 11501, and its telephone number is (516) 248-6100. See
"Certain Information Regarding American List -- General."
Snyder. Snyder is a rapidly growing provider of innovative and value-added
targeted outsourced marketing services. Snyder designs and implements
specialized sales and marketing programs primarily for Fortune 500 companies.
Snyder's specialized sales and marketing programs include the development of
strategic marketing plans, the production of marketing materials, the management
of clients' customer databases, the implementation of marketing plans with leads
generated by, among other things, Snyder's demographic marketing database and
the enrollment of new customers. Snyder's clients are primarily companies with
large annual marketing expenditures facing significant competitive pressures to
retain or expand market share in various industries, including
telecommunications, pharmaceuticals, financial services, business products and
services, and consumer packaged goods. On January 6, 1997, Snyder acquired MMD,
Inc. ("MMD"), a provider of medical sales and marketing services for
pharmaceutical companies, in a merger transaction in which MMD became a
wholly-owned subsidiary of Snyder. On March 27, 1997, Snyder acquired Brann
Holdings Limited ("Brann"), a leading direct marketing company in the United
Kingdom ("U.K."), in a share exchange transaction in which Brann became a
wholly-owned subsidiary of Snyder. On January 17, 1997, Snyder acquired Good
Neighbor Direct, Inc. ("Good Neighbor"), a marketing services company targeting
customers in retail outlets, for approximately $4,150,000 in cash.
Snyder's 1996 revenues were $82.8 million, MMD's 1996 revenues were $37.1
million, and Brann's 1996 revenues were $65.5 million. If MMD and Brann had been
wholly-owned subsidiaries of Snyder in 1996, the ten largest clients of Snyder,
listed alphabetically and based on 1996 revenues on a consolidated basis, would
have been AT&T Communications, Inc. ("AT&T"), Barclays Bank plc, Bayer
Corporation ("Bayer"), Bristol-Myers Squibb ("BMS"), Imperial Cancer Research
Fund, MCI Telecommunications Corporation ("MCI"), Microsoft Ltd., Novartis
Consumer Health, Inc. ("Novartis"), Royal Mail and Zurich Municipal.
The principal executive offices of Snyder are located at Two Democracy
Center, 6903 Rockledge Drive, Bethesda, Maryland 20817 and its telephone number
is (301) 468-1010. See "Certain Information Regarding Snyder -- General."
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<PAGE> 13
TRADING MARKETS AND MARKET PRICE DATA
Shares of common stock, par value $.01 per share, of American List (the
"American List Common Stock") are listed and traded on the AMEX under the symbol
"AMZ." Shares of common stock, par value $.001 per share, of Snyder (the "Snyder
Common Stock") are listed and traded on the NYSE under the symbol "SNC." On
March 18, 1997, the last full trading day prior to the public announcement of
the Merger, the closing price of American List Common Stock, as reported on the
AMEX, was $22.38 per share and the closing price of Snyder Common Stock, as
reported on the NYSE Composite Tape was $26.25 per share. On June 16, 1997, the
most recent practicable date prior to the printing of this Proxy
Statement/Prospectus, the closing price of American List Common Stock, as
reported on the AMEX, was $29.13 per share, and the closing price of Snyder
Common Stock, as reported on the NYSE Composite Tape, was $27.50 per share. See
"Comparative Market Price Data and Dividends."
SPECIAL MEETING
Date, Time, Place. The special meeting of stockholders (the "Meeting") of
American List will be held on July 11, 1997, at 9:00 a.m. local time, at the
Long Island Marriott Hotel, 101 James Doolittle Boulevard, Uniondale, New York
11553.
Purpose of the Meeting. Holders of American List Common Stock will
consider and vote upon a proposal to approve and adopt the Merger (as defined
below) and the Agreement and Plan of Merger, dated as of March 18, 1997 (the
"Merger Agreement"), by and among American List, Snyder and Snyder Z
Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of
Snyder ("Acquisition"). Pursuant to the Merger Agreement, Acquisition would be
merged with and into American List (the "Merger"). Holders of American List
Common Stock will also be asked to consider and vote upon such other business as
may properly come before the Meeting. A copy of the Merger Agreement is attached
to this Proxy Statement/Prospectus as Exhibit A. See "The Meeting of American
List Stockholders," "The Merger" and "The Merger Agreement."
Record Date, Quorum. The close of business on June 4, 1997 (the "Record
Date") has been fixed as the record date for determining holders of outstanding
shares of American List Common Stock entitled to notice of and to vote at the
Meeting. Accordingly, only holders of record of American List Common Stock at
the close of business on that date will be entitled to notice of and to vote at
the Meeting. As of June 4, 1997, 4,412,008 shares of American List Common Stock
were outstanding and held of record by 279 holders. The presence, in person or
by proxy, of the holders of a majority of the outstanding shares of American
List Common Stock entitled to vote at the Meeting is necessary to constitute a
quorum for the transaction of business at the Meeting. For purposes of voting at
the Meeting for the proposal, abstentions and broker non-votes will be counted
in determining whether a quorum exists to transact business at the Meeting. See
"The Meeting of American List Stockholders -- Record Date" and "The Meeting of
American List Stockholders -- Quorum."
VOTE REQUIRED; PROXIES
Under the General Corporation Law of the State of Delaware (the "DGCL"),
the affirmative vote of the holders of at least a majority of the outstanding
shares of American List Common Stock is required to approve and adopt the Merger
and the Merger Agreement at the Meeting. Each share of American List Common
Stock is entitled to cast one vote in person or by proxy with respect to the
approval and adoption of the Merger and the Merger Agreement at the Meeting.
All shares of American List Common Stock represented by properly executed
proxies received prior to or at the Meeting and not revoked will be voted in
accordance with the instructions indicated in such proxies. Stockholders are
encouraged to specify the way they wish to vote their shares by marking the
appropriate boxes on the enclosed proxies. If no instructions are indicated,
shares represented by a proxy will be voted FOR approval of the Merger and the
Merger Agreement and, in the discretion of the persons named in the proxy, on
such other matters as may properly be presented at the Meeting. Abstentions,
failures to vote and broker non-votes will have the effect of a vote AGAINST the
Merger and the Merger Agreement.
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<PAGE> 14
A stockholder may revoke its proxy at any time prior to its use by
delivering to the Secretary of American List a signed notice of revocation or a
later dated and signed proxy, or by attending the Meeting and voting in person.
Attendance at the Meeting will not in itself constitute the revocation of a
proxy. See "The Meeting of American List Stockholders -- Votes Required; Voting
Rights."
In addition to solicitation by mail, directors, officers and regular
employees of American List may solicit proxies by telephone, telegram or by
personal interviews. Such persons will receive no additional compensation for
such services but may be reimbursed for reasonable out-of-pocket expenses.
Brokers and certain other persons will be reimbursed for their charges and
expenses in forwarding proxy material to the beneficial owners of American List
Common Stock held of record by such persons. MacKenzie Partners, Inc. will
assist in the solicitation of proxies for American List for a fee of $10,000,
plus reasonable out-of-pocket expenses. Such fees and expenses, up to an amount
of $75,000, and any incremental expenses associated with the expedited delivery
of solicitation materials will be borne by Snyder. See "The Meeting of American
List Stockholders -- Solicitation of Proxies."
STOCK OWNERSHIP OF MANAGEMENT
At the close of business on the Record Date, directors and executive
officers of American List and their affiliates have the power to vote an
aggregate of 885,156 (approximately 20.06%) shares of American List Common Stock
then outstanding. See "Security Ownership of American List."
On March 18, 1997, each of Mr. Martin Lerner and D. H. Blair Investment
Banking Corp. ("D.H. Blair") entered into a Stockholders Agreement with Snyder
(the "Stockholders Agreement") which provided, among other things, that if a
stockholder vote to approve the Merger and the Merger Agreement were held, such
stockholders would vote the shares of American List Common Stock owned by them,
or over which they have the power to vote, in favor of the Merger Agreement. As
of the date of the Stockholders Agreement, such stockholders owned or had the
power to vote an aggregate of 884,546 shares of American List Common Stock
representing approximately 20.05% of the total outstanding shares of American
List Common Stock. A copy of the Stockholders Agreement is attached to this
Proxy Statement/Prospectus as Exhibit C, and should be read carefully by holders
of American List Common Stock. See "The Merger -- Agreement to Vote in Favor of
the Merger" and "The Merger -- Interests of Certain Persons in the
Merger -- Stockholders Agreement."
The directors and executive officers of American List including Mr. Lerner
and Mr. J. Morton Davis, Chairman, Chief Executive Officer and sole shareholder
of D. H. Blair, representing in the aggregate approximately 20.06% of the
outstanding shares of American List Common Stock, have indicated that they
intend to vote their shares for approval and adoption of the Merger and the
Merger Agreement. Under the DGCL, the affirmative vote of the holders of a
majority of the outstanding shares of American List Common Stock entitled to
vote is required to approve and adopt the Merger and the Merger Agreement.
Accordingly, approval and adoption of the Merger and the Merger Agreement is not
assured. See "The Meeting of American List Stockholders -- Votes Required;
Voting Rights."
THE PROPOSED MERGER
General. At the Effective Time (as defined below), Acquisition will be
merged with and into American List, which will survive the Merger as a
wholly-owned subsidiary of Snyder and the separate corporate existence of
Acquisition will cease.
Closing; Effective Time. The Merger will become effective upon the
execution and filing of a Certificate of Merger with the Secretary of State of
Delaware in accordance with the DGCL, or at such later time as is agreed between
the parties and specified in the Certificate of Merger (the "Effective Time").
Such filing will be made as soon as practicable after the date of the closing of
the Merger (the "Closing" or the "Closing Date"). The Closing will take place at
a time and on a date specified by the parties, but no later than the second
business day after satisfaction of the conditions set forth in the Merger
Agreement. See "The Merger Agreement -- The Merger."
3
<PAGE> 15
Conversion of Shares. In the Merger, each share of American List Common
Stock outstanding immediately prior to the Effective Time will be converted into
the number of shares of Snyder Common Stock equal to the Exchange Ratio to be
determined in the following manner: (i) if the Average Final Closing Price (as
defined below) of the Snyder Common Stock equals or exceeds $32.00, the Exchange
Ratio will be 1.00; (ii) if the Average Final Closing Price equals or exceeds
$28.00 but is less than $32.00, the Exchange Ratio will equal the quotient
(rounded to four decimal places) of $32.00 divided by the Average Final Closing
Price; (iii) if the Average Final Closing Price equals or exceeds $26.00 but is
less than $28.00, the Exchange Ratio will be 1.14; and (iv) if the Average Final
Closing Price is less than $26.00, the Exchange Ratio will equal the quotient
(rounded to four decimal places) of $29.71 divided by the Average Final Closing
Price. Snyder has the right to terminate the Merger Agreement if the Average
Final Closing Price is less than $24.00. American List has the right to
terminate the Merger Agreement if the Average Final Closing Price is less than
$20.00 (such termination rights of Snyder and American List collectively, the
"Walk-away Rights").
"Average Final Closing Price" means the average of closing prices (or, if
the Snyder Common Stock does not trade on any Trading Day, the average of the
high bid and low asked for prices therefor on such day), regular way, per share
of Snyder Common Stock, as reported on the NYSE Composite Tape during the twenty
consecutive Trading Days ending on (and including) the third Trading Day prior
to the Effective Time. Solely for purposes of calculating the Average Final
Closing Price with respect to the Walk-away Rights, the Effective Time shall be
the date of the Meeting. "Trading Day" means a day on which the NYSE is open for
trading. A detailed description of the Merger is set forth in this Proxy
Statement/Prospectus and in the Merger Agreement, attached hereto as Exhibit A
and incorporated herein by reference. See "The Merger Agreement -- Conversion of
Shares; Exchange of Stock Certificates; No Fractional Shares."
Assuming an Average Final Closing Price of $26.819, which represents the
average of the closing prices of Snyder Common Stock between May 19, 1997 and
June 16, 1997, each share of American List Common Stock would be converted into
1.14 shares of Snyder Common Stock pursuant to the Merger Agreement. The value
of the Snyder Common Stock that American List stockholders would receive per
share of American List Common Stock, based on such assumed Average Final Closing
Price, would be $30.57.
Factors to be Considered in Exercising Walk-Away Rights. The American List
Board will not resolicit the American List stockholders in the event the Average
Final Closing Price is below the $20.00 threshold, thereby triggering American
List's Walk-away Rights. Once such Walk-away Rights are triggered, the American
List Board, in the exercise of its fiduciary duties, will determine whether, in
its view, the Merger continues to be in the best interests of the American List
stockholders, and, accordingly, whether to proceed with the Merger. The American
List Board will consider, in consultation with its financial advisors, a number
of factors in determining whether or not to exercise its Walk-away Rights,
including, but not limited to, the following: the near-term and long-term
prospects for both American List and Snyder; whether any other offers have been
received from potential acquirors of American List and, if so, the nature and
terms of such offers; the price of Snyder Common Stock and whether it reflects
the American List Board's perceived value of such stock; whether any decline in
the price of Snyder Common Stock appears to be a continuing trend for such
stock; and the price of American List Common Stock. Furthermore, the American
List Board will consider overall market conditions.
Range of Average Final Closing Prices and Corresponding Exchange Ratios.
The following table sets forth, for a range of Average Final Closing Prices of
Snyder Common Stock, the respective Exchange Ratio
4
<PAGE> 16
and the respective value (based on such Average Final Closing Prices) of Snyder
Common Stock that American List stockholders would receive pursuant to the
Merger.
<TABLE>
<CAPTION>
VALUE OF SNYDER COMMON STOCK
AVERAGE FINAL THAT AMERICAN LIST
CLOSING PRICE EXCHANGE RATIO STOCKHOLDERS WOULD RECEIVE
- ------------- -------------- ----------------------------
<S> <C> <C>
$33 1.0000 $33.00
32 1.0000 32.00
31 1.0323 32.00
30 1.0667 32.00
29 1.1034 32.00
28 1.1429 32.00
27 1.1400 30.78
26 1.1400 29.64
25 1.1884 29.71
24 1.2379 29.71
23 1.2917 29.71
22 1.3505 29.71
21 1.4148 29.71
20 1.4855 29.71
19 1.5637 29.71
</TABLE>
If the Average Final Closing Price falls below $19, the Exchange Ratio will
increase accordingly so that the value (based on the Average Final Closing
Price) of Snyder Common Stock to be received by American List stockholders per
share of American List Common Stock would remain $29.71.
American List stockholders can call the following toll-free number at any
time following the third Trading Day prior to the Meeting to ascertain the exact
number of shares of Snyder Common Stock to be issued per share of American List
Common Stock: 1-800-322-2885.
Exchange of American List Stock Certificates. Upon consummation of the
Merger, each holder of a certificate or certificates representing shares of
American List Common Stock (the "Certificates") outstanding immediately prior to
the Merger will, upon the surrender thereof to American Stock Transfer & Trust
Company, as exchange agent designated by Snyder (the "Exchange Agent"), be
entitled to receive a certificate or certificates representing the number of
whole shares of Snyder Common Stock into which such shares of American List
Common Stock will have been converted as a result of the Merger, together with
cash in lieu of any fractional share to which such American List stockholder may
be entitled to receive. After the consummation of the Merger, the Exchange Agent
will mail a letter of transmittal with instructions to all holders of record of
American List Common Stock as of the Effective Time for use in surrendering
their Certificates in exchange for certificates representing shares of Snyder
Common Stock. CERTIFICATES SHOULD NOT BE SURRENDERED UNTIL THE LETTER OF
TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED. See "The Merger Agreement --
Conversion of Shares; Exchange of Stock Certificates; No Fractional Shares."
No fractional shares of Snyder Common Stock will be issued in the Merger.
In lieu thereof, each holder of American List Common Stock who otherwise would
have been entitled to a fractional share of Snyder Common Stock will receive
cash in an amount equal to such fraction multiplied by the Average Final Closing
Price of Snyder Common Stock. See "The Merger Agreement -- Conversion of Shares;
Exchange of Stock Certificates; No Fractional Shares."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of American
List (the "American List Board") with respect to the Merger and the Merger
Agreement, stockholders should be aware that certain members of American List's
management and the American List Board have certain interests in the Merger that
are in addition to the interests of stockholders of American List generally.
Upon consummation of the Merger, (i) Mr. Lerner will receive $2,000,000 pursuant
to the termination of his existing employment
5
<PAGE> 17
agreement, (ii) Mr. Lerner will be entitled to receive options to purchase
250,000 shares of Snyder Common Stock under its 1996 Stock Incentive Plan (the
"Snyder Stock Option Plan"), 100,000 of which are to be vested six months
following the Effective Time and with respect to the remaining 150,000 shares,
one-fifth of which will vest on each anniversary date of the Effective Time
commencing on the first anniversary date; and (iii) Snyder will grant options to
purchase up to 100,000 shares of Snyder Common Stock under the Snyder Stock
Option Plan to employees of American List and in amounts identified by Mr.
Lerner, subject to the reasonable approval of the American List Board. The
members of American List's management and the American List Board will not
receive any additional payments and, other than Messrs. Martin Lerner, Donald
Damore and Charles A. Caccia, will not enter into employment agreements with
American List upon consummation of the Merger. Furthermore, Snyder has agreed in
the Merger Agreement to assume all outstanding options (collectively, the
"American List Options") granted under American List's 1992 Stock Option Plan
(the "American List Stock Option Plan"), to indemnify past and present officers
and directors of American List for a period of six years and, subject to certain
limitations, to use its best efforts to provide directors' and officers'
liability insurance for not less than three years after the Effective Time. The
American List Board was aware of these interests and considered them, among
other matters, in approving the Merger Agreement. See "The Merger -- Interests
of Certain Persons in the Merger" and "The Merger Agreement -- Certain
Covenants."
CONDITIONS TO THE MERGER
The respective obligations of American List, Snyder and Acquisition to
consummate the Merger are subject to a number of conditions, including, among
others: (i) the approval of the Merger Agreement by American List stockholders;
(ii) the filing or obtaining of all notices or approvals required by any
governmental entity; (iii) the absence of any injunction prohibiting the
consummation of the Merger; (iv) the Registration Statement having become
effective and not being the subject of any stop order proceedings; (v) the
expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"); (vi) the
approval for listing on the NYSE of the Snyder Common Stock issuable in the
Merger; (vii) the receipt by American List of an opinion from its counsel to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); (viii) the receipt of an opinion from Arthur
Andersen LLP ("Arthur Andersen") with respect to qualification of the Merger as
a pooling of interests; (ix) each party having performed all of its obligations
contained in the Merger Agreement in all material respects; and (x) the
representations and warranties of each party to the Merger Agreement being true
and correct in all material respects at the Effective Time. American List and
Snyder may determine to modify or waive any condition to the consummation of the
Merger, to the extent permitted by law. Neither American List nor Snyder
presently contemplates waiving or modifying any of the foregoing conditions. See
"The Merger Agreement -- Conditions to the Merger," "The Merger
Agreement -- Modification or Amendment" and "The Merger Agreement -- Waiver."
OTHER ACQUISITION PROPOSALS
The Merger Agreement provides that, subject to certain exceptions, prior to
the consummation or termination of the Merger Agreement, American List, its
affiliates and their respective officers, directors, employees, representatives
and agents will not encourage, solicit, participate in or initiate discussions
or negotiations with, or provide any information to, any entity concerning any
merger, sale of assets, sale of shares of capital stock or similar transaction
involving American List or any subsidiary or division of American List, in each
case subject to certain exceptions necessary to comply with the American List
Board's fiduciary obligations to the American List stockholders. See "The Merger
Agreement -- Certain Covenants."
TERMINATION
The Merger Agreement provides that it may be terminated and the Merger
abandoned at any time prior to the Effective Time, (i) by mutual consent of
American List and Snyder, (ii) by either American List or Snyder if the Merger
shall not have been consummated by August 15, 1997, (iii) by either American
List or
6
<PAGE> 18
Snyder if a court of competent jurisdiction issues an order, decree or ruling or
takes any final action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action has become non-appealable,
(iv) by American List if (a) there has been a breach by Snyder or Acquisition of
any representation or warranty or if any representation or warranty of Snyder or
Acquisition becomes untrue, in each case such that the obligations of American
List would be incapable of being satisfied by August 15, 1997, (b) there has
been a breach of any covenants or agreements by Snyder or Acquisition having a
Material Adverse Effect (as defined in the Merger Agreement) on Snyder or
materially adversely affecting (or materially delaying) the consummation of the
Merger, which breach is not cured within 20 business days of notice, or (c)
American List enters into a definitive agreement relating to a Superior Proposal
(as defined in the Merger Agreement), and (v) by Snyder and Acquisition if (a)
there has been a breach by American List of any representation or warranty or if
any representation or warranty of American List becomes untrue, in each case
such that the obligations of Snyder and Acquisition would be incapable of being
satisfied by August 15, 1997, (b) there has been a breach of any covenants or
agreements by American List having a Material Adverse Effect on American List or
materially adversely affecting (or materially delaying) the consummation of the
Merger, which breach is not cured within 20 business days of notice, (c)
American List enters into a definitive agreement relating to any Third Party
Acquisition (as defined in the Merger Agreement), (d) the American List Board
shall have withdrawn, modified or changed its approval or recommendation of the
Merger Agreement or the Merger, or (e) the Merger Agreement and the Merger shall
fail to receive the requisite vote for approval and adoption by the stockholders
of American List at the Meeting. See "The Merger Agreement -- Termination."
In addition, the Merger Agreement may be terminated prior to the Effective
Time (i) by Snyder if the Average Final Closing Price of the Snyder Common Stock
is less than $24.00 and (ii) by American List if the Average Final Closing Price
of Snyder Common Stock is less than $20.00. See "The Merger Agreement --
Termination."
TERMINATION FEES
The Merger Agreement provides that if Snyder or American List terminates
the Merger Agreement, except in certain limited circumstances, the terminating
party will be reimbursed for all out-of-pocket fees and expenses actually and
reasonably incurred by such party, in an aggregate amount not to exceed
$1,000,000. Furthermore, if the Merger Agreement is terminated by either party
for certain specified reasons, American List will pay a break-up fee to Snyder
in the amount of $5,000,000, less any amounts already paid for out-of-pocket
fees and expenses. See "The Merger Agreement -- Fees and Expenses."
REGULATORY APPROVALS
The consummation of the Merger is subject to certain regulatory approvals,
including the expiration or termination of the relevant waiting period under the
HSR Act. Snyder and American List each filed notification and report forms under
the HSR Act, on April 15, 1997 and April 10, 1997, respectively, with the
Federal Trade Commission (the "FTC") and the Department of Justice (the "DOJ").
The waiting periods under the HSR Act expired by early termination on April 21,
1997. See "The Merger Agreement -- Conditions to the Merger" and "The
Merger -- Regulatory Approvals."
ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a pooling of interests in
accordance with generally accepted accounting principles. It is a condition to
the consummation of the Merger that Snyder receive an opinion from Arthur
Andersen that the Merger will qualify for pooling of interests accounting
treatment. See "The Merger -- Accounting Treatment" and "The Merger
Agreement -- Conditions to the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Merger is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Code such that, for federal income tax purposes, the
Merger will not result in the recognition of gain or loss by
7
<PAGE> 19
American List, Snyder, Acquisition or, except to the extent they receive any
cash in the Merger, the stockholders of American List. American List's
obligation to effect the Merger is conditioned on the delivery of an opinion
from Schulte Roth & Zabel LLP, special counsel to American List, substantially
to the effect that, on the basis of facts, representations and assumptions set
forth in such opinion, for federal income tax purposes the Merger constitutes a
reorganization within the meaning of Section 368(a) of the Code. American List
will not waive the condition requiring the receipt of such an opinion from its
counsel. Such opinion has been delivered and a copy has been filed as an exhibit
to the Registration Statement. Stockholders are urged to consult their tax
advisors as to the tax consequences of the Merger to them under federal, state,
local or any other applicable law. See "The Merger -- Certain Federal Income Tax
Consequences of the Merger."
ABSENCE OF APPRAISAL RIGHTS
Stockholders of American List do not have appraisal rights in connection
with the Merger. See "The Merger -- No Rights of Dissenting Stockholders."
CERTAIN DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS
The rights of stockholders of American List are currently governed by the
Certificate of Incorporation and Bylaws of American List. Upon consummation of
the Merger, American List stockholders will receive Snyder Common Stock in the
Merger and will become stockholders of Snyder, and their rights will be governed
by the Certificate of Incorporation and Bylaws of Snyder. See "Description of
Snyder Capital Stock" and "Comparative Rights of Stockholders."
RESALE RESTRICTIONS
All shares of Snyder Common Stock received by American List stockholders in
the Merger have been registered under the Securities Act and will be freely
transferable, except that shares of Snyder Common Stock received by persons who
are deemed to be "affiliates" (as such term is defined under the Securities Act)
of American List at the time of the Meeting may be resold by them only in
certain permitted circumstances. See "The Merger -- Restrictions on Sales of
Shares by Affiliates" and "The Merger -- Interests of Certain Persons In the
Merger."
PERCENTAGE OWNERSHIP INTEREST OF AMERICAN LIST STOCKHOLDERS AFTER THE MERGER
Based on the number of shares of Snyder Common Stock outstanding on the
Record Date and assuming the issuance of approximately 5,029,689 shares of
Snyder Common Stock in the Merger (the "Estimated Merger Shares"), based on an
assumed Average Final Closing Price of $26.819 (which represents the average of
the closing prices of the Snyder Common Stock, as reported on the NYSE Composite
Tape between May 19, 1997 and June 16, 1997), upon consummation of the Merger
there will be approximately 42,920,833 shares of Snyder Common Stock outstanding
at the Effective Time, of which the stockholders of American List, in aggregate,
will own approximately 11.72% (approximately 10.66% on a fully diluted basis
assuming the exercise of all currently outstanding options to purchase shares of
Snyder Common Stock and all currently outstanding American List Options which
will be assumed by Snyder at the Effective Time). See "Risk Factors -- Dilution
of Voting Power" and "The Merger -- Percentage Ownership Interest of American
List Stockholders after the Merger."
AMERICAN LIST BOARD'S RECOMMENDATION; REASONS FOR THE TRANSACTION
The American List Board believes that the Merger is fair to, and in the
best interests of, American List and its stockholders. The American List Board
has unanimously approved the Merger and the Merger Agreement and recommends that
you vote FOR approval of the Merger and the Merger Agreement and the
transactions contemplated thereby.
At a meeting held on March 18, 1997, the American List Board unanimously
approved the Merger and the Merger Agreement and resolved to recommend that
American List stockholders vote for approval and
8
<PAGE> 20
adoption of the Merger and the Merger Agreement. The American List Board
considered many factors in reaching its conclusion to approve the Merger and the
Merger Agreement and to recommend that American List stockholders vote for
approval and adoption of the Merger and the Merger Agreement. See "The
Merger -- Reasons for the Merger" and "The Merger -- Recommendation of the
American List Board."
OPINION OF FINANCIAL ADVISOR
Prudential Securities Incorporated ("Prudential Securities"), American
List's financial advisor, has rendered its written opinion (the "Opinion") to
the American List Board to the effect that, as of the date of such opinion, the
Exchange Ratio is fair to the stockholders of American List from a financial
point of view. A copy of the Opinion, which sets forth the assumptions made,
matters considered, and the limits of review, is attached to this Proxy
Statement/Prospectus as Exhibit B, and should be read carefully by holders of
the American List Common Stock. Prudential Securities subsequently restated the
Opinion in writing on June 18, 1997. See "Opinion of Financial Advisor to
American List."
9
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL DATA OF AMERICAN LIST
The selected consolidated financial data presented below for each of the
fiscal years ended February 28, 1995, February 29, 1996 and February 28, 1997
are derived from and are qualified by reference to American List's Consolidated
Financial Statements which have been audited by Grant Thornton LLP, independent
certified public accountants ("Grant Thornton"), as indicated in their report
contained elsewhere in this Proxy Statement/Prospectus. The consolidated
financial data for the years ended February 28, 1993 and 1994 are derived from
audited financial statements not included in this Proxy Statement/Prospectus.
This data should be read in conjunction with American List's Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements and notes thereto contained elsewhere in this
Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FEBRUARY 28 OR 29,
---------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................ $10,108 $12,635 $15,494 $18,887 $18,471
Cost of operations.................................. 1,985 1,992 2,201 2,902 3,066
Selling, general and administrative expenses........ 2,734 3,391 3,615 4,238 4,940
Operating income.................................... 5,389 7,252 9,678 11,746 10,465
Investment income................................... 271 193 378 476 390
Interest expense.................................... -- -- (129) (185) (154)
Earnings before provision for income taxes.......... 5,660 7,445 9,927 12,037 10,701
Provision for income taxes.......................... (2,148) (2,871) (3,751) (4,428) (3,953)
------- ------- ------- ------- -------
Net earnings........................................ $ 3,512 $ 4,574 $ 6,176 $ 7,609 $ 6,748
======= ======= ======= ======= =======
Net earnings per common share....................... $ .77 $ 1.00 $ 1.36 $ 1.68 $ 1.51
======= ======= ======= ======= =======
Weighted average shares outstanding................. 4,557 4,557 4,557 4,542 4,462
Dividends per common share(1)....................... $ .61 $ .79 $ .60 $ .95 $ 1.20
</TABLE>
<TABLE>
<CAPTION>
AS OF
FEBRUARY 28,
1997
---------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities....................................... $ 9,399
Working capital........................................................................ 14,693
Total assets........................................................................... 20,039
Total liabilities...................................................................... 3,040
Stockholders' equity................................................................... 16,999
</TABLE>
- ---------------
(1) American List commenced paying regular quarterly dividends of $.20 per share
in February 1994, which amount was increased to $.25 per share in June 1995
and to $.30 per share in April 1996. Reported dividends during fiscal 1995,
1996 and 1997 reflect timing differences in the declaration and payment of
dividends.
10
<PAGE> 22
SELECTED CONSOLIDATED FINANCIAL DATA OF SNYDER
In January 1997 and March 1997, respectively, Snyder acquired MMD in a
merger transaction and Brann in a share exchange transaction (the
"Acquisitions") accounted for as pooling of interests for accounting and
financial reporting purposes. The Acquisitions are further discussed in "Certain
Information Regarding Snyder -- General" and in Note 1 to the Consolidated
Financial Statements of Snyder contained elsewhere in this Proxy
Statement/Prospectus. The following table sets forth selected consolidated
financial data of Snyder as of and for each of the years in the five year period
ended December 31, 1996 and the three month periods ended March 31, 1996 and
1997, after giving effect to the Acquisitions. The table below gives effect to
the Acquisitions as if they had occurred on January 1 of each period presented.
The table also sets forth unaudited pro forma income statement data for each of
the years in the five year period ended December 31, 1996 and for the quarter
ended March 31, 1996 which gives pro forma effect to federal, state and city
income taxes as if all operations of Snyder, MMD and Brann were subject to such
taxes for all periods presented. The income statement data for each of the years
in the three year period ended December 31, 1996 and the balance sheet data as
of December 31, 1995 and 1996 are derived from the audited Consolidated
Financial Statements of Snyder. All other income statement and balance sheet
data presented are derived from unaudited Consolidated Financial Statements of
Snyder and in the opinion of the management of Snyder include all adjustments,
consisting of normal and recurring adjustments, which are necessary to present
fairly the results of operations and financial position of Snyder for each
period presented. The following selected financial data should be read in
conjunction with the Consolidated Financial Statements and notes thereto
included elsewhere in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FOR THE QUARTERS
FOR THE YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
----------- ----------- ------- -------- -------- ------- -------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(1)(2)
Revenues...................... $ 8,196 $22,168 $80,429 $132,801 $185,440 $40,506 $49,053
Acquisition costs(3).......... -- -- -- -- -- -- 16,181
Income (loss) before
extraordinary item.......... 53 877 5,814 7,195 8,231 2,372 (12,482)
Extraordinary item(4)......... -- -- -- -- (1,215) -- --
Net (loss) income............. 53 877 5,814 7,195 7,015 2,372 (12,482)
======= ======= ======= ======== ========
Unaudited:
Pro forma provision for income
taxes(5).................... 29 419 3,088 3,574 4,293 1,068 1,342
Pro forma income (loss) before
extraordinary item(5)....... 63 546 4,191 5,193 5,350 1,331 (12,483)
Pro forma net income
(loss)(5)................... 63 546 4,191 5,193 4,134 1,331 (12,483)
======= ======= ======= ======== ========
Pro forma income before
extraordinary item per
share(6).................... $ 0.00 $ 0.02 $ 0.13 $ 0.16 $ 0.16 $ 0.04 $ (0.33)
======= ======= ======= ======== ========
Pro forma net income per
share(6).................... $ 0.00 $ 0.02 $ 0.13 $ 0.16 $ 0.12 $ 0.04 $ (0.33)
======= ======= ======= ======== ========
Shares used in computing pro
forma per share
amounts(6).................. 29,466 29,466 33,163 33,163 34,455 33,163 37,364
Cash dividends declared per
common share................ -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
---------------------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
----------- ----------- ----------- ------- -------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(1)(2)
Total assets....................... $ 3,990 $ 8,378 $ 9,850 $47,549 $104,594 $99,158
Long-term debt..................... 3,234 2,638 2,057 12,064 8,043 7,350
Mandatorily redeemable preferred
stock(7)......................... -- -- -- 4,597 5,110 --
Equity (deficit)................... (3,042) (2,241) 661 4,870 50,097 52,534
</TABLE>
(Footnotes continued on next page.)
11
<PAGE> 23
- ---------------
(1) Prior to the consummation on September 24, 1996 of the reorganization (the
"Reorganization") in which Snyder acquired all of the limited partnership
interests in Synder Communications, L.P. (the "Partnership") and all of the
issued and outstanding stock of the corporate general partner, Snyder
Marketing Services, Inc. ("SMS"), the operations of Snyder were conducted
through the Partnership. The Partnership was owned 63.85 percent by SMS and
36.15 percent by the limited partners. The Reorganization resulted in the
stockholders of SMS exchanging 100 percent of their SMS stock for Snyder
Common Stock simultaneously with the limited partners exchanging their
limited partner interests in the Partnership for Snyder Common Stock. After
the Reorganization, Snyder owns 100 percent of the stock of SMS and,
directly and indirectly through its ownership of SMS, 100 percent of the
interests of the Partnership. Because of the continuity of ownership, the
Reorganization was accounted for by combining the assets, liabilities, and
operations of SMS, the Partnership, and Snyder at their historical cost
basis. Accordingly, for the periods prior to the Reorganization, the income
statement and balance sheet data include a combination of the accounts of
SMS and the Partnership.
(2) On January 25, 1994, Brann acquired all of the issued and outstanding common
stock of Brann Direct Marketing Limited ("Brann Limited") in a transaction
accounted for as a purchase.
(3) These costs are directly related to the Acquisitions. These costs include
primarily banking fees, other professional service fees, certain United
Kingdom excise and transfer taxes, as well as a non-cash charge of
approximately $9.1 million related to the accelerated vesting of options
held by Brann employees.
(4) An extraordinary item was recorded in conjunction with the early redemption
of the subordinated debentures due to related parties. The extraordinary
item is net of tax and consists of prepayment penalties and the write-off of
unamortized discount and debt issuance costs.
(5) Prior to the Reorganization and the Acquisitions, Snyder and MMD's principal
operations were not subject to federal or state corporate income taxes. In
addition, Brann is a foreign subsidiary, subject to different statutory
income tax rates. A pro forma provision for income taxes is calculated,
using a combined federal and state tax rate of 39.55% for Snyder, 44.91% for
MMD and 33.00% for Brann, as if Snyder and MMD had been taxable C
corporations for each of the periods presented except for the period ended
March 31, 1997, for which the historical provision for income taxes is
presented. The pro forma provision is the only adjustment to historical
income before taxes and extraordinary item in the calculation of pro forma
income before extraordinary item and pro forma net income.
(6) The shares used in computing pro forma net income per share before
extraordinary item and pro forma net income per share assume that the
Reorganization and the Acquisitions had occurred at the beginning of each of
the periods presented and reflect the issuance of additional shares as a
result of Snyder's initial public offering and the exercise of stock
options.
(7) On January 25, 1994, in connection with the acquisition of Brann Limited by
Brann, fixed cumulative mandatorily redeemable preferred shares were issued.
The preferred shares do not carry voting rights unless dividends are in
arrears, which has not occurred, and are not convertible into ordinary or
"A" ordinary shares. Accordingly, the preferred shares are classified as
long-term debt obligations.
12
<PAGE> 24
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The summary unaudited pro forma condensed combined financial data presented
below gives effect to Snyder's business combinations with MMD and Brann and the
proposed combination with American List (the "Business Combinations") on a
pooling of interests basis. The pro forma income statement data assumes that the
Business Combinations occurred as of January 1 of each period presented and the
combined balance sheet data assumes that the Business Combinations occurred as
of December 31, 1996.
The pro forma financial data for all periods presented reflects the
combined financial information for Snyder, MMD and Brann and has been derived
from the unaudited quarterly financial statements from the March 31, 1997 Form
10-Q filing and the audited Consolidated Financial Statements of Snyder for
1994, 1995, and 1996. The pro forma financial data for American List as of and
for the quarter ended March 31, 1997 has been derived from the audited
Consolidated Financial Statements of American List as of February 28, 1997. The
pro forma quarterly statement of income data for the quarter ended March 31,
1997 was derived by deducting the results of the nine month period ended
November 30, 1996 from the audited Consolidated Financial Statements of American
List for the year ending February 28, 1997. The pro forma financial data for
American List for the years ended December 31, 1996, 1995 and 1994 has been
derived from the audited Consolidated Financial Statements of American List as
of and for the three years ended February 28, 1997, February 29, 1996 and
February 28, 1995, respectively. The derivation of such information results in
the inclusion of the three months ended February 28, 1997 ($5,031,000 in
revenues and $1,825,000 in net income) in the pro forma financial data for the
year ended December 31, 1996 and in the inclusion of the three months ended
February 29, 1996 ($5,665,000 in revenues and $2,491,000 in net income) in the
pro forma financial data for the year ended December 31, 1995.
The unaudited pro forma data is presented for informational purposes only
and is not necessarily indicative of the operating results or financial position
that would have occurred if the Business Combinations had occurred on such date
or at the beginning of the periods indicated, nor is it necessarily indicative
of the future operating results or financial position of the combined companies.
The following unaudited pro forma data should be read in conjunction with the
Consolidated Financial Statements of Snyder and notes thereto, included
elsewhere in this Proxy Statement/Prospectus, as well as the Consolidated
Financial Statements of American List and notes thereto, included elsewhere in
this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FOR THE QUARTER
FOR THE YEARS ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------- --------------------
INCOME STATEMENT DATA 1994 1995 1996 1996 1997
------- -------- -------- ------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $95,923 $151,688 $203,911 $46,171 $ 54,084
Acquisition cost.................................. -- -- -- -- 16,181
Income (loss) from operations..................... 18,125 21,969 21,260 6,638 (8,556)
Income (loss) before taxes and extraordinary
item............................................ 17,206 20,805 20,344 6,273 (8,267)
Income (loss) from continuing operations.......... 11,990 14,805 14,979 4,862 (10,658)
======== ========= ========= ======== =========
Net income (loss) per common share................ 0.31 0.39 0.38 0.13 (0.25)
======== ========= ========= ======== =========
Shares used in computing net income amounts....... 38,359 38,341 39,347 38,341 42,451
======== ========= ========= ======== =========
Fully diluted net income (loss) from continuing
operations
per share....................................... 0.31 0.39 0.38 0.13 (0.25)
Fully diluted average shares outstanding.......... 38,359 38,341 39,542 38,341 42,451
<CAPTION>
AS OF
MARCH 31,
BALANCE SHEET DATA 1997
---------
<S> <C> <C> <C> <C> <C>
Total assets...................................... $119,197
Long-term debt.................................... 8,890
Mandatorily redeemable preferred stock............ --
Total equity...................................... 63,990
</TABLE>
13
<PAGE> 25
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
1. The pro forma combined financial information reflects the issuance of
5,029,689 shares of Snyder Common Stock for an aggregate of 4,412,008 shares
of American List Common Stock in connection with the Merger based upon a
conversion factor of 1.14 shares of Snyder Common Stock for each share of
American List Common Stock. The actual number of shares of Snyder Common
Stock to be issued will be determined at the Effective Date of the Merger.
2. On a combined basis, there were no material transactions between Snyder and
American List during any period presented.
3. An extraordinary item was recorded in conjunction with the early redemption
of subordinated debentures due to related parties. This non-recurring charge
was included in Snyder's historical consolidated financial statements.
14
<PAGE> 26
COMPARATIVE PER SHARE DATA
The following table sets forth selected unaudited comparative per share
data for Snyder and American List on a historical and pro forma combined basis.
In addition, the following unaudited information reflects American List Common
Stock on a pro forma equivalent basis. Pro forma combined per share amounts are
derived from the unaudited pro forma combined data presented elsewhere herein,
which gives effect to the Merger as a pooling of interests in accordance with
generally accepted accounting principles as if the Merger had occurred on
January 1 of each period presented. The per share equivalent pro forma combined
data for American List is calculated by multiplying the Snyder pro forma amounts
per share by the Exchange Ratio assuming that the Exchange Ratio in the Merger
is 1.14, based on an assumed Average Final Closing Price of $26.819, which
represents the average of the closing prices of the Snyder Common Stock between
May 19, 1997 and June 16, 1997. The information has been derived from the
audited historical Consolidated Financial Statements of Snyder, including the
notes thereto, the unaudited Pro Forma Combined Financial Data of Snyder,
including the notes thereto, appearing elsewhere in this Proxy
Statement/Prospectus and the audited Consolidated Financial Statements of
American List, including the notes thereto, incorporated herein by reference.
The comparative per share data for American List for the years ended December
31, 1996, 1995 and 1994 has been derived from the audited Consolidated Financial
Statements of American List as of and for the years ended February 28, 1997,
February 29, 1996 and February 28, 1995, respectively. In addition certain
American List information has been derived from the unaudited quarterly
information as of February 28, 1997, which does not appear elsewhere in this
Proxy Statement/Prospectus but has been derived by deducting the results of the
nine month period ended November 30, 1996 from the audited Consolidated
Financial Statements of American List for the year ending February 28, 1997.
This information should be read in conjunction with such historical,
supplemental and pro forma financial statements and the related notes thereto.
The information is not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have occurred
had the Merger and the Acquisitions been consummated prior to the periods
indicated.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31, QUARTER ENDED
----------------------- MARCH 31,
1994 1995 1996 1997
----- ----- ----- -------------
<S> <C> <C> <C> <C>
Snyder -- Historical:
Pro Forma Earnings from continuing operations(1)..... $0.18 $0.22 $0.24 $ (0.33)
Cash Dividends....................................... -- -- -- --
Book Value........................................... 1.45 1.41
American List -- Historical:
Earnings from continuing operations.................. 1.36 1.68 1.51 0.41
Cash Dividends....................................... 0.60 0.95 1.20 0.30
Book Value........................................... 3.81 3.81
Snyder/American List -- Pro Forma Combined:
Earnings from continuing operations(1)............... 0.31 0.39 0.38 (0.25)
Cash Dividends(2).................................... 0.07 0.11 0.14 0.03
Book Value........................................... 1.71 1.64
Equivalent Pro Forma Combined for American List Common
Stock:
Earnings from continuing operations(1)............... 0.35 0.44 0.43 (0.29)
Cash Dividends....................................... 0.08 0.13 0.16 0.03
Book Value........................................... 1.94 1.87
</TABLE>
- ---------------
(1) Prior to the Reorganization, Snyder's principal operations were not subject
to federal or state corporate income taxes. A pro forma provision for income
tax is calculated for the three years ended December 31, 1996 using a
combined federal and state tax rate of 39.55%, as if Snyder had been a
taxable C corporation for each of the periods presented. The pro forma
provision for income taxes is the only adjustment to historical earnings
from continuing operations for these periods. Such a pro forma tax
adjustment was not made to earnings from continuing operations for the
period ended March 31, 1997 as all of Snyder's operations were subject to
income tax during this period.
(2) Snyder has never paid cash dividends on Snyder Common Stock and has no
present intention of paying cash dividends in the foreseeable future.
15
<PAGE> 27
COMPARATIVE MARKET PRICE DATA AND DIVIDENDS
American List Common Stock is listed and traded on the AMEX under the
symbol "AMZ." Snyder Common Stock is listed and traded on the NYSE under the
symbol "SNC." The tables below set forth, for the quarters indicated, (i) the
high and low sales prices of American List Common Stock as reported on the AMEX
and the per share cash dividends paid to holders of American List Common Stock
and (ii) the high and low sales prices of Snyder Common Stock, as reported on
the NYSE Composite Tape.
<TABLE>
<CAPTION>
DIVIDENDS
PRICE OF PAID
AMERICAN LIST PER SHARE OF
COMMON STOCK AMERICAN
---------------- LIST
AMERICAN LIST HIGH LOW COMMON STOCK
- --------------------------------------------------------------- ------ ------ ------------
<S> <C> <C> <C>
YEAR ENDED FEBRUARY 28, 1995:
First Quarter............................................. $17.88 $16.13 $.20
Second Quarter............................................ 18.75 17.00 .20
Third Quarter............................................. 19.25 17.00 .20
Fourth Quarter............................................ 20.25 16.13 .20
YEAR ENDED FEBRUARY 29, 1996:
First Quarter............................................. 25.13 20.13 .20
Second Quarter............................................ 30.75 23.63 .25
Third Quarter............................................. 29.63 24.50 .25
Fourth Quarter............................................ 37.50 25.50 .25
YEAR ENDED FEBRUARY 28, 1997:
First Quarter............................................. 34.25 20.25 .30
Second Quarter............................................ 28.63 24.50 .30
Third Quarter............................................. 29.75 26.13 .30
Fourth Quarter............................................ 31.00 21.75 .30
YEAR ENDED FEBRUARY 28, 1998:
First Quarter............................................. 28.13 20.00 .30
Second Quarter (through June 16, 1997).................... 29.25 27.75 --
</TABLE>
<TABLE>
<CAPTION>
PRICE OF
SNYDER
COMMON STOCK
----------------
SNYDER HIGH LOW
- --------------------------------------------------------------- ------ ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Third Quarter............................................. $21.75 $17.75
Fourth Quarter............................................ 29.38 18.63
YEAR ENDED DECEMBER 31, 1997:
First Quarter............................................. 33.13 23.50
Second Quarter (through June 16, 1997).................... 28.00 19.50
</TABLE>
The closing prices of American List Common Stock and Snyder Common Stock on
March 18, 1997, the last full trading day prior to the public announcement of
the Merger, were $22.38 per share, as reported on the AMEX, and $26.25 per
share, as reported on the NYSE Composite Tape, respectively. The closing prices
of American List Common Stock and Snyder Common Stock on June 16, 1997, the most
recent practicable date prior to the printing of this Proxy
Statement/Prospectus, were $29.13 per share, as reported on the AMEX, and $27.50
per share, as reported on the NYSE Composite Tape, respectively. STOCKHOLDERS
ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS.
American List currently pays regular quarterly dividends to holders of
American List Common Stock. For fiscal 1997, American List declared quarterly
dividends of $.30 per share, the aggregate value of which was $5,354,816. The
first quarter dividend of fiscal 1998 of $.30 per share was declared on April
25, 1997 and was paid on May 16, 1997 to stockholders of record on May 6, 1997.
The current dividend rate represents an increase over the prior quarterly
dividend rate of $.25 per share. Snyder has never paid cash dividends on Snyder
Common Stock and has no present intention of paying cash dividends in the
foreseeable future.
On June 4, 1997, there were approximately 279 holders of record of American
List Common Stock. On June 4, 1997, there were approximately 65 holders of
record of Snyder Common Stock.
16
<PAGE> 28
RISK FACTORS
In considering whether to approve and adopt the Merger and the Merger
Agreement, the holders of American List Common Stock should consider the
following matters. Certain statements made in the Proxy Statement/Prospectus are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995). Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of Snyder to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These factors include reliance on major clients, management of
growth, growth through acquisitions, competitive and fragmented industry,
dependence on labor force and key personnel, government regulation and potential
fluctuations in quarterly operating results.
EXCHANGE RATIO RELATIVE TO SNYDER COMMON STOCK PRICE
The Exchange Ratio is not expressed in the Merger Agreement as a fixed
ratio. Accordingly, the Exchange Ratio will be adjusted in the event of any
increase or decrease in the average price of Snyder Common Stock prior to the
Effective Time. The Average Final Closing Price of Snyder Common Stock may vary
from its price at the date of this Proxy Statement/Prospectus and at the date of
the Meeting. Such variations may be the result of changes in the business,
operations or prospects of Snyder, market assessments of the likelihood that the
Merger will be consummated and the timing thereof, regulatory considerations,
general market and economic conditions and other factors. Because the Average
Final Closing Price of Snyder Common Stock is calculated over a twenty day
period prior to the Effective Time, there can be no assurance that the Average
Final Closing Price of Snyder Common Stock will be indicative of its price at
the date of the Meeting, at the Effective Time or after the Effective Time. In
addition, the trading price of Snyder Common Stock may be adversely affected by
shares of Snyder Common Stock issued and publicly tradable after the Effective
Time. The Effective Time will occur as soon as practicable following the Meeting
and the satisfaction or waiver of the other conditions set forth in the Merger
Agreement. Stockholders of American List are urged to obtain current market
quotations for Snyder Common Stock. See "The Merger Agreement -- Conditions to
the Merger."
DILUTION OF VOTING POWER
Each stockholder of American List will own a significantly smaller
percentage of the outstanding shares of Snyder Common Stock immediately
following the Effective Time than the percentage of the outstanding shares of
American List Common Stock which that stockholder owned immediately prior to the
Effective Time. Consequently, the Merger will cause an immediate dilution of the
voting power of each holder of American List Common Stock relative to the
outstanding shares of Snyder. Assuming the issuance in the Merger of the
Estimated Merger Shares, stockholders of American List will own in the aggregate
approximately 11.72% of the total outstanding Snyder Common Stock immediately
following consummation of the Merger.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The Merger Agreement contemplates a number of conditions which must be
satisfied or waived, to the extent permitted by law, prior to the Closing Date
of the Merger which include, among other things, (i) the approval of the Merger
Agreement by American List stockholders; (ii) the filing or obtaining of all
notices or approvals required by any governmental entity; (iii) the absence of
any injunction prohibiting the consummation of the Merger; (iv) the Registration
Statement having become effective and not being the subject of any stop order
proceedings; (v) the expiration or termination of the waiting period under the
HSR Act; (vi) the approval for listing on the NYSE of the Snyder Common Stock
issuable in the Merger; (vii) the receipt by American List of an opinion from
its counsel to the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code;
(viii) the receipt of an opinion from Arthur Andersen with respect to
qualification of the Merger as a pooling of interests; (ix) each party having
performed all of its obligations contained in the Merger Agreement in all
material respects; and (x) the representations and warranties of each party to
the Merger Agreement being true and correct in all
17
<PAGE> 29
material respects at the Effective Time. If any of the conditions set forth in
the Merger Agreement are not satisfied, the Merger would only be consummated if
such condition is waived, to the extent permitted by law. There can be no
assurance, however, that such a waiver will occur. See "The Merger Agreement --
Conditions to the Merger" and "The Merger Agreement -- Waiver."
RIGHTS AS HOLDERS OF SNYDER COMMON STOCK
Upon consummation of the Merger, the former stockholders of American List
will become stockholders of Snyder. After the Effective Time, the rights of the
American List stockholders who become stockholders of Snyder will no longer be
governed by American List's Certificate of Incorporation and Bylaws, but instead
will be governed by Snyder's Certificate of Incorporation and Bylaws. See
"Description of Snyder Capital Stock" and "Comparative Rights of Stockholders."
RELIANCE ON AT&T
Currently, AT&T is Snyder's largest client. In 1997, Snyder acquired MMD in
a merger transaction and Brann in a share exchange transaction, pursuant to
which each of MMD and Brann became wholly-owned subsidiaries of Snyder. If MMD
and Brann had been wholly-owned subsidiaries of Snyder in 1996, AT&T would have
accounted for 27%, or approximately $50.4 million, of Snyder's 1996 revenues on
a consolidated basis.
Snyder currently has two contracts with AT&T. The first contract with AT&T,
which expires in December 1997, subject to AT&T's right to renew the contract
upon terms mutually agreeable to AT&T and Snyder, provides that Snyder will
perform direct sales services for AT&T of certain consumer products. The second
contract, which expires in December 1998, subject to automatic renewal for an
additional year unless either party gives 90 days notice of termination,
provides that Snyder will provide direct sales services for AT&T to commercial
customers through direct selling, event marketing and affinity program
marketing. The contract also provides that Snyder will provide such services in
a defined "Small Business Market" on a trial basis for the first six months of
the contract commencing on January 1, 1997.
Snyder anticipates that, as the expiration of the respective AT&T contracts
nears, it will enter into negotiations with AT&T regarding extending the
relationship. The loss of AT&T as a client, or any significant portion of the
services provided to AT&T, would have a material adverse effect on Snyder. If
such negotiations were to prove unsuccessful, Snyder anticipates that it would
enter into negotiations with other companies, including with other
telecommunications companies, to utilize the resources currently devoted to AT&T
(although, under the terms of the first AT&T contract, Snyder could not enter
into such negotiations with other telecommunications companies for services
targeting the U.S.-based residential customers who either speak foreign
languages or are English speakers who consider foreign countries their home (the
"Foreign-Origin Consumer Market") until thirty days after the expiration of the
AT&T contract). There can be no assurance, however, that Snyder would be able to
find clients that would generate the same amount of revenues or profitability of
business as does AT&T.
RELIANCE ON OTHER MAJOR CLIENTS
In addition to AT&T, Snyder has a number of other significant clients. If
MMD and Brann had been wholly-owned subsidiaries of Snyder in 1996, the ten
largest clients of Snyder, listed alphabetically and based on 1996 revenues on a
consolidated basis, would have been AT&T, Barclays Bank plc, Bayer, BMS,
Imperial Cancer Research Fund, MCI, Microsoft Ltd., Novartis, Royal Mail and
Zurich Municipal. The loss of any of these clients could have a material adverse
effect on Snyder's results of operations. If MMD and Brann had been wholly-owned
subsidiaries of Snyder in 1996, AT&T and MCI would have accounted for 27% and
10%, respectively, of Snyder's total income for 1996. Concurrently with entering
a new contract to provide similar services to AT&T, Snyder terminated its
existing contract with MCI, under which it provided marketing and sales services
targeting small business customers. There can be no assurance that the new AT&T
contract will generate the same level of revenue or profitability as under the
MCI contract. See "-- Reliance on AT&T."
18
<PAGE> 30
GROWTH THROUGH ACQUISITIONS
In addition to expanding the scope and breadth of its existing products and
services, Snyder plans to further expand its business through complementary
acquisitions. Snyder is currently considering several acquisitions and expects
to continue to consider growth opportunities through additional acquisitions,
which may include payments in cash or the issuance of additional shares of
Snyder Common Stock, although there are no definitive agreements or arrangements
to do so at this time. There can be no assurance that Snyder will have
sufficient capital resources to continue to pursue this aspect of its growth
strategy. Additionally, there can be no assurance that Snyder will successfully
identify, complete or integrate additional acquisitions or that any
acquisitions, including the Merger, will perform as expected or will contribute
significant revenues or profits to Snyder. Snyder may also, in the future, face
increased competition for acquisition opportunities, which may inhibit Snyder's
ability to consummate suitable acquisitions on terms favorable to Snyder.
INTEGRATION OF ACQUISITIONS INTO EXISTING MANAGEMENT AND OPERATIONS
In January 1997, Snyder acquired MMD, a provider of medical sales and
marketing services for pharmaceutical companies, and in March 1997 Snyder
acquired Brann, a leading provider of targeted marketing services in the U.K.
Based on 1996 revenues, the acquisitions of MMD and Brann represent a 124%
increase in the size of Snyder's business. Upon consummation of the Merger,
American List will also become a wholly-owned subsidiary of Snyder, which will
further increase the aggregate size of Snyder.
The services provided by the acquired companies, although complementary,
differ from the traditional outsourced direct sales and marketing services
offered by Snyder. There can be no assurance that the anticipated benefits with
respect to the clients and targeted markets of these acquisitions will be
achieved. Moreover, Snyder had limited experience in acquiring businesses prior
to its acquisitions of MMD and Brann. Thus, Snyder has not yet demonstrated the
long-term ability to successfully manage an acquired business. There can be no
assurance that Snyder will be able to manage successfully the new service areas
of Snyder, the employees of such service areas or the client base supported by
such service areas.
MANAGEMENT OF GROWTH
Snyder has experienced rapid growth over the past several years. Continued
growth depends in significant part on Snyder's ability to successfully utilize
its existing infrastructure and databases to perform services for other clients,
as well as on Snyder's ability to develop and successfully implement new
marketing methods or channels for new services for existing and new clients.
Continued growth will also depend on a number of other factors, including
Snyder's ability to (i) maintain the high quality of the services it provides to
customers and to increase its penetration with existing customers, (ii) recruit,
motivate and retain qualified personnel, (iii) train existing sales
representatives or recruit new sales representatives on an economic basis to
sell different categories of services or products and (iv) open new field sales
offices and new call centers in a timely and economic fashion. Snyder's
continued growth also will require the implementation of enhanced operational
and financial systems, will require additional management, operational and
financial resources and could place a strain on Snyder's operations and
resources. There can be no assurance that Snyder will be able to manage its
expanding operations effectively or that it will be able to maintain its growth.
If Snyder is unable to manage growth effectively, its business, results of
operations or financial condition could be materially adversely affected.
RISK ASSOCIATED WITH INTERNATIONAL OPERATIONS AND EXPANSION
In March 1997, Snyder acquired Brann, its first international acquisition.
A key component of Snyder's growth strategy is continued international
expansion. There can be no assurance that Snyder will be able to successfully
acquire companies, or integrate acquired companies to expand its international
operations. In addition, there are certain risks inherent in conducting
international business, including exposure to currency fluctuations,
difficulties in complying with a variety of foreign laws, unexpected changes in
regulatory requirements, difficulties in staffing and managing foreign
operations, and potentially adverse tax conse-
19
<PAGE> 31
quences. There can be no assurance that one or more of such factors will not
have a material adverse effect on Snyder's international operations and
consequently on Snyder's business, results of operations or financial condition.
ADVERSE EFFECT OF FOREIGN EXCHANGE RATES ON RESULTS OF OPERATIONS
As a result of the acquisition of Brann, approximately 27% of Snyder's net
sales in 1997 are expected to be outside of the United States and will be
denominated in British pounds. The U.S. dollar value of Snyder's net sales
varies with currency exchange rate fluctuations. Significant increases in the
value of the U.S. dollar relative to the British pound could have a material
adverse effect on Snyder's results of operations. Currently, Snyder does not
hedge such currency risk. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
DEPENDENCE ON TREND TOWARD OUTSOURCING
Snyder's business and growth depend in large part on the trend toward
outsourcing of marketing services. There can be no assurance that this trend in
outsourcing will continue, as companies may elect to perform such services
internally. A significant change in the direction of this trend, or a trend in
the telecommunications or pharmaceutical industry not to use, or to reduce the
use of, outsourced marketing services, such as those provided by Snyder, would
have a material adverse effect on Snyder.
COMPETITIVE AND FRAGMENTED INDUSTRY
The industry in which Snyder competes is highly competitive and fragmented.
Snyder competes with providers of other forms of advertising and marketing
media, such as direct mail, television, radio and other advertising media.
Snyder also competes with the internal marketing capabilities of clients and
prospective clients. Snyder's largest client, AT&T, has significant internal
teleservices and field force marketing capabilities and also contracts for these
services from competitors of Snyder. Snyder competes as well with other
marketing services firms, ranging in size from very small firms offering special
applications or short-term projects to large independent firms. A number of
competitors have capabilities and resources equal to, or greater than, Snyder's.
There can be no assurance that, as Snyder's industry continues to evolve,
additional competitors with greater resources than Snyder will not enter the
industry (or particular segments of the industry) or that Snyder's clients will
not choose to conduct more of their targeted marketing services internally or
through alternative marketing media. Although Snyder intends to monitor industry
trends and respond accordingly, there can be no assurance that Snyder will be
able to anticipate and successfully respond to such trends in a timely manner.
See "Certain Information Regarding Snyder -- Competition."
DEPENDENCE ON LABOR FORCE
Many aspects of Snyder's business are very labor intensive and experience
high personnel turnover. Many of Snyder's employees receive hourly wages plus
commissions, if earned. A significant number of Snyder's employees, including
all of its Direct Services teleservices associates, are employed on a part-time
basis. A higher turnover rate among Snyder's employees would increase Snyder's
recruiting and training costs and decrease operating efficiencies and
productivity. Snyder's operations typically require specially trained employees,
such as those employees who market services and products in languages other than
English. Growth in Snyder's business will require it to recruit and train
qualified personnel at an accelerated rate from time to time. There can be no
assurance that Snyder will be able to continue to hire, train and retain a
sufficient labor force of qualified employees, particularly bilingual employees.
A significant portion of Snyder's costs consists of wages to hourly workers,
representing approximately 6% of Snyder's total cost of services in 1996. In
August 1996, the United States Congress passed and the President signed
legislation (H.R. 3448) which increased the minimum wage 90 cents over two
years; as of October 1, 1996, the minimum wage increased from $4.25 to $4.75 per
hour and on September 1, 1997 it will increase to $5.15 per hour. Although
Snyder compensates the vast majority of its workforce above the minimum wage and
therefore will not be directly impacted by the legislation, the increase in the
minimum wage may have the effect of inflating wages among hourly workers
generally in the marketplace and, in turn, the prevailing wage of employees
performing
20
<PAGE> 32
services for Snyder. An increase in hourly wages, costs of employee benefits,
employment taxes or commission rates could have a material adverse effect on
Snyder.
RELIANCE ON TECHNOLOGY; RISK OF BUSINESS INTERRUPTION
Snyder has invested significantly in sophisticated and specialized
telecommunications and computer technology and has focused on the application of
this technology to provide customized solutions to meet many of its clients'
needs. In addition, Snyder has invested significantly in sophisticated end-user
databases and software that enable it to market its clients' products to
targeted markets. Snyder anticipates that it will be necessary to continue to
select, invest in and develop new and enhanced technology and end-user databases
on a timely basis in the future in order to maintain its competitiveness. In
addition, Snyder's business is highly dependent on its computer and telephone
equipment and software systems, and the temporary or permanent loss of such
equipment or systems, through casualty or operating malfunction, or a
significant increase in the cost of telephone services that is not recoverable
through an increase in the price of Snyder's services, could have a material
adverse effect on Snyder's business. Snyder's property and business interruption
insurance may not adequately compensate Snyder for all losses that it may incur
in any such event.
DEPENDENCE ON KEY PERSONNEL
The success of Snyder depends in large part upon the abilities and
continued service of its executive officers and other key employees,
particularly Mr. Daniel M. Snyder, Chairman of the Board of Directors and Chief
Executive Officer, Ms. Michele D. Snyder, Vice Chairman, President and Chief
Operating Officer, and A. Clayton Perfall, Chief Financial Officer. There can be
no assurance that Snyder will be able to retain the services of such officers
and employees. The failure of Snyder to retain the services of Mr. Snyder, Ms.
Snyder, Mr. Perfall or of other key personnel could have a material adverse
effect on Snyder. Snyder has employment agreements with certain executive
officers, including Mr. Snyder, Ms. Snyder and Mr. Perfall, and also has
non-competition agreements with certain key personnel, including each of its
executive officers. Courts, however, are at times reluctant to enforce such
non-competition agreements. See "Snyder -- Executive Compensation -- Executive
Employment Contracts." In addition, many of Snyder's executive officers and
other key personnel either are participants in Snyder's Stock Option Plan (as is
the case with Mr. Perfall) or hold a significant amount of Snyder Common Stock
(as is the case with Mr. Snyder and Ms. Snyder). Snyder believes that these
interests increase the incentives such key employees have to remain with Snyder.
Snyder maintains a key person insurance policy on Mr. Snyder. In order to
support its growth, Snyder will be required to effectively recruit, hire, train
and retain additional qualified management personnel. The inability of Snyder to
attract and retain the necessary personnel could have a material adverse effect
on Snyder.
GOVERNMENT REGULATION
Snyder's business is subject to various federal and state laws and
regulations. Certain portions of Snyder's industry have become subject to an
increasing amount of federal and state regulation in the past five years. The
Federal Communications Commission's (the "FCC") rules under the Federal
Telephone Consumer Protection Act of 1991 limit the hours during which
telemarketers may call consumers and prohibit the use of automated telephone
dialing equipment to call certain telephone numbers. The Federal Telemarketing
and Consumer Fraud and Abuse Prevention Act of 1994 (the "TCFAPA") broadly
authorizes the FTC to issue regulations prohibiting misrepresentation in
telephone sales. In August 1995, the FTC issued regulations under the TCFAPA
which, among other things, require telemarketers to make certain disclosures
when soliciting sales. Snyder believes its operating procedures comply with the
telephone solicitation rules of the FCC and FTC. However, there can be no
assurance that additional federal or state legislation, or changes in regulatory
implementation, would not limit the activities of Snyder or its clients in the
future or significantly increase the cost of regulatory compliance.
A number of states have enacted or are considering enacting legislation to
regulate telephone and door-to-door solicitations. For example, telephone sales
in certain states cannot be final unless a written contract is
21
<PAGE> 33
delivered to and signed by the buyer and may be canceled within three business
days. Other states require third-party verification for door-to-door
solicitation.
Several of the industries in which Snyder's clients operate are subject to
varying degrees of government regulations, particularly the telecommunications
industries. Generally, compliance with these regulations is the responsibility
of Snyder's clients. However, Snyder could be subject to a variety of
enforcement or private actions for its failure or the failure of its clients to
comply with such regulations.
One of the significant regulations of the FCC applicable to long distance
carriers, such as AT&T, prohibits the unauthorized switching of subscribers'
long distance carriers, also known in the industry as "slamming." A fine of up
to $100,000 may be imposed by the FCC for each instance of slamming. In order to
prevent unauthorized switches, federal law requires that switches authorized
over the telephone, such as through Snyder's teleservices, be verified
contemporaneously by a third party. Snyder believes its procedures comply with
this third-party verification requirement.
In connection with the handling and distribution of samples of
pharmaceutical products, the Medical Services group is subject to regulation by
its clients, the Prescription Drug Marketing Act of 1987 and other applicable
federal, state and local laws and regulations.
Third-party verification generally is not required for switches obtained in
person, such as those obtained by members of Snyder's Direct Services field
sales force. Snyder's training and other procedures are designed to prevent
unauthorized switching. However, as with any field sales force, Snyder cannot
completely ensure that each employee will always follow Snyder's mandated
procedures. Accordingly, it is possible that employees may in some instances
engage in unauthorized activities, including slamming. Snyder investigates
customer complaints reported to it by its telecommunications clients and reports
the results to its clients. To Snyder's knowledge, no FCC complaint has been
brought against any of its clients as a result of Snyder's services, although
Snyder believes that the FCC is examining the sales activities of long distance
telecommunications providers, including Snyder's clients and the activities of
outside vendors, such as Snyder, used by such providers. If any complaints were
brought, Snyder's client might assert that such complaints constituted a breach
of its agreement with Snyder and, if material, seek to terminate the contract.
Any termination would be likely to have a material adverse effect upon Snyder's
business. If such complaints resulted in fines being assessed against a client
of Snyder, the client could seek to recover such fines from Snyder. Any amounts
recovered from Snyder would reduce Snyder's net income.
Pharmaceutical companies and the health care industry in general are
subject to significant federal and state regulation. In particular, regulations
affecting the pricing or marketing of pharmaceuticals could make it uneconomic
or infeasible for pharmaceutical companies to market their products through
medical marketing detailers. Other changes in the regulation of the
pharmaceutical industry could also have a material adverse effect on the Medical
Services group.
The services offered by the International Services group may be subject to
certain regulations of the U.K. and the European Union, including regulations
relating to inbound and outbound teleservices, advertising content, promotions
of financial products, activities requiring customers to send money with mail
orders and the maintenance and use of customer data held on databases. In
addition, the printing facility utilized by the International Services group is
also subject to certain environmental regulations regarding the storage and
disposal of certain chemicals involved in the printing process. Snyder believes
that the International Services group is substantially in compliance with
applicable regulations. There can be no assurance, however, that additional U.K.
or European Union legislation or changes in the regulatory implementation, would
not limit the activities of the International Services group or significantly
increase the cost of regulatory compliance.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
Snyder could experience quarterly variations in revenues and operating
income as a result of many factors, including the timing of clients' marketing
campaigns, the implementation of new products or services, the timing of
additional selling efforts and the general and administrative expenses to
acquire and support such new business and changes in Snyder's revenue mix among
its various service offerings. In connection with
22
<PAGE> 34
certain contracts, Snyder could incur costs in periods prior to recognizing
revenue under those contracts. In addition, Snyder must plan its operating
expenditures based on revenue forecasts, and a revenue shortfall below such
forecast in any quarter would be likely to affect adversely Snyder's operating
results for that quarter.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
A substantial number of shares of Snyder Common Stock will become available
for sale in the public market at various times following the consummation of the
Merger. Future sales of substantial amounts of Snyder Common Stock in the public
market could adversely affect the market price of the Snyder Common Stock and
the ability of Snyder to raise additional capital or engage in business
combinations through sales of additional shares of Snyder Common Stock. Upon
consummation of the Merger, assuming the issuance of the Estimated Merger
Shares, Snyder will have outstanding an aggregate of 42,920,833 shares of Snyder
Common Stock. The Estimated Merger Shares to be issued in connection with the
Merger will be freely transferable without restriction or further registration
under the Securities Act, except that any shares held by an "affiliate" of the
Company (as that term is defined in Rule 144 adopted under the Securities Act)
will be subject to the resale limitations of Rule 144. Of the remaining
37,891,144 shares of Snyder Common Stock, 10,068,333 shares are freely
transferable without restriction or further registration under the Securities
Act and 27,822,811 shares are "restricted securities" within the meaning of Rule
144 and may not be sold other than pursuant to an effective registration
statement under the Securities Act, pursuant to an exemption from such
registration requirement, or subject to the volume limitations of Rule 144. In
addition, shares of Snyder Common Stock to be issued upon the exercise of
certain options will be freely transferable upon such exercise. See "Shares
Eligible for Future Sale."
CONTROL BY PRINCIPAL STOCKHOLDERS
Following consummation of the Merger (and assuming an aggregate of
42,920,833 shares of Snyder Common Stock outstanding upon the issuance of the
Estimated Merger Shares), Mr. Daniel M. Snyder, the Chairman of the Board of
Directors and Chief Executive Officer of Snyder, and Ms. Michele D. Snyder, Vice
Chairman, President, Chief Operating Officer, and a director of Snyder, will
beneficially own approximately 23.4% and 8.4%, respectively, of the outstanding
shares of Snyder Common Stock. As a result, Mr. Snyder individually, and he and
Ms. Snyder if they act in concert, will have the ability to exercise substantial
influence over Snyder's business by virtue of their voting power with respect to
the election of directors and all other matters requiring action by
stockholders. Such concentration of share ownership may have the effect of
discouraging, delaying or preventing a change in control of Snyder.
EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS
Snyder's Certificate of Incorporation and Bylaws contain certain provisions
that could discourage potential takeover attempts and make attempts by Snyder's
stockholders to change management more difficult. Such provisions include the
requirement that Snyder's stockholders follow an advance notification procedure
for certain stockholder nominations of candidates for the Board of Directors of
Snyder (the "Snyder Board") and for new business to be conducted at any meeting
of the stockholders. In addition, the Certificate of Incorporation allows the
Snyder Board to issue up to 5,000,000 shares of preferred stock and to fix the
rights, privileges and preferences of those shares without any further vote or
action by the stockholders. The rights of the holders of Snyder Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred shares that may be issued by Snyder in the future. While Snyder
has no present intention to issue any shares of preferred stock, any such
issuance could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of Snyder. In addition,
Snyder is subject to certain anti-takeover provisions of the DGCL, which could
have the effect of discouraging, delaying or preventing a change of control of
Snyder.
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VOLATILITY OF STOCK PRICE AND ABSENCE OF DIVIDENDS
The public trading market for Snyder Common Stock was first established
after Snyder's initial public offering in September 1996. Between the date of
Snyder's initial public offering and June 16, 1997, the market price of Snyder
Common Stock has traded at a high of $33.13 per share and a low of the initial
public offering price of $17.00 per share. See "Comparative Market Price Data
and Dividends."
Future announcements concerning Snyder or its competitors, including
quarterly results, innovations, new product introductions, governmental
regulation, litigation or changes in earnings estimates published by analysts
may cause the market price of Snyder Common Stock to fluctuate substantially.
The stock market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market price for many emerging
growth companies which often have been unrelated to the operating performance or
prospects of these companies. These fluctuations, as well as general economic,
political and market conditions, such as recessions or international currency
fluctuations, may adversely affect the market price of Snyder Common Stock.
There can be no assurance that the market price of Snyder Common Stock will not
decline below its present market price. The market price of Snyder Common Stock
is based upon anticipated future earnings growth. Furthermore, Snyder is reliant
on a core group of key customers. Any loss of any of these customers could be
detrimental to the market price of Snyder Common Stock. See "-- Reliance on
AT&T" and "-- Reliance on Other Major Clients." The future market price of
Snyder Common Stock will depend on delivering results anticipated by public
investors. Any failure to meet specific expectations may have an adverse effect
on the market price of Snyder Common Stock. Additionally, Snyder, unlike
American List, has not paid any cash dividends since its inception and does not
anticipate paying cash dividends in the foreseeable future. See "Comparative
Market Price Data and Dividends."
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THE MEETING OF AMERICAN LIST STOCKHOLDERS
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of American
List Common Stock in connection with the solicitation of proxies by the American
List Board for use at the Meeting to be held at the Long Island Marriott Hotel,
101 James Doolittle Boulevard, Uniondale, New York 11553, at 9:00 a.m. local
time on July 11, 1997, and any adjournment or postponement thereof.
This Proxy Statement/Prospectus also includes and constitutes the
Prospectus of Snyder included as part of its Registration Statement filed with
the Commission under the Securities Act with respect to the issuance of shares
of Snyder Common Stock to be received by holders of American List Common Stock
upon consummation of the Merger. This Proxy Statement/Prospectus and the
accompanying proxy card are first being mailed to holders of American List
Common Stock on or about June 19, 1997.
It is expected that representatives of Grant Thornton, American List's
independent certified public accountants, will be present at the Meeting, to
respond to appropriate questions of holders of American List Common Stock and to
make a statement if they desire.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Meeting, the holders of American List Common Stock will be asked to
consider and vote upon a proposal to approve and adopt the Merger and the Merger
Agreement. Pursuant to the Merger Agreement, Acquisition would be merged with
and into American List. Holders of American List Common Stock will also be asked
to consider and vote upon such other business as may properly come before the
Meeting. A copy of the Merger Agreement is attached to this Proxy
Statement/Prospectus as Exhibit A.
RECORD DATE
The American List Board has fixed the close of business on June 4, 1997 as
the Record Date for the determination of holders of American List Common Stock
entitled to notice of the Meeting. Only holders of American List Common Stock as
of the Record Date will be entitled to vote at the Meeting. On the Record Date,
there were 4,412,008 shares outstanding of American List Common Stock held of
record by 279 holders.
QUORUM
The presence, in person or by proxy, at the Meeting of the holders of a
majority of the shares of American List Common Stock outstanding and entitled to
vote at the Meeting will be necessary to constitute a quorum for the transaction
of business at the Meeting. For purposes of voting at the Meeting for the
proposal, abstentions and broker non-votes will be counted in determining
whether a quorum exists to transact business at the Meeting.
VOTES REQUIRED; VOTING RIGHTS
Under the DGCL, the affirmative vote of the holders of a majority of the
outstanding shares of American List Common Stock entitled to vote is required to
approve and adopt the Merger and the Merger Agreement. Each share of American
List Common Stock is entitled to one vote with respect to the approval and
adoption of the Merger and the Merger Agreement at the Meeting.
If a sufficient number of holders of shares of American List Common Stock
having furnished proxies or otherwise indicating their intent to vote their
shares to approve the Merger are not represented at the Meeting, it is expected
that the Meeting will be postponed or adjourned for the purpose of allowing
additional time for soliciting and obtaining additional proxies or votes. If a
motion to adjourn the Meeting is presented for the purpose of allowing
additional time to solicit proxies, stockholders providing proxies that are not
voted against the Merger will be deemed to have conferred discretionary
authority to vote for such adjournment, and shares voted against the Merger and
the Merger Agreement shall be voted against a motion to adjourn such meeting.
See "-- Solicitation of Proxies."
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Under the rules of the National Association of Securities Dealers, Inc.,
brokers who hold shares in "street name" have the authority to vote on certain
matters when they do not receive instructions from beneficial owners. However,
this authority does not extend to voting on the Merger and the Merger Agreement.
Accordingly, brokers who do not receive instructions will not be entitled to
vote on the Merger and the Merger Agreement. In tabulating the vote on the
Merger and the Merger Agreement, abstentions, failures to vote and broker
non-votes will have the same effect as votes against the Merger and the Merger
Agreement.
As of the Record Date, the directors and executive officers of American
List and their affiliates have the power to vote an aggregate of 885,156 shares
of the American List Common Stock (constituting approximately 20.06% of the
outstanding shares). See "Security Ownership of American List."
The directors and executive officers of American List have indicated that
they intend to vote their shares for approval and adoption of the Merger and the
Merger Agreement. On March 18, 1997, each of Mr. Martin Lerner and D.H. Blair
entered into a Stockholders Agreement with Snyder which provided, among other
things, that if a stockholder vote to approve the Merger and the Merger
Agreement were held, such stockholders would vote the shares of American List
Common Stock, owned by them, or over which they have the power to vote, in favor
of the Merger Agreement and against certain other actions which could impede or
delay consummation of the Merger. As of the date of the Stockholders Agreement,
such stockholders owned or had the power to vote approximately 884,546 shares of
American List Common Stock representing approximately 20.05% of the total
outstanding shares of American List Common Stock. The Stockholders Agreement is
attached to this Proxy Statement/Prospectus as Exhibit C, and should be read
carefully by holders of American List Common Stock. See "The Merger -- Agreement
to Vote in Favor of the Merger" and "The Merger -- Interests of Certain Persons
in the Merger -- Stockholders Agreement."
SOLICITATION OF PROXIES
If a stockholder attends the Meeting, he or she may vote by ballot.
However, many of American List's stockholders might be unable to attend the
Meeting. Therefore, the American List Board is soliciting proxies so that each
holder of American List Common Stock on the Record Date has the opportunity to
vote on the proposals to be considered at the Meeting on which each is entitled
to vote.
When a proxy is returned properly signed and dated, the shares of American
List Common Stock represented thereby will be voted in accordance with the
instructions on the proxy. If a stockholder does not return a signed proxy or
vote in person at the Meeting, his or her shares will not be voted. Stockholders
are urged to mark the boxes on the proxy to indicate how their shares are to be
voted. If a holder of American List Common Stock returns a signed proxy, but
does not indicate how his or her shares are to be voted, the shares of American
List Common Stock represented by the proxy will be voted FOR approval and
adoption of the Merger and the Merger Agreement and, in the discretion of the
person named in the proxy, on such other matters as may properly be presented at
the Meeting.
The American List Board does not know of any matters other than those
described in the notice of the Meeting that are to come before the Meeting. If
any other matters are properly brought before the Meeting, including, among
other things, a motion to adjourn or postpone the Meeting to another time and/or
place for the purpose of, among other things, permitting dissemination of
information regarding material developments relating to the Merger or soliciting
additional proxies in favor of the proposal to adopt and approve the Merger and
the Merger Agreement, one or more of the persons named on the proxy card will
vote the shares represented by such proxy upon such matters as determined in
their best judgment and consistent with the voting rights of such shares as
provided by the American List Bylaws; provided, however, that no proxy that is
voted against the proposal to approve and adopt the Merger and the Merger
Agreement will be voted in favor of any adjournment or postponement for the
purpose of soliciting additional proxies. At any subsequent reconvening of the
Meeting, all proxies will be voted in the same manner as such proxies would have
been voted at the original convening of the Meeting, except for proxies that
have been effectively revoked or withdrawn prior to such reconvened meeting. See
"-- Votes Required; Voting Rights."
Any American List stockholder who executes and returns a proxy may revoke
such proxy at any time before it is voted by (i) notifying in writing the
Secretary of American List at 330 Old Country Road,
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Mineola, New York 11501, (ii) granting a subsequent proxy, or (iii) appearing in
person and voting at the Meeting. Additional proxy cards are available from the
Proxy Solicitor (as defined below). Attendance at the Meeting will not in and of
itself constitute revocation of a proxy.
In addition to solicitation by use of the mails, proxies may be solicited
by directors, officers and employees of American List in person or by telephone,
telegram or other means of communications. Such directors, officers and
employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation. American
List has retained MacKenzie Partners, Inc. (the "Proxy Solicitor") to assist
with soliciting and tabulating proxies for the Meeting, at an estimated expense
of approximately $10,000, plus reasonable out-of-pocket expenses. Arrangements
will be made with custodians, nominees and fiduciaries for the forwarding of
proxy solicitation materials to beneficial owners of shares held of record by
such custodians, nominees and fiduciaries, and such custodians, nominees and
fiduciaries will be reimbursed for reasonable expenses incurred in connection
therewith. American List will bear costs and expenses of this solicitation other
than expenses incurred in connection with printing and mailing of this Proxy
Statement/Prospectus, which will be shared equally by American List and Snyder,
provided that Snyder will bear the fees and expenses payable to the Proxy
Solicitor, up to an amount of $75,000, and any incremental expenses associated
with the expedited delivery of solicitation materials.
STOCKHOLDERS SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH THEIR PROXY
CARDS. PROXY CARDS SHOULD BE SENT TO MACKENZIE PARTNERS, INC., AT 156 FIFTH
AVENUE, NEW YORK, NEW YORK 10010. STOCK CERTIFICATES SHOULD BE SENT WITH THE
LETTER OF TRANSMITTAL TO AMERICAN STOCK TRANSFER & TRUST COMPANY, AS EXCHANGE
AGENT. HOWEVER, STOCK CERTIFICATES SHOULD NOT BE SURRENDERED UNTIL THE LETTER OF
TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED.
THE AMERICAN LIST BOARD HAS UNANIMOUSLY APPROVED THE MERGER AND THE MERGER
AGREEMENT AND RECOMMENDS THAT AMERICAN LIST STOCKHOLDERS VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AND THE MERGER AGREEMENT.
THE MERGER
GENERAL
The American List Board has unanimously approved the Merger and the Merger
Agreement, which provides that at the Effective Time, Acquisition will be merged
with and into American List in accordance with the DGCL, the separate corporate
existence of Acquisition will cease, and American List will continue as the
surviving corporation and a wholly-owned subsidiary of Snyder. With certain
limited exceptions described below, each share of American List Common Stock
outstanding at the Effective Time shall be converted into the number of shares
of Snyder Common Stock equal to the Exchange Ratio. The Merger is intended to
qualify as a pooling of interests for accounting purposes and as a tax-free
reorganization for federal income tax purposes.
The American List Board believes that the terms of the Merger Agreement are
fair to, and in the best interest of, American List and its stockholders and
unanimously recommends that the stockholders of American List vote to approve
and adopt the Merger and the Merger Agreement and the consummation of the
transactions contemplated thereby.
This section of the Proxy Statement/Prospectus describes certain aspects of
the proposed Merger, including the principal provisions of the Merger Agreement.
A copy of the Merger Agreement is attached to this Proxy Statement/Prospectus as
Exhibit A. All stockholders of American List are urged to read this agreement in
its entirety.
BACKGROUND OF THE MERGER
In late November 1996, Mr. Warren Woo, formerly President of Corporate
Development at Snyder, contacted representatives of Donaldson Lufkin & Jenrette
("DLJ"), financial adviser to Snyder, and expressed to them Snyder's interest in
exploring the possibility of a business combination with American List. In early
December 1996, representatives of DLJ contacted Mr. Martin Lerner, Chairman and
President of
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American List, and informed him of Snyder's interest in American List. On
December 10, 1996, representatives of DLJ, Mr. Woo and an additional member of
Snyder's senior management, met with Mr. Lerner and two other members of
American List's senior management. The purpose of this meeting was for Snyder
and American List to introduce and present a general overview of their
respective businesses and to discuss, in general terms, the possibility of a
merger between Snyder and American List. Between December 10, 1996 and January
21, 1997, DLJ and Mr. Lerner maintained a dialogue and conversed several times
by telephone. On January 21, 1997, at a meeting held at Snyder's facilities in
Bethesda, Maryland and attended by Mr. Lerner and another member of American
List's senior management, Mr. Daniel Snyder, Snyder's Chairman of the Board,
Chief Executive Officer and then President, Mr. Woo and a DLJ representative,
Mr. Snyder was introduced to American List's senior management. At the meeting,
the parties discussed the possible business synergies and potential relationship
between Snyder and American List. Thereafter, American List's senior management
toured Snyder's facilities.
On January 27, 1997, representatives of Prudential Securities met with Mr.
Lerner regarding a potential merger with Snyder. On January 28, 1997, Mr. Woo
and representatives of DLJ met with Mr. Lerner to explore the potential
transaction structure and value of a merger between Snyder and American List. At
this meeting, the financial backgrounds of both companies were discussed, as
well as mutual business opportunities. Thereafter, Messrs. Lerner and Woo met
with their respective senior management teams and financial advisors and
continued the reciprocal disclosure of certain due diligence materials,
including certain financial information of each company. The parties began to
discuss the general terms of a proposed merger. Without reaching any agreement,
the parties discussed, among other items, possible merger exchange ratios, the
structure for the merger, preliminary due diligence procedures and timing, and
other general terms that a merger agreement between the parties might include.
On February 3, 1997, Mr. Lerner and certain members of his senior
management met with representatives of Prudential Securities to discuss American
List's business and prospects. On February 4, 1997, Prudential Securities was
engaged as American List's exclusive financial advisor in connection with a
possible transaction between American List and Snyder. On February 5, 1997,
senior members of both American List and Snyder, as well as representatives of
DLJ and Prudential Securities, met to discuss American List's business and
prospects and the possible synergies resulting from the proposed transaction. At
that meeting American List provided the Snyder management and the DLJ
representatives with summary financial information regarding American List and
the parties executed a confidentiality agreement. From February 5 through
February 21, representatives of American List and Snyder had numerous meetings
by telephone and in person in which various terms of the proposed merger
agreement were discussed, including possible exchange ratios, the rights of each
party to terminate a merger agreement in certain circumstances, termination fees
and various other provisions.
On February 21, 1997, senior management of both companies met with their
financial and legal advisors to discuss the terms of the proposed merger.
Counsel for Snyder distributed a preliminary draft of a merger agreement
providing for the stock-for-stock merger of a wholly-owned subsidiary of Snyder
into American List. Thereafter Messrs. Lerner and Woo, on behalf of American
List and Snyder, respectively, together with their respective legal counsel and
financial advisors, began to negotiate the structure of the transaction, an
exchange ratio and the other principal terms of the Merger Agreement. Such
persons also had preliminary discussions concerning the terms of Mr. Lerner's
compensation as President of American List following the Merger and the terms of
certain salary, bonus and severance payments and other arrangements with Mr.
Lerner and two other senior executive officers of American List after the
consummation of the Merger.
On February 25, 1997, senior management of Snyder visited the senior
management of American List at American List's facilities in Mineola, New York
to discuss American List's business and the outlook and prospects of American
List. Both parties continued to conduct their respective due diligence
investigation of each other's businesses and to negotiate issues in the Merger
Agreement.
On March 4, 1997, Mr. Lerner and his senior management team along with his
financial and legal advisors met with certain members of Snyder's senior
management team to continue to conduct its due diligence investigation of
Snyder's business and to negotiate issues in the Merger Agreement. The meeting
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included an on-site due diligence review of the business and financial affairs
of Snyder at Snyder's facilities in Bethesda, Maryland. During the next several
days, American List and Snyder continued to exchange financial and other
information. Members of senior management of each company, as well as their
respective financial advisors and attorneys, reviewed and discussed the
exchanged information.
On March 5, 1997, the American List Board held a meeting during which the
American List Board was formally advised of the possibility of a merger between
Snyder and American List and preliminarily discussed the transaction. Present
also were American List's financial and legal advisors. At that meeting, Mr.
Lerner advised the American List Board that American List had been approached by
Snyder concerning a possible business combination, and that management had
pursued these discussions on a preliminary basis. At this meeting, Mr. Lerner
reviewed management's preliminarily favorable assessment of Snyder's business,
financial condition and prospects, and the strategic advantages that might arise
from a potential business combination. Mr. Lerner reviewed the status of the
discussions to date. Prior to the meeting on March 4, 1997 and throughout the
negotiation process, various members of the American List Board were kept
advised on an informal basis of the status of the discussions with Snyder. After
significant deliberation, the American List Board authorized Mr. Lerner and the
American List financial and legal advisors to continue their negotiations of the
Merger Agreement and in particular the terms of the exchange ratio.
During the week of March 10th, senior management of American List and
Snyder continued to conduct their respective due diligence investigations.
Representatives of American List and Snyder had numerous meetings by telephone
and in person in which various terms of the Merger Agreement were negotiated,
including the terms of the exchange ratio, the rights of each party to terminate
the Merger Agreement in certain circumstances, termination fees and various
other provisions. Most of the subsequent negotiations took place at face-to-face
meetings in New York, preceded by the exchange of proposed revisions to the
agreements then under consideration.
On March 10, 1997, a draft of the Merger Agreement, together with a summary
of the material terms of such agreement and certain other material, was
distributed to the American List Board. On March 14, 1997, the American List
Board held a meeting during which the terms and conditions of the Merger
Agreement and all related considerations with the directors were discussed,
including the directors' obligations in consideration thereof. American List's
financial advisor made presentations regarding the financial terms of the
proposed transaction. While the American List Board considered the advisability
of selling the company as opposed to remaining independent, and potential
alternative methods for pursuing a sale, the American List Board did not
actively pursue any other strategic alternatives such as a leveraged
recapitalization, in view of their belief as to the highly favorable terms of
the Merger.
Thereafter, the final terms of the Merger Agreement were negotiated. The
Exchange Ratio was determined after extensive arms-length negotiations between
Snyder and American List. The historical fluctuations in the prices of shares of
both Snyder Common Stock and American List Common Stock were considered, as well
as the respective parties' views as to the value of both companies separately
and together. These negotiations involved, at various times, senior management
of Snyder and American List and their financial advisors and attorneys. The
American List Board agreed upon the Exchange Ratio taking into consideration the
advice it received from its legal and financial advisors, including, among
others, various matters set forth under "Reasons for the Merger -- American
List."
At a special meeting held by telephone on March 16, 1997, the Snyder Board
unanimously determined that the terms of the Merger are fair to, and in the best
interests of, Snyder and the holders of Snyder Common Stock, approved the Merger
Agreement and authorized the execution and delivery thereof and the performance
of the transactions contemplated thereby.
On the morning of March 18, 1997, the American List Board held a meeting
during which representatives of Prudential Securities met with the American List
Board and its legal advisors for several hours and reviewed the proposed
transaction with American List, including the terms of the Merger Agreement
which management had negotiated with Snyder. American List's legal counsel also
discussed certain legal
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considerations with the directors at such meeting and responded to questions
from members of the American List Board. At the March 18, 1997 meeting,
Prudential Securities presented an analysis of the terms of the Merger and of
American List's and Snyder's respective financial conditions, business prospects
and stock market trading histories. During this meeting, Prudential Securities
representatives reviewed, among other things, the background of the proposed
Merger, financial and valuation analyses of the transaction and responded to
questions from members of the American List Board. Prudential Securities
delivered the Opinion to American List's Board to the effect that, as of the
date of the Opinion, the Exchange Ratio was fair to the stockholders of American
List, from a financial point of view.
As a condition to Snyder entering into the Merger Agreement, Mr. Lerner and
D.H. Blair entered into an agreement with Snyder which provided, among other
things, that if a stockholder meeting were held to approve the Merger and the
Merger Agreement, such stockholders would vote all American List Common Stock
which they owned, or had the power to vote, in favor of the Merger Agreement and
against certain other actions which could impede or delay consummation of the
Merger. Neither Mr. Lerner nor D.H. Blair received any consideration for
entering into such voting agreements. See "-- Agreement to Vote in Favor of the
Merger" and "-- Interests of Certain Persons in the Merger -- Stockholders
Agreement."
Following a full discussion of all of the relevant considerations and full
opportunity for each of the directors to ask all desired questions, the American
List Board unanimously approved the Merger and the Merger Agreement and
recommended that the stockholders of American List approve the Merger and the
Merger Agreement. The Merger Agreement was executed by each of American List and
Snyder on March 18, 1997. The terms of the Merger were announced in a joint
press release issued prior to the opening of business on March 19, 1997. See
"-- Reasons for the Merger" and "-- Recommendation of the American List Board."
REASONS FOR THE MERGER
Snyder. The Snyder Board believes that the Merger will further Snyder's
strategic objective of broadening Snyder's resources and capabilities to enhance
its ability to provide fully integrated marketing services to its clients. The
Snyder Board believes that access to proprietary high-value data as to targeted
consumers is a critical element of its fully integrated direct marketing
programs. The Snyder Board expects that (i) access to American List's
proprietary database, in addition to Snyder's existing database, will augment
Snyder's ability to channel products and services on behalf of its clients to
targeted consumers and (ii) the Merger with American List will enable Snyder to
reach and offer additional marketing services to American List's customers. The
Merger is expected to increase Snyder's fiscal year 1997 and 1998 earnings per
share (currently estimated to be $0.40 and $0.58, respectively) by $0.08 and
$0.14 to $0.48 and $0.72, respectively, although there can be no assurance as to
such future performance. Certain known and unknown risks, uncertainties and
other factors may cause actual results, performance or achievements of Snyder to
be materially different. See "Risk Factors".
American List. The American List Board has determined that the Merger and
the Merger Agreement is fair to, and in the best interest of, American List and
its stockholders. At a meeting held on March 18, 1997, the American List Board
unanimously approved the Merger and the Merger Agreement and resolved to
recommend that the stockholders of American List vote for approval and adoption
of the Merger and the Merger Agreement.
In reaching its conclusion to approve the Merger and the Merger Agreement
and to recommend that stockholders vote for approval and adoption of the Merger
and the Merger Agreement, the American List Board considered many factors
including, but not limited to the following:
(i) the Merger would provide American List stockholders with an
opportunity both to receive a premium over the recent trading price range
for American List Common Stock and, because of the greater trading volume
and number of shares of Snyder Common Stock traded after the Merger, to
receive shares for which there is a larger trading market, affording
American List stockholders who are interested in liquidity the opportunity
to own a more liquid security than American List Common Stock;
(ii) beneficial owners of approximately 20.05% of the outstanding
shares of American List Common Stock agreed to vote such shares in favor of
the Merger;
(iii) the Merger would reduce American List's stockholders' exposure
to the business cycles relating to its significant direct mailing clients,
including, in particular, credit card issuers because, as a
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result of the Merger, American List would become part of Snyder's
consolidated enterprise with a substantially broadened and diversified
array of clients and potential clients;
(iv) the financial condition, results of operations and cash flows of
each of American List and Snyder, on an historical basis, before giving
effect to the Merger;
(v) historical market prices and trading information with respect to
each of American List Common Stock and Snyder Common Stock;
(vi) the treatment of the Merger as a "tax-free reorganization" for
federal income tax purposes;
(vii) the potential efficiencies and synergies to be realized by the
combined operations of American List and Snyder which are expected to
produce a favorable impact on the long-term value of Snyder as well as
enhance the competitive position of the combined entity including the
following: significant expansion of Snyder's database; Snyder's use and
implementation of American List's database; American List's marketing of
Snyder's database; Snyder's leverage of American List's major client
relationships; an increase in the breadth of Snyder's marketing services;
an increase in administrative and managerial efficiencies; and an
enhancement of Snyder's comprehensive multi-cultural list of students;
(viii) the regulatory approvals required to consummate the Merger and
the prospects for receiving all such approvals;
(ix) the Opinion and analysis of Prudential Securities to the effect
that the Exchange Ratio was fair, from a financial point of view, to the
holders of American List Common Stock;
(x) the ability to consummate the Merger as a pooling of interests
under generally accepted accounting principles;
(xi) the terms of the Merger Agreement that permit American List to
terminate the Merger Agreement in the event that the Average Final Closing
Price of Snyder Common Stock during a specified measurement period declines
below $20.00 per share;
(xii) information with respect to American List's business, financial
condition, results of operations, assets, liabilities and business
strategy, on both a historical and a prospective basis, various
uncertainties and risks associated with the operation of American List's
business, particularly as such factors would affect stockholder value in
the future, historical market prices, price to earnings multiples and
trading patterns of the shares, market prices and financial data relating
to American List's principal competitors;
(xiii) the significant enhancement of the strategic and market
position of the combined entity beyond that achievable by American List
alone;
(xiv) the fact that the Merger Agreement, which generally prohibits
American List from soliciting any third party regarding any potential
acquisition of American List, including a merger, sale of assets, sale of
shares of capital stock or similar transaction involving American List,
does permit American List to furnish information to, and negotiate with,
any third party that has submitted a proposal for such an acquisition,
provided that certain conditions are met, including a termination fee of
$5,000,000, if American List accepts such an offer. See "The Merger
Agreement -- Certain Covenants -- Other Potential Acquirors." (The American
List Board believes that these provisions of the Merger Agreement do not
unduly restrict the ability of a third party to make a proposal meeting the
applicable conditions relating to such an acquisition, or the American List
Board's ability to consider and act upon such a proposal if made); and
(xv) the fact that the holders of American List Common Stock will have
the opportunity to participate in the ownership of a larger, more
diversified company.
Assuming an Average Final Closing Price of $26.819, which represents the
average of the closing prices of Snyder Common Stock between May 19, 1997 and
June 16, 1997, each share of American List Common Stock would be converted into
1.14 shares of Snyder Common Stock pursuant to the Merger Agreement. The value
of the Snyder Common Stock that American List stockholders would receive per
share of
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American List Common Stock, based on such assumed Average Final Closing Price,
would be $30.57. On March 18, 1997, the day prior to the announcement of the
Merger, the closing price of the American List Common Stock was $22.375. Thus,
assuming an Average Final Closing Price of $26.819, American List stockholders
would receive a premium equal to 36.6%.
Although the American List Board also considered certain potential risks
associated with the Merger to American List stockholders, including that (i)
Snyder has a high stock price multiple to historic earnings and therefore its
market values are based upon anticipated, future earnings growth, (ii) Snyder is
reliant on a smaller, less diversified group of key customers, such as AT&T,
than American List and (iii) Snyder does not pay a dividend on its common stock,
the American List Board concluded the potential benefits of the Merger
outweighed the potential risks and that the Merger was in the best interests of
the American List stockholders based on the factors set forth above.
RECOMMENDATION OF THE AMERICAN LIST BOARD
THE AMERICAN LIST BOARD HAS UNANIMOUSLY APPROVED THE MERGER AND THE MERGER
AGREEMENT AND RECOMMENDS THAT AMERICAN LIST STOCKHOLDERS VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AND THE MERGER AGREEMENT.
The factors described above in "-- Reasons for the Merger -- American List"
were considered collectively by the American List Board, without giving specific
weight to any particular factor, in connection with its assessment of the
strategic and operational benefits and risks of the Merger as well as the range
of values of each of American List and Snyder on a stand-alone basis and the
value of the combined entity on a pro forma basis. The foregoing discussion of
the information and factors considered and given weight by the American List
Board is not intended to be exhaustive. In addition, individual members of the
American List Board may have given different weight to different factors.
Throughout its deliberations, the American List Board received the advice of
special counsel. After deliberating with respect to the Merger and the other
transactions contemplated by the Merger Agreement, considering, among other
things, the matters discussed above and the opinion of Prudential Securities
referred to above, the American List Board, by unanimous vote of all directors,
approved and adopted the Merger and the Merger Agreement and transactions
contemplated thereby, as being in the best interests of American List and its
stockholders. The American List Board believes that the Merger would result in
an increase in long-term value for American List's stockholders due to the
strategic and operational benefits and synergies described above.
PERCENTAGE OWNERSHIP INTEREST OF AMERICAN LIST STOCKHOLDERS AFTER THE MERGER
Based on the number of shares of Snyder Common Stock outstanding on the
Record Date and assuming the issuance in the Merger of the Estimated Merger
Shares, upon consummation of the Merger there will be approximately 42,920,833
shares of Snyder Common Stock outstanding at the Effective Time, of which the
stockholders of American List, in aggregate, will own approximately 11.72%
(approximately 10.66% on a fully diluted basis assuming the exercise of all
currently outstanding options to purchase shares of Snyder Common Stock and all
currently outstanding American List Options which will be assumed by Snyder at
the Effective Time). See "Risk Factors -- Dilution of Voting Power."
MANAGEMENT OF SNYDER AND AMERICAN LIST AFTER THE MERGER
The Merger Agreement does not require any change to be made in the
composition or size of the Snyder Board, or for the appointment of any
additional persons as executive officers of Snyder, upon consummation of the
Merger.
Under the terms of the Merger Agreement, the directors of Acquisition at
the Effective Time will be the initial directors of American List upon
consummation of the Merger, each to hold office until its successor is duly
elected or appointed and qualified. Snyder has indicated that it has no present
intention of replacing after the Effective Time any of the executive officers of
American List. In connection with the Merger, Mr. Martin Lerner has entered into
an employment agreement with American List and Snyder, and each of Messrs.
Donald Damore and Charles Caccia has entered into an employment agreement with
American List, to serve as the President, Vice President -- Finance and Vice
President -- Marketing, respectively, of American List,
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each such agreement to be effective as of the Effective Time. See "-- Interests
of Certain Persons in the Merger."
CONDUCT OF THE BUSINESS OF SNYDER AND AMERICAN LIST IF THE MERGER IS NOT
CONSUMMATED
If the Merger is not consummated, it is expected that the business and
operations of Snyder and American List each will continue to be conducted
substantially as they currently are being conducted.
MATERIAL CONTACTS BETWEEN SNYDER AND AMERICAN LIST
Other than the discussions and negotiations relating to, and the execution
of, the Merger Agreement discussed in "-- Background of the Merger" and other
related transaction documentation, neither Snyder nor American List knows of any
past, present or proposed material contracts, arrangements, understandings,
relationships, negotiations or transactions in the last five years between
Snyder or its affiliates and American List or its affiliates.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the American List Board with respect
to the Merger Agreement and the transactions contemplated thereby, stockholders
should be aware that certain members of the management of American List and
members of the American List Board have certain interests in the Merger that are
in addition to the interests of stockholders of American List generally. The
American List Board was aware of these interests and considered them, among
other matters, in approving the Merger and the Merger Agreement.
Stock Options. As provided in the Merger Agreement, by virtue of the
Merger, all American List Options outstanding at the Effective Time under the
American List Stock Option Plan, whether or not then exercisable, will be
assumed by Snyder, converted into and become a right to purchase Snyder Common
Stock (each, a "Snyder Option"). Each American List Option assumed by Snyder
will be exercisable upon the same terms and conditions as under the American
List Stock Option Plan and applicable option agreement issued thereunder, except
that (i) each American List Option will be exercisable for that whole number of
shares of Snyder Common Stock (rounded down to the nearest whole share) into
which that whole number of shares of American List Common Stock subject to such
American List Option immediately prior to the Effective Time would be converted
pursuant to the Exchange Ratio and (ii) the option price per share of Snyder
Common Stock will be equal to (A) the option price per share of American List
Common Stock subject to such American List Option immediately prior to the
Effective Time divided by (B) the Exchange Ratio, rounded upward to the nearest
full cent. The date of grant of each Snyder Option will be the date on which the
corresponding American List Option was granted. A cash payment will be made for
any fractional share based on the closing price per share of Snyder Common Stock
on the Trading Day immediately preceding the date of exercise. As of June 16,
1997, there were 84,400 American List Options outstanding at a weighted average
price of $20.72 per share (at exercise prices ranging from $10.08 to $29.88 per
share). All American List Options outstanding as of such date have been vested.
See "The Merger Agreement -- Treatment of Stock Options."
Certain Employment Agreements. Mr. Martin Lerner has entered into an
employment agreement with American List and Snyder, dated as of March 18, 1997,
to serve as President of American List effective as of the Effective Time.
Pursuant to this contract, Mr. Lerner will receive $2,000,000 on the Effective
Date (as defined therein) and his existing employment agreement will terminate.
Thereafter, Mr. Lerner shall receive a salary at the rate of $100,000 per year
for a term of five years. Mr. Lerner's new employment agreement includes a
non-competition commitment during the term of the agreement and for a period of
three years after termination of the agreement. In addition, the employment
agreement provides that upon consummation of the Merger, (i) Mr. Lerner will be
entitled to receive options to purchase 250,000 shares of Snyder Common Stock
under the Snyder Stock Option Plan, 100,000 of which are to be vested six months
following the Effective Time and with respect to the remaining 150,000 shares,
one-fifth of which will vest on each anniversary date of the Effective Time
commencing on the first anniversary date; and (ii) Snyder will
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grant options to purchase up to 100,000 shares of Snyder Common Stock under the
Snyder Stock Option Plan to employees of American List and in amounts identified
by Mr. Lerner, subject to the reasonable approval of the American List Board.
Messrs. Donald Damore and Charles A. Caccia each have entered into an employment
agreement with American List, dated as of March 18, 1997, to serve as Vice
President -- Finance and Vice President -- Marketing of American List,
respectively, effective as of the Effective Time. Pursuant to their employment
agreements, Messrs. Damore and Caccia shall receive a salary at a rate of
$150,000 and $110,000, respectively, per year for a term of three years. The
employment agreements of Messrs. Lerner, Damore and Caccia (such agreements
collectively, the "Employment Agreements") provide, in part, that if their
employment is terminated involuntarily and not for cause, they will be entitled
to receive certain severance benefits. In the case of Mr. Lerner, these benefits
include payment of his salary as provided in his employment agreement and health
insurance benefits through the fifth anniversary of the Effective Time. In the
case of Messrs. Damore and Caccia, these benefits include payment of their
respective salaries as provided in their employment agreements for a period
equal to the lesser of (i) one year and (ii) the period remaining in the term of
their respective employment agreement, but in no event less than six months.
Indemnification and Insurance of Directors and Officers. Snyder and
Acquisition have agreed that all rights to indemnification or exculpation now
existing in favor of the directors, officers, employees and agents of American
List and its subsidiaries as provided in their respective charters or bylaws (or
other similar governing instruments) or otherwise in effect with respect to
matters occurring prior to the Effective Time will survive the Merger and will
continue in full force and effect for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in respect of a
claim asserted or made within such period will continue until the disposition of
such claim. To the maximum extent permitted by the DGCL, such indemnification
will be mandatory rather than permissive and the Surviving Corporation (as
defined in the Merger Agreement) will advance expenses in connection with such
indemnification to the fullest extent permitted under applicable law, provided
that the person to whom expenses are advanced provides an undertaking to repay
such advances if it is ultimately determined that such person is not entitled to
indemnification; provided, however, that the indemnification provided under the
Merger Agreement will not be greater than the indemnification permissible
pursuant to American List's or its subsidiaries' respective charters and bylaws
(or other similar governing instruments). Snyder has agreed to cause the
Surviving Corporation to maintain in effect for not less than three years from
the Effective Time policies of directors' and officers' liability and fiduciary
insurance substantially on the terms pursuant to which Snyder's directors
currently are insured with respect to claims arising from facts or events
occurring prior to the Effective Time to cover the types of actions and
omissions with respect to which Snyder's directors are currently insured
(provided that the Surviving Corporation will not be required to pay an annual
premium for such insurance in excess of 200% of the premiums paid as of the
Effective Time for such insurance, but in such case will be required to purchase
as much coverage as possible for such amount). See "The Merger
Agreement -- Certain Covenants -- Indemnification and Insurance of Directors and
Officers."
Affiliate Letters. Each of Messrs. Martin Lerner, J. Morton Davis, Ben
Ermini, Philip Lubitz and Kenton Wood, current directors on the American List
Board, and Mr. Damore and Mr. Caccia has entered into an affiliate letter, dated
March 18, 1997, where they have agreed not to transfer, sell or otherwise
dispose of any of the Snyder Common Stock which they will receive upon
consummation of the Merger, or upon exercise of American List Options, until
after such time as consolidated financial statements which reflect at least 30
days of post-Merger combined operations of Snyder and American List (the
"Financial Results") have been published by Snyder. Additionally, the Snyder
Common Stock that they will receive pursuant to the Merger will have restrictive
legends. See "-- Restrictions on Sales of Shares by Affiliates."
Stockholders Agreement. Mr. Lerner and D.H. Blair have entered into a
Stockholders Agreement, dated March 18, 1997, with Snyder where they have agreed
to vote at any meeting of stockholders held to approve the Merger (i) in favor
of approval of the Merger Agreement and any actions required in furtherance
thereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty of any other obligation
or agreement of American List under the Merger Agreement (after giving effect to
any materiality or similar qualifications contained therein); and (iii) except
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as otherwise agreed to in writing in advance by Snyder, against certain other
actions which could impede or delay consummation of the Merger. See
"-- Agreement to Vote in Favor of the Merger."
Lockup Letter. Mr. Daniel M. Snyder, Ms. Michele D. Snyder, U.S. News
College Marketing L.P. ("USN") and Mr. Fred Drasner, each party to the
Registration Rights Agreement, dated September 4, 1996, with Snyder and certain
other persons party to such agreement, have entered into a letter agreement,
dated March 18, 1997 (the "Lockup Letter"), where they have agreed not to
request or require Snyder to register any shares of Snyder Common Stock owned by
them or sell any such shares of Snyder Common Stock pursuant to Rule 144 of the
Securities Act, without the consent of Mr. Davis, prior to the publication by
Snyder of the Financial Results. Such restrictions will terminate on the earlier
of (a) the date of termination of the Merger Agreement or (b) August 15, 1997,
unless the Merger shall have been consummated as of such date. In any event, the
restriction under the Lockup Letter on sales pursuant to Rule 144 will terminate
on August 15, 1997.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests transaction under generally accepted accounting principles. Under such
method of accounting, holders of American List Common Stock will be deemed to
have combined their existing American List Common Stock interest with that of
holders of Snyder Common Stock by exchanging their shares of American List
Common Stock for shares of Snyder Common Stock. Accordingly, the book value of
the assets, liabilities and stockholders' equity of American List, as reported
on its consolidated balance sheet, will be carried over to the consolidated
balance sheet of Snyder and no goodwill will be created. Snyder will be able to
include in its consolidated income the consolidated income of American List for
the entire fiscal year in which the Merger occurs; however, certain expenses
incurred to effect the Merger must be treated by Snyder as current charges
against income rather than adjustments to its balance sheet. In order for the
Merger to qualify for pooling of interests accounting treatment, among other
criteria, substantially all (90% or more) of the outstanding American List
Common Stock must be exchanged for Snyder Common Stock.
Snyder and American List's respective obligations to consummate the Merger
are conditioned upon the receipt by Snyder of an opinion from Snyder's
independent public accountants, Arthur Andersen, to the effect that the Merger
qualifies for pooling of interests method of accounting.
The unaudited pro forma financial data contained in this Proxy
Statement/Prospectus has been prepared using the pooling of interests accounting
method to account for the Merger. See "Summary Unaudited Pro Forma Condensed
Combined Financial Data" and "Unaudited Pro Forma Combined Financial Data."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of the material federal income tax consequences
of the Merger under existing federal income tax law, which is subject to change,
possibly retroactively. The discussion assumes that stockholders hold American
List Common Stock as capital assets as of the Effective Date of the Merger. The
discussion does not discuss all aspects of federal income taxation that may be
relevant to particular stockholders in light of their particular circumstances,
such as holders who acquired American List Common Stock pursuant to the exercise
of an employee stock option or otherwise as compensation or who are subject to
special treatment under the federal income tax laws (for example, financial
institutions, insurance companies, tax-exempt organizations, broker-dealers and
foreign persons). The summary also does not discuss any aspects of state, local
or foreign tax law. Each stockholder is advised to consult his or her own tax
advisors as to the federal, state, local and foreign income and other tax
consequences of the Merger.
The obligation of American List to consummate the Merger is conditioned
upon the receipt by American List of an opinion from its counsel, Schulte Roth &
Zabel LLP, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In accordance with such opinion, for
federal income tax purposes, Snyder, American List and Acquisition will each be
a "party to a reorganization" within the meaning of Section 368(b) of the Code
and no gain or loss will be
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recognized by Snyder, American List and Acquisition by reason of the Merger.
Such opinion has been delivered and a copy has been filed as an exhibit to the
Registration Statement.
The federal income tax consequences of the Merger to an American List
stockholder will depend on whether such stockholder receives only Snyder Common
Stock or receives both Snyder Common Stock and cash in lieu of fractional shares
of Snyder Common Stock.
A stockholder who receives solely Snyder Common Stock in exchange for
American List Common Stock in the Merger will not recognize gain or loss upon
such exchange. Accordingly, (i) the aggregate tax basis of the Snyder Common
Stock received by the stockholder will be the same as the aggregate tax basis of
the American List Common Stock surrendered in exchange therefor pursuant to the
Merger and (ii) the holding period of the Snyder Common Stock will include the
holding period of the American List Common Stock surrendered in exchange
therefor pursuant to the Merger.
A stockholder who also receives cash in lieu of a fractional share of
Snyder Common Stock will be treated first as having received such fractional
share of Snyder Common Stock pursuant to the Merger. A ratable portion of such
stockholder's basis in his or her American List Common Stock will be allocated
to such constructively-received fractional share. Such stockholder will be
treated as then having exchanged such fractional share with Snyder for cash.
Such exchange will generally be treated as a redemption of such fractional share
by Snyder. The amount of any capital gain or loss attributable to such deemed
redemption of such fractional share will be equal to the difference between the
cash received and the portion of such stockholder's tax basis in the American
List Common Stock surrendered that is allocated to such fractional share. Such
capital gain or loss will be long-term if the stockholder held his or her
American List Common Stock for more than one year at the Effective Time.
Otherwise, an American List stockholder who receives cash in lieu of a
fractional share of Snyder Common Stock will be treated in the manner described
in the preceding paragraph.
EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS OR HER OWN TAX ADVISORS AS TO
HIS OR HER FEDERAL INCOME TAX CONSEQUENCES BASED UPON ANY PARTICULAR FACTS AND
CIRCUMSTANCES THAT MAY APPLY TO SUCH STOCKHOLDER AND ALSO AS TO ANY STATE, LOCAL
OR FOREIGN TAX CONSIDERATIONS WITH RESPECT TO THE MERGER.
REGULATORY APPROVALS
Under the HSR Act and the rules promulgated thereunder by the FTC, the
Merger cannot be consummated until requisite pre-merger notifications have been
filed and certain information has been furnished to the FTC and the DOJ and
specified waiting period requirements have been satisfied. Snyder and American
List each filed pre-merger notification and report forms under the HSR Act, on
April 15, 1997 and April 10, 1997, respectively, with the FTC and the DOJ. The
waiting periods under the HSR Act expired by early termination on April 21,
1997, without any request for additional documentary or other information. At
any time before or after the Effective Time, and notwithstanding that the HSR
Act waiting period has expired, the DOJ or any state could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin consummation of the Merger or seeking
divestiture of substantial assets of Snyder or American List. Private parties
also may seek to take legal action under the antitrust laws under certain
circumstances. Snyder and American List believe, however, that the Merger can be
effected in compliance with federal and state antitrust laws. See "Risk
Factors -- Governmental Regulation."
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES
The shares of Snyder Common Stock issuable in connection with the Merger
have been registered under the Securities Act. Such shares will be freely
transferable under the Securities Act, except for shares issued to any person
who may be deemed to be an affiliate, as such term is defined under the
Securities Act for purposes of Rule 144 (an "Affiliate"), of Snyder or American
List at the time of the Meeting. Affiliates may not sell their shares of Snyder
Common Stock acquired in connection with the Merger except pursuant to (i) an
effective registration statement under the Securities Act covering such shares,
(ii) the conditions contem-
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plated by paragraph (d) of Rule 144, or (iii) any other applicable exemption
from the registration requirements of the Securities Act. Persons who may be
deemed to be Affiliates of Snyder or American List generally include individuals
or entities that may be deemed to control, be controlled by or be under common
control with Snyder or American List, and may include officers, directors and
principal stockholders of Snyder or American List. In order to qualify for
pooling of interests treatment, an Affiliate of either Snyder or American List
may not sell, or in any other way reduce such Affiliate's risk relative to, the
shares of Snyder Common Stock until after such time as Snyder publishes results
covering at least 30 days of combined operations of Snyder and American List.
American List and Snyder and their respective Affiliates have each agreed that
such Affiliates will not engage in any such transactions. See "-- Accounting
Treatment."
STOCK EXCHANGE LISTING
Snyder will use all reasonable efforts to cause the shares of Snyder Common
Stock to be issued in the Merger and the shares of Snyder Common Stock to be
reserved for issuance upon exercise of American List Options which will be
assumed by Snyder at the Effective Time, to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective Time. The
obligations of American List to consummate the Merger are subject to the shares
of Snyder Common Stock to be issued to American List stockholders and such other
shares required to be reserved for issuance in connection with the Merger being
authorized for listing on the NYSE, upon official notice of issuance.
AGREEMENT TO VOTE IN FAVOR OF THE MERGER
On March 18, 1997, Mr. Martin Lerner and D.H. Blair, who hold in the
aggregate approximately 20.05% of the outstanding American List Common Stock,
entered into a Stockholders Agreement with Snyder which provided, among other
things, that if a stockholder vote was taken to approve the Merger and the
Merger Agreement, such stockholder would vote all of the shares of American List
Common Stock owned by such stockholder in favor of the Merger Agreement and
against certain other actions which could impede or delay consummation of the
Merger. A copy of the Stockholders Agreement is attached to this Proxy
Statement/Prospectus as Exhibit C, and should be read carefully by holders of
American List Common Stock. See "-- Interests of Certain Persons in the
Merger -- Stockholders Agreement."
NO RIGHTS OF DISSENTING STOCKHOLDERS
Under the DGCL, stockholders of American List will not be entitled to
appraisal rights or similar dissenters' rights for their shares of American List
Common Stock in connection with the approval and adoption of the Merger and the
Merger Agreement.
OPINION OF FINANCIAL ADVISOR TO AMERICAN LIST
On March 18, 1997, Prudential Securities delivered the Opinion to the
American List Board that, as of such date, the Exchange Ratio was fair, from a
financial point of view, to the stockholders of American List. Prudential
Securities made a presentation of the Opinion and the underlying financial
analysis at a meeting of the American List Board on March 18, 1997 and provided
the directors a detailed report setting forth the financial analysis underlying
the Opinion. This analysis, as presented to the American List Board, is
summarized below. All of the members of the American List Board were present at
the meeting (two via teleconference) and had an opportunity to ask questions
regarding the report. Prudential Securities discussed with the American List
Board the information in the report, and the financial data and other factors
considered by Prudential Securities, in conducting its analysis, all of which
are summarized below. Prudential Securities subsequently restated the Opinion in
writing on June 18, 1997.
In requesting the Opinion, the American List Board did not give any special
instructions to Prudential Securities or impose any limitation upon the scope of
the investigation that Prudential Securities deemed necessary to enable it to
deliver the Opinion. A copy of the Opinion, which sets forth the assumptions
made, matters considered and limits on the review undertaken, is attached to
this Proxy Statement/Prospectus as Exhibit B and is incorporated herein by
reference. The summary of the Opinion set forth below is qualified in
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its entirety by reference to the full text of the Opinion. The American List
stockholders are urged to read the Opinion in its entirety.
THE OPINION IS DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO TO THE
STOCKHOLDERS OF AMERICAN LIST FROM A FINANCIAL POINT OF VIEW AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD
VOTE AT THE MEETING.
In conducting its analysis and arriving at the Opinion, dated March 18,
1997, Prudential Securities reviewed such information and considered such
financial data and other factors as Prudential Securities deemed relevant under
the circumstances, including, among others, the following: (i) a draft, dated
March 17, 1997, of the Merger Agreement; (ii) certain publicly-available
historical financial and operating data of American List including, but not
limited to, (a) the Annual Reports to Stockholders and Annual Reports of
American List for the fiscal years ended February 28, 1994 and February 28, 1995
on Form 10-KSB, and for fiscal year ended February 29, 1996 on Form 10-K, (b)
the Quarterly Reports on Form 10-Q for the quarters ended May 31, August 31 and
November 30, 1996, (c) the Proxy Statement for the Annual Meeting of
Stockholders held on August 5, 1996 and (d) the American List Prospectus, dated
March 8, 1996, relating to the sale of 1,400,000 shares of American List Common
Stock; (iii) certain publicly-available historical financial and operating data
for Snyder, including, but not limited to, (a) the Financial Statements for the
year ended December 31, 1996, (b) the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, (c) Snyder's Prospectus, dated September 24,
1996, relating to the initial public offering of Snyder Common Stock and (d) a
press release dated February 10, 1997 announcing financial results for the
fiscal year ended December 31, 1996; (iv) certain information relating to
American List, including projected income statements for the fiscal years ending
February 1997, 1998 and 1999, prepared by the management of American List; (v)
certain information relating to Snyder, including financial forecasts for the
fiscal years ending December 31, 1997 and 1998, prepared by the management of
Snyder; (vi) publicly available financial, operating and stock market data
concerning certain companies engaged in businesses Prudential Securities deemed
comparable to American List and Snyder, respectively, or otherwise relevant to
Prudential Securities' inquiry; (vii) the financial terms of certain recent
transactions Prudential Securities deemed relevant to its inquiry; (viii) the
historical stock prices and trading volumes of the American List Common Stock
and the Snyder Common Stock; and (ix) such other financial studies, analyses and
investigations that Prudential Securities deemed appropriate. Prudential
Securities assumed, with American List's consent, that the draft of the Merger
Agreement which Prudential Securities reviewed would conform in all material
respects to that document when in final form.
Prudential Securities met with the senior management of American List and
Snyder to discuss (i) the prospects for their respective businesses, (ii) their
estimates of such businesses' future financial performance, (iii) the financial
impact of the Merger on the respective companies, and (iv) such other matters
that Prudential Securities deemed relevant.
In connection with its review and analysis and in arriving at the Opinion,
Prudential Securities assumed and relied upon the accuracy and completeness of
the financial and other information provided to it by American List and Snyder
and has not undertaken any independent verification of such information or any
independent valuation or appraisal of any of the assets or liabilities of
American List or Snyder. With respect to certain financial forecasts provided to
Prudential Securities by American List for American List and Snyder for Snyder,
Prudential Securities has assumed that such information (and the assumptions and
bases therefor) represents each respective management's best currently available
estimate as to the future financial performance of American List and of Snyder.
The Opinion is predicated on the Merger qualifying (i) as a reorganization
within the meaning of Section 368 (a) of the Code, and (ii) for pooling of
interests accounting treatment.
In connection with Prudential Securities advisory assignment, Prudential
Securities was not authorized by American List or the American List Board to
solicit, nor has Prudential Securities solicited, indications of interest from
third parties for the acquisition of all or any part of American List. The
Opinion does not address nor should it be construed to address the relative
merits of the Merger and alternative business combinations
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with third parties. In addition, the Opinion does not in any manner address the
prices at which the Snyder Common Stock will actually trade following
consummation of the Merger.
In arriving at the Opinion, Prudential Securities performed a variety of
financial analyses, including those summarized herein. The summary set forth
below of the analyses presented to the American List Board at the March 18, 1997
meeting does not purport to be a complete description of the analyses performed.
The preparation of a fairness opinion is a complex process that involves various
determinations as to the most appropriate and relevant methods of financial
analyses and the application of these methods to the particular circumstance
and, therefore, such an opinion is not necessarily susceptible to partial
analysis or summary description. Prudential Securities believes that its
analysis must be considered as a whole and that selecting portions thereof or
portions of the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process underlying
the Opinion. Prudential Securities made numerous assumptions with respect to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of American
List and Snyder. Any estimates contained in Prudential Securities' analyses are
not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, estimates of the values of businesses and securities do not
purport to be appraisals or necessarily reflect the prices at which businesses
or securities may be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty. Subject to the foregoing, the
following is a summary of the material financial analyses presented by
Prudential Securities to the American List Board in connection with the Opinion,
dated March 18, 1997.
Comparable Company Analysis. A comparable company analysis was employed by
Prudential Securities to establish implied ranges for the Exchange Ratio.
Prudential Securities analyzed publicly-available historical and projected
financial results, including multiples of current stock price to latest twelve
months ("LTM") earning per share ("LTM EPS"), projected calendar year 1997
earnings per share ("1997 EPS") and projected calendar year 1998 earnings per
share ("1998 EPS"), aggregate value (defined as current stock price multiplied
by the number of shares outstanding plus net indebtedness) to LTM earnings
before interest, taxes, depreciation and amortization ("LTM EBITDA") and LTM
revenues of certain companies considered by Prudential Securities to be
reasonably similar to American List. The companies analyzed included: Acxiom
Corp., ADVO, Inc., American Business Information, Inc., Catalina Marketing
Corp., Harte-Hanks Communications, Inc., Heritage Media Corp., LCS Industries,
Inc. and Metromail Corp. (the "Comparable Companies"). All of the trading
multiples of the Comparable Companies were based on closing stock prices on
March 14, 1997 (the "March 14th Closing Price") and all of the earnings per
share estimates were published by First Call, an on-line data service available
to subscribers which compiles estimates developed by research analysts. The
estimates published by First Call were not prepared in connection with the
Merger or at the request of Prudential Securities.
The Comparable Companies were found to have a March 14th Closing Price
estimated to be equal to 9.5x to 39.1x LTM EPS, 11.9x to 31.1x 1997 EPS and
11.8x to 16.6x 1998 EPS, and an aggregate value estimated to be equal to 3.1x to
17.0x LTM EBITDA and 0.5x to 6.3x LTM revenues. Applying such multiples to
American List's LTM EPS ($1.65), 1997 EPS ($1.82), 1998 EPS ($2.19), LTM EBITDA
($12.2 million) and LTM revenues ($19.1 million) resulted in an implied range
for the Exchange Ratio of 0.5207 to 1.6901. The Exchange Ratio is above the mean
and median for the exchange ratio implied by Prudential Securities' comparable
company analysis. The above-referenced estimates for American List were prepared
by American List.
None of the companies utilized in the above analysis for comparative
purposes is, of course, identical to American List. Accordingly, a complete
analysis of the results of the foregoing calculations cannot be limited to a
quantitative review of such results and involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the Comparable Companies and other factors that could affect the public trading
value of the Comparable Companies as well as that of American List.
Comparable Transactions Analysis. Prudential Securities also analyzed the
consideration paid in several recent merger and acquisition transactions deemed
by Prudential Securities to be reasonably similar to the Merger, and considered
the multiple of the transaction value (defined as the purchase price of the
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acquired entity's equity) to the acquired entity's LTM net income and aggregate
transaction value (defined as the transaction value plus the acquired entity's
net indebtedness) to the acquired entity's LTM EBITDA and revenues, based upon
publicly available information for such transactions. The transactions
considered were the combinations of: (i) TRW's Information and Services Unit and
Bain Capital & Thomas H. Lee, (ii) DiMark, Inc. and Harte-Hanks Communications,
Inc., (iii) DIMAC Corporation and Heritage Media Corp., (iv) Direct Marketing
Group, Inc. and Dimac Direct Inc., (v) Palm Coast Data, Ltd. and DIMAC Corp. and
(vi) McClure Group and DIMAC Corp. (the "Comparable Transactions"). The
Comparable Transactions were found to imply for the acquired entity a
transaction value equal to 9.7x to 28.5x LTM net income, an aggregate
transaction value equal to 6.4x to 11.6x LTM EBITDA and 0.6x to 2.0x LTM
revenues. Applying such multiples to American List's LTM net income ($7.4
million), LTM EBITDA ($12.2 million) and LTM revenues ($19.1 million) resulted
in an implied range for the Exchange Ratio of 0.4068 to 1.0489. The Exchange
Ratio is above the mean and median of the range for the exchange ratio implied
by Prudential Securities' comparable transaction analysis.
None of the acquired entities utilized in the above analysis for
comparative purposes is, of course, identical to American List. Accordingly, a
complete analysis of the results of the foregoing calculations cannot be limited
to a quantitative review of such results and involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the acquired entities and other factors that could affect the consideration paid
for each of the acquired entities as well as that of American List.
Pro Forma Earnings Per Share. Prudential Securities also analyzed the pro
forma effect of the Merger on Snyder's fiscal year 1997 and 1998 earnings per
share. An analysis of anticipated future results based on projections provided
by the management of American List for American List and the management of
Snyder for Snyder indicated that the Merger results in an increase in Snyder's
pro forma 1997 and 1998 earnings per share. The resulting increases in Snyder's
pro forma earnings per share, which, in limited respects, reflect slightly
higher pro forma earnings per share, are not materially different from the
results described under "Reasons for the Merger -- Snyder," with such
differences attributable to the respective combination assumptions utilized in
the respective analyses, in particular higher earnings per share estimates for
American List, which were developed by American List and used by Prudential
Securities in its analysis.
Projected financial and other information concerning American List and
Snyder and the impact of the Merger upon the holders of American List Common
Stock are not necessarily indicative of future results. All projected financial
information is subject to numerous contingencies, many of which are beyond the
control of management of American List and Snyder.
Stock Trading History. Prudential Securities also analyzed the history of
the trading prices and volume for the American List Common Stock and the Snyder
Common Stock. Prudential Securities observed that between March 14, 1996 and
March 14, 1997, American List Common Stock traded in the range of $20.00 and
$33.125 per share. Additionally, Prudential Securities noted with respect to the
closing prices of American List Common Stock and Snyder Common Stock as of March
14, 1997, the Exchange Ratio results in an implied value per share of American
List Common Stock of $30.78 which represents a premium paid of 43.2% over
American List's closing price on March 7, 1997 (one week prior). By way of
comparison, Prudential Securities observed that the premium over the acquired
entity's closing stock price one week prior to the announcement of the
transaction was 21.0% for the comparable transaction analysis and 35.9% for
calendar year 1996 transactions according to Mergerstat's, a division of
Houlihan Lokey Howard & Zukin, Fourth Quarter -- 1996 Report (the "Mergerstat
Report"). The Mergerstat Report was not prepared in connection with the Merger
or at the request of Prudential Securities. Prudential Securities also observed
that since the initial public offering of the Snyder Common Stock that the
shares of Snyder Common Stock traded in the range of $17.75 and $33.125.
American List selected Prudential Securities to provide a fairness opinion
because it is a nationally recognized investment banking firm engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions and for other purposes and has substantial experience in
transactions similar to the Merger. The engagement letter with Prudential
Securities provides that American List will pay Prudential Securities an
advisory fee equal to: (i) .7% of the consideration received by the American
List stockholders upon consummation of the Merger on the first $30.00 per share
of the consideration received, plus (ii) 1.5% of
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the amount by which the consideration, on a per share basis, exceeds $30.00 and
is less than or equal to $32.00, plus (iii) 3.0% of the amount by which the
consideration, on a per share basis, exceeds $32.00. In addition, the engagement
letter with Prudential Securities provides that American List will reimburse
Prudential Securities for its out-of-pocket expenses and will indemnify
Prudential Securities and certain related persons against certain liabilities,
including liabilities under securities laws, arising out of the Merger or its
engagement. In the ordinary course of business, Prudential Securities may
actively trade the shares of American List Common Stock and Snyder Common Stock
for its own account and for the accounts of customers, and accordingly, may at
any time hold a long or short position in such securities.
THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT,
WHICH IS ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE MERGER AGREEMENT. CAPITALIZED TERMS USED AND
NOT DEFINED BELOW HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN THE MERGER
AGREEMENT. ALL HOLDERS OF AMERICAN LIST COMMON STOCK ARE ENCOURAGED TO READ THE
MERGER AGREEMENT CAREFULLY AND IN ITS ENTIRETY.
THE MERGER
The Merger Agreement provides that, subject to the satisfaction of the
terms and conditions contained therein, including the approval and adoption
thereof by the requisite vote of the stockholders of American List, Acquisition
will be merged with and into American List, and American List will be the
Surviving Corporation in the Merger. At the Effective Time, the Certificate of
Incorporation of American List in effect immediately prior to such time will
become the Certificate of Incorporation of the Surviving Corporation, and the
Bylaws of American List in effect immediately prior to such time will become the
Bylaws of the Surviving Corporation, in each case until thereafter amended
(SECTIONS 1.1, 1.2 AND 1.5).
EFFECTIVE TIME
The Merger Agreement provides that, subject to the satisfaction of the
terms and conditions contained therein, including the approval and adoption
thereof by the requisite vote of the stockholders of American List, the Merger
will become effective on the date on which a Certificate of Merger is filed with
the Secretary of State of the State of Delaware or at such time as is agreed
between the parties and specified in the Certificate of Merger. The Closing will
take place at a time and on a date specified by the parties, but no later than
the second business day after the satisfaction of the latest to occur of the
conditions set forth in Article 5 of the Merger Agreement. The Merger Agreement
may be terminated by either American List or Snyder if, among other reasons, the
Merger has not been consummated by August 15, 1997. See "-- Conditions to the
Merger" (SECTIONS 1.2, 1.3 AND 6.1).
CONVERSION OF SHARES; EXCHANGE OF STOCK CERTIFICATES; NO FRACTIONAL SHARES
At the Effective Time, pursuant to the Merger Agreement, each share of
American List Common Stock outstanding immediately prior to the Effective Time
(other than shares held by Snyder, Acquisition or any other subsidiary of Snyder
or any subsidiary of American List) will, by virtue of the Merger and without
any action on the part of any holder thereof, be converted into the number of
shares of Snyder Common Stock equal to the Exchange Ratio. The Exchange Ratio
will be determined in the following manner: (i) if the Average Final Closing
Price equals or exceeds $32.00, the Exchange Ratio will be 1.00; (ii) if the
Average Final Closing Price equals or exceeds $28.00 but is less than $32.00,
the Exchange Ratio will equal the quotient (rounded to four decimal places) of
$32.00 divided by the Average Final Closing Price; (iii) if the Average Final
Closing Price equals or exceeds $26.00 and is less than $28.00, the Exchange
Ratio will be 1.14; and (iv) if the Average Final Closing Price is less than
$26.00, the Exchange Ratio will equal the quotient (rounded to four decimal
places) of $29.71 divided by the Average Final Closing Price. Snyder has the
right to terminate the Merger Agreement if the Average Final Closing Price is
less than $24.00. American List has the right to terminate the Merger Agreement
if the Average Final Closing Price is less than $20.00.
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"Average Final Closing Price" means the average of the closing prices (or,
if the Snyder Common Stock should not trade on any Trading Day, the average of
the high bid and low asked prices therefor on such day), regular way, per share
of Snyder Common Stock, as reported on the NYSE Composite Tape during the twenty
consecutive Trading Days ending on (and including) the third Trading Day prior
to the Effective Time. Solely for purposes of calculating the Average Final
Closing Price with respect to the Walk-away Rights, the Effective Time shall be
the date of the Meeting. The multiple of Snyder Common Stock represented by the
Exchange Ratio shall be the Merger Consideration.
At the Effective Time, each share of American List Common Stock owned by
Snyder, Acquisition or any subsidiary of Snyder or American List immediately
prior to the Effective Time will be cancelled, retired and cease to exist and no
payment will be made with respect thereto, and each outstanding share of common
stock of Acquisition at the Effective Time will be converted into one share of
common stock, $.01 par value, of the Surviving Corporation. Based on the number
of shares of American List Common Stock outstanding as of the Record Date, and
assuming an Average Final Closing Price of $26.819 (which represents the average
of the closing prices of the Snyder Common Stock, as reported on the NYSE
Composite Tape between May 19, 1997 and June 16, 1997), approximately 5,029,689
shares of Snyder Common Stock will be issued in the Merger. No fractional shares
of Snyder Common Stock will be issued in the Merger to the holders of American
List Common Stock, but in lieu thereof, each holder of shares of American List
Common Stock otherwise entitled to receive a fractional share of Snyder Common
Stock, upon surrender of his, her or its certificates evidencing shares of
American List Common Stock, will be entitled to receive an amount of cash
(without interest) determined by multiplying the Average Final Closing Price by
the fractional share interest to which such holder otherwise would be entitled.
At the Effective Time, Snyder will make available to the Exchange Agent,
for the benefit of the holders of shares of American List Common Stock (i)
certificates representing the appropriate number of shares of Snyder Common
Stock to be issued in the Merger and (ii) cash to be paid in lieu of fractional
shares of Snyder Common Stock. As soon as reasonably practicable after the
Effective Time, the Exchange Agent will mail to each record holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of American List Common Stock whose shares were
converted in the Merger into the right to receive shares of Snyder Common Stock:
(i) a letter of transmittal (specifying that delivery will be effected, and risk
of loss and title to the certificates will pass, only upon delivery of the
certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the certificates in exchange for certificates representing
shares of Snyder Common Stock. Upon surrender of a certificate for cancellation
to the Exchange Agent, together with such letter of transmittal, duly executed,
the holder of such certificate will be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Snyder Common Stock
(and, if applicable, a check representing the cash consideration to which such
holder may be entitled on account of a fractional share of Snyder Common Stock)
and the certificate so surrendered will be cancelled (SECTIONS 1.8 AND 1.9).
STOCKHOLDERS SHOULD NOT FORWARD THEIR CERTIFICATES TO THE EXCHANGE AGENT
UNTIL THEY HAVE RECEIVED A LETTER OF TRANSMITTAL AND INSTRUCTIONS TO EFFECT THE
PROPER DELIVERY THEREOF.
Until surrendered, each certificate will be deemed after the Effective Time
to represent only the right to receive upon such surrender of the certificate a
certificate representing shares of Snyder Common Stock and cash in lieu of any
fractional shares of Snyder Common Stock (SECTION 1.9).
All shares of Snyder Common Stock issued and cash in lieu of fractional
share interests paid upon surrender of certificates will be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of American
List Common Stock (SECTION 1.9).
The American List Board will not resolicit the American List stockholders
in the event the Average Final Closing Price is below the $20.00 threshold,
thereby triggering American List's Walk-away Rights. In the event such Walk-away
Rights are triggered, the American List Board, in the exercise of its fiduciary
duties, will determine whether, in its view, the Merger continues to be in the
best interests of the American List stockholders and, accordingly, whether to
proceed with the Merger.
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TREATMENT OF STOCK OPTIONS
All American List Options outstanding at the Effective Time under the
American List Stock Option Plan will remain outstanding following the Effective
Time. At the Effective Time, such American List Options will, by virtue of the
Merger and without any further action on the part of American List or the holder
of such American List Options, be assumed by Snyder in such manner that Snyder
(a) is a corporation (or a parent or a subsidiary corporation of such
corporation) "assuming a stock option in a transaction to which Section 424(a)
applied" within the meaning of Section 424 of the Code; or (b) to the extent
that Section 424 of the Code does not apply to any such American List Options,
would be such a corporation (or a parent or a subsidiary corporation of such
corporation) were Section 424 applicable to such option. At the Effective Time,
(i) all references in the American List Stock Option Plan to American List will
be deemed to refer to Snyder and (ii) as soon as practicable, but in no event
later than 30 days following the Effective Time, Snyder will issue to each
holder of an American List Option a document evidencing the assumption of such
option by Snyder. Each American List Option assumed by Snyder will be
exercisable upon the same terms and conditions including, without limitation,
vesting, as under the American List Stock Option Plan and the applicable option
agreement issued thereunder, except that (x) each American List Option will be
exercisable for that whole number of shares of Snyder Common Stock (rounded down
to the nearest whole share) into which the number of shares of American List
Common Stock subject to such American List Option immediately prior to the
Effective Time would be converted pursuant to the Exchange Ratio; and (y) the
option price per share of Snyder Common Stock will be equal to the option price
per share of American List Common Stock subject to such American List Option in
effect immediately prior to the Effective Time divided by the Exchange Ratio
(the option price per share, as so determined, being rounded upward to the
nearest full cent). The date of grant of each American List Option assumed by
Snyder will be the date on which the corresponding American List Option was
granted. A cash payment shall be made for any fractional share based upon the
last reported sale price per share of Snyder Common Stock on the Trading Day
immediately preceding the date of exercise (SECTION 1.10).
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
parties thereto. These include representations and warranties by American List
with respect to it and its subsidiaries as to, among other things: corporate
organization and qualification, capitalization, authority relative to the Merger
Agreement, consents and approvals, filings by American List with the Commission,
financial statements, information included in this Proxy Statement/Prospectus
and the Registration Statement, no default, no undisclosed liabilities and
absence of changes, litigation, compliance with applicable law, employee plans,
environmental laws and regulations, tax matters, intangible property, opinion of
American List's financial adviser, brokers, material contracts, pooling of
interests and disclosure (ARTICLE II).
Snyder and Acquisition also have made certain representations and
warranties with respect to: organization, capitalization, authority relative to
the Merger Agreement, filings by Snyder with the Commission, financial
statements, information included in this Proxy Statement/Prospectus and the
Registration Statement, consents and approvals, no default, no undisclosed
liabilities and absence of changes, litigation, compliance with applicable law,
environmental laws and regulations, tax matters, intangible property, brokers,
pooling of interests and disclosure (ARTICLE III).
CERTAIN COVENANTS
The Merger Agreement contains certain covenants and agreements, certain of
which are summarized below.
Conduct of Business of American List. Pursuant to the Merger Agreement,
American List has agreed that, except as contemplated by the Merger Agreement or
set forth in American List's Disclosure Schedule, during the period from the
date of the Merger Agreement until the Effective Time, American List will, and
will cause each of its subsidiaries to, conduct its operations in the ordinary
course of business consistent with past practice and, to the extent consistent
therewith, with no less diligence and effort than would be applied in
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the absence of the Merger Agreement, seek to preserve intact its current
business organizations, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that goodwill and ongoing businesses
will be unimpaired at the Effective Time (SECTION 4.1).
Without limiting the generality of the foregoing, and except as provided in
the Merger Agreement, prior to the Effective Time, neither American List nor any
of its subsidiaries will, without the prior written consent of Snyder: (i) amend
its certificate of incorporation or bylaws (or other similar governing
instruments); (ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities or equity equivalents (including,
without limitation, any stock options or stock appreciation rights), except for
the issuance of shares of American List Common Stock upon the exercise of
options outstanding under the American List Stock Option Plan, in accordance
with the terms of such Plan and options as in effect on the date of the Merger
Agreement; (iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of any
shares of its capital stock or otherwise make any payments to stockholders in
their capacity as such, or redeem or otherwise acquire any of its securities or
any securities of any of its subsidiaries, except for the regular quarterly
dividend on American List Common Stock not in excess of $.30 per share per
quarter; (iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of American List or any of its subsidiaries (other than the Merger); (v) alter
through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any subsidiary; (vi)(A) incur or
assume any long-term or short-term debt or issue any debt securities; (B)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person
except in the ordinary course of business consistent with past practice and in
amounts not material to American List and its subsidiaries, taken as a whole,
and except for obligations of the wholly-owned subsidiary of American List; (C)
make any loans, advances or capital contributions to, or investments in, any
other person (other than to a subsidiary of American List or customary loans or
advances to employees in the ordinary course of business consistent with past
practice and in amounts not material to the maker of such loan or advance); (D)
pledge or otherwise encumber shares of capital stock of American List or its
subsidiaries; or (E) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material lien thereupon; (vii)
except as may be required by law or as contemplated by the Merger Agreement,
enter into, adopt or amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee in any manner, or increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan and arrangement as in effect as of
the date of the Merger Agreement (including, without limitation, the granting of
stock appreciation rights or performance units); (viii) acquire, sell, lease or
dispose of any assets outside the ordinary course of business or any assets
which in the aggregate are material to American List and its subsidiaries taken
as a whole, or enter into any commitment or transaction outside the ordinary
course of business consistent with past practice; (ix) except as may be required
as a result of a change in law or in GAAP, change any of the accounting
principles or practices used by it; (x) revalue in any material respect any of
its assets, including, without limitation, writing down the value of inventory
or writing-off notes or accounts receivable other than in the ordinary course of
business or as required by GAAP; (xi)(A) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof or any equity interest therein; (B) other than
in the ordinary course of business consistent with past practice, enter into any
contract or agreement or amend any of the contracts or the agreements referred
to in the Merger Agreement, provided that in no event will American List or any
of its subsidiaries amend, modify or extend any of the agreements set forth in
American List's Disclosure Schedule; (C) authorize any new capital expenditure
or expenditures which, individually, is in excess of $30,000 or, in the
aggregate, are in excess of $100,000; or (D) enter into or
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amend any contract, agreement, commitment or arrangement providing for the
taking of any action that would be prohibited under the Merger Agreement; (xii)
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business of claims,
liabilities reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of American List and
its subsidiaries or incurred in the ordinary course of business consistent with
past practice; (xiii) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated by the Merger
Agreement; (xiv) make or revoke any material tax election or settle or
compromise any tax liability material to American List and its subsidiaries
taken as a whole; or (xv) take, or agree in writing or otherwise to take, any of
the actions described above or any action which would make any of the
representations or warranties of American List contained in the Merger Agreement
untrue or incorrect (SECTION 4.1).
Conduct of Business of Snyder. Except as contemplated by the Merger
Agreement, during the period from the date of the Merger Agreement to the
Effective Time, Snyder has agreed that it will not, without the prior written
consent of American List: (i) amend its certificate of incorporation (except to
increase its authorized capital stock) or bylaws; (ii) combine or reclassify any
shares of its capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make any
payments to stockholders in their capacity as such, or redeem or otherwise
acquire any of its securities, or (unless a proportionate adjustment shall be
made to the merger consideration) split its shares of capital stock; (iii) adopt
a plan of complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of Snyder; or (iv) take, or agree in
writing or otherwise to take, any of the actions described above or any action
which would make any of the representations or warranties of Snyder contained in
the Merger Agreement untrue or incorrect (SECTION 4.2).
Proxy Statement; The Meeting. Snyder has agreed that as promptly as
practicable, it will prepare and file with the Commission this Registration
Statement containing this Proxy Statement/Prospectus and a form of proxy.
American List has agreed, as promptly as practicable, to prepare and file with
the Commission this Proxy Statement/Prospectus and a form of proxy. Snyder and
American List have agreed to, and to cause their accountants and lawyers to, use
their best efforts to have or cause the Registration Statement to be declared
effective as promptly as practicable. American List has agreed to use its best
efforts to cause the Proxy Statement/Prospectus to be mailed to its stockholders
at the earliest practicable date.
American List has agreed to call a meeting of its stockholders to be held
as promptly as practicable for the purpose of voting upon the Merger Agreement
and related matters. In addition, American List and Acquisition have agreed
through their respective Boards of Directors to recommend to their respective
stockholders adoption of such matters; provided, however, that the American List
Board may withdraw its recommendation if it determines by a majority vote, in
its good faith judgment, after consultation with independent legal counsel, that
it is required to do so to comply with its fiduciary duties to stockholders
under applicable law (SECTIONS 4.3 AND 4.6).
The American List Board will consider a variety of factors when deciding
whether to withdraw its recommendation, including, without limitation, the price
of Snyder Common Stock, the price of American List Common Stock, the prospects
for each company, the advice of its independent legal counsel and financial
advisers, the proposals of any other potential acquirors and general economic
and market conditions. If the American List Board believes that it is no longer
in the best interests of the American List stockholders to proceed with the
Merger, the American List Board will be required, in the exercise of its
fiduciary duties, to recommend a vote against the Merger.
Benefit Plans. Snyder has agreed that, for a period of at least one year
following the Closing, Snyder will use commercially reasonable best efforts to
continue to provide to the employees of the Surviving Corporation and its
subsidiaries American List's Oxford health plan as currently in effect, or if
not practicable, benefits at least as favorable to the benefits currently
provided under the Oxford plan. Snyder has agreed to waive any pre-existing
condition exclusions and actively-at-work requirements and to take into account
expenses incurred prior to the Effective Time to the extent allowable under
American List's benefit plans, for purposes
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of satisfying deductible, coinsurance and maximum out-of-pocket provisions of
Snyder benefit plans providing medical or dental welfare benefits. In addition,
Snyder has agreed to grant all American List employees credit for all service
with American List and its predecessors for all purposes under its benefit plans
(SECTION 4.16).
Other Potential Acquirors. American List has agreed that American List,
its affiliates and their respective officers, directors, employees,
representatives and agents will cease any existing discussions or negotiations,
if any, with any parties conducted prior to the date of the Merger Agreement
with respect to any acquisition of all or any material portion of the assets of,
or any equity interest in, American List or its subsidiaries or any business
combination with American List or its subsidiaries. However, American List may,
directly or indirectly, furnish information and access, in each case only in
response to unsolicited requests therefor, to any corporation, partnership,
person or other entity or group pursuant to confidentiality agreements, and may
participate in discussions and negotiate with such entity or group concerning
any merger, sale of assets, sale of shares of capital stock or similar
transaction involving American List or any subsidiary or division of American
List, if such entity or group has submitted a proposal to the American List
Board relating to any such transaction and the American List Board determines in
its good faith judgment, after consultation with independent legal counsel, that
it is required to do so to comply with its fiduciary duties to stockholders
under applicable law.
The American List Board has agreed to (i) provide a written notice to
Snyder and Acquisition describing in reasonable detail the material terms and
conditions of any such proposal as promptly as reasonably practicable following
prompt consideration thereof by the American List Board, and (ii) keep Snyder
and Acquisition advised of material developments with respect thereto as
promptly as reasonably practicable. Except as set forth above, American List has
agreed that neither it nor any of its affiliates will, nor will American List
authorize or permit any of its or their respective officers, directors,
employees, representatives or agents, to directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Snyder and Acquisition, any affiliate or associate of Snyder
and Acquisition or any designees of Snyder and Acquisition) concerning any
merger, sale of assets, sale of shares of capital stock or similar transaction
involving American List or any subsidiary or division of American List;
provided, however, that the American List Board is permitted to take and
disclose to American List's stockholders a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any tender offer and
the American List Board may make such disclosure as in the good faith judgment
of the American List Board, after consultation with independent legal counsel,
is required to comply with its fiduciary duties to stockholders under applicable
law (SECTION 4.4).
The American List Board in the exercise of its fiduciary duties to its
stockholders will negotiate with another potential acquiror only if such
potential acquiror submits a proposal deemed by the American List Board to be
clearly superior to the terms of the Merger, taking into account the fees and
expenses American List would be required to pay in connection with terminating
the Merger. Such an analysis would take into consideration the price of Snyder
Common Stock and the prospects for Snyder Common Stock in the future. If, after
weighing the benefits of an alternative proposal, the American List Board
determined that in spite of the costs and risks associated with not consummating
the Merger, the alternative proposal was clearly superior to the Merger, the
American List Board may be required to recommend to the American List
stockholders in favor of such alternative proposal and recommend against
consummation of the Merger.
Indemnification and Insurance of Directors and Officers. Snyder and
Acquisition have agreed that all rights to indemnification or exculpation now
existing in favor of the directors, officers, employees and agents of American
List and its subsidiaries as provided in their respective charters or bylaws (or
other similar governing instruments) or otherwise in effect with respect to
matters occurring prior to the Effective Time will survive the Merger and will
continue in full force and effect for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in respect of a
claim asserted or made within such period will continue until the disposition of
such claim. To the maximum extent permitted by the DGCL, such indemnification
will be mandatory rather than permissive and the Surviving Corporation will
advance expenses in connection with such indemnification to the fullest extent
permitted under applicable law, provided that the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
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determined that such person is not entitled to indemnification; provided,
however, that the indemnification provided under the Merger Agreement will not
be greater than the indemnification permissible pursuant to American List's or
its subsidiaries' respective charters and bylaws (or other similar governing
instruments) (SECTION 4.12).
Snyder has agreed to cause the Surviving Corporation to maintain in effect
for not less than three years from the Effective Time policies of directors' and
officers' liability and fiduciary insurance substantially on the terms pursuant
to which Snyder's directors currently are insured with respect to claims arising
from facts or events occurring prior to the Effective Time to cover the types of
actions and omissions with respect to which Snyder's directors are currently
insured (provided that the Surviving Corporation will not be required to pay an
annual premium for such insurance in excess of 200% of the premiums paid as of
the Effective Time for such insurance, but in such case will be required to
purchase as much coverage as possible for such amount) (SECTION 4.12).
Pooling. American List and Snyder each has agreed that it will not take
any action which could prevent the Merger from being accounted for as a
"pooling-of-interests" for accounting purposes and American List has agreed to
bring to the attention of Snyder, and Snyder has agreed to bring to the
attention of American List, any actions, or agreements or understandings,
whether written or oral, that could be reasonably likely to prevent Snyder from
accounting for the Merger as a "pooling-of-interests." Concurrently with the
Merger Agreement, Arthur Andersen and Grant Thornton delivered to Snyder and
American List, respectively, letters to the effect that Snyder and American
List, respectively, qualify for pooling-of-interest accounting. Snyder and
American List have each agreed to use commercially reasonable efforts to cause
Arthur Andersen and Grant Thornton, respectively, to deliver to Snyder and
American List, respectively, updating confirmations of their respective letters,
upon the filing of the Registration Statement and the mailing of the Proxy
Statement/Prospectus (SECTION 4.14).
Other Covenants. Each of Snyder, Acquisition and American List has agreed
to use its best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including, without
limitation: (i) cooperation in the preparation and filing of the Proxy
Statement/Prospectus and the Registration Statement, any filings that may be
required under the HSR Act, and any amendments to any thereof; (ii) contesting
any legal proceeding relating to the Merger; and (iii) the execution of any
additional instruments, including the Certificate of Merger, necessary to
consummate the transactions contemplated by the Merger Agreement. In addition,
Snyder and Acquisition have agreed to use all reasonable efforts to cause the
Effective Time to occur as soon as practicable after the stockholder vote with
respect to the Merger (SECTION 4.9).
American List also has agreed to use its best efforts to cause to be
delivered to Snyder a letter of Grant Thornton and Snyder has agreed to use its
best efforts to cause to be delivered to American List a letter of Arthur
Andersen, in each case dated a date within two business days before the date on
which the Registration Statement will become effective, in form and substance
reasonably satisfactory to the recipients and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement (SECTION 4.5).
CONDITIONS TO THE MERGER
The respective obligations of each of Snyder, American List and Acquisition
to effect the Merger are subject to the following conditions, among others: (i)
the Merger Agreement shall have been adopted by the requisite vote of the
stockholders of American List; (ii) no statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any United States court or United States governmental
authority which prohibits, restrains, enjoins or restricts consummation of the
Merger; (iii) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated by
the Merger Agreement shall have been either filed or received; (iv) the
Registration Statement shall have become effective under the Securities Act and
shall not be the subject of any stop order
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or proceedings seeking a stop order, and Snyder shall have received all state
securities laws or "blue sky" permits and authorizations necessary to issue
shares of Snyder Common Stock in exchange for the shares of American List Common
Stock; (v) Snyder shall have received a letter from Arthur Andersen, to the
effect that the Merger will be accounted for under GAAP as a
pooling-of-interests, and such opinion shall not have been withdrawn or modified
in any material respect; and (vi) the Employment Agreements shall be in full
force and effect (SECTION 5.1).
The obligation of American List to effect the Merger is subject to the
following additional conditions: (i) the representations of Snyder and
Acquisition contained in the Merger Agreement or in any other document delivered
pursuant thereto shall be true and correct in all material respects at and as of
the Effective Time with the same effect as if made at and as of the Effective
Time; (ii) each of the obligations of Snyder and Acquisition to be performed at
or before the Effective Time shall have been duly performed in all material
respects at or before the Effective Time; (iii) the shares of Snyder Common
Stock issuable to the American List stockholders and such other shares required
to be reserved for issuance in connection with the Merger have been authorized
for listing on the NYSE upon official notice of issuance; (iv) the opinion of
Schulte Roth & Zabel LLP, its counsel, to the effect that the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code; (v) Snyder shall have obtained the
consent or approval of each person whose consent or approval is required in
connection with the transactions contemplated by the Merger Agreement, except
those for which the failure to obtain such consent or approval would not, in the
reasonable opinion of American List, individually or in the aggregate, have a
Material Adverse Effect on Snyder; and (vi) there shall not have occurred any
events, changes or effects with respect to Snyder or its subsidiaries having or
which could reasonably be expected to have a Material Adverse Effect on Snyder
(SECTION 5.2).
The obligations of Snyder and Acquisition to effect the Merger are further
subject to the following additional conditions: (i) the representations of
American List contained in the Merger Agreement or in any other certificate
delivered pursuant thereto shall be true and correct in all material respects at
and as of the Effective Time with the same effect as if made at and as of the
Effective Time; (ii) each of the obligations of American List to be performed at
or before the Effective Time shall have been duly performed in all material
respects at or before the Effective Time; (iii) each American List Affiliate and
each stockholder which is a party to the Stockholders Agreement having performed
in all material respects his or its obligations under the applicable affiliate
letter and/or Stockholders Agreement (if applicable), and Snyder shall have
received a certificate signed by each of them to such effect; (iv) American List
shall have obtained the consent or approval of each person whose consent or
approval will be required in order to permit the succession by the Surviving
Corporation pursuant to the Merger to any obligation, right or interest of
American List or any of its subsidiaries, except those for which the failure to
obtain such consents and approvals would not, in the reasonable opinion of
Snyder, individually or in the aggregate, have a Material Adverse Effect on
American List; and (v) there shall not have occurred any events, changes or
effects with respect to American List or its subsidiaries having or which could
reasonably be expected to have a Material Adverse Effect on American List
(SECTION 5.3).
TERMINATION
Termination by Mutual Consent. The Merger Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time by the mutual
written consent of Snyder, Acquisition and American List (SECTION 6.1).
Termination by Either Snyder and Acquisition or by American List. The
Merger Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time by Snyder and Acquisition or by American List if: (i) any
court of competent jurisdiction in the United States or another United States
governmental authority issues a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action has become nonappealable, or (ii) the
Merger has not been consummated by August 15, 1997 (provided that such right to
terminate will not be available to a party whose failure to fulfill any
obligation under the Merger Agreement is the reason that the Merger failed to
occur on or before such date) (SECTION 6.1).
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Termination by Snyder and Acquisition. The Merger Agreement may be
terminated and the Merger abandoned at any time prior to the Effective Time by
Snyder and Acquisition if: (i) there shall have occurred a breach of any
representation or warranty of American List set forth in the Merger Agreement or
if any representation or warranty of American List shall have become untrue, in
either case such that the conditions to the obligations of Snyder and
Acquisition to effect the Merger set forth in the Merger Agreement with respect
to such representations and warranties being true and correct in all material
respects would be incapable of being satisfied by August 15, 1997 (or any
extension of such date); (ii) there shall have occurred a breach by American
List of its covenants or agreements under the Merger Agreement having a Material
Adverse Effect on American List or materially adversely affecting (or materially
delaying) the consummation of the Merger, and American List shall not have cured
such breach within 20 business days after notice by Snyder and Acquisition
thereof, provided that neither Snyder nor Acquisition has breached any of their
respective obligations under the Merger Agreement; (iii) American List enters
into a definitive agreement relating to any Third Party Acquisition (as defined
in the Merger Agreement); (iv) the American List Board shall have withdrawn,
modified or changed its approval or recommendation of the Merger Agreement or
the Merger, shall have recommended to the American List Stockholders a Third
Party Acquisition or shall have adopted any resolution to effect any of the
foregoing; (v) the Average Final Closing Price is less than $24.00; or (vi)
American List shall have convened a meeting of its stockholders to vote upon the
Merger and failed to obtain the requisite vote of its stockholders in respect of
the Merger Agreement (SECTION 6.1).
Termination by American List. The Merger Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time by American List
if: (i) there shall have occurred a breach of any representation or warranty on
the part of Snyder or Acquisition set forth in the Merger Agreement, or any
representation or warranty of Snyder or Acquisition otherwise shall have become
untrue, in either case such that the conditions to American List's obligation to
effect the Merger set forth in the Merger Agreement with respect to such
representations and warranties being true and correct in all material respects
would be incapable of being satisfied by August 15, 1997 (or any extension of
such date); (ii) there shall have occurred a breach by Snyder or Acquisition of
any of their respective covenants or agreements hereunder having a Material
Adverse Effect on Snyder or materially adversely affecting (or materially
delaying) the consummation of the Merger, and Snyder or Acquisition, as the case
may be, shall not have cured such breach within 20 business days after notice by
American List thereof, provided that American List has not breached any of its
obligations under the Merger Agreement; (iii) American List enters into a
definitive agreement relating to a Superior Proposal (as defined in the Merger
Agreement), provided that such termination will not be effective unless American
List has complied with the provisions of the Merger Agreement relating to
potential acquirors and until payment of the termination fee; or (iv) the
Average Final Closing Price is less than $20.00 (SECTION 6.1).
Effect of Termination. Generally, if the Merger Agreement is terminated as
described above, the Merger Agreement will become void and have no effect,
without any liability to Snyder, Acquisition or American List (or any of their
respective affiliates, directors, officers or stockholders), except for the
termination and other fees payable under the circumstances described in those
provisions of the Merger Agreement relating to termination of the Merger
Agreement, access to information, fees and expenses and brokers (SECTION 6.2).
FEES AND EXPENSES
Except as set forth below, each of Snyder, Acquisition and American List
has agreed to bear its own expenses in connection with the Merger, and the cost
of printing the Registration Statement and this Proxy Statement/Prospectus and
the filing fees payable to the Commission in connection therewith will be borne
equally by Snyder and American List (SECTION 6.3).
If the Merger Agreement is terminated (i) by American List in the case
American List enters into a definitive agreement relating to a Superior
Proposal, (ii) by Snyder and Acquisition in the case American List enters into a
definitive agreement relating to any Third Party Acquisition, or (iii) by Snyder
and Acquisition in the case of the American List Board having withdrawn,
modified or changed its approval or recommendation of the Merger Agreement or
the Merger, recommended to American List's stockholders a Third Party
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Acquisition, or adopted a resolution to effect any such matters: then, American
List will be required to pay to Snyder liquidated damages in the amount of
$5,000,000 (less amounts previously paid to Snyder, Acquisition and their
affiliates, in an aggregate amount not to exceed $1,000,000, for out-of-pocket
expenses as described in clauses (iii) and (iv) of the succeeding paragraph),
payable (A) immediately upon demand under the circumstances described in clause
(iii) above and (B) concurrently with entering into such agreements, under the
circumstances described in clauses (i) and (ii) above (SECTION 6.3).
If Snyder and Acquisition terminate the Merger Agreement as a result of (i)
the breach by American List of any of its representations or warranties set
forth in the Merger Agreement or the inaccuracy thereof such that the conditions
to Snyder's obligation under the Merger Agreement to effect the Merger would not
be capable of being satisfied by August 15, 1997 (or any extension of such
date), (ii) the breach by American List of any of its covenants or agreements
under the Merger Agreement having a Material Adverse Effect on American List or
materially adversely affecting (or materially delaying) consummation of the
Merger and American List has not cured such breach within 20 business days after
notice thereof by Snyder, (iii) American List enters into a definitive agreement
relating to any Third Party Acquisition, (iv) the American List Board has
withdrawn, modified or changed its prior approval or recommendation of the
Merger Agreement or the Merger, has recommended to the American List
stockholders a Third Party Acquisition or has adopted any resolution to effect
any of the foregoing, or (v) American List shall have convened a meeting of its
stockholders to vote on the Merger and failed to obtain the requisite vote in
respect of the Merger Agreement, American List has agreed to reimburse Snyder,
Acquisition and their affiliates for all actual documented out-of-pocket fees
and expenses actually and reasonably incurred by any of them or on their behalf
in connection with the Merger (including certain professional advisory fees) in
an amount not to exceed $1,000,000. If American List terminates the Merger
Agreement as a result of (i) the breach by Snyder or Acquisition of any of their
representations or warranties set forth in the Merger Agreement or the
inaccuracy thereof such that the conditions to American List's obligation under
the Merger Agreement to effect the Merger would not be capable of being
satisfied by August 15, 1997 (or any extension of such date) or (ii) the breach
by Snyder or Acquisition of any of their respective covenants or agreements
under the Merger Agreement having a Material Adverse Effect on Snyder or
materially adversely affecting (or materially delaying) consummation of the
Merger and Snyder or Acquisition, as the case may be, has not cured such breach
within 20 business days after notice thereof by American List, Snyder has agreed
to reimburse American List and its affiliates for all actual documented
out-of-pocket fees and expenses actually and reasonably incurred by them in
connection with the Merger (including certain professional advisory fees) in an
amount not to exceed $1,000,000 (SECTION 6.3).
MODIFICATION OR AMENDMENT
The Merger Agreement may be amended by action taken by American List,
Snyder and Acquisition at any time before or after approval of the Merger by the
stockholders of American List but, after any such approval, no amendment may be
made which requires the approval of such stockholder under applicable law
without such approval. The Merger Agreement may not be amended except by an
instrument in writing signed on behalf of the parties to the Merger Agreement
(SECTION 6.4).
WAIVER
At any time prior to the Effective Time, Snyder, American List or
Acquisition may, in writing (i) extend the time for the performance of any of
the obligations or other acts of the other party to the Merger Agreement; (ii)
waive any inaccuracies in the representations and warranties of the other party
contained in the Merger Agreement or in any document, certificate or writing
delivered pursuant to the Merger Agreement; or (iii) waive compliance by the
other party with any of the agreements or conditions contained in the Merger
Agreement (SECTION 6.5).
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CERTAIN INFORMATION REGARDING SNYDER
GENERAL
Snyder is a rapidly growing provider of innovative and value-added targeted
outsourced marketing services. Snyder designs and implements specialized sales
and marketing programs primarily for Fortune 500 companies. Snyder's specialized
sales and marketing programs include the development of strategic marketing
plans, the production of marketing materials, the management of clients'
customer databases, the implementation of marketing plans with leads generated
by, among other things, Snyder's demographic marketing database and the
enrollment of new customers. Snyder's clients are primarily companies with large
annual marketing expenditures facing significant competitive pressures to retain
or expand market share in various industries, including telecommunications,
pharmaceuticals, financial services, business products and services, and
consumer packaged goods. As of December 31, 1996 and based on 1996 revenues, the
ten largest clients of Snyder, listed alphabetically, were AT&T, Gerber Products
Company ("Gerber"), Hoechst Marion Roussel, Kellogg U.S.A., Inc. ("Kellogg"),
Kraft Foods, Inc. ("Kraft"), MCI, The Prudential Insurance Company of America,
the Quaker Oats Company ("Quaker Oats"), Reckitt & Colman, Inc., and Ross/Abbott
Labs.
Snyder has historically specialized primarily in channeling products and
services from large clients in competitive marketing-intensive businesses to
consumers in high-value, hard-to-reach, growing market niches, with a focus on
multi-cultural and elderly markets. Through these efforts Snyder has developed a
pool of field sales representatives and teleservices associates who can market
in 32 different foreign languages, and a demographic marketing database which
includes the names of approximately 18 million households and approximately two
million small businesses in the United States.
Since January 1, 1997, Snyder has expanded the scope and extent of the
marketing services it can provide its clients through three acquisitions:
- On January 6, 1997, Snyder acquired MMD in a merger transaction in which
MMD became a wholly-owned subsidiary of Snyder. In the acquisition,
Snyder issued 1,354,500 shares of Snyder Common Stock for all of the
issued and outstanding stock of MMD. In connection with the acquisition,
Snyder also retained Barbara Saltzman, the President of MMD, and other
key officers of MMD to manage MMD's day-to-day operations after the
acquisition. MMD provides outsourced medical sales and marketing services
and has over 1,500 detailing representatives conducting sales and
marketing programs for some of the world's premier pharmaceutical
companies. MMD's clients include, alphabetically, Bayer, BMS, Novartis
and Wyeth-Ayerst Division of American Home Products ("Wyeth-Ayerst"). The
acquisition of MMD not only allows Snyder to offer its clients the
services of MMD's detailing representatives but also expands Snyder's
business relationships within the pharmaceutical industry.
- On January 17, 1997, Snyder acquired Good Neighbor for approximately
$4,150,000 in cash. Good Neighbor provides marketing services through
information centers located in over 7,000 targeted retail outlets
throughout the United States. Through the acquisition of Good Neighbor,
Snyder increased its information display locations throughout the United
States to over 26,000.
- On March 27, 1997, Snyder acquired Brann, a U.K. company, in a share
exchange in which Brann became a wholly-owned subsidiary of Snyder. In
the acquisition, Snyder agreed to issue 2,350,152 shares of Snyder Common
Stock and 389,730 options for Snyder Common Stock in exchange for all the
issued and outstanding ordinary shares and options for ordinary shares of
Brann, respectively. In addition, all of Brann's outstanding redeemable
preference shares, valued at $5,035,000 including accrued dividends
through March 21, 1997, were redeemed in cash. In connection with the
acquisition, Snyder also retained Chris Gater, the Chief Executive of
Brann, and other key officers of Brann to manage Brann's day-to-day
operations after the acquisition. Brann is a leading provider of
integrated targeted marketing services in the U.K., and it offers a full
range of creative, telemarketing and database services to over 70 large
corporations, government agencies, and charitable organizations. Clients
of Brann include, alphabetically, Barclays Bank plc, Microsoft Ltd.,
Midland Bank, Peugeot
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Motor Company plc, The Salvation Army and Unilever plc. The acquisition
of Brann significantly strengthens Snyder's presence in the U.K. Snyder
believes that Brann's infrastructure, existing client relationships and
position as a leading provider of targeted marketing services in the U.K.
provide Snyder with the opportunity to significantly expand its
relationships with existing multinational clients and to attract new
European-based and multinational clients.
Snyder is currently considering several acquisitions and expects to
continue to consider growth opportunities through additional complementary
acquisitions, which may include payments in cash or the issuance of additional
shares of Snyder Common Stock, although there are no definitive agreements or
arrangements to do so at this time.
Snyder's 1996 revenues were $82.8 million, MMD's 1996 revenues were $37.1
million, and Brann's 1996 revenues were $65.5 million. If MMD and Brann had been
wholly-owned subsidiaries of Snyder in 1996, the ten largest clients of Snyder,
listed alphabetically and based on 1996 revenues on a consolidated basis, would
have been AT&T, Barclays Bank plc, Bayer, BMS, Imperial Cancer Research Fund,
MCI, Microsoft Ltd., Novartis, Royal Mail, and Zurich Municipal.
MARKETING PROGRAMS
Snyder's marketing programs utilize the resources of one or more of
Snyder's five service groups, depending on the client's needs. Snyder's five
service groups are: Direct Services, Media and Sampling Services, Medical
Services, Data Delivery Services and International Services.
DIRECT SERVICES. The Direct Services group uses field sales and
teleservices to procure customers for Snyder's clients. Historically, such
programs have been directed primarily at multi-cultural residential and
small-business customers. If MMD and Brann had been wholly-owned subsidiaries of
Snyder in 1996, Direct Services would have accounted for 37% of Snyder's 1996
revenues on a consolidated basis.
Field Sales. Using field sales (face-to-face) and event marketing,
Snyder's field sales representatives make face-to-face contact with potential
customers at the customers' homes or offices and at local cultural events. Field
sales representatives who are targeting consumer residential customers focus
their sales efforts on event marketing, mainly at fairs, festivals, and shopping
malls. Field sales representatives who are targeting business customers
typically call on small businesses either on a "cold call" basis, or
increasingly from leads generated by Snyder's direct mail or telemarketing
efforts. The productivity of the field sales representatives is enhanced by the
fact that they generally live in the area in which they are soliciting business.
Snyder's field sales representatives currently market in 32 different foreign
languages and well over half of Snyder's Direct Services field sales
representatives are bilingual. As of March 31, 1997, Snyder had over 1,000 field
sales representatives working in its Direct Services group in 38 offices in 15
states and the District of Columbia.
Teleservices. Prospective customers may also be contacted by telephone.
Snyder's teleservices associates operating within the Direct Services group, who
are all bilingual, use an internally prepared sales script to market the
client's products or services. Teleservices associates in Snyder's U.S. call
centers use a computerized call management system that employs state-of-the-art
call routing and predictive dialing technologies. As of March 31, 1997, Snyder
had a total of 589 call stations and over 570 teleservices associates in the
United States.
The Direct Services group provides services for a number of clients,
including, listed alphabetically, AT&T, DHL Airways Inc. ("DHL"), Enron Capital
& Trade Resources Corp. ("Enron") and Foundation Health. These clients
illustrate the breadth of products and services for which Snyder provides
targeted marketing services. Snyder markets long-distance telecommunications
services on behalf of AT&T, U.S-origin overnight package delivery services on
behalf of DHL, natural gas and electrical supply services on behalf of Enron and
membership in certain managed health care plans for Foundation Health. Snyder's
contracts with its Direct Services clients are typically multi-year contracts,
under which Snyder is typically paid only for successful performance. Many of
Snyder's contracts in the Direct Services group limit the ability of Snyder to,
or prevent Snyder from, working for the client's competitors during the term of
the contract and, in some cases, for a defined period after termination.
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AT&T is a significant client for the Direct Services group. If MMD and
Brann had been wholly-owned subsidiaries of Snyder in 1996, AT&T would have
accounted for 27% of Snyder's 1996 revenues on a consolidated basis.
Under Snyder's original direct sales contract with AT&T, Snyder provides
field sales and teleservices for AT&T's Foreign-Origin Consumer Market and
provides field sales for AT&T's U.S. residential customers who are not part of
the Foreign-Origin Consumer Market (the "Domestic Consumer Market"). This
contract, which relates to the Foreign-Origin Consumer Market, runs through
December 1997, subject to AT&T's right to seek to renew the contract upon terms
mutually agreeable to AT&T and Snyder.
AT&T enjoys certain exclusivity rights under this contract with respect to
the Foreign-Origin Consumer Market. During the term of the contract, Snyder
cannot, for any other long-distance telecommunications company, target the
Foreign-Origin Consumer Market by (i) creating or distributing customized
application brochures to be inserted in the publications in which such brochures
are placed by Snyder on behalf of AT&T, or (ii) offering programs similar to
those offered to AT&T under the contract. In addition, during the term of the
contract, if Snyder wishes to institute any other marketing program that
involves long-distance telecommunications services targeted to the
Foreign-Origin Consumer Market, AT&T has an exclusive 45-day period in which to
negotiate with Snyder with respect to such program. Until 30 days following
termination of the contract, Snyder can neither provide, nor enter into
negotiations or discussions to provide, customer acquisition services for
long-distance telecommunications services targeted to the Foreign-Origin
Consumer Market for any other telecommunications company.
Snyder's arrangement with AT&T relating to field sales for the Domestic
Consumer Market is not reflected in a formal contract. Snyder has provided these
services since September 1995. AT&T compensates Snyder based upon the types of
customers enrolled by Snyder and certain other criteria with respect to the
enrolled customers.
In December 1996, Snyder entered into a two-year contract to provide
"turn-key" marketing services to AT&T to acquire new business customers for
AT&T. Snyder will assist AT&T in signing up small and medium-sized business
customers to its long distance, Intralata (long distance service within one area
code), toll-free and calling card services. The new AT&T contract runs through
December 31, 1998, and is subject to automatic renewal for an additional year
unless either Snyder or AT&T gives 90 days prior written notice of its intention
not to renew. Snyder's marketing efforts on behalf of AT&T with respect to small
business customers is subject to a six-month trial period ending June 30, 1997,
at which time AT&T may, but is not obligated to, extend the time in which Snyder
may market to small business customers on behalf of AT&T. In addition, during
the term of the agreement Snyder cannot market products competitive with the
products it markets on behalf of AT&T to the markets and in the areas it markets
on behalf of AT&T. Concurrently with entering into the new contract with AT&T,
Snyder terminated its existing contract with MCI, under which it provided
marketing and sales services to MCI targeting small business customers.
MEDIA AND SAMPLING SERVICES. The Media and Sampling Services group uses
WallBoard(R) information displays, Good Neighbor information centers and sample
pack distributions to reach potentially high-value market segments at the time
that the target customers are most likely to use the products. If MMD and Brann
had been wholly-owned subsidiaries of Snyder in 1996, Media and Sampling
Services would have accounted for approximately 8% of Snyder's 1996 revenues on
a consolidated basis.
WallBoard(R) Information Displays. WallBoards(R) are framed information
and advertisement displays that are mounted on a wall. WallBoards(R) present
educational, editorial and product information targeted to specific user groups.
They are located in areas where the targeted customers are likely to be waiting
for a service, such as the offices of specialty health-care providers,
child-care centers and corporate airport terminals. Most of Snyder's
WallBoards(R) are strategically located to provide information to targeted
consumers at a time when the customers are likely to be interested in receiving
information and trying new products. Each WallBoard(R) location is available
only to Snyder under a two- or three-year exclusive agreement, with automatic
renewal provisions. WallBoard(R) locations provide the WallBoard(R) free of
charge because of its perceived benefit to the targeted audience. Two examples
of Snyder's WallBoard(R) information displays are the Heart Health WallBoard(R),
which targets cardiology patients, and the Your Kids WallBoard(R),
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which targets working parents. Sponsors of Snyder's WallBoard(R) information
displays include, alphabetically, Gerber, Hoechst Marion Roussel, Kellogg and
Quaker Oats. Each of the WallBoard(R) sponsors has "category exclusivity" for
their product in their program.
To enhance the editorial quality of its WallBoards(R), Snyder has also
established alliances with associations that specialize in the targeted areas,
such as the American Heart Association, the National Child Care Association, the
Arthritis Foundation and the Children's National Medical Center. As of April 1,
1997, there were 14 different WallBoard(R) programs displayed in approximately
19,600 locations throughout the United States.
Information Centers. As a result of its acquisition of Good Neighbor,
Snyder has expanded its marketing services capacity to include information
centers in over 7,000 targeted retail outlets. The Good Neighbor information
centers are displays which include pockets for take-one literature, tear off
pads for the distribution of rebate offers and recipes, mini-posters which
contain consumer information and commercial messages, and free ad cards for
individuals to offer products or services. Participating locations sign one-,
two-or three-year agreements stating that the Good Neighbor information center
will be the only external bulletin board allowed at the location during that
time. In return, the locations are either paid a small yearly fee or provided
other services by Snyder. Unlike the WallBoard(R) and sample pack programs,
however, the sponsors of the Good Neighbor program typically do not receive
"category exclusivity" for their products.
Sample Packs. Sample packs are small cardboard boxes containing a variety
of sample products, coupons, and literature. They are given away free in areas
where targeted customers are frequently present, such as fitness centers,
child-care centers, and the offices of specialty health-care providers.
Participating locations sign a two- or three-year exclusive agreement stating
that the pack will be the only sampling program allowed at the location during
that time. Similar to WallBoards(R), sample packs distribute products and
information to targeted customers at a time when they are usually most
interested in trying new products. Three examples of Snyder's sample pack
programs are the New Member Pack, which is distributed at fitness centers, the
Diabetes Pack, which is distributed to diabetes patients by specialty
health-care providers, and the Arthritis Pack, which is distributed to arthritis
patients by specialty health-care providers.
Sponsors of Snyder's sample packs include, alphabetically, Kellogg, Kraft,
Reckitt & Colman, Inc. and Ross/Abbott Labs, among others. Each sponsor has
"category exclusivity" within the sampling pack, such that there are no
competing products in the pack.
As with its WallBoards(R) programs, Snyder is able to leverage its
alliances with leading associations, such as the American Diabetes Association,
which has permitted Snyder to print the association's logo on the outside of the
Diabetes Pack, and the Arthritis Foundation, which has permitted Snyder to print
the foundation's logo on the Arthritis Pack. As of March 31, 1997, there were
seven different sample pack programs and approximately 4,500,000 sample packs
were distributed during 1996.
MEDICAL SERVICES. The Medical Services group currently consists of the
business operations acquired in connection with the acquisition of MMD. The
Medical Services group uses field sales to procure customers for Snyder's
pharmaceutical clients through a process known as "detailing." Pharmaceutical
detailing entails a presentation to a physician by a field representative,
during which the features and benefits of a drug are discussed and product
literature and samples are provided to the physician. Snyder focuses its direct
detailing and selling on physicians, pharmacists and long-term care facilities.
As of March 31, 1997, the Medical Services group employed approximately 1,500
field representatives located throughout the United States who operate as
independent contractors and are typically paid based on "completed calls." A
completed call is generally defined as a face-to-face meeting by a field
representative with a physician. At any particular time, each field
representative typically details one or more pharmaceutical products for one
client. Snyder seeks to hire individuals with medical or scientific backgrounds
for its field representatives. More specifically, most of the field
representatives have experience in sales of pharmaceutical products. In
addition, each field representative undergoes specialized training before
providing detailing services on behalf of clients in order to familiarize
himself or herself with the products being detailed. The Medical Services group
also employs field managers located throughout the United States. As of March
31, 1997, the Medical Services group employed approximately 90 field managers.
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Snyder's contracts for its Medical Services range from six months to three
years in duration, many of which are subject to termination by the client upon
60 days prior notice. If MMD and Brann had been wholly-owned subsidiaries of
Snyder in 1996, Bayer, BMS, and Novartis collectively would have accounted for
approximately 16% of Snyder's 1996 revenues on a consolidated basis. Generally,
each Medical Services client contract provides for the detailing of between one
and three pharmaceutical products. Such contracts also provide for payment based
on each completed call by a field representative.
BMS is a significant client of the Medical Services group, which would have
represented 9.8% of Snyder's 1996 revenue on a consolidated basis had MMD and
Brann been wholly-owned subsidiaries of Snyder in 1996. MMD has performed
medical detailing services for BMS since 1993. The current contract runs through
December 1999, subject at that time to the option of BMS to extend the term for
an additional three years. The agreement is subject to termination by BMS upon
60 days prior notice.
Snyder is paid under the contract on the basis of the number of "details"
it performs for BMS each month and may also be entitled to an additional
quarterly attainment fee depending on the ratio of actual factory sales to
budgeted factory sales of the products detailed by Snyder. In addition, Snyder's
aggregate payments received under the contract cannot exceed $20,000,000 per
year without the consent of BMS.
DATA DELIVERY SERVICES. The Data Delivery Services group develops and
maintains a demographic marketing database that includes data about
approximately 18 million households and 2 million small businesses in the United
States. Because this database is owned by Snyder, it is able to utilize the
database for multiple client contracts and at various purchase points in a
customers' life cycle. This database has been used to support Snyder's Direct
Services marketing efforts and to deliver direct mail pieces to targeted
markets. With respect to direct mailings, Snyder assumes responsibility for the
editorial content and graphic design of the direct mail pieces, arranges for the
mailings to be printed, executes the direct mail campaign and handles inbound
responses to the mailings through its teleservices facilities. The responses to
the direct mailings are input into Snyder's demographic marketing database and
provide leads for field sales and teleservices representatives. As of March 31,
1997, client contracts which provide for data delivery services include Echostar
Communications Corporation, Foundation Health, and Lucent Technologies, BCS.
Typically, Snyder is paid for such services for each piece mailed.
The Data Delivery Services group represented only a small portion of
Snyder's revenue in 1996. Snyder expects that the revenues from its existing
Data Delivery Services group will increase during 1997 as compared to 1996. In
addition, if the Merger is approved and consummated as described herein,
American List's operations will become part of the Data Delivery Services group.
INTERNATIONAL SERVICES. The International Services group consists
primarily of contracts and infrastructure acquired in connection with the
acquisition of Brann. As of March 31, 1997, approximately 760 people were
employed in the International Services group, operating out of five facilities
located in the United Kingdom. The International Services group provides
marketing services to over 70 large corporations, government agencies, and
charitable organizations, including, alphabetically, Barclays Bank plc,
Microsoft Ltd., Midland Bank, Peugeot Motor Company plc, The Salvation Army and
Unilever plc.
Snyder's International Services group provides a variety of targeted
marketing services for its clients. The International Services group seeks to
provide its clients with "turn-key" marketing services, and can provide
marketing services to its clients throughout the marketing cycle, from marketing
campaign development through implementation. Snyder's clients in the
International Services group typically enter into contracts for services ranging
in duration from a few months (for project-specific assignments) to two- to
three-years. Snyder is typically paid on the basis of the resources devoted to
the client under these contracts, either on a monthly fee basis or on a project
budget basis. These services are identified by five functional areas, which are
utilized to varying degrees depending on the client's need: consulting services,
creative services, database management, teleservices, and printed
communications. If MMD and Brann had been wholly-owned subsidiaries of Snyder in
1996, International Services would have accounted for approximately 35% of
Snyder's 1996 revenues on a consolidated basis.
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Consulting Services. The consulting services unit's goal is to become a
partner in the direct marketing and customer development process of the
International Services group's clients. The consulting services unit provides a
wide variety of strategic, planning and management services for the
International Services group's clients, including creating strategic marketing
plans, analyzing market information, defining target audiences, planning and
purchasing media campaigns, and managing marketing campaigns. Typically
specified individuals from the consulting services unit are dedicated to a
client's project, improving continuity and client coordination during the
execution of the project.
Creative Services. The creative services unit develops in conjunction with
the client the ideas and content to execute the client's marketing campaign. The
creative services unit's activities might include for a particular client the
creation and execution of a direct mail campaign, the creation of insert or door
drop pieces, the development of sales literature, videos, or media advertising,
or the development of new media applications, such as web sites and CD-ROMs.
Database Management. The database management unit builds and runs customer
information systems, databases and direct marketing systems for Snyder's
International Services clients on dedicated computer hardware housed in Snyder's
International Services facilities. Approximately 110 employees work in database
management.
Teleservices. Snyder's 200-work station call center in Bristol, England
provides teleservices for its International Services clients. There are
approximately 310 teleservices employees in the International Services group, of
which 100 are full-time and 210 are part-time, giving a total full-time
equivalent work force of 240 employees. During 1996, and based on 1996 revenues,
approximately 90% of such services involved inbound teleservices, and 10%
involved outbound teleservices. In contrast to the Direct Services teleservices
unit, the International Services teleservices unit focuses more on customer
assistance and follow-up than customer acquisition.
Printed Communications. The printed communications unit supports the
marketing efforts of the International Services group through its printing
capabilities. Fewer than one-half of the direct mail pieces, inserts, sales
literature and other printed material developed by the International Services
group is printed by the printed communications unit; the remaining material is
printed either by outside vendors or the group's clients.
The International Services group has also developed new marketing and
database analysis products in response to client demands. The International
Services group has developed database analysis software which permits the
management and analysis of client's marketing and customer databases in a
desktop environment. Clients of this software include, alphabetically, J.
Sainsbury plc, Lloyds TSB Group, Microsoft Ltd. and Proctor & Gamble.
MARKETING OPPORTUNITIES
Snyder believes that it is well-positioned to capitalize on the following
five dynamic trends: (1) the outsourcing of marketing and sales functions, (2)
trends in demographics, (3) changes in the regulatory environment, (4)
globalization and (5) increased demand for direct marketing services in the U.K.
and Europe.
OUTSOURCING. In recent years, more and more corporations have integrated
outsourcers into their overall marketing strategies. Snyder believes that, as
more and more corporations adopt capital saving strategies and focus on their
core competencies, the demand for outsourced marketing services will increase.
Snyder believes that it is well-positioned to capitalize on the continued
momentum of the corporate trend toward outsourcing. Snyder also perceives that
corporations value service providers who can provide them with a wide range of
services, thereby lowering transaction costs. Snyder believes that its recent
acquisitions increase its competitive position by, among other things, expanding
the type and scope of services Snyder can offer its clients.
TRENDS IN DEMOGRAPHICS. Snyder believes that it is well-positioned to take
advantage of two demographic trends in the United States. First, multi-cultural
populations are growing much more rapidly than the overall population. According
to population projections prepared by the U.S. Bureau of the Census which are
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based in part on 1990 census data ("Census Bureau Population Projection"), there
were approximately 9.7 million Asian/Pacific Islanders living in the United
States during 1996 and that group is expected to grow approximately 57% by the
year 2010. In 1996, there were approximately 27.8 million Hispanics living in
the United States and that group is expected to grow approximately 48% by the
year 2010 according to the Census Bureau Population Projection. In contrast, the
total population in the United States is expected to grow approximately 12% by
the year 2010 according to the Census Bureau Population Projection. Snyder has
designed a marketing strategy for its Direct Services group to reach the rapidly
growing multi-cultural populations which involves the use of bilingual field
sales and teleservices representatives. Second, according to the Census Bureau
Population Projection, in 1996 there were approximately 69.2 million people who
were 50 years or older in the United States. The 50 years and older age group is
the fastest growing age group in the United States, and it is projected to grow
by approximately 39% through the year 2010 according to the Census Bureau
Population Projection. A number of Snyder's marketing programs are designed to
target this population sector. Snyder's demographic marketing database includes
valuable data about aging baby boomers and other potential customers in this
population sector that will assist in designing marketing programs to reach the
50 years and older age group.
CHANGES IN THE REGULATORY ENVIRONMENT. A typical result of deregulation is
increased competition as companies seek to acquire market share. In a regulated
environment companies do not need to compete for market share, so deregulation
generally finds companies with limited or no internal sales capabilities. For
example, companies in the telecommunications industry are competing for market
share and marketing their new brands and services as a result of deregulation in
that industry, and the deregulation of the U.S. gas and electric utilities
industries presents opportunities for companies in those industries to market
their products directly to consumers who, historically, have had no choices
regarding who provided gas and electric services to them. Finally, Snyder
believes that the increased pace at which pharmaceuticals are approved will
increase the number of products available to physicians, and thereby increase
the demand for Snyder's medical detailing services.
GLOBALIZATION. The vast majority of Snyder's significant clients are
companies that have international operations. Snyder believes that these
corporations and other multinational companies will seek to do business with
companies that can provide solutions that span national boundaries. Snyder
believes that its recent acquisition of Brann significantly increases its
ability to provide targeted marketing services to globally-oriented clients.
INCREASED DEMAND FOR DIRECT MARKETING SERVICES IN THE U.K. AND
EUROPE. Direct marketing activities, such as direct mail and teleservices, are
not as prevalent in the U.K. and Europe as they are in the United States. Snyder
believes that the demand for direct marketing services in both the U.K. and
Europe will increase significantly during the next few years. Snyder believes
that its existing U.K. infrastructure and experience along with Snyder's
historic direct marketing experience will enable Snyder to capitalize on this
demand.
COMPETITION
The industry in which Snyder operates is very competitive and highly
fragmented. Snyder competes with other outsourced marketing services firms. Many
of the other firms offer a limited number of services within a limited
geographic area, but there are several participants whose business, like that of
Snyder, tends to be national and offers a broad array of marketing services,
such as, listed alphabetically, Abacus Direct Corporation, CUC International,
Inc., Ogilvy & Mather Direct, Quintiles Transnational Co., Sitel Corporation,
WWAV Rapp Collins and Wunderman Cato Johnson. Snyder believes that certain
competitors may have capabilities and resources comparable to and in certain
respects greater than those of Snyder. Snyder also competes with the internal
marketing capabilities of its clients and potential clients as well as with
providers of other forms of advertising and marketing media, such as radio and
television.
Snyder believes that it competes primarily on the basis of demonstrated
ability to attract customers; reputation for quality; price; geographic presence
with regard to field sales, WallBoard(R) information displays, Good Neighbor
information centers and sample packs; creative and consulting expertise,
technological
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expertise; and the ability to promptly provide clients with customized solutions
to their sales and marketing needs.
SEASONALITY
Various aspects of Snyder's business are subject to seasonal variation.
However, Snyder believes that the seasonality of the various aspects of its
business are not coincident, such that on an aggregate basis Snyder's business
is not subject to significant seasonal variation.
REGULATION
Snyder's business is subject to various federal, state and foreign laws and
regulations. Certain portions of Snyder's marketing services business have
become subject to an increasing amount of regulation. There is no assurance that
additional legislation or regulation would not limit the activities of Snyder or
its clients in the future or significantly increase the cost of regulatory
compliance. See "Risk Factors -- Government Regulation."
One of the significant regulations of the FCC applicable to long distance
carriers, such as AT&T, prohibits the unauthorized switching of customers' long
distance carriers. In order to prevent unauthorized switches, federal law
requires that switches authorized over the telephone be verified
contemporaneously by a third party. Snyder believes that its procedures comply
with this verification requirement.
Third-party verification generally is not required for switches obtained in
person, such as those obtained by members of Snyder's Direct Services field
sales force. Snyder's training and other procedures are designed to prevent
unauthorized switching. However, as with any field sales force, Snyder cannot
completely ensure that each employee will always follow Snyder's mandated
procedures. Accordingly, it is possible that employees may in some instances
engage in unauthorized activities, including slamming. To Snyder's knowledge, no
FCC complaint has been brought against any of its clients as a result of
Snyder's services, although Snyder believes that the FCC is examining the sales
activities of long distance telecommunications providers, including Snyder's
clients and the activities of outside vendors, such as Snyder, used by such
providers. See "Risk Factors -- Government Regulation."
In connection with the handling and distribution of samples of
pharmaceutical products, the Medical Services group is subject to regulation by
its clients, the Prescription Drug Marketing Act of 1987 and other applicable
federal, state and local laws and regulations.
In addition to the laws and regulations of the United States, the services
offered by the International Services group may be subject to certain
regulations of the U.K. and the European Union, including regulations relating
to inbound and outbound teleservices, advertising content, promotions of
financial products, activities requiring customers to send money with mail
orders and the maintenance and use of customer data held on databases. In
addition, the printing facility utilized by the International Services group is
also subject to certain environmental regulations regarding the storage and
disposal of certain chemicals involved in the printing process. Snyder believes
that the International Services group is substantially in compliance with
applicable regulations. See "Risk Factors -- Government Regulation."
EMPLOYEES
As of March 31, 1997, Snyder had approximately 2,800 full and part-time
employees on a consolidated basis and approximately 1,500 individuals on a
consolidated basis operating as independent contractors. Approximately 50
employees in the International Services group, primarily in the International
Services print shop unit, are covered by a collective bargaining agreement with
the Graphical Paper and Media Union which expires on April 24, 1998. Neither
Snyder nor MMD have ever experienced a work-related stoppage, and Brann has not
experienced a work-related stoppage for more than 20 years. Snyder believes its
relations with its employees, both unionized and nonunionized, are satisfactory.
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PROPERTIES
Snyder's corporate headquarters are located in Bethesda, Maryland in leased
facilities consisting of approximately 68,800 square feet of office space,
including 260 call stations. The term of the lease, as amended, expires in
November 2002 with respect to substantially all of the space. Snyder also leases
approximately 35,400 square feet of office space in Rockville, Maryland, and
this location includes 329 call stations.
Snyder also leases the facilities for its field sales offices. The leases
for Snyder's field sales offices generally have terms ranging from a
month-to-month basis to two years and generally have renewal options. The
Medical Services group leases approximately 11,000 square feet of office space
in New York City for a term expiring in September 2005.
The International Services group, located in England, conducts its
operations principally out of three facilities in Cirencester, one facility in
Bristol and one facility in London. In Cirencester, Snyder owns two facilities
totaling approximately 66,000 square feet which are primarily used for office
space and also as warehouse space. The other facility in Cirencester, which is
approximately 16,000 square feet, is leased with a term extending to June 2007,
except for 2,000 square feet of office space and a garage which are leased with
terms expiring in April or September 1998. The Bristol facility, which is 34,160
square feet, is leased for a period expiring in September 2014, with an option
to terminate upon 12 months notice by Snyder in 2009. Snyder also leases a 6,000
square foot client meeting facility in London.
Snyder believes that its current facilities are adequate for its current
operations.
LEGAL PROCEEDINGS
From time to time, Snyder is involved in litigation incidental to its
business. In the opinion of Snyder, no pending or threatened litigation of which
Snyder is aware has had or is expected to have a material adverse effect on
Snyder's results of operations, financial condition, or liquidity.
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SNYDER MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of Snyder's results of operations and of its
liquidity and capital resources is based upon Snyder's consolidated financial
statements which have been retroactively restated to give effect to the MMD and
Brann acquisitions. The following discussion should be read in conjunction with
the Selected Consolidated Financial Data of Snyder and the Consolidated
Financial Statements of Snyder and related notes thereto included elsewhere in
this Proxy Statement/Prospectus.
OVERVIEW
Quarter Ended March 31, 1997
Snyder completed three strategic acquisitions and entered into the Merger
Agreement during the quarter ended March 31, 1997. Snyder's strategy for the
operation of its acquirees is to integrate the sales effort and corporate
services provided. Snyder expects the synergies created will increase its
opportunities and strengthen customer relationships. Historically, Snyder has
not attempted to integrate the infrastructures of its acquirees' and does not
expect to incur material costs to integrate its acquirees operations in the
future.
On January 6, 1997, Snyder acquired MMD in a merger transaction in which
1,354,500 shares of Snyder common stock were issued for all of the issued and
outstanding stock of MMD. MMD provides outsourced medical sales and marketing
services and has over 1,500 detailing representatives conducting sales and
marketing programs for some of the world's premier pharmaceutical companies. The
merger transaction with MMD was accounted for as a pooling of interests for
accounting and financial reporting purposes.
On January 17, 1997, Snyder acquired Good Neighbor for approximately
$4,150,000 in cash. Good Neighbor provides marketing services through
information centers located in over 7,000 targeted retail outlets throughout the
United States. The acquisition of Good Neighbor was accounted for as a purchase
for accounting and financial reporting purposes. The Company recorded
approximately $3.9 million in goodwill from this transaction.
On March 27, 1997, Snyder acquired Brann in a share exchange in which
2,350,152 shares of Snyder common stock and 389,730 options for Snyder common
stock were issued for all of the issued and outstanding ordinary shares and
options for ordinary shares of Brann, respectively. In addition, all of Brann's
outstanding mandatorily redeemable preferred shares, valued at $5,035,000
including accrued dividends through March 21, 1997, were redeemed in cash. Brann
is a leading provider of integrated targeted marketing services in the United
Kingdom, and it offers a full range of creative, telemarketing and database
services to over 70 large corporations, government agencies and charitable
organizations. The share exchange with Brann was accounted for as a pooling of
interests for accounting and financial reporting purposes. The Company is now
subject to the impact of foreign currency fluctuation, specifically that of the
British pound.
On March 18, 1997, Snyder entered into the Merger Agreement to acquire
American List. See "The Merger" and "The Merger Agreement."
In December 1996, Snyder entered into a two-year contract to provide
turn-key marketing services to AT&T in the business market. Under this contract,
Snyder will assist AT&T in signing up small and medium-sized business customers
for its long distance, Intralata, toll-free and calling card services. Through
1996 the marketing services provided to AT&T were limited to assisting AT&T
increase its market share in the consumer long-distance market.
Concurrently with entering into the new contract with AT&T, Snyder
terminated its contract with MCI, under which it provided marketing and sales
services to MCI targeting small business customers. Although Snyder expects
revenues from the start-up phase of the new AT&T contract to be less than those
from the MCI contract, the termination of the contract with MCI is not expected
to have a material impact on the Company, primarily because Snyder has acquired
MMD and Brann, and also because it has entered into additional contracts with
other clients, including the new contract with AT&T to provide services similar
to those previously provided to MCI. During the quarter ended March 31, 1997,
Snyder completed all services required under the MCI contract and recorded $2.3
million of revenue that had previously been deferred.
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Year Ended December 31, 1996
Snyder's revenues increased significantly to $185.4 million in 1996 from
$132.8 million in 1995, primarily from the continued increase in the volume of
services provided in Snyder's Direct Services group. In 1996, Snyder continued
to add staff to its field and teleservices sales forces, including field sales
supervisors and senior executives, to improve the quality of its sales force,
training programs and support systems for the continued expansion of existing
services and the introduction of additional clients. AT&T accounted for 27% of
Snyder's total revenues in 1996.
During 1996, Snyder expanded the clients to which it provides direct
services and the industries in which the clients of the Direct Services group
operate. In the third quarter of 1996, Snyder entered into contracts with Lucent
Technologies, BCS to market and sell certain Lucent telecommunications
equipment, and DHL Airways, Inc. to market and sell overnight package delivery
services. Also in the third quarter of 1996, Snyder entered into two contracts
with Foundation Health, a California health plan, to market and sell memberships
in certain managed health care plans to residential customers in designated
areas. Snyder does not anticipate that these new contracts will begin to produce
any significant revenues until the second half of 1997. Snyder added 329 call
stations in December 1996 that are equipped with state-of-the-art systems
capable of handling both inbound and outbound calls.
The Media and Sampling Services group introduced a new Healthy Child
WallBoard(R) information display in November 1996. This new pediatric marketing
program is designed to reach more than half of the pediatricians in the United
States, and the Healthy Child WallBoard(R) information display will be placed in
approximately 4,000 locations. Initial sponsors for this new pediatric marketing
program include General Mills, Hoechst Marion Roussel, Hinkley and Schmidt, and
Quaker Oats. A new Healthy Child sample pack was also introduced in January 1997
that will be distributed in the offices of pediatricians throughout the United
States.
In 1996, the Medical Services group expanded its operations and began
detailing pharmaceuticals for Bayer and Wyeth-Ayerst. The Medical Services group
also renewed its largest contract with BMS during 1996. The management team was
strengthened and the infrastructure was enhanced to handle the increased
operations of the Medical Services group.
In 1996, the International Services group consolidated its sales and
account management functions to position itself for continued rapid growth as a
full-service provider of integrated direct marketing services. The consolidation
of the sales and account management functions involved significant investment in
process re-engineering, new skill development, enhancing technological
infrastructure and the creation of additional capacity. This group, which
operates in the U.K., focuses on providing integrated services and cross selling
all services that are appropriate for a particular client. During 1996 the
International Services group concentrated most of its efforts on the cross
selling of additional services to existing clients rather than the solicitation
of new clients.
RESULTS OF OPERATIONS
In the Direct Services group, revenues from field sales and teleservices
are based on both the number of accepted customers and the type of services
sold. Snyder typically receives a fixed dollar amount per customer. Revenues
related to such sales are recognized on the date that the application for
service is accepted by Snyder's clients. In the Media and Sampling group, Snyder
is paid by sponsors of its WallBoard(R) information displays and sample packs in
installments, generally quarterly or semi-annually, over the term of the
contract under which services are rendered, which is generally one year or less.
In the Medical Services group, revenues are based on the number of presentations
made to physicians. Snyder typically receives a fixed dollar amount per
presentation, and revenues are recognized as presentations are made. In the
International Services group, revenues are recognized when services are
completed in accordance with the terms of the contracts.
Cost of services consists of all costs specifically associated with client
programs, such as salary, commissions and benefits paid to personnel, including
senior executive officers associated with specific service
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groups, inventory, payments to third-party vendors and systems and other support
facilities specifically associated with client programs.
Selling, general and administrative expense is primarily comprised of costs
associated with Snyder's centralized staff functions, such as financial,
accounting, human resources and personnel costs of senior executive officers not
specifically associated with any single service group.
QUARTER ENDED MARCH 31, 1997 COMPARED TO QUARTER ENDED MARCH 31, 1996
Revenues increased $8.5 million, or 21.1%, from $40.5 million in the first
quarter of 1996 to $49.0 million in the first quarter of 1997. The $49.0 million
includes approximately $16.0 million in revenues from the previously separate
entities of MMD and Brann prior to the dates of their respective mergers.
Approximately 69% of the increase in revenues is due to increased sales volumes
in the Direct Services and Medical Services groups. Revenues in the Media and
Sampling Services group increased approximately $2.1 million due to the growth
of existing products and programs as well as through the generation of revenues
from the Good Neighbor information centers which were acquired in January 1997.
Cost of services increased $4.3 million from $30.3 million in the first
quarter of 1996 to $34.6 million in the first quarter of 1997. Cost of services
as a percentage of revenues decreased from 74.8% in the first quarter of 1996 to
70.4% in first quarter of 1997. The decrease in cost of services as a percentage
of revenues resulted primarily from costs incurred for starting new contracts
during the first quarter of 1996 which were not incurred during the first
quarter of 1997, as well as the previously mentioned recognition of deferred
revenue.
Selling, general and administrative expenses combined with compensation to
stockholders increased $2.3 million from $7.4 million in the first quarter of
1996 to $9.7 million in the first quarter of 1997. Selling, general and
administrative expenses combined with compensation to stockholders as a
percentage of revenues increased to 19.8% in the first quarter of 1997 from
18.2% in the first quarter of 1996. The increase in selling, general and
administrative expenses is due primarily to additional personnel expenses.
During 1996, Snyder established human resources and information systems
departments and expanded its finance department. The increase in corporate
personnel occurred throughout 1996, and therefore, there are more corporate
personnel employed in the first quarter of 1997 than in the first quarter of
1996.
Interest expense decreased $209,000 to $301,000 in the first quarter of
1997 from $510,000 in the first quarter of 1996 because Snyder redeemed in full
the subordinated debentures due to related parties in October 1996 with proceeds
from the offering.
Snyder recorded a $1.3 million tax provision for the quarter ended March
31, 1997, consisting of a $2.0 million provision for the $5.0 million in income
from recurring operations and interest and a $0.7 million benefit from the $16.2
million of nonrecurring acquisition costs. Snyder's effective tax rate for the
quarter ended March 31, 1997 differs from the Federal statutory rate due
primarily to the nondeductibility of certain of the acquisition costs and state
income taxes. The nonrecurring acquisition costs of $16.2 million also resulted
in a net loss of $12.5 million for the quarter ended March 31, 1997. Without the
nonrecurring acquisition costs, Snyder would have recorded net income of $2.9
million or $0.08 per share.
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<PAGE> 74
The following table sets forth, for the three years ended December 31,
1996, certain components of Snyder's income statement data, including such data
as a percentage of revenues.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1994 1995 1996
---------------- ----------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues.............................. $80,429 100.0% $132,801 100.0% $185,440 100.0%
Operating expenses:
Cost of services...................... 53,219 66.2 93,824 70.7 139,359 75.2
Selling, general and administrative
expenses............................ 15,754 19.6 21,721 16.3 33,739 18.2
Compensation to stockholders.......... 3,009 3.7 7,034 5.3 1,548 0.8
------- ----- -------- ----- -------- -----
Income from operations................ 8,447 10.5 10,222 7.7 10,794 5.8
Interest expense...................... (1,249) (1.6) (1,771) (1.3) (1,993) (1.1)
Interest and other income............. 81 0.1 316 0.2 841 0.5
------- ----- -------- ----- -------- -----
Income before taxes and extraordinary
item................................ 7,279 9.0 8,767 6.6 9,642 5.2
Income tax provision (benefit)........ 1,465 1.8 1,572 1.2 1,412 0.8
------- ----- -------- ----- -------- -----
Income before extraordinary item...... 5,814 7.2 7,195 5.4 8,230 4.4
Extraordinary item.................... -- -- -- -- 1,215 0.6
------- ----- -------- ----- -------- -----
Net income............................ $ 5,814 7.2% $ 7,195 5.4% $ 7,015 3.8%
======= ===== ======== ===== ======== =====
Pro forma income data (unaudited):
Historical income before taxes and
extraordinary item as reported...... $ 7,279 9.0% $ 8,767 6.6% $ 9,642 5.2%
Pro forma provision for income
taxes............................... (3,088) (3.8) (3,574) (2.7) (4,293) (2.3)
------- ----- -------- ----- -------- -----
Pro forma income before extraordinary
item................................ 4,191 5.2 5,193 3.9 5,349 2.9
Extraordinary item.................... -- -- -- -- 1,215 .6
------- ----- -------- ----- -------- -----
Pro forma net income.................. $ 4,191 5.2% $ 5,193 3.9% $ 4,134 2.3%
======= ===== ======== ===== ======== =====
</TABLE>
1996 COMPARED TO 1995
Revenues. Revenues increased $52.6 million, or 39.6%, from $132.8 million
in 1995 to $185.4 million in 1996. The increase in revenues is due to increased
sales volumes in the Direct Services group as well as increased pharmaceutical
detailing fees in the Medical Services group. In the Direct Services group
revenue increased approximately $40.5 million. The increase in revenues and
sales volumes in the Direct Services group corresponds with the increase during
1995 and 1996 in the number of sales offices, the number of field sales
personnel, and the number of teleservices representatives. Revenues in the
Medical Services group increased approximately $9.8 million due primarily to
increased revenues from pharmaceutical detailing presentations from three large
contracts in 1996. Approximately $39.9 million of the increase in revenues is
due to Snyder's internal growth.
Cost of Services. Cost of services increased $45.6 million from $93.8
million in 1995 to $139.4 million in 1996. Cost of services as a percentage of
revenues increased from 70.7% to 75.2% due primarily to an increase in personnel
costs. Additional management and client support personnel were employed to
handle the continued growth in Direct Services and the expanded operations in
Medical Services. The number of managers and ratio of managers to sales
representatives increased in both the Direct Services and Medical Services
groups to further improve the quality of oversight of the sales and detailing
representatives activities. Additional recruiting costs were incurred during
1996 to retain the additional management and client support personnel. The
increase in the number of supervisory personnel has adversely affected operating
margins, however, Snyder expects that its current personnel structure and labor
force will be sufficient to support additional client services. Also, as Snyder
continues to grow through acquisition, its operating margins will be
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<PAGE> 75
impacted by the margins of the companies acquired. The International Services
Group also incurred additional labor costs to remain competitive under the
contracts for which it provides services.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $12.0 million from $21.7 million in 1995 to
$33.7 million in 1996. Selling, general and administrative expense as a
percentage of revenues increased from 16.3% in 1995 to 18.2% in 1996.
Substantially all of the increase in selling, general and administrative
expenses as a percentage of revenues is due to additional personnel and
corporate expenses incurred to support the growth of the Direct Services group.
The increase in payroll and payroll related expenses accounted for the majority
of the total increase in selling, general and administrative expenses. Snyder
employed additional senior executives and corporate personnel in 1996 to support
the continued expansion of its services. Prior to 1996, Snyder did not have
established human resources or information systems departments. Also during
1996, the number of personnel in the finance department increased significantly.
Compensation to Stockholders. Compensation to stockholders decreased $5.5
million from $7.0 million in 1995 to $1.5 million in 1996. Approximately $4.4
million of the decrease relates to compensation paid to SMS stockholders prior
to Snyder's Reorganization. Prior to Snyder's Reorganization, Snyder's
operations were conducted by the Partnership. SMS, the general partner of the
Partnership, paid compensation to certain officers and employees of the
Partnership for services performed for SMS. The compensation from SMS was in
addition to the compensation that these individuals received from the
Partnership. These individuals were stockholders in both the Partnership and
SMS. In conjunction with the Reorganization, no such compensation was paid to
these individuals in 1996 nor is any such compensation expected to be paid in
the future.
Interest Expense. Interest expense increased $0.2 million from $1.8
million in 1995 to $2.0 million in 1996 due to an increase in interest expense
on the subordinated debentures. Interest expense on the subordinated debentures
was $0.8 million in 1995 and $1.0 million in 1996. In 1995, Snyder incurred
interest expense on the subordinated debentures for eight months from the time
of issuance in May 1995 through December 1995. In 1996, Snyder incurred interest
expense on the subordinated debentures for 10 months from January 1996 until
repayment in October 1996.
Extraordinary Item. In October 1996, Snyder redeemed in full the
subordinated debentures and recorded an extraordinary loss of $1.2 million, net
of income taxes. The extraordinary loss consists of prepayment penalties and the
write-off of unamortized discount and debt issuance costs.
Pro Forma Net Income. Pro forma net income decreased $1.1 million from
$5.2 million in 1995 to $4.1 million in 1996 due primarily to the increases in
cost of services and selling, general and administrative expenses as a
percentage of revenues, offset by the decrease in compensation to stockholders.
For the period from January 1, 1996 until the Reorganization on September 24,
1996, Snyder had elected to be treated for federal and certain state income tax
purposes as an S corporation, and therefore, the stockholders of Snyder were
taxed on their proportionate share of Snyder's taxable income, and Snyder did
not have an obligation to pay income taxes. Pro forma net income includes a
provision for federal and state income taxes as if Snyder had been a C
corporation for all periods presented.
1995 COMPARED TO 1994
Revenues. Revenues increased $52.4 million, or 65.1%, from $80.4 million
in 1994 to $132.8 million in 1995. The increase in revenues is due primarily to
an increase in the volume of marketing programs in the Direct Services, Media
and Sampling, and International Services groups. Revenues in the Direct Services
group increased approximately $25.9 million because 1995 was the first full year
of operations for the AT&T and MCI contracts. Revenues in the Media and Sampling
group increased approximately $5.3 due to an increase in sample pack revenues.
Revenues in the International Services group increased approximately $19.6
million because 1995 was the first year of operations after the management
buyout which occurred in January 1994 and the group concentrated on increasing
the services it provided to existing clients. Approximately $31.2 million of the
increase in revenues is due to Snyder's internal growth.
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<PAGE> 76
Cost of Services. Cost of services increased $40.6 million from $53.2
million in 1994 to $93.8 million in 1995. Cost of services, as a percentage of
revenues, increased from 66.2% in 1994 to 70.7% in 1995 primarily reflecting
increased staffing in the Direct Services and Medical Services groups. Snyder
began providing teleservices in 1995 and employed 177 teleservices personnel at
the end of 1995. Snyder also opened additional field sales offices in 1995. The
increased number of teleservices, field and pharmaceutical representatives
within the Direct Services and Medical Services groups resulted in an increase
in the number of supervisors and managers employed within those groups.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $5.9 million, from $15.8 million in 1994 to
$21.7 million in 1995 due primarily to additional administrative personnel and
related corporate expenses associated with the Snyder's growth. Selling, general
and administrative expenses, as a percentage of revenues, decreased from 19.6%
in 1994 to 16.3% in 1995, reflecting a moderately increased corporate overhead
expense being spread over a larger base of revenues.
Compensation to Stockholders. Compensation to stockholders increased $4.0
million from $3.0 million in 1994 to $7.0 million in 1995 primarily due to the
$4.4 million paid to certain officers and employees of the Partnership for
services performed for SMS prior to Snyder's Reorganization.
Interest Expense. Interest expense increased from $1.2 million in 1994 to
$1.8 million in 1995 due primarily to interest expense related to the
subordinated debentures which were issued in May 1995.
Pro Forma Net Income. Pro forma net income increased $1.0 million from
$4.2 million in 1994 to $5.2 million in 1995. The increase in pro forma net
income that was attributed to the significant growth in revenues and the
controlled overhead expenditures was offset by the increase in compensation to
stockholders resulting in a $1.0 million increase in pro forma net income.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company has $37.6 million in cash and equivalents.
Cash and equivalents decreased $15.8 million during the three months ended March
31, 1997. Operating activities used $5.6 million in cash due primarily to the
net loss recorded from the nonrecurring acquisition costs, which included the
$9.1 million noncash expense from the accelerated vesting of options held by
Brann employees. Investing activities used $9.8 million in cash due to the
purchases of personal property and equipment and Good Neighbor. Financing
activities used $0.9 million in cash due to $5.1 million used to redeem the
Brann preferred shares and the net $1.8 million used to pay distributions and
dividends to stockholders of the Pooled Entities prior to their mergers with
SCI, the note payable, and capital lease obligations, offset by the $6.0 million
in proceeds from the exercise of stock options.
At March 31, Brann had outstanding debt of $6.5 million. On April 14, 1997
the full amount of the outstanding debt was repaid in full. No gain or loss was
recorded in connection with the repayment of the debt.
Snyder's operations provided positive cash flows in each of the three years
ended December 31, 1996. The cash flows provided by operations increased in each
of the three years ended December 31, 1996 consistent with the increase in
revenues. Snyder used $6.7 million in 1996 for the purchase of personal property
and equipment to expand its infrastructure to handle its increased operations in
the Direct Services, Medical Services and International Services groups.
Snyder experienced significant growth during 1996 and expects to continue
to grow through both internal expansion and complementary acquisitions. Snyder
expects that it will commit approximately $10.5 million for capital expenditures
during 1997 primarily for the expansion of its facilities and the upgrading of
its systems. Snyder believes that the proceeds from the initial public offering
and cash provided by operations will be sufficient to fund Snyder's current
operations and planned capital expenditures. Acquisitions will initially be
financed using Snyder's excess cash and equivalents, but depending on the amount
necessary to complete an acquisition, additional funding may be required.
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<PAGE> 77
NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
This statement is effective for years ending after December 15, 1997 and will be
implemented by Snyder in its December 31, 1997 financial statements. SFAS 128
requires primary earnings per share ("EPS") to be replaced with basic EPS, which
is computed by dividing reported earnings available to common stockholders by
the weighted average number of shares outstanding without consideration of
common stock equivalents or other potentially dilutive securities. Fully diluted
EPS, now called diluted EPS is still included. Snyder adopted the Snyder Stock
Option Plan and began offering stock options in September 1996. Because the
stock options were outstanding for only a short period of time in 1996, Snyder
does not expect the implementation of SFAS 128 to have a material impact on its
calculation of basic EPS in 1996. However, in 1997 and future years, when the
stock options are outstanding for the entire year, Snyder expects basic EPS will
be higher under SFAS 128 than under the existing primary EPS standard. SFAS 128
will not materially impact Snyder's EPS reported for the quarter ended March 31,
1997 because Snyder's common stock equivalents were anti-dilutive for the
quarter ended March 31, 1997.
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<PAGE> 78
DIRECTORS AND EXECUTIVE OFFICERS OF SNYDER
MEMBERS OF THE BOARD OF DIRECTORS
Biographical information concerning each member of the Snyder Board is
presented below. Each of the directors serves for a term of one year and has
served on the Snyder Board since 1996.
<TABLE>
<CAPTION>
NAME AGE
- ------------------------------------------------------ ---
<S> <C>
Daniel M. Snyder...................................... 32
Michele D. Snyder..................................... 34
A. Clayton Perfall.................................... 38
Mortimer B. Zuckerman................................. 59
Fred Drasner.......................................... 54
Philip Guarascio...................................... 55
Mark E. Jennings...................................... 34
</TABLE>
Daniel M. Snyder, Chairman of the Board and a founder of Snyder, has served
as Chief Executive Officer of Snyder and its predecessors since Snyder was
founded in 1987, and served as President of Snyder until May 1997.
Michele D. Snyder, a founder of Snyder, has been with Snyder since its
inception, and currently serves as the Vice Chairman, President, Chief Operating
Officer and a director of Snyder. Ms. Snyder is responsible for the day-to-day
operations of Snyder, including personnel, executive management, contract
negotiations and research and development of new programs. Ms. Snyder is Daniel
M. Snyder's sister.
A. Clayton Perfall, Chief Financial Officer of Snyder and a director of
Snyder, spent fifteen years with Arthur Andersen. During his tenure as a partner
with Arthur Andersen, Mr. Perfall had a wide range of responsibilities within
the Washington, D.C., Baltimore, Maryland and Richmond, Virginia marketplaces,
including responsibility for the firm's Structured Finance and Financial
Products tax practice and responsibility for its Business Valuation Services
Group. Mr. Perfall was a key participant in the development of Arthur Andersen's
business strategies, the hiring of its professional staff and the development
and marketing of its services.
Mortimer B. Zuckerman, a director of Snyder, has been the Chairman of
Boston Properties, Inc., a national real estate development and management
company, since 1970. He has been the Chairman of U.S. News & World Report, L.P.
and Editor-in-Chief of U.S. News & World Report since 1985, Chairman of Daily
News, L.P. and Co-Publisher of the New York Daily News since 1993, Chairman of
The Atlantic Monthly Company since 1980 and Chairman of the Board of Directors
of Applied Graphics Technologies, Inc. since April 1996.
Fred Drasner, a director of Snyder, has been the Chief Executive Officer of
Daily News, L.P. and Co-Publisher of the New York Daily News since 1993, the
President of U.S. News & World Report, L.P. from 1985 to February 1997 and Chief
Executive Officer of U.S. News since 1985, the Chairman and Chief Executive
Officer of Applied Graphics Technologies, Inc. since April 1996, the Chief
Executive Officer of Applied Printing Technologies, L.P. since 1986, and the
Vice-Chairman and Chief Executive Officer of The Atlantic Monthly Company since
1986.
Philip Guarascio, a director of Snyder, has been a Vice President of
General Motors since July 1994, where is he primarily responsible for worldwide
advertising resource management, managing consolidated media placement efforts
and working with General Motors' North American Operations vehicle divisions to
increase marketing effectiveness and efficiency. Mr. Guarascio also manages
corporate image advertising activities and oversees GM Credit Card operations.
Prior to his current position, from July 1992 to July 1994, Mr. Guarascio served
as General Manager of Marketing and Advertising for General Motors' North
American Operations. Mr. Guarascio joined General Motors in 1985 after 21 years
with the New York advertising agency, D'Arcy, Masius, Benton & Bowles (formerly,
Benton & Bowles, Inc.). Mr. Guarascio is Chairman Emeritus of the Advertising
Council and serves on the Executive Committee of that organization.
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<PAGE> 79
He also serves on the boards of the Association of National Advertisers, the
Women's Sports Foundation and the Ellis Island Restoration Commission.
Mark E. Jennings, a director of Snyder, has been a Managing Partner of
Generation Partners L.P. since August 1995. Generation Partners L.P. is the
managing general partner of Generation Capital Partners L.P., a $165 million
investment partnership. Prior to August 1995, he was a Partner of Centre
Partners L.P., an investment affiliate of Lazard Freres & Co., where he had been
employed since 1987. From 1986 to 1987, Mr. Jennings was employed at Goldman,
Sachs & Co. in its Corporate Finance Department. Mr. Jennings also serves on the
boards of directors of The Johnny Rockets Group, Inc., Jeepers!, Inc., LVI
Holdings, Inc., Scientific Games, Inc. and Muzak Limited Partnership.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Snyder Board held one meeting during 1996. Each director of Snyder (who
served as such for the period during which the meeting was held) attended the
meeting of the Snyder Board held in 1996, except Messrs. Guarascio and Jennings,
who did not attend such meeting, held shortly after their respective elections
to the Snyder Board.
The Snyder Board currently has a standing Audit Committee and a standing
Compensation Committee.
The Audit Committee, which was established in January 1997, currently
consists of Messrs. Jennings and Guarascio. The Audit Committee is responsible
for recommending to the Snyder Board the engagement of Snyder's independent
public accountants, reviewing with the independent public accountants the audit
plan and the results of each audit engagement, reviewing the independence of the
independent accounts, reviewing the range of audit and non-audit fees, reviewing
the adequacy of Snyder's internal accounting controls, and exercising oversight
with respect to Snyder's code of conduct and other policies and procedures
regarding adherence to legal requirements.
The Snyder Board appointed in March 1997 a Compensation Committee
consisting of Messrs. Guarascio and Jennings. The Compensation Committee will be
responsible for establishing the salaries, bonuses and other compensation of the
officers of Snyder and its subsidiaries, and for administering the Snyder Stock
Option Plan for all employees of Snyder at or above the rank of Senior Vice
President.
Messrs. Guarascio and Jennings, the only directors who are not also
employees or affiliates of Snyder, each were granted options to purchase 25,000
shares of Snyder Common Stock upon their election to the Snyder Board, in lieu
of directors' fees.
EXECUTIVE OFFICERS
Executive officers of Snyder serve at the pleasure of the Snyder Board and
are elected by the Snyder Board annually for a term expiring upon the election
and qualification of their respective successors, or their earlier resignation
or removal.
Certain information regarding the executive officers of Snyder, as of April
24, 1997 is set forth below. See "-- Members of the Board of Directors" for
additional information concerning Mr. Daniel M. Snyder, Snyder's Chief Executive
Officer and Chairman of the Board of Directors, Ms. Michele D. Snyder, Snyder's
Vice Chairman, President, Chief Operating Officer and a member of the Snyder
Board and Mr. A. Clayton Perfall, Snyder's Chief Financial Officer and a member
of the Snyder Board.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Daniel M. Snyder.................. 32 Chairman of the Board of Directors and Chief
Executive Officer
Michele D. Snyder................. 34 Vice Chairman, President, Chief Operating Officer
and Director
A. Clayton Perfall................ 38 Chief Financial Officer and Director
David B. Pauken................... 34 Chief Accounting Officer
</TABLE>
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<PAGE> 80
David B. Pauken has served as Chief Accounting Officer since August 1996.
Prior to joining Snyder, from July 1984 to August 1996, Mr. Pauken served in
various capacities at Arthur Andersen, most recently as a Senior Manager in the
Washington, D.C. office. At Arthur Andersen, he was primarily responsible for
management of financial statement audits of publicly traded companies, including
Fortune 500 companies, as well as operational and financial consulting to
various entities.
OTHER SENIOR MANAGEMENT PERSONNEL
The following employees of Snyder have significant management
responsibilities.
Shaun P. Gilmore, 42, joined Snyder in August 1996 and has operational
responsibility for the Direct Services group. Prior to joining Snyder, Mr.
Gilmore spent 16 years at AT&T where, from January 1, 1996 to August 1996, he
was President -- Northeast States with responsibility for AT&T's Consumer &
Small Business Markets in New York and New England. In addition, Mr. Gilmore
represented all of AT&T in matters of strategy and external communications for
the region. From October 1993 to January 1, 1996, Mr. Gilmore was Vice
President -- Global Consumer Communications Services with responsibility for all
aspects of AT&T's Global Consumer Long Distance business. From 1980 to 1993, Mr.
Gilmore held a variety of positions in Marketing, Finance, Operations, Field
Sales, Personnel and Strategic Planning for AT&T's Business Markets division.
Terry Bateman, 40, has operational responsibility for the Media and
Sampling Services group. Prior to this position, Mr. Bateman served as the
Senior Vice President of Sales and Marketing in the Media and Sampling Services
group of Snyder from November 1995 to March 1997. Previously, he was the Vice
President of Business Development of Snyder from July 1995 to November 1995
where he was primarily responsible for developing new media programs and
supervising marketing personnel. Prior to joining Snyder, he served as a Vice
President of Marketing for Times Mirror corporation from 1994 to July 1995,
where he was responsible for marketing the on-line medical service initiative of
Times Mirror, and was Executive Vice President of the Medical News Network of
Whittle Communications from June 1993 to 1994 where he was responsible for
expanding the Medical News Network into the managed care arena. From June 1991
to June 1993, Mr. Bateman served as Executive Vice President of the Special
Report Network of Whittle Communications where he oversaw the sales effort of
the network. From March 1989 to June 1991, he served as President of Bateman &
Associates, a marketing concern.
Barbara Saltzman, 57, has operational responsibility for the Medical
Services group. Ms. Saltzman served in various capacities at MMD prior to its
acquisition by Snyder in January 1997. Ms. Saltzman joined MMD as a flex-time
field representative in 1978, and between 1978 and 1982 served as a district
manager, account executive and Vice President of New Business Development before
becoming President and Chief Executive Officer of MMD in 1982.
Chris Gater, 45, has operational responsibility for the International
Services group. Mr. Gater served in various capacities at Brann prior to its
acquisition by Snyder in 1997. Mr. Gater joined Brann as Computer Services
Manager in 1977 and was appointed Associate Director in 1979, Director in 1980,
Vice Chairman in 1988, and Chief Executive in 1994.
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<PAGE> 81
SNYDER -- EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the Chief Executive
Officer of Snyder and to each of the four other most highly compensated
executive officers of Snyder (the "Named Executive Officers") with respect to
1996. As a result of Snyder's acquisitions and the consequent expansion of its
business, certain individuals listed below as executive officers in 1996 are not
considered executive officers of the expanded enterprise.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ------------
------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)
- ---------------------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. Snyder.................. 1996 $300,000 $100,000 -- -- --
Chief Executive Officer
Michele D. Snyder................. 1996 200,000 100,000 -- -- --
Vice Chairman, President and
Chief Operating Officer
Terry Bateman..................... 1996 175,000 125,000 -- 100,000 --
General Manager of Media and
Sampling
Mitchell N. Gershman.............. 1996 142,174 50,000 -- 100,000 --
Senior Vice President of
Operations
Susan Marentis.................... 1996 138,077 200,904 -- 75,000 --
Senior Vice President of
Marketing
</TABLE>
- ---------------
(1) Snyder was organized in June 1996 to be the holding company for the
Partnership. Prior to the Reorganization, compensation paid to such Named
Executive Officers was paid by the Partnership. See "Snyder -- Certain
Transactions." The above compensation table excludes a former executive
officer of the Partnership, who was never an executive officer of Snyder.
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<PAGE> 82
STOCK OPTION GRANTS IN 1996
The following table sets forth information concerning all stock options
granted during 1996 to the Named Executive Officers. No stock options were
awarded to Mr. Daniel M. Snyder or Ms. Michele D. Snyder during 1996. As of
April 24, 1997 Snyder has not granted any stock appreciation rights or
restricted stock awards.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(4)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ------------------------
NAME GRANTED(1) IN 1996 ($/SHARE)(2) DATE(3) 5% 10%
- -------------------------------- ----------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Terry Bateman................... 100,000 2.4% $17.00 9/4/04 $1,069,121 $2,709,362
Mitchell N. Gershman............ 100,000 2.4 17.00 9/4/04 1,069,121 2,709,362
Susan L. Marentis............... 75,000 1.8 17.00 9/4/04 801,841 2,032,022
</TABLE>
- ---------------
(1) One-fourth of each option vests on each of the first, second, third and
fourth anniversary of the option grant date.
(2) The exercise price may be paid in cash, in shares of Snyder Common Stock
valued at fair market value on the exercise date, or in a combination of
cash and shares.
(3) The term of each option may not exceed ten years.
(4) The hypothetical potential appreciation shown in these columns reflects the
required calculations at annual assumed appreciation rates of 5% and 10%, as
set by the Commission, and therefore is not intended to represent either
historical appreciation or anticipated future appreciation of the Snyder
Common Stock.
None of the Named Executive Officers exercised any options during 1996.
EXECUTIVE EMPLOYMENT CONTRACTS
Snyder has entered into employment agreements with each of the executive
officers named in the Summary Compensation Table above. Snyder's employment
agreements with each of Mr. Bateman, Mr. Gershman and Ms. Marentis provide that
Snyder will employ each such executive officer on an "at will" basis. The base
salary for each such executive officer for 1996 was: Mr. Bateman -- $175,000,
Mr. Gershman -- $200,000, and Ms. Marentis -- $150,000. The employment
agreements between Snyder and Mr. Bateman, Mr. Gershman and Ms. Marentis also
provide for incentive bonuses based on attaining specific performance criteria.
These agreements also include a non-competition commitment during the term of
the agreement and for a period of 18 months after termination of the agreement
and contain commitments, non-solicitation of employee provisions, and assignment
of work product agreements. In addition, Snyder agreed to grant to each such
executive officer non-qualified stock options to acquire Snyder Common Stock.
Snyder also has entered into employment agreements with Mr. Snyder and Ms.
Snyder, which were effective in September 1996 and are for a term of three
years, unless sooner terminated as provided in the agreements. The agreements
provide that the 1996 base salaries for Mr. Snyder and for Ms. Snyder were
$300,000 and $200,000, respectively. The agreements with Mr. Snyder and Ms.
Snyder also provide for incentive bonuses based on attaining performance
criteria to be established by the Compensation Committee or the Snyder Board,
and include a non-competition commitment during the term of the agreement,
confidentiality commitments, non-solicitation of employee provisions, and
assignment of work product agreements.
Snyder also has entered into employment agreements with each of its other
executive officers. These agreements generally include certain non-competition
agreements, confidentiality commitments, non-solicitation of employee provisions
and assignment of work product agreements.
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<PAGE> 83
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to March 1997, the Snyder Board had not appointed a Compensation
Committee. Accordingly, during 1996, the Snyder Board was responsible for the
establishment of the general compensation policies of Snyder.
Throughout 1996 and to the date of this Proxy Statement/Prospectus, Mr.
Daniel M. Snyder, the President and Chief Executive Officer of Snyder, and Ms.
Michele D. Snyder, the Chief Operating Officer of Snyder, also served as
directors of Snyder. Mr. A. Clayton Perfall, the Chief Financial Officer of
Snyder, was elected as a director of Snyder in September 1996, and continues to
serve as such to the date of this Proxy Statement/Prospectus. Finally, Mr. Brian
Benhaim, Senior Vice President of Corporate Development, also served as a
director of Snyder from September 1996 through January 1997. Each of these
executive officers absented himself or herself from all discussions relating to,
and abstained from voting on, resolutions concerning his or her own
compensation.
In addition, Mr. Mortimer B. Zuckerman and Mr. Fred Drasner also have
served as directors of Snyder since September 1996. Mr. Zuckerman and Mr.
Drasner also are the beneficial owners of USN, the original limited partner of
the Partnership, and beneficially own U.S. News & World Report. See
"Snyder -- Certain Transactions."
REPORT OF THE BOARD OF DIRECTORS
OF SNYDER ON EXECUTIVE COMPENSATION
Prior to March 1997, the Snyder Board had not appointed a Compensation
Committee. Accordingly, during 1996, the Snyder Board was responsible for the
establishment of the general compensation policies of Snyder and the specific
compensation of its executive officers, including its Chief Executive Officer.
The Snyder Board also was responsible for administering the Snyder Stock Option
Plan during 1996 for Snyder's executive officers.
EXECUTIVE COMPENSATION POLICY
During 1996, in setting executive compensation, the objective of the Snyder
Board was to attract, retain and motivate highly qualified employees and
executive officers who contribute to growth in stockholder value over time. To
accomplish this objective, the Snyder Board seeks to provide strong financial
incentives to Snyder's executive officers, at a reasonable cost to Snyder and
its stockholders. Compensation currently consists principally of salary, annual
performance-based bonuses and stock options granted under the Snyder Stock
Option Plan. In establishing certain components of compensation, the Snyder
Board seeks to provide Snyder's executive officers with a strong financial
incentive aligned with the business objectives and performance of Snyder,
thereby reflecting the interests of Snyder's stockholders. From September 25,
1996, the date on which Snyder Common Stock began trading on the NYSE, to
December 31, 1996, Snyder's share price increased by over 58%.
1996 EXECUTIVE OFFICER COMPENSATION
During 1996, Snyder's compensation for its executive officers consisted
principally of salary, bonus and stock options. In setting base salaries for
1996, the Snyder Board used a subject evaluation process considering the
performance of Snyder, the officer's position, level and scope of
responsibility, as well as the recommendations of management with respect to
base salary for such executive officer. The Snyder Board also sought to set
salaries at levels that, in the opinion of the members of the Snyder Board,
approximate the salary levels for outsourced marketing companies that are
comparable to Snyder. In addition, certain of Snyder's executive officers have
employment agreements that establish a base salary, subject to such increases as
may be approved by the Snyder Board. See "Snyder -- Executive
Compensation -- Executive Employment Contracts."
Bonuses are awarded principally on the basis of Snyder's performance during
the period and on the Snyder Board's assessment of the extent to which the
executive officer contributed to the overall profitability
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of Snyder or a particular operating division of Snyder for a specific period. In
awarding performance-based bonuses, the Snyder Board during 1996 sought to set
such bonuses at a level that would provide executive officers eligible to
receive such bonuses with a strong incentive to contribute to the success and
profitability of Snyder. During 1996, a total of $600,904 was paid in bonuses to
executive officers of Snyder, excluding the $100,000 bonus paid to Snyder's
Chief Executive Officer.
In a further attempt to link compensation to the long-term performance of
Snyder, in September 1996, Snyder adopted the Snyder Stock Option Plan. In
connection with the initial public offering of Snyder, the Snyder Board awarded
stock options to all of the executive officers of Snyder, other than Mr. Daniel
M. Snyder, the Chief Executive Officer, and Ms. Michele D. Snyder. Such option
awards were made based principally on the recommendations of management. All of
the options granted under the Snyder Stock Option Plan in 1996 were
non-qualified stock options with an exercise price that was equal to the fair
market value of the Snyder Common Stock on the option grant date. Options
granted in conjunction with Snyder's initial public offering were granted with
an exercise price equal to the initial public offering price of $17.00 per
share. Generally, the options granted under the Snyder Stock Option Plan vest
ratably over a four-year period on the anniversary date of the option grant
date. However, in connection with the initial public offering of Snyder, a
portion of the stock options granted to certain of the executive officers of
Snyder by the Snyder Board vested immediately upon the consummation of the
initial public offering. Under the Snyder Stock Option Plan, an aggregate of
2,940,000 stock options were granted to 12 executive officers of Snyder during
1996.
1996 CHIEF EXECUTIVE OFFICER COMPENSATION
During 1996, the Snyder Board entered into an Employment Agreement with Mr.
Daniel M. Snyder, Snyder's Chief Executive Officer. The Employment Agreement
provides that Mr. Snyder's base salary for 1996 is $300,000. Under the
Employment Agreement, Mr. Snyder also is eligible to receive such bonuses as may
be awarded from time to time by the Snyder Board. Mr. Snyder received a bonus of
$100,000 with respect to 1996. In the subjective view of the Snyder Board, Mr.
Snyder's base salary and bonus are roughly comparable to, or below, the median
base salary and bonus awarded by comparable companies to their Chief Executive
Officers. Further, the Snyder Board believes that such compensation is
reasonable in light of the significant and material contributions of Mr. Snyder
to the day-to-day business operations of Snyder and the consummation in 1996 of
Snyder's initial public offering. The Snyder Board did not make any stock option
or other stock-based incentive awards to Mr. Snyder during 1996. The Snyder
Board determined that, given Mr. Snyder's substantial beneficial ownership of
Snyder Common Stock, his long-term interests in the performance and
profitability are aligned with those of other stockholders and, accordingly, no
additional financial, stock-based incentive was warranted.
Potential Effect of Section 162(m) of the Code. Section 162(m) of the Code
generally sets a limit of $1,000,000 on the amount of compensation paid to
executive employees (other than enumerated categories of compensation, including
performance-based compensation) that may be deducted by a publicly-held company.
It is the policy of the Snyder Board to seek to qualify executive compensation
for deductibility to the extent that such policy is consistent with Snyder's
overall objectives and executive compensation policy. Compensation attributable
to stock options granted under the Snyder Stock Option Plan currently is
excluded from the $1,000,000 limit as "qualified performance-based compensation"
under the transition rules contained in applicable Treasury regulations. None of
Snyder's executive officers received compensation in 1996 in excess of the
limits imposed under Section 162(m).
SNYDER -- CERTAIN TRANSACTIONS
The following is a description of certain transactions between Snyder and
each of its directors, executive officers, entities beneficially owned by its
executive officers or directors and security holders known to Snyder to
beneficially own more than 5% of the outstanding Snyder Common Stock.
Reorganization. Snyder was organized in June 1996 to be the holding
company for the Partnership. USN, which is beneficially owned by Mr. Mortimer B.
Zuckerman and Mr. Fred Drasner, was a limited
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partner of the Partnership. SMS, a corporation beneficially owned in part by Mr.
Daniel M. Snyder, Chairman and Chief Executive Officer of Snyder, and Ms.
Michele D. Snyder, Vice Chairman, President and Chief Operating Officer of
Snyder, was the corporate general partner of the Partnership. On September 24,
1996, Snyder consummated the Reorganization, pursuant to which Snyder acquired
all of the limited partnership interests of the Partnership and all of the
issued and outstanding common stock of SMS. In the Reorganization, each 1%
interest in the Partnership was exchanged, directly by the limited partners of
the Partnership or indirectly by the stockholders of SMS, for 294,584 shares of
Snyder Common Stock. In the Reorganization, 29,458,400 aggregate shares of
Snyder Common Stock were issued in exchange for 100% of the Partnership.
Prior to the Reorganization, the Partnership distributed to its partners in
one or more distributions, including SMS, its then cash balance, and SMS
distributed to its stockholders its then cash balance. The amount of the
distributions during 1996 totaled $18.7 million, of which approximately $2.7
million was a non-cash distribution. Such distributions were made as a return to
the partners on their respective investments and to allow them to pay their
income tax liability. The former partners of the Partnership and the former
stockholders of SMS were liable for income tax payable with respect to Snyder's
operations for periods prior to the consummation of the Reorganization.
Investment in Snyder Communications, L.P. On May 18, 1995, the Partnership
Agreement of the Partnership was amended to admit certain new investors as
limited partners. Concurrently with the amendment, the Partnership entered into
the Debenture and Partnership Interest Purchase Agreement and issued to such new
investors debentures with a face amount of $6.0 million. At that date, the new
investors purchased an aggregate 3% limited partnership interest in the
Partnership and, concurrently, USN purchased an additional 3.15% limited
partnership interest in the Partnership. A portion of the proceeds from the
issuance of the debentures was distributed to the USN to repay its capital
contributions in the amount of $297,773 and to repay a note to USN in the amount
of $2,606,151. Another portion of the proceeds of such issuance was distributed
to SMS and to USN in a special cash distribution in the amount of $1,450,000 and
$1,050,000, respectively. The remaining proceeds were used for general corporate
purposes.
Related Party Lending. During 1995, SMS advanced to Gerald S. Snyder, a
former stockholder in Snyder and Daniel M. Snyder's and Michele D. Snyder's
father, $2,725,000, evidenced by a non-interest-bearing loan secured by all of
Gerald S. Snyder's then-owned stock in SMS. SMS distributed the obligation,
in-kind, to the stockholders of SMS, pro rata on June 30, 1996.
Services. Snyder produces a WallBoard(R) sponsored by U.S. News & World
Report, a publication beneficially owned by Mortimer B. Zuckerman and Fred
Drasner, directors of Snyder. The agreement between U.S. News & World Report,
L.P. and Snyder provides that U.S. News & World Report, L.P. will provide Snyder
with the use of editorial content from U.S. News & World Report, in
WallBoards(R) at airports for private aircraft nationwide, in exchange for U.S.
News & World Report being included as one of the sponsors in this program. The
arrangement is terminable by either party upon 30 days notice. This WallBoard(R)
program commenced in July 1995. Revenues earned by Snyder from sponsors of this
WallBoard(R) program other than U.S. News & World Report were approximately
$850,000 during 1995 and $2,515,050 during 1996.
Related Party Leases. Snyder leases its Bethesda, Maryland location from
Boston Properties, a company beneficially owned by Mortimer B. Zuckerman, a
director of Snyder. The amounts paid to Boston Properties during 1994, 1995 and
1996 were $355,483, $771,855 and $1,125,542, respectively. Such space is used as
the corporate headquarters for Snyder and houses Snyder's teleservices call
stations for the Direct Sales division. Snyder believes that the terms of the
lease at the time the lease was entered into were no less favorable to Snyder
that those that could be obtained from another lessor.
Service Arrangement With Applied Graphics Technologies, Inc. Snyder is
currently contemplating entering into an agreement with Applied Graphics
Technologies, Inc. ("AGT") pursuant to which AGT will provide Snyder with
prepress services. Prepress services from AGT may be used by Snyder in
connection with wallboard advertising it is providing to U.S. News & World
Report, L.P. under a separate agreement between Snyder and U.S. News & World
Report, L.P. Messrs. Zuckerman and Drasner, directors of Snyder, are the
beneficial owners of U.S. News & World Report, L.P. and of approximately 62.5%
of the common stock of AGT. In addition, Mr. Zuckerman is the Chairman of U.S.
News & World Report, L.P., Editor-in-Chief of
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U.S. News & World Report, and Chairman of the Board of Directors of AGT, and Mr.
Drasner is the Chief Executive Officer of U.S. News & World Report, L.P. and
Chairman and Chief Executive Officer and a director of AGT.
CERTAIN INFORMATION REGARDING AMERICAN LIST
GENERAL
American List, through its wholly-owned subsidiary, American Student List
Co., Inc., develops, maintains and markets one of the largest and most
comprehensive databases of high school, college and pre-school through junior
high school students in the United States. American List rents lists derived
from its database for use primarily in direct mail and telemarketing programs.
During the fiscal year ended February 28, 1997, American List rented its lists
to approximately 3,840 customers, including list brokers and advertising
agencies, financial institutions, retailers and educational institutions.
American List's computerized database contains information such as name,
address, gender and, if available, date of birth and telephone number of the
individuals included. From this database, American List extracts, manipulates
and sorts information to create its multiple list products which are available
in a variety of formats, including prospect lists, mailing labels, 3" x 5" index
cards and computer magnetic tapes, cartridges and disks. American List's
computer processing facility provides it with the ability to customize its lists
to best serve each customer's marketing goals.
The information contained in American List's database is derived from a
number of sources which are the result of long-term relationships developed by
American List over the past 30 years, as well as from certain publicly available
sources. American List believes that its relationships with many of its
information sources make it difficult for others to obtain comparable data and,
accordingly, provide American List with a competitive advantage.
PRODUCTS AND SERVICES
American List markets a variety of products and services, which are created
from the information contained in its database. American List has devoted
significant time and effort to developing, maintaining and enhancing its
database. American List utilizes a state-of-the-art computer system for data
compilation and list production. Data inputting is outsourced to third party
vendors, and is backed up as information is updated and then stored off site.
Sophisticated computer hardware and software enable the rapid compilation,
processing, storage, sorting and quality control of inputted data. American List
also utilizes software to check the accuracy of the inputted data, including
spelling, zip code information, address and date of birth, as well as to perform
the valuable tasks of removing duplication from American List's list products.
Each of American List's lists is guaranteed to be at least 95% deliverable if
the mailing takes place within 30 days after receipt of the list. To date,
refunds pursuant to this guarantee arrangement have not been material.
American List typically will rent its lists for a one-time use unless other
arrangements are made. Rental prices for a one-time use generally range from $60
to $120 per thousand names depending upon the criteria selected. Rates for
unlimited use of a list for a one-year period typically range from $150 to $250
per thousand names. American List takes precautions to protect against
unauthorized usage of lists by seeding its lists with decoy names.
American List currently markets lists in the following categories:
High School Students. American List believes it maintains the most
complete and accurate list of high school students available. For fiscal 1997,
rentals of high school student lists accounted for approximately 60% of American
List's revenues. The high school student list is used by marketers of credit
cards, scholarships, colleges, the armed services, catalogue items, formal wear,
magazines, computers, software and accessories. This segment, as well as the
college segment of American List's database, has significant appeal to direct
marketing companies, which place a strong emphasis on reaching younger consumers
effectively, as they are
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seen as important first-time buyers who form their own long-term buying habits
and develop brand loyalties. American List updates this list as new information
becomes available, which is generally on a monthly basis.
College Students. The college student market is attractive to direct
marketing companies because of the significant amount of money college students
have available for discretionary spending. Marketers generally wish to cultivate
the development of first-time buying habits of this group. Furthermore,
marketers view information on this segment of the population as extremely
valuable because the transient nature of college students often makes them
difficult to locate and reach. American List offers to its customers, college
student lists segmented by school, class and/or major. Customers purchasing
these lists include companies marketing automobiles, credit cards, clothing and
scholarships. American List updates its college student list primarily in the
late fall and winter when new student information becomes available.
Pre-School Through Junior High School Students. American List has compiled
a database of approximately 35%, or 15 million names, of children between the
ages of two and 13. Applications of this list include the marketing of
encyclopedias and books, children's magazines, children's catalogue items,
summer camps and amusement parks. American List updates this list as information
becomes available, generally on a monthly basis.
Young Adults. American List has compiled a database of young adults
between the ages of 19 and 36. Applications of this list include the marketing
of automobiles, trade schools and the armed services. American List updates this
list as information becomes available which is generally on a monthly basis.
Historically, this list has accounted for less than 5% of American List's
revenues.
Other List Products and Services. In order to expand its customer base and
increase sales to its existing customers, American List is focusing on new list
products and new applications of its database. American List introduced the
following list compilations: (i) a list of newly engaged couples which it
markets for use by caterers, musicians, photographers, and other product and
service providers in the wedding market as well as to insurance companies and
others seeking to target newlyweds; and (ii) religious and ethnic compilations
which it markets for use by religious and ethnic publications, and colleges and
universities, as well as existing customers. These lists are designed to further
a company's ability to target customers distinctly through direct marketing
programs.
Additionally, American List offers its customers a full range of data
processing services which enable them to maintain their current customer files
and prospect files for ongoing mailings. Among the services offered by American
List are carrier route coding, address standardization, postal presorting, file
overlays, back end mailing analysis, tape/diskette conversions, telephone
appending, merge/purge and custom programming.
In June 1995, American List, through GeoDemX Corporation, a Michigan
corporation and wholly-owned subsidiary, acquired certain assets and liabilities
of an early stage business engaged in the sale of computer software that
incorporates computerized maps and electronic demographic data to generate sales
leads. The GeoDemX software is designed to permit an organization to target
selectively a prospective customer base that is similar to that organization's
existing customer base.
New Products and Services. In January 1997, American List entered into an
agreement with Creative Media Generations, Inc. ("CMG") which provides for an
exclusive arrangement to introduce to American List's college student marketing
customers a system developed by CMG to maximize postal efficiencies. This
arrangement allows American List to offer these customers the opportunity to
save up to 50% of their current postage costs in mailings to college students.
CUSTOMERS
American List's customer base is comprised of list brokers and advertising
agencies which resell American List's list products as well as end users
employing direct mail and telemarketing campaigns as part of their marketing
efforts. Among the numerous large and small entities who have utilized American
List's lists over the years are banks and other financial institutions,
educational institutions such as colleges and trade schools, the armed forces,
record companies, publishers, catalogue companies, retailers and consumer goods
marketers. A significant portion of American List's recent growth has been the
result of increased marketing
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expenditures by financial institutions relating to the promotion of credit cards
and other financial products. List brokers and advertising agencies, which are
resellers of American List's products, generally account for between 40% and 50%
of annual revenues. These customers generally receive a 20% brokerage commission
on their sales. American List's revenues are calculated net of such brokerage
commissions. In each of the past 10 years, no single customer has accounted for
more than 5% of American List's revenues.
To date, American List's experience has been that first-time customers rent
only a small portion of American List's database and generally increase their
usage over time. American List believes this results from customers' increasing
familiarity and experience with the effectiveness of American List's products in
their direct marketing programs.
SALES AND MARKETING
American List markets its products and services to existing and prospective
customers through an in-house marketing staff which conducts telemarketing and
direct sales, and through third party resellers such as independent list brokers
and advertising agencies. American List also continually seeks to broaden its
customer base by attending trade shows and conventions. American List has
recently increased expenditures for in-house advertising and expanded its
in-house sales force.
COMPETITION
American List competes with a number of small and large companies, many of
which have substantially greater resources and provide a broader array of
services than does American List. These companies include list compilers, list
brokers, marketing consultants and advertising agencies, and include companies
such as Metromail Corporation, Donnelley Marketing, Inc., TRW, Inc. and Equifax
Inc. The primary competitive factors in the children and student list business
are the reliability of the information, the level of service provided and price.
American List believes the accuracy and breadth of its database, its service and
its prices enable it to remain competitive. American List maintains long-term
relationships with many of its customers and information sources, and considers
them a competitive advantage. Although Educational Testing Services of
Princeton, New Jersey also compiles and provides lists of high school students,
it does so only to non-profit institutions and, accordingly, competes with
American List solely in this limited market.
RIGHTS TO DATA
American List attempts to protect its database and certain of its software
by relying on trade secret laws and seeding its lists with decoy names to
identify unauthorized usage. To date, American List has not filed for copyright
protection of its database or list products. There can be no assurance that the
steps taken by American List will be adequate to deter misappropriation of its
data or independent third party development of substantially similar products
and technology.
A patent application relating to the GeoDemX software product was filed
with the United States Patent and Trademark Office in November 1995 and is still
pending. There can be no assurance that this patent application will result in a
patent being issued or that any issued patent will afford adequate protection to
American List in the event that the GeoDemX product is successfully
commercialized.
PRIVACY LEGISLATION
In recent years, numerous legislation has been introduced in the United
States Senate and various state legislatures, which would require, among other
things, parental consent for the sale or rental of lists of children. American
List, along with the industry trade association, various educational
institutions and numerous other organizations have opposed the current
legislation, and have proposed alternative terms and provisions to the
legislation. The direct marketing industry and American List have been working
closely with representatives from the state legislatures and Congress to apprise
them of the consequences of the proposed legislation to the entire direct mail
industry. The direct marketing industry and American List believe that a policy
designed to respect the privacy of households that do not want direct mail can
be developed and
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implemented through industry self-regulation rather than government legislation.
At present it cannot be determined what effect, if any, the proposed legislation
would have on American List if adopted.
EMPLOYEES
As of June 16, 1997, American List had 40 employees, including 14 in
marketing and sales, nine in administration, five in data compilation, eight in
data processing operations and four in its GeoDemX operations. None of American
List's employees is subject to a collective bargaining agreement nor has
American List ever experienced a work stoppage. American List believes that its
employee relations are generally good.
PROPERTIES
American List's principal executive offices and computer facility are
located in approximately 9,400 square feet of space at 330 Old Country Road,
Mineola, New York, and are occupied pursuant to a lease which terminates on June
15, 2001. Rent expense was $351,000 during the year ended February 28, 1997. The
lease contains an escalation clause relating to increases in real estate taxes.
American List maintains a branch sales office located in approximately
1,500 square feet of space at 2900 North Military Trail, Suite 140, Boca Raton,
Florida, and is occupied pursuant to a lease which terminates on June 30, 2001.
Rent expense was $17,125 during the year ended February 28, 1997. The lease
contains an escalation clause relating to increases in operating expenses.
GeoDemX currently occupies approximately 2,300 square feet of office space
at 17117 West Nine Mile Road, Southfield, Michigan on a month-to-month basis
after expiration of its lease on such premises on May 31, 1996. The base monthly
rent is $2,204. American List believes it will be able to renew its lease or
lease new space in the same building should it determine to do so.
LEGAL PROCEEDINGS
An officer of American List, who was subject to an employment agreement
expiring in March 2001, was terminated in February 1997. The employee has
challenged the basis for termination under the terms of such agreement before an
independent arbitrator and accordingly seeks reinstatement, back pay and
benefits. As of the date of this Proxy Statement/Prospectus, American List's
counsel with respect to this matter believes that American List has meritorious
defenses and is pursuing the matter vigorously. Furthermore, American List does
not currently believe that this action will have a material adverse affect on
American List's results of operations, cash flow or financial condition.
From time to time, American List is subject to ordinary routine litigation
and various other legal proceedings, claims and liabilities which are incidental
to the business. American List believes that none of these other legal
proceedings has had or is likely to have a material adverse affect on American
List's results of operations, cash flow or financial condition.
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AMERICAN LIST MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1997, American List had cash, cash equivalents and
marketable securities of approximately $9.4 million and working capital of
approximately $14.7 million. Cash, cash equivalents and marketable securities
decreased by approximately $2 million during fiscal 1997 primarily due to net
cash used in financing activities of $9.6 million and capital expenditures of
$.3 million offset by $8.1 million of net cash provided by operations.
The net cash used in financing activities of $9.6 million reflects the
payment of dividends of $5.4 million, the acquisition of treasury stock of $4.1
million and the payment of long-term debt of $.6 million pursuant to the
licensing agreement described below. Cash flows from financing activities of $.5
million resulted from the issuance of American List Common Stock in connection
with the exercise of American List Options.
Historically, American List has financed its cash flow requirements with
funds generated from operations. Net cash flows from operating activities
amounted to approximately $8.1 million and $6.6 million during fiscal 1997 and
1996, respectively. This increase in cash flows from operating activities is
primarily attributable to a decrease in accounts receivable of $.4 million
during fiscal 1997 as compared to an increase of $1.4 million during fiscal
1996. The changes in accounts receivable directly relate to the fluctuations in
sales for the year.
On March 22, 1995, the American List Board authorized the repurchase of up
to 200,000 shares of American List Common Stock. In April 1995, American List
purchased 24,600 shares of its Common Stock for an aggregate price of $509,238.
An additional 300 shares were repurchased in November 1995 for an aggregate
price of $7,634.
On May 23, 1996, the American List Board increased the number of shares
that may be repurchased to 300,000 shares of American List Common Stock. In May
1996, American List purchased 110,000 shares of its Common Stock for an
aggregate price of $2,768,009. In January 1997, American List purchased 55,000
shares of its Common Stock for an aggregate price of $1,325,815. In connection
with the Merger Agreement with Snyder, American List discontinued its repurchase
program.
Effective July 1, 1994, American List entered into a licensing agreement
with Metromail Corporation, pursuant to which it became obligated to pay a total
of $4,200,000 in decreasing annual installments through July 2003. See Note E to
the Consolidated Financial Statements.
On June 22, 1995, American List consummated an agreement (the "GeoDemX
Agreement") pursuant to which it acquired, through GeoDemX, the assets of a
business engaged in the sale of geodemographic computer software -- an emerging
category of software designed by combining computerized maps with electronic
demographic data -- for use in the generation of sales leads. Pursuant to the
GeoDemX Agreement, American List advanced GeoDemX $750,000 to fund its working
capital requirements and other operating expenses. Although it is American
List's present position that the GeoDemX technology is a viable product and can
be marketed successfully, American List cannot assure that it will continue
funding future operations of the GeoDemX business. American List is actively
pursuing a purchaser of GeoDemX. Accordingly, an adjustment to expense the
unamortized portion of goodwill as of February 28, 1997 of approximately
$100,000 was recorded to reflect the possible discontinuance of the operations
of the GeoDemX business. Management believes that the remaining net assets of
approximately $133,000 are fully recoverable.
Pursuant to the GeoDemX Agreement, additional consideration, if any, for
the acquisition of the GeoDemX business will involve the issuance by American
List of shares of its Common Stock having a market value equal to between 40%
and 50% of the Pre-Tax Earnings (as defined in the GeoDemX Agreement), if any,
of the GeoDemX business during the fiscal years ending February 28 or 29, 1996,
1997, 1998 and 1999. Any payment required during the second year will be reduced
in the event the GeoDemX operations generate a Pre-Tax Loss (as defined in the
GeoDemX Agreement) during the first year. The GeoDemX Agreement grants the
sellers the option to receive a portion of any payments earned in cash. No
payment was required for the fiscal year ended February 28, 1997.
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American List believes that available cash, together with revenues
generated from operations, will be sufficient to fund American List's continuing
operations and the payment of dividends on a short and long term basis. American
List may also from time to time consider the acquisition of complementary
businesses, products or technologies which may require it to obtain additional
financing. American List has no present understandings, commitments or
agreements, nor is it engaged in any discussions or negotiations, with respect
to any such transactions. In addition, certain of such transactions would be
subject to the prior approval of Snyder until consummation or termination of the
Merger Agreement.
See Note A-11 to the Consolidated Financial Statements for disclosure of
the impact of the issuance of Statement of Financial Accounting Standards No.
128, Earnings Per Share.
RESULTS OF OPERATIONS
Revenues from list sales are recognized upon the shipment of lists to
customers on computerized labels, magnetic tape, cartridges or diskettes, or the
electronic transfer of the list. For fiscal 1997, high school student lists and
college student lists accounted for approximately 60% and 26%, respectively, of
American List's revenues. Revenues from the sale of software are recognized upon
installation and acceptance by the customer. The GeoDemX operations accounted
for approximately 3% of fiscal 1997 revenues.
Costs of operations consists of all costs relating to list production and
maintenance, such as salaries, depreciation and supplies, and the cost of data
acquisition, which includes the amortization of list costs and royalties due
third parties for the sale of certain lists.
Selling, general and administration expenses consist primarily of officer,
sales and administrative salaries, employee benefits, rent and professional
fees.
FISCAL YEAR ENDED FEBRUARY 28, 1997
COMPARED TO FISCAL YEAR ENDED FEBRUARY 29, 1996
Revenues decreased by approximately $416,000 (2%) to $18.5 million for
fiscal 1997 as compared to fiscal 1996. For the three months ended February 28,
1997, revenues decreased by approximately $634,000 (11%) to $5.0 million from
the comparable period in fiscal 1996. Revenues were below prior year comparative
results for both fiscal 1997 and the fourth quarter of fiscal 1997 due primarily
to a decrease in sales to the credit card industry, the scholarship industry and
a decline in new sales to major customers. According to industry sources, credit
card default rates rose in 1996, and as a result, certain credit card issuers
(which include customers of American List) tightened credit requirements which
resulted in lower mail quantities or, in some cases, the postponement of an
entire mailing program.
Cost of operations increased by approximately $163,000 (6%) for fiscal 1997
as compared to fiscal 1996 primarily due to purchases of additional data
processing equipment, and increased software costs and royalties due to third
parties on certain list rentals. As a percentage of sales, costs of operations
increased to 16.6% during fiscal 1997 as compared to 15.4% during fiscal 1996 as
a result of the lower sales volume in fiscal 1997.
Selling, general and administrative expenses increased by approximately
$702,000 (17%) for fiscal 1997 as compared to fiscal 1996 primarily due to
expenses associated with the opening of a branch sales office, professional
fees, personnel expenses and the write-off of goodwill associated with GeoDemX.
Professional fees were up over $300,000 from the prior year due to legal and
accounting fees associated with the Merger with Snyder, lobbying costs relating
to proposed privacy legislation and personnel matters. This increase in costs
were partially offset by the modification of Mr. Martin Lerner's employment
agreement lowering his fiscal 1997 salary by $200,000. As a percentage of sales,
such expenses increased during fiscal 1997 to 26.7% as compared to 22.4% during
fiscal 1996.
The lobbying costs were incurred in connection with legislation that was
recently introduced in the United States Senate and various state legislatures,
which would require, among other things, parental consent for the sale or rental
of lists of children. American List incurred lobbying costs of approximately
$92,000 during fiscal 1997 and expects these costs to increase in the future.
For a discussion of the proposed legislation. See "Certain Information Regarding
American List -- Privacy Legislation."
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Investment income decreased approximately $86,000 (18%) to $390,611 for the
fiscal year ended February 28, 1997 from the comparable 1996 period primarily
due to a decrease in the amount of funds available for investment and a decrease
in interest rates.
Interest expense for the year ended February 28, 1997 decreased by
approximately $31,000 (17%) to $154,355 from the comparable 1996 period
primarily due to a reduction in debt associated with normal loan repayments.
There was no material change in the effective tax rate for fiscal 1997,
which increased to 36.9% for such year, as compared to 36.8% for fiscal 1996.
FISCAL YEAR ENDED FEBRUARY 29, 1996
COMPARED TO FISCAL YEAR ENDED FEBRUARY 28, 1995
Revenues increased by approximately $3.4 million (22%) for the fiscal year
ended February 29, 1996 from the fiscal year ended February 28, 1995. The
increase in revenues is primarily attributable to increased sales to existing
and new customers, price increases which took effect in September 1994 and April
1995 and revenues generated by GeoDemX.
Cost of operations increased by approximately $702,000 (32%) for fiscal
1996 as compared to fiscal 1995 primarily due to the amortization of deferred
license costs and costs associated with GeoDemX. As a percentage of sales, cost
of operations remained relatively constant during fiscal 1996 and 1995,
reflecting the inclusion of sales of lower margin GeoDemX products.
Selling, general and administrative expenses increased by approximately
$623,000 (17%) for fiscal 1996 as compared to fiscal 1995 primarily due to
expenses associated with GeoDemX and American List's hiring of additional
personnel. As a percentage of sales, such expenses decreased during fiscal 1996
to 22.4% as compared to 23.3% during fiscal 1995.
Investment income increased by approximately $98,000 (26%) for fiscal 1996
from fiscal 1995 primarily due to an increase in interest rates and a greater
amount of funds available for investment.
Interest expense increased by approximately $56,000 (43%) for fiscal 1996
as compared to fiscal 1995 as a result of the debt associated with a license
agreement entered into in July 1994. See Note E to the Consolidated Financial
Statements.
The effective tax rate decreased to 36.8% for fiscal 1996 as compared to
37.8% for fiscal 1995 primarily due to increased non-taxable municipal bond
interest income.
FISCAL YEAR ENDED FEBRUARY 28, 1995
COMPARED TO FISCAL YEAR ENDED FEBRUARY 28, 1994
Revenues increased by approximately $2.9 million (23%) for fiscal 1995 from
fiscal 1994. The increase in revenues is primarily attributable to increased
sales to existing and new customers, price increases which took effect in
January and September 1994 and a license agreement entered into in July 1994.
See Note E to the Consolidated Financial Statements.
Cost of operations increased by approximately $209,000 (10%) for fiscal
1995 as compared to fiscal 1994 primarily due to the amortization of deferred
license costs. See Note E to the Consolidated Financial Statements. As a
percentage of sales, cost of operations decreased from 16% during fiscal 1994 to
14% during fiscal 1995 due to increased sales volume in excess of the growth in
cost of operations.
Selling, general and administrative expenses increased by approximately
$224,000 (7%) for fiscal 1995 from fiscal 1994 primarily due to an increase in
personnel costs and consulting fees related to the upgrade of American List's
computer networking system. As a percentage of revenues, such expenses decreased
during fiscal 1995 to 23% as compared to 27% during fiscal 1994. This decrease
resulted from changes to an executive officer's compensation agreement which
kept such costs constant for fiscal 1995 as compared to fiscal 1994.
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<PAGE> 93
Investment income increased by approximately $184,000 (95%) for fiscal 1995
from fiscal 1994 primarily due to an increase in interest rates and to a lesser
extent the adoption of Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" which
requires American List to record any unrelated gains and losses from securities
available for sale as a component of stockholders' equity. In contrast, during
fiscal 1994, American List recorded an unrealized loss as a reduction of
investment income.
Interest expense of approximately $129,000 for fiscal 1995 resulted from a
license agreement entered into in July 1994. See Note E to the Consolidated
Financial Statements.
The effective tax rate decreased to 37.8% for fiscal 1995 as compared to
38.6% for fiscal 1994 as a result of an increase of tax-free municipal bond
interest earned in fiscal 1995.
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<PAGE> 94
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following unaudited pro forma combined financial data gives effect to
Snyder's business combinations with MMD and Brann and proposed combination with
America List (the "Business Combinations") on a pooling of interests basis. The
pro forma combined statement of operations data assumes that the Business
Combinations occurred as of January 1 of each period presented and the combined
balance sheet data assumes that the Business Combinations occurred as of March
31, 1997.
The pro forma financial data for all periods presented reflects the
combined financial information for Snyder and has been derived from the
unaudited quarterly financial statements from Synder's March 31, 1997 Form 10-Q
filing and its audited Consolidated Financial Statements for 1994, 1995, and
1996. The pro forma financial data for American List as of March 31, 1997 has
been derived from the audited Consolidated Financial Statements of American List
as of February 28, 1997. The pro forma quarterly statement of income data for
the quarter ended March 31, 1997 was derived by deducting the results of the
nine month period ended November 30, 1996 from the audited Consolidated
Financial Statements of American List for the year ending February 28, 1997. The
pro forma financial data for American List for the years ended December 31,
1996, 1995 and 1994 have been derived from the audited Consolidated Financial
Statements of American List as of and for the three years ended February 28,
1997, February 29, 1996, and February 28, 1995, respectively. The derivation of
such information results in the inclusion of the three months ended February 28,
1997 ($5,031,000 in revenues and $1,825,000 in net income) in the pro forma
financial data for the year ended December 31, 1996 and in the inclusion of the
three months ended February 29, 1996 ($5,665,000 in revenues and $2,491,000 in
net income) in the pro forma financial data for the year ended December 31,
1995.
The unaudited pro forma data is presented for informational purposes only
and is not necessarily indicative of the operating results or financial position
that would have occurred if the Business Combinations had occurred on such date
or at the beginning of the periods indicated, nor is it necessarily indicative
of the future operating results or financial position of the combined companies.
The following unaudited pro forma information should be read in conjunction with
the Consolidated Financial Statements of Snyder and notes thereto included
elsewhere in this Proxy Statement/Prospectus as well as the Consolidated
Financial Statements of American List and notes thereto, incorporated herein by
reference.
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<PAGE> 95
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 28,
1997 1997 MERGER AFTER
SNYDER AMERICAN LIST ADJUSTMENTS MERGER
--------- ------------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents......................... 37,646 3,102 40,748
Marketable securities........................ -- 6,297 6,297
Accounts receivable.......................... 21,344 5,469 26,813
Unbilled services............................ 5,584 -- 5,584
Unamortized cost of lists.................... -- 857 857
Other current assets......................... 5,004 467 5,471
--------- ------------- ----------- -------
Total current assets.................... 69,578 16,192 -- 85,770
Property and equipment, net....................... 21,215 512 21,727
Deferred license costs, net....................... -- 2,456 2,456
Goodwill.......................................... 7,353 7,353
Deposits and other assets......................... 1,012 879 1,891
--------- ------------- ----------- -------
Total assets............................ 99,158 20,039 -- 119,197
======= ========== ========= =======
LIABILITIES
CURRENT LIABILITIES:
Current obligations under debt and capital
leases..................................... 3,350 374 3,724
Accounts payable and accrued expenses........ 30,779 1,125 5,544 37,448
Unearned revenue............................. 4,824 -- 4,824
--------- ------------- ----------- -------
Total current liabilities............... 38,953 1,499 5,544 45,996
Deferred income taxes............................. 232 -- 232
Other long-term liabilities....................... 89 -- 89
Long-term obligations under debt and capital
leases.......................................... 7,350 1,540 8,890
--------- ------------- ----------- -------
Total liabilities....................... 46,624 3,039 5,544 55,207
--------- ------------- ----------- -------
EQUITY
Preferred stock................................... -- -- --
Common stock...................................... 37 45 (40) 42
Additional Paid-in capital........................ 61,060 4,175 40 65,275
Retained earnings (deficit)....................... (8,724) 14,102 (5,544) (166)
Unrealized gain on marketable securities.......... -- 4 4
Cumulative foreign currency translation
adjustment...................................... 161 -- 161
Treasury stock.................................... -- (1,326) (1,326)
--------- ------------- ----------- -------
Total equity............................ 52,534 17,000 (5,544) 63,990
--------- ------------- ----------- -------
Total liabilities and equity............ 99,158 20,039 -- 119,197
======= ========== ========= =======
</TABLE>
See notes to pro forma combined financial information.
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<PAGE> 96
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------ QUARTER ENDED QUARTER ENDED
1994 1995 1996 MARCH 31, 1996 MARCH 31, 1997
------ ------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues........................ 95,923 151,688 203,911 46,171 54,084
Operating expenses:
Cost of services........... 55,420 96,726 142,424 31,167 35,290
Selling, general and
administrative........... 19,369 25,959 38,679 8,366 11,169
Acquisition costs.......... -- -- -- -- 16,181
Compensation to
stockholders............. 3,009 7,034 1,548 -- 0
------ ------- ------- ----------- -----------
Income (loss) from operations... 18,125 21,969 21,260 6,638 (8,556)
Interest
expense -- substantially all
to related parties............ (1,378) (1,956) (2,147) (554) (337)
Interest income................. 459 792 1,231 189 626
------ ------- ------- ----------- -----------
Income (loss) before taxes and
extraordinary item............ 17,206 20,805 20,344 6,273 (8,267)
Income tax provision
(benefit)..................... 5,216 6,000 5,365 1,411 2,391
------ ------- ------- ----------- -----------
Income (loss) from continuing
operations.................... 11,990 14,805 14,979 4,862 (10,658)
====== ======= ======= =========== ===========
Net income (loss) from
continuing operations per
common share.................. 0.31 0.39 0.38 0.13 (0.25)
Average shares outstanding...... 38,359 38,341 39,347 38,341 42,451
Fully diluted net income (loss)
from continuing operations per
share......................... 0.31 0.39 0.38 0.13 (0.25)
Fully diluted average shares
outstanding................... 38,359 38,341 39,542 38,341 42,451
</TABLE>
See notes to unaudited pro forma combined financial data.
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<PAGE> 97
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
1. The pro forma combined financial data reflect the issuance of 5,029,689
shares of Snyder Common Stock for an aggregate of 4,412,008 shares of
American List Common Stock in connection with the Merger based upon a
conversion factor of 1.14 shares of Snyder Common Stock for each share of
American List Common Stock. The actual number of shares of Snyder Common
Stock to be issued will be determined at the Effective Time of the Merger.
2. The pro forma combined balance sheet reflects the estimated acquisition costs
of $5,544,000 expected to be incurred in connection with the Merger.
3. On a combined basis, there were no material transactions between Snyder and
American List during any period presented.
4. The table below sets forth the composition of the unaudited pro forma
revenues, income from operations and net income for each of the periods shown
had the Merger taken place at the beginning of the periods shown:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE FOR THE FOR THE
AMOUNTS) QUARTER ENDED QUARTER ENDED
--------------------------------- MARCH 31, MARCH 31,
1994 1995 1996 1996 1997
------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues
Snyder................... $80,429 $132,801 $185,440 $40,506 $ 49,053
American List............ 15,494 18,887 18,471 5,665 5,031
------- -------- -------- ------- --------
Combined................. $95,923 $151,688 $203,911 $46,171 $ 54,084
======= ======== ======== ======= ========
Cost of services
Snyder................... $53,219 $ 93,824 $139,359 $30,291 $ 34,555
American List............ 2,201 2,902 3,066 876 735
------- -------- -------- ------- --------
Combined................. $55,420 $ 96,726 $142,425 $31,167 $ 35,290
======= ======== ======== ======= ========
Income (loss) from operations
Snyder................... $ 8,447 $ 10,222 $ 10,794 $ 2,835 $ (11,378)
American List............ 9,678 11,746 10,465 3,803 2,822
------- -------- -------- ------- --------
Combined................. $18,125 $ 21,968 $ 21,259 $ 6,638 $ (8,556)
======= ======== ======== ======= ========
Income (loss) from continuing
operations
Snyder................... $ 5,814 $ 7,195 $ 8,230 $ 2,372 $ (12,483)
American List............ 6,176 7,609 6,748 2,491 1,827
------- -------- -------- ------- --------
Combined................. $11,990 $ 14,804 $ 14,978 $ 4,862 $ (10,656)
======= ======== ======== ======= ========
</TABLE>
86
<PAGE> 98
DESCRIPTION OF SNYDER CAPITAL STOCK
COMMON STOCK
The Certificate of Incorporation of Snyder authorizes the issuance of up to
120,000,000 shares of Snyder Common Stock, par value of $.001 per share. As of
June 16, 1997, 37,891,144 shares of Snyder Common Stock were issued and
outstanding.
Holders of Snyder Common Stock are entitled to one vote per share for each
share held of record on all matters submitted to a vote of the stockholders.
Holders of Snyder Common Stock are entitled to receive ratably such dividends as
may be declared by the Snyder Board on the Snyder Common Stock out of funds
legally available therefor. Holders of Snyder Common Stock do not have
preference in the assets of Snyder over any other class or classes of stock,
upon the voluntary or involuntary liquidation of Snyder. Holders of Snyder
Common Stock have no preemptive rights, cumulative voting rights, or rights to
convert shares of Snyder Common Stock into any other securities, and are not
subject to future calls or assessments by Snyder. All outstanding shares of
Snyder Common Stock issued are fully paid and nonassessable.
PREFERRED STOCK
The Certificate of Incorporation authorizes the Snyder Board to issue up to
an aggregate of 5,000,000 shares of preferred stock (the "Preferred Stock"), to
establish one or more series of Preferred Stock and to determine, with respect
to each such series, the preferences, rights and other terms thereof. Snyder
believes that the ability of the Snyder Board to issue one or more series of
Preferred Stock will provide Snyder with increased flexibility in structuring
possible future financings and acquisitions, and in meeting other corporate
needs. The authorized shares of Preferred Stock, as well as shares of Snyder
Common Stock, would be available for issuance without further action by Snyder's
stockholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which Snyder's securities
may be listed or traded. As of June 16, 1997, no shares of Preferred Stock were
outstanding and the Snyder Board has no present plans to issue any such shares.
CERTAIN CHARTER PROVISIONS
Section 203 of the Delaware General Corporation Law. Snyder is subject to
the provisions of Section 203 of the DGCL (the "Antitakeover Law") regulating
corporate takeovers. The Antitakeover Law prevents certain Delaware
corporations, including those whose securities are listed on the NYSE, from
engaging, under certain circumstances, in a "business combination" (which
includes a merger or sale of more than 10% of the corporation's assets) with any
"interested stockholder" (a stockholder who acquired 15% or more of the
corporation's outstanding voting stock without the prior approval of the
corporation's Board of Directors) for three years following the date that such
stockholder became an "interested stockholder." A Delaware corporation may "opt
out" of the Antitakeover Law with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or bylaws resulting from a stockholders' amendment approved by at
least a majority of the outstanding voting shares. Snyder has not "opted out" of
the application of the Antitakeover Law.
Certain Other Provisions. Snyder's Certificate of Incorporation does not
provide for cumulative voting in the election of directors. Snyder's Bylaws
provide that stockholders holding, in the aggregate, not less than twenty-five
percent of the Snyder Common Stock are permitted to call a special meeting of
the stockholders.
TRANSFER AGENT AND REGISTER
The transfer agent and registrar for the Snyder Common Stock is American
Stock Transfer & Trust Company.
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<PAGE> 99
COMPARATIVE RIGHTS OF STOCKHOLDERS
American List and Snyder are both Delaware corporations and the rights of
their stockholders are governed by the DGCL. The rights of American List
stockholders are governed by American List's Certificate of Incorporation and
Bylaws (the "American List Charter" and the "American List Bylaws,"
respectively, and collectively the "American List Charter Documents"). The
rights of Snyder stockholders are governed by Snyder's Certificate of
Incorporation and Bylaws (the "Snyder Charter" and the "Snyder Bylaws,"
respectively, and collectively, the "Snyder Charter Documents"). If the Merger
is consummated, former American List stockholders will become stockholders of
Snyder. The rights of such former American List stockholders as Snyder
stockholders will continue to be governed by the DGCL, but will be governed by
the Snyder Charter Documents. The following is a summary of the material
differences between (i) the American List Charter Documents and (ii) the Snyder
Charter Documents, which may significantly affect the rights of American List
stockholders. The summary does not purport to be a complete statement of the
rights of holders of shares of Snyder Common Stock and shares of American List
Common Stock under, and is qualified in its entirety by reference to, the Snyder
Charter Documents and the American List Charter Documents, respectively.
DIRECTORS
Number. The Snyder Bylaws provide that the number of directors which
constitutes the Snyder Board will be not less than one nor more than nine, as
fixed from time to time by the Snyder Board. The American List Bylaws provide
that the number of directors which constitutes the American List Board will be
fixed from time to time by the vote of a majority of the entire American List
Board, but will not be less than three.
Removal of Directors. The Snyder Bylaws provide that any director may be
removed, with or without cause, by the holders of a majority of the shares of
Snyder Common Sock then entitled to vote at an election of directors. The
American List Bylaws provide that any director may be removed by a majority vote
of the stockholders at a meeting called and held for that purpose and by a
majority vote of the American List Board at a meeting called for such purpose.
Power to Call Special Meeting of Board of Directors. The Snyder Bylaws
provide that special meetings of the Snyder Board may be called by the
president, or by the president or secretary on the written request of a majority
of the directors. The American List Bylaws provide that special meetings of the
American List Board may be called by two or more directors, by the Chairman of
the Board or by the president.
Indemnification of Directors and Officers. Section 145 of the DGCL
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. Such indemnification may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. A Delaware corporation is permitted to indemnify directors, officers,
employees and other agents of such corporation in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the person to be indemnified has been
adjudged to be liable to the corporation. Where a director, officer, employee or
agent of the corporation is successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to above or in defense of any claim,
issue or matter therein, the corporation must indemnify such person against the
expenses (including attorneys' fees) which he or she actually and reasonably
incurred in connection therewith.
The Snyder Bylaws provide that Snyder shall indemnify, to the full extent
and under the circumstances permitted by the DGCL in effect from time to time,
any past, present or future director or officer, made or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding, by
reason of
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the fact that such person is or was a director, officer, employee or agent, or
was serving in such capacities at another entity at the specific request of
Snyder, on the same conditions provided by the DGCL. The Snyder Bylaws further
provide that Snyder shall indemnify any such person in any threatened, pending
or completed action or suit by or in the right of Snyder under similar
conditions, except that no indemnification is permitted without judicial
approval if the person to be indemnified has been adjudged to be liable to
Snyder. In addition, the Snyder Bylaws provide that the Snyder Board may also
grant indemnification to any individual other than an officer or director, as it
may determine in its sole discretion.
The American List Charter provides that American List shall indemnify any
person who was or is a party or witness, or is threatened to be made a party or
witness, to any threatened, pending or completed action, suit or proceeding, by
reason of the fact that such person is or was a director or officer of American
List, or, as a director or officer, is or was serving as a director, officer,
employee, agent, partner or trustee (or any similar position) of another entity,
to the fullest extent authorized or permitted by the DGCL, as may be amended.
The American List Charter further provides that except with respect to
proceedings to enforce indemnification, American List shall indemnify any such
person in connection with an action, suit or proceeding initiated by such person
only if the initiation of such action, suit or proceeding was authorized by the
American List Board. The American List Bylaws provide that American List shall,
to the fullest extent permitted by the DGCL, indemnify any and all persons whom
it shall have power to indemnify against costs, expenses, liabilities or other
matters incurred by reason of having been officers or directors.
AMENDMENT OF BYLAWS
The Snyder Charter provides that the Snyder Board shall have the power,
without the assent or vote of the stockholders, to make, alter, amend, change,
add to, or repeal the Snyder Bylaws. The Snyder Bylaws provide that such Bylaws
may be amended or repealed by the affirmative vote of a majority of the
directors then in office.
The American List Charter provides that the power to make, alter, or repeal
the American List Bylaws and to adopt any new Bylaw is vested in the American
List Board, except a Bylaw classifying directors for election for staggered
terms. The American List Bylaws provide that such Bylaws may be amended or
repealed, or new Bylaws adopted, by a majority of the total votes of the
stockholders (or when a class vote is required, by a majority of the appropriate
class) as well as by the American List Board, and that Bylaws adopted by the
American List Board may be amended or repealed by the stockholders as provided
above.
STOCKHOLDER VOTE REQUIRED FOR ACTION
Under the DGCL, in the absence of specification in the certificate of
incorporation or bylaws of the corporation, (i) in all matters other than the
election of directors, the affirmative vote of the majority of shares present in
person or represented by proxy at the meeting and entitled to vote thereon
constitutes the act of the stockholders, and (ii) directors will be elected by a
plurality of the votes of the shares present in person or represented by proxy
and entitled to vote on the election of directors.
The Snyder Bylaws provide that when a quorum is present at any meeting, the
affirmative vote of the majority of shares present in person or represented by
proxy at the meeting and entitled to vote on the matter constitutes the act of
the stockholders. The Snyder Charter Documents do not contain a specific
provision relating to the requisite majority for the election of directors.
The American List Bylaws provide that except as otherwise provided by
statute, the American List Charter or Bylaws, an action of the stockholders is
authorized by a majority of the total votes (or when a class vote is required,
by a majority of the votes of such class) cast at the meeting by the holders of
shares present in person or represented by proxy and entitled to vote on such
action, and further provide that unless otherwise provided by statute or the
American List Bylaws, the persons receiving a plurality of the votes cast at a
stockholders' meeting for the election of directors will be elected.
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<PAGE> 101
POWER TO CALL SPECIAL STOCKHOLDERS' MEETING
Under the DGCL, a special meeting of stockholders may be called by the
board of directors or by such person or persons authorized by the certificate of
incorporation or the bylaws. The Snyder Bylaws provide that special meetings of
stockholders may be called by the president or by the Snyder Board, and also by
the secretary at the request in writing of holders of not less than 25% of the
outstanding shares entitled to vote at such meeting, or of the Snyder Board. The
American List Bylaws provide that a special meeting of stockholders may be
called by the American List Board or the Chairman of the Board or by the
president, and that the American List Board shall call such a meeting when
requested in writing by holders of not less than 20% of the outstanding stock of
American List.
INTERESTED DIRECTORS
Under the DGCL, a contract or transaction between a corporation and one or
more of its directors or officers, or between a corporation and another entity
in which one or more of its directors or officers are directors or officers or
have a financial interest, will not be void or voidable solely for this reason,
if (i) approved in good faith by either (a) a majority of the disinterested
board of directors or committee thereof, or (b) a majority of the shareholders,
in each case after disclosure or with knowledge of the material relevant facts,
or (ii) the contract or transaction is fair as to the corporation as of the time
it is authorized, approved or ratified by the board of directors, a committee or
the shareholders. The American List Bylaws provide that contracts or
transactions in which any director or directors may be interested or to which
they are a party shall not be affected and invalidated by such fact, and further
provide that each person who may become a director of American List is relieved
from any liability that might otherwise exist from contracting with American
List for the benefit of himself, any firm, association or corporation in which
he may be in any way interested. The Snyder Charter Documents contain no similar
provision.
PREFERRED STOCK
The Snyder Charter currently provides that Snyder is authorized to issue a
total of 125,000,000 shares of capital stock, consisting of 120,000,000 shares
of common stock and 5,000,000 shares of preferred stock. The American List
Charter currently provides that American List is authorized to issue 20,000,000
shares of common stock. The Snyder Charter allows the Snyder Board to issue
shares of preferred stock from time in one or more series and to fix the rights,
privileges and preferences of those shares, including with respect to dividends,
conversion, rights upon liquidation, dissolution or winding-up, merger,
consolidation of, or sale of assets by, Snyder, redemption and voting power
(including the right to elect one or more directors), without any further vote
or action by the stockholders. The rights of the holders of Snyder Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any shares of preferred stock that may be issued by Snyder in the future.
SHARES ELIGIBLE FOR FUTURE SALE
A substantial number of shares of Snyder Common Stock will become available
for sale in the public market at various times following the consummation of the
Merger. Future sales of substantial amounts of Snyder Common Stock in the public
market could adversely affect the market price of the Snyder Common Stock and
the ability of Snyder to raise additional capital or engage in business
combinations through sales of additional shares of Snyder Common Stock. Upon
consummation of the Merger, assuming the issuance of the Estimated Merger
Shares, Snyder will have outstanding an aggregate of 42,920,833 shares of Snyder
Common Stock. The Estimated Merger Shares to be issued in connection with the
Merger will be freely transferable without restriction or further registration
under the Securities Act, except that any shares held by an Affiliate of Snyder
will be subject to the resale limitations of Rule 144. Of the remaining
37,891,144 shares of Snyder Common Stock, 10,068,333 shares are freely
transferable without restriction or further registration under the Securities
Act and 27,822,811 shares are "restricted securities" within the meaning of Rule
144 and may not be sold other than pursuant to an effective registration
statement under the Securities Act, pursuant to an exemption from such
registration requirement, or subject to the volume limitations of Rule 144.
90
<PAGE> 102
Of the "restricted securities," Mr. Daniel M. Snyder holds 10,047,124
shares, Ms. Michele D. Snyder holds 3,586,711 shares, Mr. Mortimer B. Zuckerman
and the MBZ Trust of 1996 beneficially own 6,860,236 shares collectively and Mr.
Fred Drasner beneficially owns 2,350,606 shares, for an aggregate of 22,844,677
shares of Snyder Common Stock held by Affiliates of Snyder. The holding period
limitations of Rule 144 applicable to the restricted securities held by these
Affiliates have expired. All of these shares are currently subject to the volume
limitations of Rule 144. In addition, Mr. Snyder was granted certain "demand"
and "piggyback" registration rights and Ms. Snyder, Mr. Zuckerman and the MBZ
Trust of 1996 and Mr. Drasner were also granted certain piggyback registration
rights (collectively, the "Snyder Registration Rights") in connection with the
shares of Synder Common Stock held by each of them (the "Registrable Shares").
The Snyder Registration Rights grant Mr. Synder and his assignees the
opportunity to register all or any portion of their Registrable Shares and grant
all of the stockholders named above the right to have their Registrable Shares
registered in connection with any registration by Snyder of shares of Snyder
Common Stock or other securities substantially similar to the Snyder Common
Stock. Mr. Snyder may exercise his demand registration rights no more than five
times in total.
Pursuant to the Lockup Letter Mr. Snyder, Ms. Snyder, USN and Mr. Drasner
have agreed not to request or require Snyder to register any shares of Snyder
Common Stock owned by them or sell such shares pursuant to Rule 144, without the
consent of Mr. J. Morton Davis, prior to the publication of the Financial
Results. Pursuant to the Merger Agreement, Snyder has agreed to use its best
efforts to publish the Financial Results no later than 30 days after the end of
the first calendar month following the month in which the Effective Time occurs.
Such restrictions will terminate on the earlier of (a) the date of termination
of the Merger Agreement or (b) August 15, 1997, unless the Merger shall have
been consummated as of such date. In any event, the restriction under the Lockup
Letter on sales pursuant to Rule 144 will terminate on August 15, 1997. See "The
Merger -- Interests of Certain Persons in the Merger -- Lockup Letter."
In connection with the initial offering of shares of Snyder Common Stock,
certain other holders of Snyder Common Stock, including Allen & Company
Incorporated, certain officers and related persons of Allen & Company
Incorporated and certain other investors (collectively, the "1995 Investors"),
as a group, were granted certain demand and piggyback registration rights with
respect to 883,752 restricted securities of Snyder Common Stock. These
registration rights grant the 1995 Investors the opportunity to register all or
any portion of the shares of Snyder Common Stock held by them in connection with
any registration by Snyder of shares of Snyder Common Stock or other securities
substantially similar to Snyder Common Stock. The 1995 Investors may exercise
their demand registration rights only once.
Snyder has granted to certain non-affiliate shareholders ("MMD Holders")
certain demand and piggyback registration rights (collectively, the "MMD
Registration Rights") with respect to 1,354,500 restricted securities issued in
connection with the acquisition of MMD. The MMD Registration Rights grant MMD
Holders the opportunity to register all or any portion of the Snyder Common
Stock they hold pursuant to the acquisition, except that, in the case of demand
registration, Snyder is not obligated to file any registration statement
initiated by any such holder until July 6, 1997 or with respect to shares held
by MMD Holders having less than a $5,000,000 aggregate offering price. The MMD
Holders may exercise their demand registration rights only once and any request
for registration must encompass at least 50% of the shares held by such persons.
Snyder has granted to certain non-affiliate shareholders ("Brann Holders")
certain demand and piggyback registration rights (collectively, the "Brann
Registration Rights") with respect to 2,350,152 restricted securities issued in
connection with the acquisition of Brann. The Brann Registration Rights grant
the Brann Holders the opportunity to demand registration of 50% of the Snyder
Common Stock issued in connection with the acquisition at any time 30 days after
the publication of the combined operations of Snyder and Brann, expected to
occur in June 1997 (the "Pooling Date"). The Brann Registration Rights also
grant Brann Holders the right to demand registration of 100% of the Snyder
Common Stock issued in connection with the acquisition any time after the first
anniversary of the Pooling Date. One demand for registration can be made prior
to the first anniversary of the Pooling Date, and one demand may be made after
such date. Each such demand must include shares constituting at least 20% of all
shares subject to the Brann Registration Rights. In addition, pursuant to the
acquisition of Brann, Snyder granted options to purchase 389,730
91
<PAGE> 103
restricted shares of Snyder Common Stock to the option holders of Brann, all of
which have been exercised. The shares of Snyder Common Stock issued to such
option holders of Brann are subject to a one-year holding period under Rule 144,
which will expire on March 27, 1998, at which time such shares of Snyder Common
Stock may be transferred subject to the volume limitations of Rule 144. The
two-year holding period imposed under Rule 144 expires on March 27, 1999, at
which time such shares will be freely transferable. In addition, Snyder has
agreed to provide to the holders of such shares the same registration rights as
the Brann Holders.
The foregoing registration rights are subject to cut-back provisions in
connection with underwritten offerings, the ability of Snyder to defer any
requested filings pursuant to the exercise of demand registration rights for
periods up to 120 days, and certain other customary conditions and limitations.
In addition, Snyder has filed a registration statement under the Securities
Act to register initially an aggregate of 5,000,000 shares of Snyder Common
Stock reserved for issuance in connection with the Snyder Stock Option Plan. At
an annual meeting of Snyder stockholders held on May 7, 1997, the Snyder
stockholders voted to increase the number of shares of Snyder Common Stock
authorized for issuance under the Snyder Stock Option Plan to 6,100,000 shares
(which number is to increase on the date the Snyder Board authorizes the
issuance of additional shares, by 17.5% of the number of such additional
shares). As of June 16, 1997, Snyder has granted 5,075,000 options under the
Snyder Stock Option Plan, of which 1,210,000 options are vested and currently
exercisable. Of the 1,210,000 options currently exercisable, 200,000 options are
held by an Affiliate of Snyder and upon the exercise of said options, such
shares of Snyder Common Stock will be subject to the volume limitations imposed
by Rule 144. Upon exercise of the remaining 1,010,000 vested options, such
shares will be freely transferable. As provided in the Merger Agreement, Snyder
will assume all American List Options outstanding at the Effective Time. As of
June 16, 1997, there were 84,400 American List Options outstanding. All American
List Options are vested and upon assumption and conversion by Snyder pursuant to
the Merger Agreement will be immediately exercisable. See "The
Merger -- Interests of Certain Persons in the Merger -- Stock Options."
92
<PAGE> 104
SECURITY OWNERSHIP OF AMERICAN LIST
Set forth below is information concerning stock ownership of all persons
known by American List to own beneficially 5% or more of the American List
Common Stock, each director and all directors and executive officers of American
List as a group based upon the number of outstanding shares as of June 16, 1997.
For the purposes of this Proxy Statement/Prospectus, beneficial ownership is
defined in accordance with the rules of the Commission and generally means the
power to vote or to dispose of the securities regardless of any economic
interest therein.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP PERCENT OF CLASS(2)
- ------------------------------------------------------------ ----------------------- -------------------
<S> <C> <C>
D.H. Blair Investment Banking Corp.(3)...................... 711,021 16.12%
Martin Lerner(4)............................................ 227,089 5.09
J. Morton Davis(3).......................................... 711,021 16.12
Donald Damore(5)............................................ 14,950 *
Phillip Lubitz.............................................. 610 *
Fidelity Investment(6)...................................... 435,180 9.86
Massachusetts Financial Services Company(7)................. 287,470 6.52
Dimensional Fund Advisors Inc.(8)........................... 238,840 5.41
All directors and executive officers as a group (6
persons)(4)(5)............................................ 953,670 21.30
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise specified, the address of each of the persons in the table
above is 330 Old Country Road, Mineola, NY 11501.
(2) Based upon 4,412,008 shares of American List Common Stock outstanding.
Shares of American List Common Stock not outstanding but deemed
beneficially owned by virtue of the right of a person or group to acquire
them within 60 days are treated as outstanding only for purposes of
determining the percent owned by such person or group. Except as otherwise
set forth below, each named owner has the sole voting power and investment
power of the shares set forth.
(3) Consists of shares of American List Common Stock owned by D. H. Blair of
which J. Morton Davis, a director of American List, is Chairman, Chief
Executive Officer and sole shareholder. The address of D. H. Blair and of
J. Morton Davis is 44 Wall Street, New York, NY 10005.
(4) Includes 3,564 shares of American List Common Stock held by Mr. Lerner's
wife, as to which Mr. Lerner disclaims beneficial interest, and immediately
exercisable American List Options to purchase 50,000 shares of American
List Common Stock.
(5) Consists of immediately exercisable American List Options to purchase
14,950 shares of American List Common Stock.
(6) Fidelity Investment has reported (in a Schedule 13G dated February 10, 1997
and filed with the Commission) that, as of that date, it had sole
dispositive power with respect to 435,180 shares of American List Common
Stock. The address of Fidelity Investment is 82 Devonshire Street, Boston,
MA 02109.
(7) Massachusetts Financial Services Company has reported in (a Schedule 13G
dated February 11, 1997 and filed with the Commission) that, as of that
date, it had sole voting power with respect to 254,770 shares of American
List Common Stock and sole dispositive power with respect to 281,470 shares
of American List Common Stock. The address of Massachusetts Financial
Services Company is 500 Boylston Street, Boston, MA 02116.
(8) Dimensional Fund Advising Inc. has reported (in a Schedule 13D dated
February 13, 1996 and filed with the Commission) that, as of that date, it
had sole voting power with respect to 216,400 shares of American List Common
Stock and sole dispositive power with respect to 238,840 shares of American
List Common Stock. The address of Dimensional Fund Advisors Inc. is 1299
Ocean Avenue, Santa Monica, CA 90401.
93
<PAGE> 105
SECURITY OWNERSHIP OF SNYDER
The following table sets forth, as of June 16, 1997, information regarding
the beneficial ownership of the Snyder Common Stock by (a) each director of
Snyder, (b) each of the executive officers of Snyder named in the Summary
Compensation Table under "Snyder -- Executive Compensation," except for Terry
Bateman and Mitchell N. Gershman who are no longer executive officers of Snyder,
(c) all persons known to Snyder to be the beneficial owner of more than 5% of
the Snyder Common Stock and (d) all directors and executive officers of Snyder
as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP PERCENT OF CLASS(2)
- --------------------------------------------------------- ----------------------- -------------------
<S> <C> <C>
Daniel M. Snyder......................................... 10,047,124 26.52%
Michele D. Snyder........................................ 3,586,711 9.47
Mortimer B. Zuckerman and MBZ Trust of 1996(3)........... 6,860,236 18.11
Fred Drasner(4).......................................... 2,350,606 6.20
Mark E. Jennings(5)...................................... 4,600 *
A. Clayton Perfall(6).................................... 200,000 *
All directors and executive officers as a group (8
persons)(7)............................................ 23,051,977 60.52%
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise specified, the address of each of the persons in the table
above is 6903 Rockledge Drive, 15th Floor, Bethesda, Maryland 20817.
(2) Based upon 37,891,144 shares of Snyder Common Stock outstanding. Unless
otherwise indicated, each named owner has the sole voting power and
investment power of the shares set forth.
(3) Consists of shares held in a limited partnership in which a corporation is
an 84.85% general partner and Fred Drasner is a 15.15% limited partner.
One-third of the shares of such corporate general partner are owned by
Mortimer B. Zuckerman and two-thirds of such shares are owned by the MBZ
Trust of 1996, for which an outside person acts as the Trustee. Mr.
Zuckerman's address is 599 Lexington Avenue, Suite 1300, New York, New York
10022. The address of MBZ Trust of 1996 is c/o Boston Properties, 8
Arlington Street, Boston, MA 02116.
(4) Mr. Drasner's address is 450 West 33rd Street, New York, New York 10001.
(5) Mr. Jennings' address is 551 Fifth Avenue, New York, New York 11176.
(6) All such shares of Snyder Common Stock issuable upon exercise of currently
exercisable options.
(7) Includes 200,000 shares of Snyder Common Stock issuable upon exercise of
currently exercisable options.
94
<PAGE> 106
LEGAL MATTERS
The legality of the Snyder Common Stock to be issued in the Merger will be
passed upon for Snyder by Weil, Gotshal & Manges LLP, counsel to Snyder. Schulte
Roth & Zabel LLP, counsel to American List, will render an opinion with respect
to certain federal income tax consequences of the Merger. See "The Merger --
Certain Federal Income Tax Consequences of the Merger."
EXPERTS
The consolidated financial statements and schedule of American List for the
years ended February 28, 1997 and February 29, 1996 and February 28, 1995,
appearing in this Proxy Statement/Prospectus have been so included in reliance
upon reports of Grant Thornton LLP, independent certified public accountants,
given on the authority of such firm as experts in accounting and auditing.
Representatives of Grant Thornton LLP are expected to be present at the Meeting,
where they will have the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
The historical consolidated financial statements of Snyder Communications,
Inc., appearing in this Proxy Statement/Prospectus as of December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996, and
the related schedule included in the Registration Statement of which this Proxy
Statement/Prospectus forms a part, have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in its reports thereon included
herein. Such consolidated financial statements and schedule are so included in
reliance upon reports of Arthur Andersen LLP pertaining to such financial
statements and schedule given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Brann and its subsidiaries as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996, have been audited by Price Waterhouse, Chartered Accountants,
as set forth in its report thereon included herein. Such consolidated financial
statements are so included in reliance upon reports of Price Waterhouse,
Chartered Accountants, pertaining to such financial statements and schedule
given upon the authority of such firm as experts in accounting and auditing.
STOCKHOLDER PROPOSALS FOR THE 1997
ANNUAL MEETING OF AMERICAN LIST STOCKHOLDERS
If the Merger is not consummated, it is currently anticipated that the 1997
Annual Meeting of stockholders of American List will be held on or about
December 8, 1997. If such meeting is held, stockholder proposals intended to be
presented at such meeting must be received by American List not later than July
14, 1997 for inclusion in the proxy materials for such meeting.
95
<PAGE> 107
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AMERICAN LIST CORPORATION
Report of Independent Certified Public Accountants................................... F-2
Consolidated Balance Sheets
February 28, 1997 and February 29, 1996............................................ F-3
Consolidated Statements of Earnings
Year Ended February 28, 1997, February 29, 1996 and February 28, 1995.............. F-4
Consolidated Statement of Stockholders' Equity
Year Ended February 28, 1997, February 29, 1996 and February 28, 1995.............. F-5
Consolidated Statements of Cash Flows
Year Ended February 28, 1997, February 29, 1996 and February 28, 1995.............. F-6
Notes to Consolidated Financial Statements........................................... F-7
SNYDER COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheet as of December 31, 1996 and March 31, 1997...... F-15
Condensed Consolidated Statement of Income for the three months ended March 31, 1996
and 1997........................................................................... F-16
Condensed Consolidated Statement of Cash Flows for the three months ended March 31,
1996 and 1997...................................................................... F-17
Notes to Condensed Consolidated Financial Statements................................. F-18
Report of Independent Public Accountants............................................. F-21
Consolidated Balance Sheet as of December 31, 1995 and 1996.......................... F-22
Consolidated Statement of Income, including pro forma data for the years ended
December 31, 1994, 1995 and 1996................................................... F-23
Consolidated Statement of Equity for the years ended December 31, 1994, 1995 and
1996............................................................................... F-24
Consolidated Statement of Cash Flows for the years ended December 31, 1994, 1995 and
1996............................................................................... F-25
Notes to Consolidated Financial Statements........................................... F-26
</TABLE>
F-1
<PAGE> 108
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
AMERICAN LIST CORPORATION
We have audited the accompanying consolidated balance sheets of American
List Corporation and Subsidiaries as of February 28, 1997 and February 29, 1996,
and the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the years in the three-year period ended February 28,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of American List
Corporation and Subsidiaries as of February 28, 1997 and February 29, 1996, and
the consolidated results of their operations and their consolidated cash flows
for each of the years in the three-year period ended February 28, 1997 in
conformity with generally accepted accounting principles.
/s/ GRANT THORNTON LLP
Melville, New York
April 11, 1997
F-2
<PAGE> 109
AMERICAN LIST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents......................................... $ 3,101,520 $ 3,611,609
Marketable securities............................................. 6,297,412 7,775,051
Trade accounts receivable, net of allowance for doubtful accounts
of $80,000 and $50,000, respectively........................... 5,469,023 5,781,175
Unamortized costs of lists........................................ 856,943 869,899
Prepaid income taxes.............................................. 407,894 192,152
Prepaid expenses and other........................................ 59,187 127,380
------------ ------------
Total current assets...................................... 16,191,979 18,357,266
PROPERTY AND EQUIPMENT -- AT COST
Furniture and fixtures............................................ 362,753 294,783
Computer equipment................................................ 1,137,021 1,000,824
Leasehold improvements............................................ 86,979 10,959
------------ ------------
1,586,753 1,306,566
Less accumulated depreciation..................................... 1,075,079 845,121
------------ ------------
511,674 461,445
DEFERRED LICENSE COST, net of accumulated amortization of $884,000
and $549,000, respectively........................................ 2,455,782 2,790,369
UNAMORTIZED COSTS OF LISTS.......................................... 522,186 494,200
OTHER ASSETS........................................................ 357,195 406,792
------------ ------------
$ 20,038,816 $ 22,510,072
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt................................. $ 374,113 $ 445,645
Accounts payable.................................................. 354,921 240,973
Accrued pension and profit-sharing contributions.................. 227,517 202,773
Accrued salaries.................................................. 196,562 270,564
Accrued expenses.................................................. 346,293 239,553
------------ ------------
Total current liabilities................................. 1,499,406 1,399,508
LONG-TERM DEBT...................................................... 1,540,117 1,893,264
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share; authorized 20,000,000
shares; issued 4,466,678 and 4,541,403 shares, respectively.... 44,667 45,414
Additional paid-in capital........................................ 4,174,899 6,459,011
Unrealized gain on marketable securities.......................... 3,747 4,687
Retained earnings................................................. 14,101,795 12,708,188
------------ ------------
18,325,108 19,217,300
Less treasury stock at cost -- 55,000 shares...................... (1,325,815) --
------------ ------------
16,999,293 19,217,300
------------ ------------
$ 20,038,816 $ 22,510,072
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 110
AMERICAN LIST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues................................................ $ 18,471,146 $ 18,886,844 $ 15,494,219
Costs and expenses
Cost of operations.................................... 3,065,750 2,902,328 2,200,784
Selling, general and administrative expenses.......... 4,940,229 4,238,206 3,615,328
------------ ------------ ------------
8,005,979 7,140,534 5,816,112
------------ ------------ ------------
Operating income.............................. 10,465,167 11,746,310 9,678,107
Other income (expense)
Investment income..................................... 390,611 476,142 378,430
Interest expense...................................... (154,355) (185,430) (129,487)
------------ ------------ ------------
Earnings before provision for income taxes.... 10,701,423 12,037,022 9,927,050
Provision for income taxes.............................. 3,953,000 4,428,000 3,751,000
------------ ------------ ------------
NET EARNINGS.................................. $ 6,748,423 $ 7,609,022 $ 6,176,050
========== ========== ==========
Net earnings per common share........................... $ 1.51 $ 1.68 $ 1.36
========== ========== ==========
Weighted average shares outstanding..................... 4,462,421 4,542,397 4,557,445
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 111
AMERICAN LIST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL GAIN (LOSS)
PAID-IN ON MARKETABLE RETAINED TREASURY
SHARES AMOUNT CAPITAL SECURITIES EARNINGS STOCK TOTAL
--------- ------- ----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 1, 1994......... 4,142,556 $41,426 $12,867,120 $12,908,546
Issuance of common stock in
connection with 10% stock
dividend..................... 414,157 4,141 $ 6,881,219 (6,885,360)
Issuance of common stock in
connection with exercise of
stock options................ 3,300 33 32,092 32,125
Unrealized loss on marketable
securities................... $ (11,833) (11,833)
Net earnings................... 6,176,050 6,176,050
Cash dividends declared on
common stock -- $.60 per
share........................ (2,734,523) (2,734,523)
--------- ------- ----------- ------------- ----------- ----------- -----------
Balance at February 28, 1995..... 4,560,013 45,600 6,913,311 (11,833) 9,423,287 16,370,365
Issuance of common stock in
connection with exercise of
stock options................ 6,290 63 62,323 62,386
Purchase and retirement of
treasury stock............... (24,900) (249) (516,623) (516,872)
Unrealized gain on marketable
securities................... 16,520 16,520
Net earnings................... 7,609,022 7,609,022
Cash dividends declared on
common stock -- $.95 per
share........................ (4,324,121) (4,324,121)
--------- ------- ----------- ------------- ----------- ----------- -----------
Balance at February 29, 1996..... 4,541,403 45,414 6,459,011 4,687 12,708,188 19,217,300
Issuance of common stock in
connection with exercise of
stock options................ 35,275 353 482,797 483,150
Purchase and retirement of
treasury stock............... (110,000) (1,100) (2,766,909) (2,768,009)
Purchase of common stock for
treasury..................... $(1,325,815) (1,325,815)
Unrealized loss on marketable
securities................... (940) (940)
Net earnings................... 6,748,423 6,748,423
Cash dividends declared on
common stock -- $1.20 per
share........................ (5,354,816) (5,354,816)
--------- ------- ----------- ------------- ----------- ----------- -----------
Balance at February 28, 1997..... 4,466,678 $44,667 $ 4,174,899 $ 3,747 $14,101,795 $(1,325,815) $16,999,293
======== ======= ========== ============= ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE> 112
AMERICAN LIST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net earnings....................................... $ 6,748,423 $ 7,609,022 $ 6,176,050
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization................... 693,997 510,102 302,244
Provision for losses on accounts receivable..... (73,691) (17,734) (22,955)
Amortization of bond premium.................... 200,299 220,937 256,992
Gain on sale of investments..................... (12,745)
Changes in operating assets and liabilities, net
of acquisition in fiscal 1996
Accounts receivable........................... 385,843 (1,355,854) (1,431,636)
Unamortized costs of lists.................... (15,030) 223,972 195,837
Prepaid income taxes.......................... (215,742) (192,152)
Prepaid expenses and other.................... 68,193 (84,338) 28,436
Other assets.................................. (79,855) (116,489) (52,219)
Accounts payable.............................. 113,948 (64,168) (34,764)
Accrued pension and profit-sharing
contributions.............................. 24,744 10,724 5,536
Accrued salaries.............................. (74,002) (118,996) (176,973)
Accrued expenses.............................. 282,061 183,454 156,980
Income taxes payable.......................... (170,337) (745,259)
------------ ------------ ------------
Net cash provided by operating
activities............................... 8,059,188 6,625,398 4,658,269
------------ ------------ ------------
Cash flows from investing activities
Capital expenditures............................... $ (280,187) $ (156,969) $ (71,176)
Sale (purchase) of marketable securities........... 1,276,400 (680,756) (1,959,812)
Acquisition of subsidiary, net of cash acquired.... (69,534)
Proceeds from sale of marketable securities........ 75,443
Deferred license costs............................. (600,000)
------------ ------------ ------------
Net cash provided by (used in) investing
activities............................... 996,213 (831,816) (2,630,988)
------------ ------------ ------------
Cash flows from financing activities
Proceeds from issuance of common stock............. 483,150 62,386 32,125
Cash dividends paid................................ (5,354,816) (4,324,121) (3,563,034)
Acquisition of common stock........................ (4,093,824) (516,872)
Payment of long-term debt.......................... (600,000) (600,000)
------------ ------------ ------------
Net cash used in financing activities...... (9,565,490) (5,378,607) (3,530,909)
------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS.............................. (510,089) 414,975 (1,503,628)
Cash and cash equivalents at beginning of year....... 3,611,609 3,196,634 4,700,262
------------ ------------ ------------
Cash and cash equivalents at end of year............. $ 3,101,520 $ 3,611,609 $ 3,196,634
========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 113
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
NOTE A -- DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES
American List Corporation ("ALC"), through its wholly-owned subsidiary,
American Student List Company, Inc. ("ASL"), primarily develops, maintains and
markets databases of high school, college and pre-school through junior high
school students in the United States. ASL rents lists to its customers derived
from its database for use primarily in direct mail and marketing programs. ASL's
customers consist mainly of list brokers and advertising agencies, financial
institutions, retailers and educational institutions. These customers are
located primarily in the United States. ALC's wholly-owned subsidiary, GeoDemX
Corporation ("GeoDemX"), is engaged in the sale of software that incorporates
computerized mapping and electronic demographic data for the generation of sales
leads.
A summary of the significant accounting policies applied on a consistent
basis in the preparation of the accompanying consolidated financial statements
follows:
1. Principles Applied in Consolidation
The consolidated financial statements include the accounts of American List
Corporation and its wholly-owned subsidiaries, American Student List Company,
Inc. and GeoDemX Corporation, (the "Company"). All significant intercompany
balances and transactions have been eliminated.
2. Depreciation and Amortization
Depreciation and amortization of property and equipment are provided
primarily on the straight-line basis over the estimated useful lives of the
respective assets, generally ranging from three to seven years.
3. Revenue Recognition
Revenues from the sale of lists are recognized upon the shipment to
customers of lists on computerized labels, magnetic tape or computer diskettes
for a one-time usage. Additional billings are made by the Company for additional
usage by the customers. Revenues from the sale of software use are recognized
upon installation by the Company and acceptance from customers. Historically,
actual sales returns and allowances have not been material.
4. Costs of Lists
Costs of purchased lists are amortized on a straight-line basis over their
estimated useful lives, generally one to five years. The Company determines the
useful lives of its lists based upon the estimated period of time such lists are
marketable. The portion of the list amortized within one year from the balance
sheet date is classified as a current asset. The Company periodically reviews
the marketability of its lists and, accordingly, the respective estimated useful
lives. Such reviews, to date, have not resulted in revised estimates of useful
lives of the lists.
5. Earnings per Share
Earnings per share are based upon the weighted average number of shares of
common stock outstanding during the year. Common stock equivalents are not
included in the computation as they are not materially dilutive.
6. Income Taxes
Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
F-7
<PAGE> 114
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
7. Marketable Securities
The Company's investments are classified into three categories. Those
securities classified as "trading" or "available-for-sale" are reported at
market value. Debt securities are classified as "held to maturity" which are
reported at amortized cost. Cost is determined using the specific identification
method. Unrealized gains and losses from securities "available-for-sale" are
reported as a separate component of stockholders' equity, net of related tax
effects.
8. Statement of Cash Flows
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. The Company
paid income taxes for the years ended February 28, 1997, February 29, 1996 and
February 28, 1995 of $4,211,395, $4,832,044, and $4,553,686, respectively.
During fiscal 1995, the Company had noncash investing and financing activities
in connection with the acquisition of a licensing agreement of approximately
$3,339,000.
9. Financial Instruments and Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily cash and cash equivalents,
marketable securities and accounts receivable. The Company places its
investments in highly rated financial institutions, United States Treasury
bills, investment grade short-term debt instruments and state and local
municipalities, while limiting the amount of credit exposure to any one entity.
Concentrations of credit risk with respect to accounts receivable are limited
due to the large number of customers, generally short payment terms, and their
dispersion across geographic areas.
10. Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
11. New Accounting Standards Not Yet Adopted
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share," which is
effective for financial statements for both interim and annual periods ending
after December 15, 1997. Early adoption of the new standard is not permitted.
The standard eliminates primary and fully diluted earnings per share and
requires presentation of basic and diluted earnings per share together with
disclosure of how the per share amounts were computed. The adoption of this new
standard is not expected to have a material impact on the disclosure of earnings
per share in the consolidated financial statements.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 129 ("SFAS No. 129"), "Disclosure of Information About
Capital Structure." The Company does not anticipate that SFAS No. 129 will have
a material impact on the consolidated financial statements.
F-8
<PAGE> 115
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
NOTE B -- MARKETABLE SECURITIES
The amortized cost, unrealized gains and losses, and market values of the
Company's held-to-maturity and available-for-sale securities are summarized as
follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
February 28, 1997
Held to maturity, maturing in less than one
year
State and municipal bonds................... $5,571,856 $ 4,493 $ (5,945) $5,570,404
Certificates of deposit..................... 188,656 (547) 188,109
---------- ---------- ---------- ----------
$5,760,512 $ 4,493 $ (6,492) $5,758,513
========= ======= ======== =========
Available for sale
Equity securities........................... $ 104,452 $ 1,192 $ (23,739) $ 81,905
Government income securities................ 498,162 (43,167) 454,995
---------- ---------- ---------- ----------
$ 602,614 $ 1,192 $ (66,906) $ 536,900
========= ======= ======== =========
February 29, 1996
Held to maturity, maturing in less than one
year
State and municipal bonds................... $6,484,774 $ 8,116 $ (718) $6,492,172
U.S. Treasury bills......................... 500,353 (116) 500,237
Certificates of deposit..................... 281,955 (541) 281,414
---------- ---------- ---------- ----------
$7,267,082 $ 8,116 $ (1,375) $7,273,823
========= ======= ======== =========
Available for sale
Equity securities........................... $ 102,882 $ 1,091 $ (30,760) $ 73,213
Government income securities................ 469,808 (35,052) 434,756
---------- ---------- ---------- ----------
$ 572,690 $ 1,091 $ (65,812) $ 507,969
========= ======= ======== =========
February 28, 1995
Held to maturity, maturing in less than one
year
State and municipal bonds................... $6,214,203 $ 3,566 $ (15,947) $6,201,822
U.S. Treasury bills......................... 613,840 14,362 628,202
---------- ---------- ---------- ----------
$6,828,043 $ 17,928 $ (15,947) $6,830,024
========= ======= ======== =========
Available for sale
Equity securities........................... $ 173,293 $ 803 $ (43,763) $ 130,333
Government income securities................ 439,968 (46,934) 393,034
---------- ---------- ---------- ----------
$ 613,261 $ 803 $ (90,697) $ 523,367
========= ======= ======== =========
</TABLE>
As a result of changes in market value of the available-for-sale security
portfolio, a valuation adjustment of $3,747, $4,687 and $(11,833), net of
deferred taxes, is recorded as a separate component of stockholders' equity at
February 28, 1997, February 29, 1996 and February 28, 1995, respectively.
F-9
<PAGE> 116
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
NOTE C -- INCOME TAXES
The Company files a consolidated Federal income tax return.
Income tax expense is comprised of the following elements:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Current
Federal...................................... $3,374,000 $3,817,000 $3,126,000
State........................................ 579,000 611,000 625,000
---------- ---------- ----------
$3,953,000 $4,428,000 $3,751,000
========= ========= =========
</TABLE>
The difference between these amounts and amounts computed by applying the
statutory Federal income tax rate to earnings before taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY YEAR ENDED FEBRUARY YEAR ENDED FEBRUARY
28, 1997 29, 1996 28, 1995
------------------- ------------------- -------------------
% OF % OF % OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
---------- ------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense......... $3,638,484 34.0% $4,092,587 34.0% $3,375,200 34.0%
Increases (reductions) in taxes
resulting from
State income taxes, net of Federal
income tax benefit................. 382,140 3.5 403,260 3.4 412,500 4.2
Other................................. (67,624) (.6) (67,847) (.6) (36,700) (.4)
---------- ------ ---------- ------ ---------- ------
Actual tax expense $3,953,000 36.9% $4,428,000 36.8% $3,751,000 37.8%
========= ===== ========= ===== ========= =====
</TABLE>
NOTE D -- PENSION AND PROFIT-SHARING PLANS
Effective March 1, 1974, the Company adopted both pension and
profit-sharing plans covering all full-time employees, as defined, which provide
for death and retirement benefits. The noncontributory plans are funded through
the purchase of insurance policies and contributions to trust funds.
Contributions and trust earnings of the plans are credited to the account
of each employee. The plans are defined contribution plans and, accordingly,
individual benefits are limited to the balance of the trust funds and amounts
payable under the insurance policies.
Pension and profit-sharing expenses have been charged as follows for the
years ended:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Pension expense................................. $195,311 $178,306 $174,222
Profit-sharing expense.......................... 30,000 25,000 23,000
------------ ------------ ------------
$225,311 $203,306 $197,222
========= ========= =========
</TABLE>
NOTE E -- LICENSE AGREEMENT
Effective July 1, 1994, the Company entered into an exclusive licensing
agreement, whereby the Company obtained a ten-year license to use, reproduce and
distribute a defined segment of the licensor's lists and to use their sources
and customer list to compile and market the Company's own lists. The licensor
will have the nonexclusive right to broker the licensed list to third parties in
return for a commission.
F-10
<PAGE> 117
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
As consideration for the granting of the license, the Company will pay a
total of $4,200,000. The license fee is payable in three annual installments of
$600,000 which began July 1994; three annual installments of $500,000 beginning
July 1997; three annual installments of $250,000 beginning July 2000; and a
final installment of $150,000 in July 2003.
The Company has recorded the cost and related obligation for the license,
net of imputed interest at 7.25%, which approximated $3.3 million. The net cost
of the license is being amortized on a straight-line basis over the ten-year
term of the license agreement.
In the event that facts and circumstances indicate that the deferred cost
of the license may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated future undiscounted cash
flows associated with the license would be compared to the asset's carrying
amount to determine if a write-down to market value or discounted cash flow
value is required. Impairment would be recognized in operating results if a
permanent diminution in value were to occur. At February 28, 1997, the value of
the asset ("deferred license cost") is estimated to be fully recoverable.
NOTE F -- COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company currently occupies an office and computer facility under an
operating lease which commenced June 15, 1991 and expires June 15, 2001. The
lease, as amended on July 1, 1996, currently provides for an annual base rent of
$285,812 which will increase ratably over the term of the lease to a maximum of
$331,050. The lease contains an escalation clause relating to increases in real
estate taxes.
The Company also maintains a branch sales office under an operating lease
which commenced on July 1, 1996 and expires June 30, 2001. The lease currently
provides for an annual base rent of $16,500, which will increase ratably over
the term of the lease to a maximum of $19,738.
The approximate minimum rental commitments under these operating leases are
as follows:
<TABLE>
<CAPTION>
YEARS ENDING FEBRUARY 28,
-------------------------------------------------------------------------
<S> <C>
1998................................................................ $ 322,000
1999................................................................ 331,000
2000................................................................ 341,000
2001................................................................ 351,000
2002................................................................ 101,000
----------
Total minimum payments required................................ $1,446,000
=========
</TABLE>
Total rent expense for the years ended February 28, 1997, February 29, 1996
and February 28, 1995 including escalation payments, amounted to approximately
$394,000, $294,000 and $288,000, respectively.
Legal Proceedings
An officer of the Company, who was subject to an employment agreement
expiring in March 2001, was terminated in February 1997. The employee has
challenged the basis for termination under the terms of such agreement before an
independent arbitrator and accordingly seeks reinstatement, back pay and
benefits. As of the date of this Proxy Statement/Prospectus, the Company's
counsel with respect to this matter believes that the Company has meritorious
defenses and is pursuing the matter vigorously Furthermore, the Company does not
believe that this action will have a material adverse affect on the Company's
results of operations, cash flow or financial position.
F-11
<PAGE> 118
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
From time to time, the Company is subject to ordinary routine litigation
and various other legal proceedings, claims and liabilities which are incidental
to the business. The Company believes that none of these other legal proceedings
has had or is likely to have a material adverse affect on the Company's results
of operations, cash flow or financial position.
NOTE G -- STOCKHOLDERS' EQUITY
The Company's 1992 Stock Option Plan (the "Plan") provides for the issuance
of options to purchase up to 300,000 shares, as adjusted, of common stock. The
Plan provides for the issuance of both incentive stock options to purchase the
Company's common stock at not less than fair market value on the date of the
grant and nonqualified options to purchase shares at exercise prices determined
by the Board of Directors.
A summary of stock option activity related to the Company's Plan is as
follows:
<TABLE>
<CAPTION>
INCENTIVE STOCK OPTIONS
------------------------------------- NONQUALIFIED
WEIGHTED- STOCK OPTIONS
AVERAGE ---------------
EXERCISE PRICE
PRICE RANGE SHARES PRICE RANGE SHARES
--------------- ------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Outstanding at March 1, 1995................. $ 9.39 - $18.00 135,145 $ 16.08 $11.89 1,650
Granted.................................... 21.00 - 29.88 57,500 22.01
Exercised.................................. 9.39 - 11.89 (6,290) 10.18
------- ------
Outstanding at February 29, 1996............. 9.39 - 29.88 186,355 18.12 11.89 1,650
Granted.................................... 26.88 7,000 26.88
Exercised.................................. 9.39 - 18.00 (35,275) 13.70
Expired.................................... 18.00 (75,000) 18.00
------- ------
Outstanding at February 28, 1997............. $10.08 - $29.88 83,080 $ 20.85 $11.89 1,650
======= ======= ====== =====
Exercisable at February 28, 1997............. $10.08 - $29.88 83,080 $ 20.85 $11.89 1,650
======= ======= ====== =====
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable incentive stock options:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
RANGE OF NUMBER OUTSTANDING REMAINING CONTRACTUAL WEIGHTED-AVERAGE
EXERCISE PRICES AND EXERCISABLE LIFE (YEARS) EXERCISE PRICE
- --------------- ------------------ --------------------- ----------------
<S> <C> <C> <C>
$10 - $20 18,415 6.8 years....... $14.95
20 - 30 64,665 8.26 years...... 22.54
-------
83,080
==============
</TABLE>
The weighted average option fair value on the grant date was $11.34 and
$9.09 for options issued during the years ended February 28, 1997 and February
28, 1996, respectively.
F-12
<PAGE> 119
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
The Company has adopted only the disclosure provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"); it applies APB Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations in accounting for the
Plan and does not recognize compensation expense for such Plan. If the Company
had elected to recognize compensation expense based upon the fair value at the
grant dates for awards under these plans consistent with the methodology
prescribed by SFAS No. 123, the Company's reported net earnings and earnings per
share would be reduced to the pro forma amounts indicated below for the years
ended:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
------------ ------------
<S> <C> <C>
Net earnings
As reported............................................... $ 6,748,423 $ 7,609,022
Pro forma................................................. 6,655,393 7,051,597
Earnings per common share
As reported............................................... $ 1.51 $ 1.68
Pro forma................................................. 1.49 1.55
</TABLE>
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense related to
grants made before fiscal 1996. The fair value of these options was estimated at
the date of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions for the fiscal years ended February 28,
1997 and February 29, 1996, respectively: expected volatility of 34 and 32
percent; risk-free interest rates of 6.51 and 6.39 percent; and expected life of
seven years for both years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the use
of highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
On May 23, 1996, the Board of Directors increased the number of shares the
Company may repurchase under its common stock purchase plan to 300,000 shares of
the Company's common stock. On April 7 and November 16, 1995, the Company
purchased 24,600 and 300 shares of its common stock for $509,238 and $7,634,
respectively. In May 1996, the Company purchased 110,000 shares of its common
stock in the open market for $2,768,009. In January 1997, the Company purchased
55,000 shares of its common stock in the open market for $1,325,815.
In connection with the transaction described in Note I, the Company has
discontinued its common stock buy-back program.
NOTE H -- ACQUISITION OF GEODEMX
On June 22, 1995, the Company acquired substantially all of the operating
assets and liabilities of GeoDemX for nominal consideration. The purchase
agreement provides for, among other things, additional consideration to be paid
based on a percentage of GeoDemX's annual pretax earnings through February 28,
1999. Such additional consideration shall be paid through the issuance of the
Company's common stock. However, the sellers may elect to receive up to 50% of
such additional consideration in cash. The cost in excess of the fair value of
the net assets acquired, approximating $125,000, has been included in other
assets, and was being amortized on a straight-line basis over a five-year
period. The Company periodically reviews
F-13
<PAGE> 120
AMERICAN LIST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
and evaluates whether there has been any permanent impairment in the value of
recorded amounts. Factors considered in the valuation include current operating
results, trends and anticipated undiscounted future cash flows. During the
fourth quarter of fiscal 1997, the Company recognized a goodwill impairment
charge of approximately $100,000 related to the June 1995 acquisition of
GeoDemX.
At the date of acquisition, the Company set forth certain conditions and
expectations for the GeoDemX business. At present, it cannot assure that it will
continue to fund the operations of GeoDemX. However, the Company expects to
recover the carrying value of the net assets of GeoDemX ($133,000) at February
28, 1997.
NOTE I -- SUBSEQUENT EVENT
On March 18, 1997, the Company entered into an Agreement and Plan of Merger
(the "Agreement") with Snyder Communications, Inc. ("Snyder") and will become a
wholly-owned subsidiary of Snyder.
In accordance with the Agreement, each share of the Company's common stock
outstanding immediately prior to the merger will be converted into shares of
Snyder common stock equal to the exchange ratio determined in the following
manner: (i) if the average final closing price of the Snyder common stock equals
or exceeds $32.00, the exchange ratio will be 1.00; (ii) if the average final
closing price equals or exceeds $28.00 but is less than $32.00, the exchange
ratio will equal the quotient of $32.00 divided by the average final closing
price; (iii) if the average final closing price equals or exceeds $26.00 but is
less than $28.00, the exchange ratio will be 1.14; and (iv) if the average final
closing price is less than $26.00, the exchange ratio will equal the quotient
(rounded to four decimal places) of $29.71 divided by the average final closing
price, as defined. Snyder has the right to terminate the Agreement if the
average final closing price of its common stock is less than $24.00 per share.
The Company has the right to terminate the Agreement if the average final
closing price of Snyder's common stock is less than $20.00 per share.
The merger is subject to approval by the stockholders of the Company and to
customary regulatory approval.
F-14
<PAGE> 121
SNYDER COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
<S> <C> <C>
(UNAUDITED)
<CAPTION>
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents......................................... $ 53,475,047 $37,645,872
Accounts receivable, net of allowance for doubtful accounts
of $779,863 and $681,125 at December 31, 1996 and March 31,
1997, respectively.......................................... 20,353,637 21,344,363
Unbilled services............................................ 3,823,608 5,583,689
Inventory.................................................... 763,284 1,489,820
Deferred tax asset........................................... 1,323,921 1,587,689
Prepaid expenses and other assets............................ 2,073,625 1,926,527
------------ -----------
Total current assets.................................... 81,813,122 69,577,960
Property and equipment, net....................................... 17,315,877 21,215,340
Goodwill.......................................................... 3,386,861 7,352,559
Deposits and other assets......................................... 2,077,682 1,011,676
------------ -----------
Total assets............................................ $104,593,542 $99,157,535
=========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit.............................................. $ 2,294,522 $ 2,503,204
Current obligations under capital leases..................... 1,108,954 846,926
Accounts payable and accrued expenses........................ 27,862,386 28,121,828
Accrued payroll.............................................. 5,175,719 2,656,715
Unearned revenue............................................. 4,641,998 4,824,139
------------ -----------
Total current liabilities............................... 41,083,579 38,952,812
Deferred income taxes............................................. 170,817 231,593
Deferred rent..................................................... 88,718 88,718
Brann Holdings Limited mandatorily redeemable preferred stock,
held by related parties......................................... 5,110,241 --
Long-term debt and obligations under capital leases............... 8,043,172 7,350,279
------------ -----------
Total liabilities....................................... 54,496,527 46,623,402
Equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, none issued and outstanding at December 31, 1996
and March 31, 1997.......................................... -- --
Common stock, $.001 par value, 120,000,000 shares authorized,
37,226,214 and 37,401,214 shares issued and outstanding at
December 31, 1996 and March 31, 1997, respectively.......... 37,226 37,401
Additional paid-in capital................................... 46,006,027 61,059,910
Retained earnings (deficit).................................. 3,759,015 (8,723,791)
Cumulative foreign currency translation adjustment........... 294,747 160,613
------------ -----------
Total equity............................................ 50,097,015 52,534,133
------------ -----------
Total liabilities and equity............................ $104,593,542 $99,157,535
=========== ==========
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
balance sheet.
F-15
<PAGE> 122
SNYDER COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------
1996 1997
----------- ------------
<S> <C> <C>
Revenues.......................................................... $40,505,922 $ 49,053,118
Operating expenses:
Cost of services............................................. 30,290,730 34,555,284
Selling, general and administrative expenses................. 6,922,850 9,694,664
Compensation to stockholders................................. 456,979 --
Acquisition costs............................................ -- 16,181,134
----------- ------------
37,670,559 60,431,082
----------- ------------
Income (loss) from operations..................................... 2,835,363 (11,377,964)
Interest expense.................................................. (509,790) (300,773)
Interest income................................................... 74,293 537,483
----------- ------------
Income (loss) before taxes........................................ 2,399,866 (11,141,254)
Income tax provision.............................................. 28,306 1,341,551
----------- ------------
Net income (loss)................................................. $ 2,371,560 $(12,482,805)
========== ===========
Pro forma income data (unaudited):
Historical income before taxes as reported................... $ 2,399,866
Pro forma provision for income taxes......................... (1,068,420)
-----------
Pro forma net income.................................... $ 1,331,446
==========
Net income (loss) per share:
Net income (loss) as reported................................ 0.07 (0.33)
Pro forma adjustment......................................... (0.03) --
----------- ------------
Net income (loss) per share............................. 0.04 (0.33)
========== ===========
Shares used in computing net income per share..................... 33,163,052 37,364,201
========== ===========
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
financial statement.
F-16
<PAGE> 123
SNYDER COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------
1996 1997
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $ 2,371,560 $(12,482,806)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization................................ 1,004,935 1,437,481
Noncash expense from accelerated vesting of Brann Holdings,
Ltd. options................................................ -- 9,096,899
(Gain) loss on disposal of assets............................ (35,227) 12,920
Deferred taxes............................................... (133,309) (202,992)
Changes in assets and liabilities:
Accounts receivable.......................................... (1,713,378) (990,726)
Deposits and other assets.................................... (58,666) 857,674
Prepaid expenses and other assets............................ (642,025) 147,098
Accrued payroll.............................................. (642,865) (2,519,004)
Accounts payable and accrued expenses........................ 3,714,064 1,347,176
Unearned revenue............................................. 145,521 182,141
Unbilled services............................................ (2,329,172) (1,760,081)
Inventory.................................................... (181,847) (726,536)
----------- ------------
Net cash provided by (used in) operating activities..... 1,499,591 (5,600,756)
----------- ------------
Cash flows from investing activities:
Purchases of property and equipment.......................... (1,491,831) (5,608,355)
Purchase of Good Neighbor.................................... -- (4,148,790)
Notes and net advances to SMS stockholders................... (6,617) --
----------- ------------
Net cash used in investing activities................... (1,498,448) (9,757,145)
----------- ------------
Cash flows from financing activities:
Redemption of Brann Holdings, Ltd. mandatorily redeemable
preferred stock............................................. -- (5,110,241)
Repayment of note payable.................................... -- (578,492)
Distributions and dividends.................................. (1,327,174) (1,087,734)
Net borrowings from line of credit........................... (827,850) 208,682
Payments on capital lease obligations........................ (108,256) (376,429)
Proceeds from exercise of options............................ -- 5,957,159
----------- ------------
Net cash (used in) financing activities................. (2,263,280) (987,055)
----------- ------------
Effect of exchange rate changes.............................. 143,154 515,781
Net decrease in cash and equivalents.............................. (2,118,983) (15,829,175)
Cash and equivalents, beginning of period......................... 9,033,620 53,475,047
----------- ------------
Cash and equivalents, end of period............................... $ 6,914,637 $ 37,645,872
========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest..................... $ 366,575 $ 315,619
Cash paid for income taxes................................... $ 996,092 $ 793,445
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
financial statement.
F-17
<PAGE> 124
SNYDER COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION:
On October 19, 1988, Collegiate Marketing and Communications, Inc., a
Delaware corporation (the "General Partner"), and a Delaware limited partnership
beneficially owned by Mortimer B. Zuckerman and Fred Drasner (the "Original
Limited Partner") entered into a partnership agreement (the "Partnership
Agreement") pursuant to the provisions of the Delaware Act, under the name
Collegiate Marketing and Communications, L.P. (the "Partnership"). On September
1, 1989, the name of the Partnership was changed to Snyder Communications, L.P.,
and the name of the General Partner was changed to Snyder Communications, Inc.
On May 18, 1995, the Partnership Agreement was amended to admit several new
limited partners into the Partnership. On June 25, 1996, the name of the General
Partner was changed to Snyder Marketing Services, Inc. ("SMS"). Snyder
Communications, Inc., a Delaware corporation, was incorporated on June 25, 1996
to continue the business operations of the Partnership. Snyder Communications,
Inc. ("SCI"), in conjunction with all of the existing partners in the
Partnership, reorganized on September 24, 1996, (the "Reorganization") upon the
effectiveness of the initial public offering of its common stock. After
consummation of the Reorganization, SCI owns 100 percent of the stock of SMS and
directly and indirectly (through its ownership of SMS), 100 percent of the
interests in the Partnership. Because of the continuity of ownership, the
Reorganization was accounted for by combining the assets, liabilities and
operations of SMS, the Partnership, and SCI at their historical cost basis.
On January 6, 1997, SCI acquired MMD, Inc. ("MMD") in a merger transaction
in which MMD became a wholly owned subsidiary of SCI. In this transaction, 966
shares of outstanding MMD common stock were converted into 1,354,500 shares of
SCI common stock. In addition, on March 27, 1997, SCI acquired Brann Holdings
Limited ("Brann") in a merger transaction in which Brann became a wholly owned
subsidiary of SCI. In this transaction, 339,000 shares of outstanding Brann
common stock were converted into 2,350,152 shares of SCI common stock, while
63,850 Brann options, which were fully vested and immediately exercisable, were
converted into 389,730 SCI options with similar terms. Collectively, the MMD and
Brann business combinations will be referred to herein as the "Acquisitions".
The Mergers have been accounted for as pooling of interests for accounting and
financial reporting purposes. The accompanying condensed consolidated financial
statements have been retroactively restated to reflect the combined financial
position and combined results of operations and cash flows of SCI, MMD and Brann
for all periods presented, giving effect to the Mergers as if they had occurred
at the beginning of the earliest period presented (the combined entity will be
referred to herein as "Snyder"). The condensed consolidated balance sheets for
all periods presented give effect to the conversion of the shares of MMD and
Brann common stock to 3,704,652 shares of SCI common stock. Certain amounts
previously presented have been reclassified to conform to the March 31, 1997
presentation.
The following details revenues and net income (loss) for each of the years
ended December 31, 1994, 1995 and 1996 and for the three months ended March 31,
1996 and 1997 of Snyder and the previously separate entities of MMD and Brann
(the "Pooled Entities") through the dates of their respective mergers.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED MARCH 31,
------------------------------------------- ---------------------------
1994 1995 1996 1996 1997
----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Snyder............. $11,740,235 $ 42,891,561 $ 82,839,947 $17,359,830 $ 33,084,893
Pooled Entities.... 68,688,803 89,909,812 102,600,466 23,146,092 15,968,225
----------- ------------ ------------ ----------- ------------
$80,429,038 $132,801,373 $185,440,413 $40,505,922 $ 49,053,118
=========== ============ ============ =========== ============
Net Income (Loss):
Snyder............. $ 1,389,995 $ 3,971,760 $ 6,977,003 $ 2,485,179 $(12,484,146)
Pooled Entities.... 4,423,954 3,223,451 38,363 (113,619) 1,341
----------- ------------ ------------ ----------- ------------
$ 5,813,949 $ 7,195,211 $ 7,015,366 $ 2,371,560 $(12,482,805)
=========== ============ ============ =========== ============
</TABLE>
F-18
<PAGE> 125
SNYDER COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. ORGANIZATION AND BASIS OF PRESENTATION: -- (CONTINUED)
On January 17, 1997 Snyder acquired Good Neighbor Direct, Inc. ("Good
Neighbor") for approximately $4,150,000 in cash. The acquisition of Good
Neighbor was accounted for as a purchase for accounting and financial reporting
purposes. The acquisition of Good Neighbor did not have a material impact on
Snyder's results of operations or financial condition during the quarter ended
March 31, 1997.
The accompanying unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. As a result, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. Snyder believes
that the disclosures made are adequate to make the information presented not
misleading. The condensed consolidated financial statements reflect all
adjustments (consisting of only normal recurring accruals except as discussed in
note 3) which, in the opinion of management, are necessary to present fairly the
financial position, results of operations and cash flows of Snyder as of March
31, 1996 and 1997 and for the periods then ended. Operating results for the
three month period ended March 31, 1997 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997. The unaudited
condensed consolidated financial statements should be read in conjunction with
the financial statements and footnotes thereto included elsewhere in this
filing.
2. PENDING ACQUISITION:
On March 19, 1997, Snyder entered into a definitive agreement to acquire
American List Corporation ("American List") in a merger transaction in which
American List will become a wholly owned subsidiary of Snyder. Under the terms
of the agreement, the Company will issue one share of common stock in exchange
for each of the approximately 4.5 million shares of American List common stock
outstanding provided that the average trading price (as defined in the
definitive agreement) of Snyder's common stock prior to closing of the
transaction is at least $32 per share. The definitive agreement provides that
the exchange ratio increases if the average trading price of Snyder's common
stock prior to closing is less than $32 per share. Each American List
stockholder will receive a pro-rata amount of Snyder's common stock in
proportion to their relative percentage ownership in American List. This
acquisition is subject to the approval of American List stockholders and to
customary regulatory approval. This merger will be accounted for as a pooling of
interests for accounting and financial reporting purposes. American List is a
resource for targeted marketing campaigns, providing clients with the ability to
reach over 30 million students and young adults through its proprietary
database.
3. ACQUISITION COSTS:
Snyder recorded approximately $16.2 million in nonrecurring acquisition
costs during the quarter ended March 31, 1997. The acquisition costs are costs
directly related to the consummation of Snyder's Acquisitions. These costs
include primarily investment banking fees, other professional service fees,
certain United Kingdom excise and transfer taxes, as well as a non-cash charge
of approximately $9.1 million related to the accelerated vesting of options held
by Brann employees.
4. INCOME TAXES:
The Company's effective tax rate in the first quarter of 1997 differs from
the Federal statutory rate due primarily to nonrecurring, nondeductible
acquisition costs, state income taxes, and different tax rates in the United
Kingdom.
5. PRO FORMA INCOME DATA:
Prior to the Reorganization, no provision for Federal or state income taxes
related to income earned by the Partnership was recorded because each of the
partners of the Partnership reflected their share of the
F-19
<PAGE> 126
SNYDER COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. PRO FORMA INCOME DATA: -- (CONTINUED)
Partnership's net income on their respective tax returns. Also, for the period
from January 1, 1996 until the Reorganization, SMS had elected to be treated for
Federal and certain State income tax purposes as an S corporation. Effective
with the Reorganization, SCI has been treated as a C corporation for Federal and
State income tax purposes. MMD also operated as an S corporation from 1994 until
the date of its merger in January 1997. The pro forma income data in the
Condensed Consolidated Statement of Income includes a provision for Federal and
state income taxes as if all operations of Snyder had been taxed similar to a C
corporation for the quarter ended March 31, 1996.
6. NEW ACCOUNTING PRONOUNCEMENT:
During February 1997, the Financial Accounting Standards Board Issued
Statements of Financial Accounting Standards No. 128 ("SFAS 128") "Earnings Per
Share". This statement is effective for years ending after December 15, 1997 and
will be implemented by Snyder in its December 31, 1997 financial statements.
SFAS 128 requires primary earnings per share ("EPS") to be replaced with
basic EPS. Primary EPS is computed by dividing reported earnings available to
common stockholders by the weighted average number of shares outstanding without
consideration of common stock equivalents or other potentially dilutive
securities. Fully diluted EPS, now called diluted EPS is still included. Snyder
adopted its stock option plan and began offering stock options in September
1996. Because the options were outstanding for only a short period of time
during 1996, management has established that the effect of this pronouncement on
the computation of basic EPS is immaterial for 1996. However, in 1997 and future
years, when Snyder's options are outstanding for the entire year, management has
estimated that Snyder's reported EPS will be higher under SFAS 128 than under
the old EPS standard. SFAS 128 will not materially impact Snyder's EPS reported
for the quarter ended March 31, 1997 because Snyder's common stock equivalents
were anti-dilutive for the quarter ended March 31, 1997.
F-20
<PAGE> 127
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Snyder Communications, Inc.:
We have audited the accompanying consolidated balance sheet of Snyder
Communications, Inc. and subsidiaries (the "Company") as of December 31, 1995
and 1996, and the related consolidated statements of income, equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of Brann Holdings Limited included in the consolidated financial
statements of the Company, which statements reflect total assets constituting 61
percent and 30 percent of the related consolidated totals as of December 31,
1995 and 1996, respectively, and revenues constituting 53 percent, 47 percent
and 35 percent of the related consolidated totals in 1994, 1995 and 1996,
respectively. These statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Brann Holdings Limited, is based solely
upon the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audit and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Snyder Communications, Inc. and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996.
ARTHUR ANDERSEN LLP
Washington, D.C.
May 30, 1997
F-21
<PAGE> 128
SNYDER COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEET
(NOTE 1)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents................................................... $ 9,033,620 $ 53,475,047
Accounts receivable, net of allowance for doubtful accounts of $533,306
and $779,863 at December 31, 1995 and 1996, respectively.............. 16,162,548 20,353,637
Unbilled services...................................................... 1,567,015 3,823,608
Inventory.............................................................. 682,095 763,284
Deferred tax asset..................................................... 143,069 1,323,921
Prepaid expenses and other assets...................................... 797,234 2,073,625
----------- ------------
Total current assets.............................................. 28,385,581 81,813,122
Note and advances to stockholders.......................................... 2,770,426 --
Property and equipment, net................................................ 11,896,761 17,315,877
Deferred financing costs, net.............................................. 496,001 --
Goodwill................................................................... 3,173,828 3,386,861
Deposits and other assets.................................................. 825,977 2,077,682
----------- ------------
Total assets...................................................... $47,548,574 $104,593,542
============ =============
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit........................................................ $ 1,768,710 $ 2,294,522
Current obligations under capital leases............................... 299,942 1,108,954
Accrued payroll........................................................ 2,894,745 5,175,719
Accounts payable and accrued expenses.................................. 18,401,528 26,774,652
Unearned revenue....................................................... 2,273,704 4,641,998
Distribution payable................................................... -- 1,087,734
----------- ------------
Total current liabilities......................................... 25,638,629 41,083,579
Subordinated debentures due to related parties............................. 5,125,821 --
Deferred income taxes...................................................... 334,087 170,817
Deferred rent.............................................................. 43,949 88,718
Brann Holdings Limited mandatorily redeemable preferred stock, held by
related parties.......................................................... 4,596,793 5,110,241
Long-term obligations under capital leases................................. 461,247 1,726,395
Long-term debt............................................................. 6,477,580 6,316,777
----------- ------------
Total liabilities...................................................... $42,678,106 $ 54,496,527
Commitments and contingencies
Equity:
Preferred stock, $.001 par value per share, 5,000,000 shares
authorized, none issued and outstanding at December 31, 1995 and
December 31, 1996..................................................... -- --
Common stock 120,000,000 shares authorized, 3,704,652 and 37,226,214 shares
issued and outstanding at December 31, 1995 and December 31, 1996,
respectively............................................................. 4,204 37,226
Additional paid-in capital................................................. 1,870,959 46,006,027
Retained earnings.......................................................... 4,450,585 3,759,015
Cumulative foreign currency translation adjustment......................... (4,950) 294,747
Limited partners' deficit.................................................. (1,450,330) --
----------- ------------
Total equity...................................................... 4,870,468 50,097,015
----------- ------------
Total liabilities and equity...................................... $47,548,574 $104,593,542
============ =============
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
F-22
<PAGE> 129
SNYDER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF INCOME
(NOTE 1)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1994 1995 1996
----------- ------------ ------------
<S> <C> <C> <C>
Revenues............................................ $80,429,038 $132,801,373 $185,440,413
Operating expenses:
Cost of services............................... 53,218,580 93,824,100 139,358,642
Selling, general and administrative expenses... 15,754,501 21,721,130 33,739,130
Compensation to stockholders................... 3,009,064 7,034,274 1,548,321
----------- ------------ ------------
Income from operations.............................. 8,446,893 10,221,869 10,794,320
Interest expense, including amounts to related
parties of $620,558, $1,149,537 and $1,370,736 in
1994, 1995 and 1996, respectively................. (1,248,678) (1,771,269) (1,992,578)
Interest income..................................... 80,880 316,304 840,770
----------- ------------ ------------
Income before taxes and extraordinary item.......... 7,279,095 8,766,904 9,642,512
Income tax provision................................ 1,465,146 1,571,693 1,411,741
----------- ------------ ------------
Income before extraordinary item.................... 5,813,949 7,195,211 8,230,771
Extraordinary item, less applicable income taxes of
$805,874.......................................... -- -- (1,215,405)
----------- ------------ ------------
Net income.......................................... $ 5,813,949 $ 7,195,211 $ 7,015,366
========== =========== ===========
PRO FORMA INCOME DATA (UNAUDITED):
Historical income before income taxes and
extraordinary item as reported............... $ 7,279,095 $ 8,766,904 $ 9,642,512
Pro forma provision for income taxes........... 3,087,792 3,574,267 4,292,846
----------- ------------ ------------
Pro forma income before extraordinary item..... 4,191,303 5,192,637 5,349,666
Extraordinary item, less applicable income
taxes of $805,874............................ -- -- (1,215,405)
----------- ------------ ------------
Pro forma net income........................... $ 4,191,303 $ 5,192,637 $ 4,134,261
Pro forma income before extraordinary item
per share............................... $ 0.13 $ 0.16 $ 0.16
========== =========== ===========
Pro forma net income per share............ $ 0.13 $ 0.16 $ 0.12
========== =========== ===========
Shares used in computing pro forma per
share amounts........................... 33,163,052 33,163,052 34,454,967
Pro forma fully diluted income before
extraordinary item per share............ $ 0.13 $ 0.16 $ 0.16
========== =========== ===========
Pro forma fully diluted net income per
share................................... $ 0.13 $ 0.16 $ 0.12
========== =========== ===========
Shares used in computing pro forma fully
diluted per share amounts............... 33,163,052 33,163,052 34,534,984
</TABLE>
The accompanying notes are an integral part of this consolidated statement of
income.
F-23
<PAGE> 130
SNYDER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF EQUITY
(NOTE 1)
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL LIMITED CURRENCY
COMMON PAID-IN RETAINED PARTNERS' TRANSLATION
STOCK CAPITAL EARNINGS DEFICIT ADJUSTMENT TOTAL
------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993, as
previously reported.......... $ 500 $ 138,342 $ (693,823) $(2,680,421) $ -- $ (3,235,402)
Pooling of MMD, Inc............ 1,354 7,140 985,162 -- -- 993,656
------- ------------ ------------ ----------- ----------- ------------
Balance, December 31, 1993, as
restated..................... 1,854 145,482 291,339 (2,680,421) -- (2,241,746)
Pooling of Brann Holdings
Limited.................. 2,350 504,116 -- -- -- 506,466
Distributions and
dividends................ -- -- (1,829,320) -- -- (1,829,320)
Foreign currency
translation adjustment... -- -- -- -- 46,740 46,740
Net income................. -- -- 4,544,008 1,269,941 5,813,949
------- ------------ ------------ ----------- ----------- ------------
Balance, December 31, 1994..... 4,204 649,598 3,006,027 (1,410,480) 46,740 2,296,089
Proceeds from sale of
partnership interest, net
of income taxes of
$815,000................. -- 1,221,361 -- 13,639 -- 1,235,000
Distributions and
dividends................ -- -- (1,950,974) (3,853,168) -- (5,804,142)
Foreign currency
translation adjustment... -- -- -- -- (51,690) (51,690)
Net income................. -- -- 3,395,532 3,799,679 -- 7,195,211
------- ------------ ------------ ----------- ----------- ------------
Balance, December 31, 1995..... 4,204 1,870,959 4,450,585 (1,450,330) (4,950) 4,870,468
Proceeds from Initial
Public Offering.......... 4,038 59,169,659 -- -- -- 59,173,697
Distributions and
dividends................ -- -- (13,174,013) (8,612,050) -- (21,786,063)
Reorganization............. 28,959 (15,558,416) 7,630,431 7,899,026 -- --
Exercise of stock
options.................. 25 424,975 -- -- -- 425,000
Tax effect of option
exercises................ -- 98,850 -- -- -- 98,850
Foreign currency
translation adjustment... -- -- -- -- 299,697 299,697
Net income................. -- -- 4,852,012 2,163,354 -- 7,015,366
------- ------------ ------------ ----------- ----------- ------------
Balance, December 31, 1996..... $37,226 $ 46,006,027 $ 3,759,015 $ -- $ 294,747 $ 50,097,015
======== ============= ============= ============ ========== =============
</TABLE>
The accompanying notes are an integral part of this consolidated statement of
equity.
F-24
<PAGE> 131
SNYDER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(NOTE 1)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1994 1995 1996
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................... $ 5,813,949 $ 7,195,211 $ 7,015,366
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................. 2,254,721 2,976,674 4,884,171
Loss on repayment of subordinated debt......................... -- -- 2,021,279
Loss on disposal of assets..................................... -- 133,920 323,385
Deferred taxes................................................. 2,866 30,285 (1,392,841)
Changes in assets and liabilities:
Accounts receivable............................................ (2,352,669) (4,948,013) (4,191,089)
Unbilled services.............................................. (2,212,878) 645,863 (2,256,593)
Inventory...................................................... 72,744 (7,838) (81,190)
Deposits and other assets...................................... (154,444) (474,914) (1,397,513)
Prepaid expenses and other assets.............................. (49,691) (67,112) (1,276,391)
Accrued payroll, accounts payable and accrued expenses......... 6,688,753 5,652,889 10,353,948
Unearned revenue............................................... 512,470 583,892 2,368,294
Other taxes.................................................... 299,232 617,754 477,600
Deferred rent.................................................. -- 43,949 44,769
----------- ----------- ------------
Net cash provided by operating activities.................. 10,875,053 12,382,560 16,893,195
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Brann Limited.......................................... (3,498,948) -- --
Proceeds from sale of investments.................................. -- -- 145,469
Note and advances to stockholders.................................. (5,657) (2,764,769) --
Other.............................................................. (3,191,837) (4,731,512) (6,755,977)
----------- ----------- ------------
Net cash used in investing activities...................... (6,696,442) (7,496,281) (6,610,508)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term notes payable to limited partners and
others........................................................... (9,258,807) (2,641,968) --
Proceeds from issuance of subordinated debentures due to related
parties.......................................................... -- 5,000,000 --
Proceeds from sale of partnership interest......................... -- 2,050,000 --
Tax effect of equity transaction................................... -- (815,000) --
Debt issuance costs................................................ (180,774) (557,000) --
Distributions and dividends........................................ (1,829,320) (5,804,142) (17,973,329)
Repayment of subordinated debentures............................... -- -- (6,900,000)
Proceeds from line of credit borrowing............................. 7,768,800 1,000,000 1,958,910
Repayment of line of credit borrowing.............................. (225,274) (580,013) (2,368,942)
Payments on capital lease obligations.............................. (674,820) (650,933) (655,092)
Proceeds from exercise of options.................................. -- -- 425,000
Proceeds from Initial Public Offering.............................. -- -- 59,173,697
Issuance of Brann common stock..................................... 506,466 -- --
Issuance of redeemable preferred stock, held by related parties.... 4,582,098 -- --
----------- ----------- ------------
Net cash provided by (used in) financing activities........ 688,369 (2,999,056) 33,660,244
Effect of exchange rate changes.................................... 242,682 (112,837) 498,496
----------- ----------- ------------
NET INCREASE IN CASH AND EQUIVALENTS................................... 5,109,662 1,774,386 44,441,427
CASH AND EQUIVALENTS, beginning of year................................ 2,149,572 7,259,234 9,033,620
----------- ----------- ------------
CASH AND EQUIVALENTS, end of year...................................... $ 7,259,234 $ 9,033,620 $ 53,475,047
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest including dividends on mandatorily
redeemable preferred shares...................................... $ 1,123,643 $ 1,437,791 $ 1,736,304
Cash paid for income taxes......................................... $ 464,427 $ 1,512,112 $ 3,130,956
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Equipment purchased under capital leases........................... $ 268,599 $ 525,956 $ 2,703,823
Distribution of note receivable from stockholder to SMS
stockholders..................................................... $ -- $ -- $ 2,725,000
Distribution payable............................................... $ -- $ -- $ 1,087,734
</TABLE>
The accompanying notes are an integral part of this consolidated statement of
cash flows.
F-25
<PAGE> 132
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS:
On October 19, 1988, Collegiate Marketing and Communications, Inc., a
Delaware corporation (the "General Partner"), and a Delaware limited partnership
beneficially owned by Mortimer B. Zuckerman and Fred Drasner (the "Original
Limited Partner") entered into a partnership agreement (the "Partnership
Agreement") pursuant to the provisions of the Delaware Act, under the name
Collegiate Marketing and Communications, L.P. (the "Partnership"). On September
1, 1989, the name of the Partnership was changed to Snyder Communications, L.P.,
and the name of the General Partner was changed to Snyder Communications, Inc.
On May 18, 1995, the Partnership Agreement was amended to admit several new
limited partners into the Partnership. On June 25, 1996, the name of the General
Partner was changed to Snyder Marketing Services, Inc. ("SMS").
Snyder Communications, Inc., a Delaware corporation, was incorporated on
June 25, 1996, to continue the business operations of the Partnership. Snyder
Communications, Inc., in conjunction with all of the existing partners in the
Partnership, reorganized on September 24, 1996 (the "Reorganization"), upon the
effectiveness of the initial public offering of its common stock.
Prior to the Reorganization, SMS owned 63.85 percent of the Partnership and
the limited partners owned the remaining 36.15 percent. The Reorganization
resulted in the stockholders of SMS exchanging 100 percent of their SMS stock
for stock of Snyder Communications, Inc. simultaneously with the limited
partners exchanging their limited partnership interests in the Partnership for
common stock of Snyder Communications, Inc. After consummation of the
Reorganization, Snyder Communications, Inc. owns 100 percent of the stock of SMS
and, directly and indirectly (through its ownership of SMS), 100 percent of the
interests in the Partnership. In connection with the Reorganization, 29,458,400
shares of common stock were issued to the stockholders of Snyder Communications,
Inc.
Because of the continuity of ownership, the Reorganization was accounted
for by combining the assets, liabilities and operations of SMS, the Partnership
and Snyder Communications, Inc., at their historical cost basis. Accordingly,
the accompanying consolidated balance sheet as of December 31, 1995 and the
consolidated financial statements for the years ended December 31, 1994 and 1995
include a combination of the accounts of SMS and the Partnership after
elimination of all significant intercompany transactions. The accompanying
consolidated financial statements as of and for the year ended December 31, 1996
include the consolidated accounts of Snyder Communications, Inc., SMS and the
Partnership (the consolidated entity will be referred to herein as "SCI" or
"Snyder Communications") after elimination of all significant intercompany
transactions. Certain amounts previously presented have been reclassified to
conform to the December 31, 1996 presentation.
Snyder Communications provides outsourced marketing services. SCI designs
and implements marketing programs for its customers utilizing field sales,
teleservices, sponsored WallBoards(R) and product sampling. SCI's operations are
conducted throughout the United States and in the United Kingdom.
On January 6, 1997, SCI acquired MMD, Inc. ("MMD") in a merger transaction
in which MMD became a wholly owned subsidiary of SCI. In this transaction, 966
shares of outstanding MMD common stock were converted into 1,354,500 shares of
SCI common stock. In addition, on March 27, 1997, SCI acquired Brann Holdings
Limited ("Brann") in a share exchange transaction in which Brann became a wholly
owned subsidiary of SCI. In this transaction, 339,000 shares of outstanding
Brann common stock were converted into 2,350,152 shares of SCI common stock,
while 63,850 Brann options, which were fully vested and immediately exercisable,
were converted into 389,730 SCI options with similar terms. Collectively the MMD
and Brann business combinations will be referred to herein as the
"Acquisitions." The Acquisitions have been accounted for as a pooling of
interests for accounting and financial reporting purposes. The accompanying
financial statements have been retroactively restated to reflect the combined
financial position and combined results of operations and cash flows of SCI, MMD
and Brann for all periods presented, giving effect to the Acquisitions
F-26
<PAGE> 133
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS: -- (CONTINUED)
as if they had occurred at the beginning of the earliest period presented (the
combined entity will be referred to herein as the "Company"). The consolidated
balance sheet for all periods presented give effect to the conversion of the
shares of MMD and Brann common stock to 3,704,652 shares of SCI common stock.
MMD was incorporated under the laws of the state of New Jersey on December
7, 1982. MMD's principal business activity involves marketing medical products
for pharmaceutical companies, utilizing field sales, throughout the United
States. MMD previously utilized an October 31 year-end. Concurrent with its
merger with SCI, MMD changed its fiscal year-end to December 31 and restated its
financial statements to conform to SCI's calendar reporting.
Brann, a United Kingdom ("U.K.") registered company, began operations on
January 25, 1994 when it acquired all of the outstanding common stock of Brann
Direct Marketing Limited through a management buy-out. On January 11, 1995,
Brann Direct Marketing Limited changed its name to Brann Limited. Brann's
principal business activities are planning, creating and delivering direct
response marketing communications; marketing systems design and consultancy;
print production services; and telephone and response management services, for
companies involved in marketing, advertising and direct selling and services.
Brann's operations are conducted throughout the United Kingdom.
The Company anticipates recognizing a charge to first quarter 1997 income
of approximately $16.2 million (before income taxes) related to costs incurred
and resulting from the Acquisitions. This charge consists primarily of
investment banking, other professional service fees and certain U.K. exercise
and transfer taxes as well as a charge of approximately $9.1 million related to
the accelerated vesting of Brann options (see Note 10).
There are important risks associated with the Company's business and
financial results. These risks include (i) the Company's current reliance on two
significant clients, which constituted 27 and 10 percent of its 1996 revenues
and on other major clients (see Note 3); (ii) the Company's ability to sustain
and manage future growth; (iii) the Company's ability to manage and successfully
integrate the businesses it has acquired and may acquire in the future; (iv) the
Company's ability to successfully manage its international operations; (v) the
potential adverse effects of fluctuations in foreign exchange rates; (vi) the
Company's dependence on industry trends toward outsourcing of marketing
services; (vii) the risks associated with the Company's contracts; and (viii)
the dependence of the Company's success on its executive officers and other key
employees, in particular, its Chairman of the Board of Directors, Chief
Executive Officer and President.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash and Equivalents
Cash and equivalents are comprised principally of amounts in operating
accounts, money market investments, and other short-term instruments, stated at
cost which approximates market value, with original maturities of three months
or less.
Deferred Financing Costs
Deferred financing costs, which were incurred in connection with the
issuance of the subordinated debentures (see Note 5), were charged to expense as
additional interest expense over the life of the subordinated debentures using
the interest method.
Property and Equipment
Property and equipment is stated at cost. The Company depreciates
furniture, fixtures and office and telephone equipment on a straight-line basis
over three to ten years; computer equipment over two to four
F-27
<PAGE> 134
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
years; automobiles over three to five years and buildings over fifty years.
Custom wood cases used to display WallBoards(R) are placed in locations targeted
at specific advertising markets. The original cost of these cases is capitalized
and depreciated over five years. Leasehold improvements are amortized on a
straight-line basis over the shorter of the term of the lease or the estimated
useful life of the improvements.
When assets are retired or sold, the cost and related accumulated
depreciation and amortization are removed from the accounts and any gain or loss
is reflected in income.
Revenue Recognition
DIRECT SALES -- The Company performs marketing of telecommunication and
other services on behalf of its clients utilizing its field sales and
teleservicing resources. These contracts provide for payments based on accepted
customers and the type of service purchased by the customer. Revenues related to
these sales are recognized on the date the application for service is accepted
by the Company's clients. At this point, the Company has no further performance
obligation related to the submitted customer and is contractually entitled to
payment. Certain of the Company's contracts provide the client with the right to
seek a return of previously paid commissions if the customers submitted by the
Company do not meet certain defined characteristics and performance standards.
These relate to the client's ability to successfully provide service to the
customer, the bad debt experience of the customer base submitted by the Company,
the achievement of targeted customer goals and certain minimum usage and life
measures of the customer base. At the point of revenue recognition, an allowance
is recorded by the Company based on an estimate for these returned commissions.
The allowance is estimated based on the Company's historical experience and
periodically reviewed by the Company and adjusted when necessary.
WALLBOARD(R) REVENUE -- The Company contracts with clients to display
sponsored information in mounted wall units at target market locations.
WallBoard(R) revenue is recognized over the life of the contract as services are
rendered which is generally one year or less. Unearned revenue is recorded for
billings prior to the earning of such revenue.
PRODUCT SAMPLING -- The Company contracts with clients to produce and
distribute product samples, coupons and pieces of literature to target markets.
Sampling revenue is recognized over the contract term of the sampling program as
services are rendered which generally extends for one year.
MEDICAL SERVICES REVENUE -- The Company recognizes revenue and associated
costs when services have been performed by field representatives. Customer
advances represent payments received under contracts in advance of the Company
performing the related service. These amounts are deferred and recognized as
revenue when services are performed. Unbilled services represent revenues earned
on contracts, but billed in a subsequent accounting period.
INTERNATIONAL SERVICES REVENUE -- The Company provides integrated targeted
marketing services to its clients in the United Kingdom under contracts that
provide for payment as services are rendered. Services provided include database
management, creative design, teleservices, direct response marketing, and print
production. Revenues are recognized as services are rendered in accordance with
the terms of the contracts.
Goodwill
Goodwill was recorded in connection with the January 25, 1994 acquisition
of Brann Limited by Brann and is amortized on a straight-line basis over thirty
years from the acquisition date. When conditions or events occur which
management believes might impact the value of the goodwill, an analysis of
future undiscounted cash flows is undertaken to determine if any write down in
the carrying value of the goodwill is required.
F-28
<PAGE> 135
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
Inventory
Inventory, consisting primarily of paper and supplies, is stated at the
lower of cost or market. Cost is the direct cost of purchased materials on a
First In First Out basis, plus attributable labor and expenses with respect to
work in progress.
Income Taxes
The accompanying consolidated financial statements reflect no provision for
federal or state income taxes related to income earned by the Partnership prior
to the Reorganization since each of the partners of the Partnership reflected
their share of the Partnership's net income on their respective tax returns.
Prior to January 1, 1996, SMS was taxed as a C corporation and, accordingly, a
provision (benefit) for taxes of SMS is reflected in the accompanying
consolidated statement of income for each of the two years in the period ended
December 31, 1995. During this period, SMS accounted for income taxes in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" "SFAS 109". Effective January 1, 1996, SMS elected to be taxed
as an S corporation under the Internal Revenue Code. In lieu of corporate taxes,
the stockholders of an S corporation are taxed on their proportionate share of
the Company's taxable income.
Effective with the Reorganization, SCI is treated as a C corporation for
federal and state income tax purposes. At the date of the Reorganization, SCI
recognized a net deferred tax asset and an associated tax benefit equal to the
cumulative net deductible temporary differences existing at that date. The
income tax provision recorded for the year ended December 31, 1996 includes a
provision for income taxes for SCI for the period from September 24, 1996, the
date of the Reorganization, through December 31, 1996, offset by the net
deductible temporary differences existing at the date of the Reorganization.
Prior to November 1, 1992, MMD filed its income tax return using the
cash-basis method of reporting. Beginning November 1, 1992, MMD switched to the
accrual method. In connection with this change, MMD, for income tax purposes,
was required to recognize additional taxable income of approximately $642,000
over a four-year period, beginning in 1993. Accordingly, at December 31, 1995, a
deferred income tax liability of $78,601 is reflected as the balance due for the
change in the tax accounting method described above and is included in accounts
payable and accrued expenses in the accompanying consolidated balance sheet.
During 1994, MMD elected to be taxed as a small business corporation (S
corporation) under the applicable sections of the Code and New York state income
tax laws. Accordingly, no provision for federal income taxes has been made for
MMD in the accompanying consolidated financial statements. However, MMD is
subject to New York state income tax at reduced rates and New York City income
tax. MMD elected to retain its tax fiscal year-end, which was October 31,
through October 31, 1996. As an S corporation with a year-end which is other
than a calendar year, a deposit was required to be held on account with the IRS.
This deposit amounted to $283,183 and $316,777 as of December 31, 1995 and 1996,
respectively. As a result of the merger transaction discussed above, MMD has
changed its tax fiscal year-end to December 31.
Brann incurs and pays taxes in the U.K. on a corporate level similar to a C
corporation in the United States.
Pro Forma Income Data (Unaudited)
The unaudited pro forma net income and net income per share amounts include
a provision for federal and state income taxes as if the Company had been a
taxable C corporation for all periods presented. The shares used in computing
pro forma net income per share assume that the Reorganization and the
Acquisitions had occurred at the beginning of each of the periods presented and,
for 1996 reflect the issuance
F-29
<PAGE> 136
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
of additional shares as a result of the initial public offering and the exercise
of stock options. The pro forma income tax rate reflects the combined federal
and state income taxes of approximately 42.4 percent, 40.8 percent and 44.5
percent, for the years ended December 31, 1994, 1995 and 1996, respectively.
Accounting for Stock Options
The Company accounts for its stock-based compensation plan using the
intrinsic value based method in accordance with the provisions of APB Opinion
No. 25, "Accounting for Stock Issued to Employees." Pro forma disclosure of net
income and earnings per share, calculated as if the Company accounted for its
stock-based compensation plan using the fair value based method in accordance
with the provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), is included in Note 10.
Foreign Currency Translations
Assets and liabilities of Brann are translated using the exchange rate at
the balance sheet date. Revenue and expense accounts for this subsidiary are
translated using the average exchange rate during the period. Foreign currency
translation adjustments are disclosed as a separate component of equity.
Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Company's most significant estimates relate to certain of its contracts to
provide outsourced marketing services. The terms of these contracts provide that
the Company's clients may seek a return of previously paid commissions if
certain defined characteristics or performance standards are not met. The
Company has recorded an allowance in the accompanying consolidated financial
statements in an amount which it considers sufficient to satisfy any claims
which might be made pursuant to these provisions.
Concentration of Credit Risk
Concentration of credit risk is limited to accounts receivable and unbilled
services and is subject to the financial conditions of certain major clients as
described in Note 3. The Company's receivables are concentrated with customers
in the telecommunications and pharmaceutical industries. The Company does not
require collateral or other security to support clients' receivables.
New Accounting Pronouncements
During February 1997, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS 128"). This statement is effective for years ending after December 15,
1997 and will be implemented by the Company in its December 31, 1997 financial
statements.
SFAS 128 requires primary earnings per share ("EPS") to be replaced with
basic EPS. Primary EPS is computed by dividing reported earnings available to
common stockholders by the weighted average number of shares outstanding without
consideration of common stock equivalents or other potentially dilutive
securities. Fully diluted EPS, now called diluted EPS is still included. As
discussed in Note 10, SCI adopted its stock option plan and began offering stock
options in September 1996. Because the options were outstanding for only a short
period of time during 1996, management has established that the effect of this
pronouncement on
F-30
<PAGE> 137
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
the computation of basic EPS is immaterial for 1996. However, in future years,
when the options are outstanding for the entire year, management has estimated
that the Company's reported EPS will be higher under SFAS 128 than under the old
EPS standard.
3. SIGNIFICANT CLIENTS:
The Company had one client which represented 2, 19 and 27 percent of the
Company's total revenues for the years ended December 31, 1994, 1995 and 1996,
respectively. The loss of this client would have a material adverse effect on
the Company's business. The Company's principal contract with this client
extends through December 1997. In January 1997 the Company entered into another
two-year contract with this client to provide additional services. The Company
had a second client which accounted for 10 percent of the Company's total
revenues for the year ended December 31, 1996. Effective January 1997, the
Company is no longer doing business with this client. The termination of the
contract with this client is not expected to have a material impact on the
Company. The Company had a third client which represented 15, 16 and 9 percent
of the Company's total revenues for the years ended December 31, 1994, 1995 and
1996, respectively.
4. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
WallBoards(R).................................... $ 1,829,398 $ 1,790,566
Buildings........................................ 3,735,281 4,127,897
Computer equipment............................... 9,210,599 12,720,836
Office and telephone equipment................... 7,816,985 13,061,161
Furniture and fixtures........................... 335,840 538,217
Automobiles...................................... 269,125 253,287
Leasehold improvements........................... 1,303,244 2,445,640
------------ ------------
24,500,472 34,937,604
Accumulated depreciation......................... (12,603,711) (17,621,727)
------------ ------------
$ 11,896,761 $ 17,315,877
=========== ===========
</TABLE>
5. DEBT:
Lines of Credit
SCI obtained a $2.5 million line of credit in September 1996. The line of
credit has a variable rate of interest with borrowings payable on an amortizing
basis to September 1999, the date the line expires. At December 31, 1996,
approximately $0.9 million was outstanding and the interest rate was 6.75
percent. The weighted average interest for the period ended December 31, 1996
was 6.71 percent.
MMD has a $2.0 million revolving line of credit agreement with a bank. The
line of credit has a variable interest rate based on the bank's prime rate (8.25
percent as of December 31, 1996). MMD had $1.0 and $0.5 million outstanding on
this line at December 31, 1995 and 1996, respectively, and the effective
interest rate was 8.0 percent for the year ended December 31, 1996. Borrowings
pursuant to the line of credit are collateralized by substantially all of the
assets of MMD. In February 1997, MMD paid off the outstanding balance of $0.5
million.
F-31
<PAGE> 138
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. DEBT: -- (CONTINUED)
Brann has a loan payable to a commercial bank in the amount of $7,246,290
and $7,165,631 as of December 31, 1995 and 1996, respectively. The loan has an
interest rate of 7.6275 percent per annum until January 28, 1999, at which date
the interest rate changes to the bank's base rate plus 1.75 percent. The loan is
payable in annual installments of $855,700, until March 1, 2004, when the entire
unpaid amount is due in full. The loan is secured by Brann's assets and the book
value of the loan approximates its fair value as of December 31, 1996. On April
14, 1997, the full amount of the loan outstanding was repaid.
Future minimum payments on the loan are as follows:
<TABLE>
<S> <C>
1997............................................ $ 855,700
1998............................................ 855,700
1999............................................ 855,700
2000............................................ 855,700
2001............................................ 855,700
Thereafter...................................... 2,887,131
----------
Total................................. $7,165,631
=========
</TABLE>
Brann also has a $1,283,000 line of credit for general business
expenditures. The line of credit bears interest at the commercial bank's base
rate plus 1.25 percent. There was no balance outstanding under this line of
credit at December 31, 1996.
Subordinated Debentures
On October 28, 1996 SCI used approximately $7.0 million of cash to redeem
in full the subordinated debentures ("the Debentures") due to related parties.
The Debentures were originally issued on May 18, 1995, with a face amount of
$6.0 million. Cash proceeds of $5.0 million were received upon issuance of the
Debentures. The difference between the cash proceeds received and the face
amount of the Debentures was accounted for as an original issue discount. The
Debentures had a stated interest rate of 12.25 percent (effective interest rate
to maturity of approximately 17 percent) and an original maturity date of
December 31, 2001. The Debentures were classified as long term at December 31,
1995, because SCI did not have the intent to repay them at that date. The $7.0
million payment consisted of the face amount of the Debentures, a prepayment
penalty and accrued interest. A nonrecurring charge of $1.2 million, net of a
$805,874 tax benefit, was recorded at December 31, 1996 as an extraordinary loss
related to this early debt extinguishment. The nonrecurring charge consists of
prepayment penalties and the write-off of unamortized discount and debt issuance
costs.
Notes Payable
Concurrent with the formation of the Partnership, the Original Limited
Partner loaned the Partnership $350,000 as evidenced by a promissory note. On
May 10, 1989, the Partnership entered into another promissory note agreement
with the Original Limited Partner to repay the principal amount of advances
previously made by the Original Limited Partner to the Partnership. Effective
January 1, 1993, all prior notes payable and the related accrued interest to the
Original Limited Partner were combined into one note totaling $3,252,781. This
note bore interest of 8.00 percent per annum. This note was paid in full in May
of 1995 with a portion of the proceeds from the Debentures.
F-32
<PAGE> 139
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES:
Prior to January 1, 1996, SMS was taxed as a C corporation for federal and
state corporate income tax purposes. Effective January 1, 1996, SMS elected to
be taxed as an S corporation and accordingly, SMS's income was taxable to its
stockholders.
During 1994, MMD elected to be taxed as an S corporation for federal and
state corporate income tax purposes. However, MMD is subject to New York State
income tax at reduced rates and New York City income tax.
At the date of the Reorganization, a net deferred tax asset was recorded
with an associated credit to the provision for income taxes. The Company's
income tax provision (benefit) for the periods when it operated as a C
corporation, the years ended December 31, 1994 and 1995 and for the period from
the date of Reorganization to December 31, 1996, includes the following
components.
<TABLE>
<CAPTION>
1994 1995 1996
------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Current.............................. U.S.-Federal $ 2,000 $ 433,500 $ 1,590,176
U.S.-State and City 402,730 255,229 508,175
U.K. 978,948 1,589,077 685,630
------------------- ------------------- -------------------
1,383,678 2,277,806 2,783,981
Deferred............................. U.S.-Federal 83,000 51,000 (668,618)
U.S.-State and City -- 9,000 (114,824)
U.K. (1,532) 48,887 (588,798)
------------------- ------------------- -------------------
81,468 108,887 (1,372,240)
Tax effect of equity transaction..... -- (815,000) --
------------------- ------------------- -------------------
Income tax provision................. $ 1,465,146 $ 1,571,693 $ 1,411,741
========= ========= ==========
</TABLE>
The provision for taxes on income before extraordinary item differs from
the amount computed by applying the U.S. Federal income tax rate as a result of
the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Taxes at statutory U.S. Federal income tax rate..................... 35.00 35.00 35.00
U.S./U.K. tax rate differential..................................... (0.57) (0.91) 0.15
Income taxed directly to owners..................................... (21.95) (21.80) (16.55)
State and city income taxes (benefit), net of federal tax benefit... 3.58 1.96 2.71
Tax effect of Reorganization........................................ -- -- (6.69)
Tax effect of dividends on mandatorily redeemable preferred stock... 1.47 1.38 (1.18)
Tax effect of U.K. permanent differences............................ 2.59 2.30 (2.17)
Other............................................................... -- -- 3.37
------ ------ ------
Effective tax rate.................................................. 20.12 17.93 14.64
====== ====== ======
</TABLE>
Deferred income taxes are recorded based upon differences between the
financial statement and tax bases of assets and liabilities. There has been no
valuation allowance recorded relating to the deferred tax assets. As
F-33
<PAGE> 140
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES: -- (CONTINUED)
of December 31, 1995 and 1996 temporary differences that give rise to the
deferred tax assets and liabilities consisted of the following:
<TABLE>
<CAPTION>
1995 1996
--------- ----------
<S> <C> <C>
Accrued expenses and other liabilities............................... $ 52,411 $1,161,329
Vacation and severance accruals...................................... 32,907 120,010
Allowance for doubtful accounts...................................... 40,000 42,582
Other................................................................ 17,751 --
--------- ----------
Gross deferred tax assets............................................ 143,069 1,323,921
Property and equipment............................................... (273,766) (86,958)
Prepaid pension cost................................................. (60,321) (83,859)
--------- ----------
Gross deferred tax liabilities....................................... (334,087) (170,817)
--------- ----------
Net deferred tax (liability) asset................................... $(191,018) $1,153,104
========= =========
</TABLE>
At December 31, 1996, cumulative undistributed earnings of Brann were
approximately $1.7 million. No provision for U.S. income taxes or U.K.
withholding taxes has been made since the Company considers these undistributed
earnings to be permanently invested in the U.K. The Company has estimated that
because of available tax planning strategies such earnings, if repatriated,
would not result in an additional material tax provision.
7. INTERNATIONAL OPERATIONS:
After giving effect to the Acquisitions, the Company has operations in both
the United States and the U.K. Financial information by country is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1994 1995 1996
----------- ------------ ------------
<S> <C> <C> <C>
Revenues
United States.................. $37,477,886 $ 70,260,899 $119,977,514
U.K. .......................... 42,951,152 62,540,474 65,462,899
----------- ------------ ------------
Total Revenues...................... $80,429,038 $132,801,373 $185,440,413
========== =========== ===========
Income from operations
United States.................. $ 5,487,069 $ 5,367,367 $ 10,572,041
U.K............................ 2,959,824 4,854,502 222,279
----------- ------------ ------------
Total income from operations........ $ 8,446,893 $ 10,221,869 $ 10,794,320
========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Identifiable assets
United States............................ $18,320,584 $ 72,925,797
U.K. .................................... 29,227,990 31,667,745
----------- ------------
Total identifiable assets..................... $47,548,574 $104,593,542
========== ===========
</TABLE>
F-34
<PAGE> 141
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. LEASES:
The Company leases certain facilities, office equipment and other assets.
The following is a schedule of future minimum lease payments for capital leases
and for operating leases (with initial or remaining terms in excess of one year
at December 31, 1996).
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASES LEASES
- ------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
1997............................................................... $ 1,354,384 $ 5,697,191
1998............................................................... 1,167,393 4,966,457
1999............................................................... 648,001 3,973,093
2000............................................................... 80,590 3,189,087
2001............................................................... -- 2,987,102
Thereafter......................................................... -- 10,543,113
----------- -----------
Total minimum lease payments.................................. 3,250,368 31,356,043
==========
Less -- Amount representing interest............................... (415,019)
-----------
Total obligation under capital leases......................... 2,835,349
Less -- Current portion............................................ (1,108,954)
-----------
Long-term portion.................................................. $ 1,726,395
==========
</TABLE>
Property and equipment, net, on the consolidated balance sheets includes
$1,326,069 and $3,258,065 for equipment purchased under capital leases as of
December 31, 1995 and 1996, respectively.
Rental expense for all operating leases was approximately $1,806,400,
$2,838,600 and $4,119,691 for the years ended December 31, 1994, 1995 and 1996,
respectively.
9. CAPITAL STOCK:
On September 30, 1996 SCI completed an initial public offering of 8,970,000
shares of its common stock, par value $0.001 per share (the "Common Stock") at
an offering price of $17.00 per share. The offering included 4,038,162 newly
issued shares of Common Stock sold by SCI and 4,931,838 previously outstanding
shares of Common Stock sold by selling stockholders. SCI received net proceeds
of $59.2 million from the offering (after deducting the costs associated with
the offering). SCI did not receive any proceeds from the sale of shares of
Common Stock in the offering by the selling stockholders.
In May 1995, SMS sold a 6.15 percent interest in the Partnership for
$2,050,000 in cash proceeds. These proceeds are reflected (net of associated
income taxes of $815,000 and SMS's basis in the equity interest) as a
contribution to additional paid-in capital in the accompanying consolidated
financial statements.
10. STOCK INCENTIVE PLAN:
In September 1996, SCI adopted the 1996 Stock Incentive Plan (the "Stock
Option Plan"). The Stock Option Plan authorizes SCI to grant incentive stock
options, non-qualified stock options, restricted stock awards and stock
appreciation rights ("SARs"). Subject to adjustment, the aggregate number of
shares of Common Stock which may be issued under the Stock Option Plan upon
exercise of options, SARs or in the form of restricted stock may not exceed five
million shares.
In conjunction with Brann's purchase of Brann Limited in January 1994,
Brann adopted a stock option plan. Granted options were exercisable upon a sale
or flotation of Brann as defined in the terms of the plan. No compensation
expense has been recognized in the financial statements for the Brann options
for any of the periods presented as the conditions for their exercise were not
probable at any of the balance sheet dates. In
F-35
<PAGE> 142
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. STOCK INCENTIVE PLAN: -- (CONTINUED)
conjunction with the acquisition of Brann by SCI, all of the outstanding options
of Brann were exchanged for options of the common stock of the Company under the
Stock Option Plan. The exchange of Brann options for SCI options was based on
the final common stock exchange rates used in the acquisition, with the SCI
options possessing identical terms to the Brann options at the date of
conversion. Management anticipates recognizing a charge to first quarter income
of approximately $9.1 million related to the accelerated vesting of these
options.
The exercise price of options granted under the Stock Option Plan may not
be less than 100 percent (110 percent in the case of an optionee who is a 10
percent stockholder) of the fair market value per share of Common Stock on the
date of the option grant. The vesting and other provisions of the options are
determined by the Company's Board of Directors. All options granted as of
December 31, 1996 vest on or before the fourth anniversary of the date of grant
and expire on or before the tenth anniversary of the date of grant.
A summary of the activity within the Stock Option Plan, for the three years
ended December 31, 1996, after giving retroactive effect to the conversion of
the Brann options, is as follows:
<TABLE>
<CAPTION>
SHARES OUTSTANDING
-------------------------------
1994 1995 1996
------- ------- ---------
<S> <C> <C> <C>
Beginning of year.............................. -- 402,254 378,448
Granted................................... 402,254 3,662 4,289,494
Exercised................................. -- -- (25,000)
Forfeited................................. -- (27,468) (280,520)
Expired................................... -- -- --
------- ------- ---------
End of year.................................... 402,254 378,448 4,362,422
======= ======= ========
Exercisable at end of year..................... -- -- 275,000
======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED AVERAGE EXERCISE
PRICE
----------------------------
1994 1995 1996
----- ----- ------
<S> <C> <C> <C>
Beginning of year................................ $ -- $0.27 $ 0.27
Granted..................................... 0.27 0.27 15.18
Exercised................................... -- -- 17.00
Forfeited................................... -- 0.27 15.38
Expired..................................... -- -- --
----- ----- ------
End of year...................................... $0.27 $0.27 $15.18
===== ===== ======
</TABLE>
Weighted average fair value of options granted $37,498,732
Of the 4,362,422 options outstanding as of December 31, 1996, 3,767,500
options have an exercise price of $17.00 and a weighted average remaining
contractual life of 9.69 years. Another 194,500 options have exercise prices
between $19.375 and $27, with a weighted average exercise price of $22.972 and a
weighted average remaining contractual life of 9.93 years. The remaining 400,422
options relate to the previously converted Brann options which have exercise
prices between $0.27 and $2.67 and a remaining contractual life of 7 years.
The fair value of each option grant is estimated on the date of grant using
a Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1996: risk-free interest rate of 6.2 percent,
expected dividend yield of zero, expected life of 5 years, and expected
volatility of 50 percent.
F-36
<PAGE> 143
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. STOCK INCENTIVE PLAN: -- (CONTINUED)
If the Company had recorded compensation expense using the fair value based
method prescribed by SFAS 123, the Company's pro forma net income and pro forma
net income per share amounts would have been reduced to the following as
adjusted amounts.
<TABLE>
<S> <C> <C>
Pro forma net income (loss): As reported............. $ 5,047,479
As adjusted............. (1,847,675)
Pro forma net income (loss) per share: As reported............. $ 0.16
As adjusted............. (0.06)
Pro forma fully diluted net income (loss) per share: As reported............. $ 0.16
As adjusted............. (0.06)
</TABLE>
11. MANDATORILY REDEEMABLE PREFERRED STOCK:
On January 25, 1994, in connection with the acquisition of Brann Direct
Marketing Limited by Brann Holdings, fixed cumulative mandatorily redeemable
preferred shares with a par value of L0.90 were issued for L1.00. All of the
3,067,000 authorized shares were issued yielding proceeds of $4,582,098 less
associated issue costs of $129,978. A fixed cumulative dividend was payable at
the following rates:
<TABLE>
<S> <C>
1994................................................... 5%
1995................................................... 6%
1996................................................... 7%
Thereafter............................................. 8%
</TABLE>
The shares were redeemable at L1.00 per share, including the L0.10 premium
per share on the following dates by the holders or earlier at the option of
Brann.
<TABLE>
<CAPTION>
NUMBER
-------
<S> <C>
December 31, 1998.................................. 517,000
December 31, 1999.................................. 850,000
December 31, 2000.................................. 850,000
December 31, 2001.................................. 850,000
</TABLE>
The preferred shares are mandatorily redeemable on a specific date, do not carry
voting rights unless dividends are in arrears, which has not occurred, and are
not convertible into Brann common equity. Accordingly, the preference shares are
classified as long term debt obligations and the dividends as well as the
amortization of associated issue costs are charged as a component of interest
expense in the accompanying consolidated financial statements. Dividends
included in interest expense were $324,784, $366,096 and $362,338 in 1994, 1995
and 1996, respectively. The preferred shares were redeemed in full subsequent to
December 31, 1996, as part of the Acquisitions.
12. PENSIONS:
Brann operates The Brann Retirement Benefits Plan, which is a funded
defined benefit plan available to all employees. The assets of the plan are held
separately from those of Brann and are invested in managed funds principally
comprising equity securities. Plan benefits are based on years of service and
compensation levels at the time of retirement. The funding of the plan is
determined following consultation with actuaries using the projected unit credit
method.
F-37
<PAGE> 144
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. PENSIONS: -- (CONTINUED)
An actuarial valuation of the pension plan is performed on a triennial
basis consistent with regulations governing pensions plans and the accounting
therefor in the United Kingdom. SFAS No. 87 requires an annual valuation of a
plan's assets and liabilities. For purposes of these financial statements, the
actuarial value of the plan's liabilities has been estimated using the available
actuarial valuations and the plan's asset values reflect the actual market value
of those assets at each balance sheet date based on records maintained by the
plan's trustees. The most recent actuarial valuation of the plan's liabilities
was performed as of April 1, 1996. The significant assumptions used and the
funded status of the plan are set out in the tables below.
Significant Assumptions
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------
1995 1996
---- ----
1994 % %
----
%
<S> <C> <C> <C>
Discount rate...................................................... 9.0 8.0 8.0
Expected long-term rate of return on plan assets................... 10.0 9.0 9.0
Rate of increase in compensation................................... 7.0 6.0 6.0
</TABLE>
Net Periodic Pension Cost
Net periodic pension cost is determined using the assumptions as of the
beginning of the year and is comprised of the following (in thousands).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Service cost............................................. $ 812 $ 726 $ 1,109
Interest cost on projected benefit obligation............ 521 710 875
Actual return on plan assets............................. 935 (1,704) (1,078)
Net amortization of unrecognized net (gain) loss and
deferral of actual return on plan assets............... (1,578) 915 125
------- ------- -------
Net periodic pension cost................................ $ 690 $ 647 $ 1,031
======= ======= =======
</TABLE>
Funded Status
The funded status is determined using the assumption as of the end of the
year and is reflected as follows (in thousands).
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1995 1996
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated and fully vested......................... $ 9,033 $11,501
Accumulated benefit obligation............................ 9,033 11,501
Effect of projected future compensation levels............ 1,918 2,430
------- -------
Projected benefit obligation.............................. 10,951 13,931
Plan assets at fair value................................. 9,930 13,777
------- -------
Plan assets less than projected benefit obligation........ (1,021) (154)
Unrecognized loss......................................... 1,206 411
------- -------
Prepaid pension cost...................................... $ 185 $ 257
======= =======
</TABLE>
F-38
<PAGE> 145
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. RELATED PARTIES:
SCI's headquarters office space is leased from a third party, in which one
of the former limited partners has an ownership interest. Rent paid under this
lease was $355,483, $771,855, and $ 1,125,542 in 1994, 1995, and 1996,
respectively.
During 1995, SCI advanced $2,725,000 to a stockholder of SMS as evidenced
by a promissory note. The note was non-interest bearing and secured by SMS
stock. This note was distributed to the SMS stockholders, pro rata, on June 30,
1996.
SCI produces a WallBoard(R) for which a publication beneficially owned by
the Original Limited Partner is one of the sponsors. Such publication
participates as a sponsor in exchange for the use by the Company of its
editorial information. Because it is not practicable to estimate the benefit
received by or provided to SCI and the Original Limited Partner, no accounting
recognition has been provided for this transaction in the accompanying
consolidated financial statements.
14. COMPENSATION TO STOCKHOLDERS:
Prior to the Reorganization, SCI's operations were conducted by the
Partnership. SMS, the general partner of the Partnership, paid compensation to
certain officers and employees of the Partnership for services performed for
SMS. The compensation from SMS was in addition to the compensation that these
individuals received from the Partnership. Following consummation of the
Reorganization, these individuals are not performing any comparable duties or
responsibilities for SMS. No such compensation was paid by SMS to these
individuals in 1996 nor is any such compensation expected to be paid in the
future. This non-recurring compensation is included in compensation to
stockholders on the consolidated statement of income for the year ended December
31, 1995.
Prior to its merger with SCI, the stockholders of MMD received compensation
for services provided to MMD. Following this merger, two of the former
stockholders are not performing comparable duties for MMD. No such compensation
is expected to be paid to these individuals in the future. The remaining
individual has entered into an employment agreement with the Company which
provides for compensation at a reduced level compared to that paid for the
periods presented. Based on this individual's compensation for the year ended
December 31, 1996, it is anticipated that compensation levels will decrease
approximately $1.1 million in 1997.
15. COMMITMENTS AND CONTINGENCIES:
The Company is subject to lawsuits, investigations and claims arising out
of the conduct of its business, including those related to commercial
transactions, contracts, government regulation and employment matters. Certain
claims, suits and complaints have been filed or are pending against the Company.
In the opinion of management, all matters are without merit or are of such kind,
or involve such amounts, as would not have a material effect on the financial
position or results of operations of the Company if disposed of unfavorably.
The Internal Revenue Service ("IRS") is currently conducting an examination
of MMD's Federal employment tax returns for the years ended December 31, 1992
and 1993. During the course of the examination, the IRS has requested
documentation from MMD to support MMD's classification of its field
representatives as independent contractors. The Company believes that it has
adequate support for its treatment of field representatives as independent
contractors. In the opinion of management, the resolution of this matter will
not have a material effect on the financial position or results of operations of
the Company, and adequate provision for any potential losses has been made in
the accompanying consolidated financial statements.
F-39
<PAGE> 146
SNYDER COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE
DATA):
The following table summarizes financial data by quarter for SCI, MMD and
Brann for all periods presented, giving effect to the Mergers as if they had
occurred at the beginning of the earliest period presented.
<TABLE>
<CAPTION>
QUARTER ENDED 1995
--------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
-------- ------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues................................. $28,759 $30,678 $ 33,136 $40,228 $132,801
Gross Profit............................. 8,622 8,558 9,981 11,816 38,977
Net Income............................... 2,104 1,677 2,860 554 7,195
Pro Forma Net Income..................... 1,473 1,191 2,112 417 5,193
Pro Forma Net Income per share........... $ 0.04 $ 0.04 $ 0.07 $ 0.01 $ 0.16
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED 1996
--------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
-------- ------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues................................. $40,506 $44,249 $ 45,335 $55,350 $185,440
Gross Profit............................. 10,215 10,860 11,007 14,000 46,082
Income Before
Extraordinary Item.................. 2,372 1,751 2,169 1,939 8,231
Net Income............................... 2,372 1,751 2,169 723 7,015
Pro Forma Net Income
Before Extraordinary Item........... 1,332 1,004 902 2,112 5,350
Pro Forma Net Income..................... 1,332 1,004 902 896 4,134
Pro Forma Net Income
Before Extraordinary Item per
Share............................. $ 0.04 $ 0.03 $ 0.03 $ 0.06 $ 0.16
Pro Forma Net Income per share........... $ 0.04 $ 0.03 $ 0.03 $ 0.02 $ 0.12
</TABLE>
17. SUBSEQUENT EVENT -- RECENT ACQUISITION:
On January 17, 1997, the Company acquired Supermarket Communications
Systems, Inc. ("SCS"). SCS provides marketing services through information
centers located in over 7,000 targeted retail outlets. Upon consummation of the
acquisition, SCS's name was changed to Good Neighbor Direct, Inc. ("Good
Neighbor"), and the information centers acquired will be operated by the Company
through Good Neighbor. The purchase price of $4,150,000 was paid in cash. The
assets acquired in the purchase include information centers with a net book
value of approximately $498,000 and certain other assets with a book value of
approximately $29,000.
18. SUBSEQUENT EVENT -- PENDING ACQUISITION:
On March 18, 1997, the Company entered into a definitive agreement to
acquire American List Corporation ("American List") in a merger transaction in
which American List will become a wholly owned subsidiary of the Company. Under
the terms of the agreement, the Company will issue one share of Common Stock in
exchange for all of the outstanding stock of each of the approximately 4.5
million shares of American List common stock outstanding if the average trading
price of the Company's Common Stock prior to closing of the transaction is at
least $32 per share with the exchange ratio increasing if the average trading
price of the Company's Common Stock prior to closing is less than $32 per share.
Therefore, each American List stockholder will receive a pro-rata amount of the
Company's Common Stock in proportion to their relative percentage ownership in
American List. This acquisition is subject to the approval of American List
stockholders and to customary regulatory approval. Pending approval, the Company
expects to complete this merger transaction in the second quarter of 1997. This
merger will be accounted for as a pooling of interests for accounting and
financial reporting purposes. American List is a targeted marketing resource,
providing clients with the ability to reach over 30 million students and young
adults through its proprietary database.
F-40
<PAGE> 147
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Brann Holdings Limited:
We have audited the consolidated balance sheets of Brann Holdings Limited
(the Company) and its subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1996
(not presented separately herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom, which do not differ in any material respect
from generally accepted auditing standards in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements audited by us present
fairly, in all material respects, the financial position of the Company and its
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles in
the United States.
Price Waterhouse
Chartered Accountants
and Registered Auditors
Bristol, England
May 30, 1997
F-41
<PAGE> 148
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 18, 1997
AMONG
AMERICAN LIST CORPORATION,
SNYDER COMMUNICATIONS, INC.
AND
SNYDER Z ACQUISITION, INC.
<PAGE> 149
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 THE MERGER.................................................................. A-1
Section 1.1. The Merger............................................................ A-1
Section 1.2. Effective Time........................................................ A-1
Section 1.3. Closing of the Merger................................................. A-2
Section 1.4. Effects of the Merger................................................. A-2
Section 1.5. Certificate of Incorporation and Bylaws............................... A-2
Section 1.6. Directors............................................................. A-2
Section 1.7. Officers.............................................................. A-2
Section 1.8. Conversion of Shares.................................................. A-2
Section 1.9. Exchange of Certificates.............................................. A-3
Section 1.10. Stock Options......................................................... A-4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................... A-5
Section 2.1. Organization and Qualification; Subsidiaries.......................... A-5
Section 2.2. Capitalization of the Company and Its Subsidiaries.................... A-5
Section 2.3. Authority Relative to This Agreement; Consents and Approvals.......... A-6
Section 2.4. SEC Reports; Financial Statements..................................... A-7
Section 2.5. Information Supplied.................................................. A-7
Section 2.6. Consents and Approvals; No Violations................................. A-7
Section 2.7. No Default............................................................ A-8
Section 2.8. No Undisclosed Liabilities; Absence of Changes........................ A-8
Section 2.9. Litigation............................................................ A-8
Section 2.10. Compliance with Applicable Law........................................ A-8
Section 2.11. Employee Plans........................................................ A-9
Section 2.12. Environmental Laws and Regulations.................................... A-9
Section 2.13. Tax Matters........................................................... A-9
Section 2.14. Intangible Property................................................... A-10
Section 2.15. Opinion of Financial Adviser.......................................... A-11
Section 2.16. Brokers............................................................... A-11
Section 2.18. Material Contracts.................................................... A-11
Section 2.19. Pooling of Interests.................................................. A-12
Section 2.20. Disclosure............................................................ A-12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION....................
A-12
Section 3.1. Organization.......................................................... A-12
Section 3.2. Capitalization of Parent and Its Subsidiaries......................... A-12
Section 3.3. Authority Relative to This Agreement.................................. A-13
Section 3.4. SEC Reports; Financial Statements..................................... A-13
Section 3.5. Information Supplied.................................................. A-13
Section 3.6. Consents and Approvals; No Violations................................. A-14
Section 3.7. No Default............................................................ A-14
Section 3.8. No Undisclosed Liabilities; Absence of Changes........................ A-14
Section 3.9. Litigation............................................................ A-14
Section 3.10. Compliance with Applicable Law........................................ A-15
Section 3.11. Environmental Laws and Regulations.................................... A-15
</TABLE>
i
<PAGE> 150
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 3.12. Tax Matters........................................................... A-15
Section 3.13. Intangible Property................................................... A-16
Section 3.14. Brokers............................................................... A-16
Section 3.15. Pooling of Interests.................................................. A-16
Section 3.16. Disclosure............................................................ A-16
ARTICLE 4 COVENANTS................................................................... A-17
Section 4.1. Conduct of Business of the Company.................................... A-17
Section 4.2. Conduct of Business of Parent......................................... A-18
Section 4.3. Preparation of S-4 and the Proxy Statement............................ A-19
Section 4.4. Other Potential Acquirors............................................. A-19
Section 4.5. Letters of Accountants................................................ A-20
Section 4.6. Meeting............................................................... A-20
Section 4.7. Stock Exchange Listing................................................ A-20
Section 4.8. Access to Information................................................. A-20
Section 4.9. Additional Agreements; Best Efforts................................... A-21
Section 4.10. Consents.............................................................. A-21
Section 4.11. Public Announcements.................................................. A-21
Section 4.12. Indemnification; Directors' and Officers' Insurance................... A-21
Section 4.13. Notification of Certain Matters....................................... A-22
Section 4.14. Pooling............................................................... A-22
Section 4.15. Tax-Free Reorganization Treatment..................................... A-22
Section 4.16. Employment Benefits................................................... A-22
Section 4.17. Company Affiliates.................................................... A-23
Section 4.18. SEC Filings........................................................... A-23
Section 4.19. Guarantee of Performance.............................................. A-23
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER.................................... A-23
Section 5.1. Conditions to Each Party's Obligations to Effect the Merger........... A-23
Section 5.2. Conditions to the Obligations of the Company.......................... A-24
Section 5.3. Conditions to the Obligations of Parent and Acquisition............... A-24
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER.............................................. A-25
Section 6.1. Termination........................................................... A-25
Section 6.2. Effect of Termination................................................. A-26
Section 6.3. Fees and Expenses..................................................... A-26
Section 6.4. Amendment............................................................. A-26
Section 6.5. Extension; Waiver..................................................... A-27
ARTICLE 7 MISCELLANEOUS............................................................... A-27
Section 7.1. Nonsurvival of Representations and Warranties......................... A-27
Section 7.2. Entire Agreement; Assignment.......................................... A-27
Section 7.3. Validity.............................................................. A-27
Section 7.4. Notices............................................................... A-27
Section 7.5. Governing Law......................................................... A-28
Section 7.6. Descriptive Headings.................................................. A-28
Section 7.7. Parties in Interest................................................... A-28
Section 7.8. Severability.......................................................... A-28
Section 7.9. Specific Performance.................................................. A-28
Section 7.10. Brokers............................................................... A-28
Section 7.11. Counterparts.......................................................... A-28
</TABLE>
ii
<PAGE> 151
EXHIBIT A - Employment Agreements
EXHIBIT B - Stockholders Agreement
EXHIBIT C - Affiliate Letter
EXHIBIT D - Tax Certificate of Company
EXHIBIT E - Tax Certificate of Parent and Acquisition
iii
<PAGE> 152
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
CROSS REFERENCE
TERM IN AGREEMENT PAGE
- ------------------------------------------------ -------------------------------- ----------
<S> <C> <C>
AA.............................................. Section 4.5..................... A-20
Acquisition..................................... Preamble........................ A-1
Affiliate Letter................................ Recitals........................ A-1
Average Final Closing Price..................... Section 1.8(a).................. A-2
Certificate of Merger........................... Section 1.2..................... A-1
Certificates.................................... Section 1.9(b).................. A-3
Claim........................................... Section 4.12(a)................. A-21
Closing......................................... Section 1.3..................... A-2
Closing Date.................................... Section 1.3..................... A-2
Code............................................ Recitals........................ A-1
Company......................................... Preamble........................ A-1
Company Affiliate............................... Recitals........................ A-1
Company Board................................... Section 2.3(a).................. A-6
Company Disclosure Schedule..................... Section 2.1(b).................. A-5
Company Option(s)............................... Section 1.10(a)................. A-4
Company Permits................................. Section 2.10.................... A-8
Company Plan.................................... Section 1.10(a)................. A-4
Company SEC Reports............................. Section 2.4..................... A-7
Company Securities.............................. Section 2.2(a).................. A-6
Contracts....................................... Section 2.18(a)................. A-11
Current Premium................................. Section 4.12(b)................. A-21
DGCL............................................ Section 1.1..................... A-1
Effective Time.................................. Section 1.2..................... A-1
Employment Agreements........................... Recitals........................ A-1
Environmental Claim............................. Section 2.12(a)................. A-9
Environmental Laws.............................. Section 2.12(a)................. A-9
ERISA........................................... Section 2.11.................... A-9
Exchange Act.................................... Section 2.2(c).................. A-6
Exchange Agent.................................. Section 1.9(a).................. A-3
Exchange Fund................................... Section 1.9(a).................. A-3
Financial Adviser............................... Section 2.15.................... A-11
GAAP............................................ Section 2.4..................... A-7
Governmental Entity............................. Section 2.6..................... A-7
HSR Act......................................... Section 2.6..................... A-7
Lien............................................ Section 2.2(b).................. A-6
Material Adverse Effect......................... Sections 2.1(a), 3.1(a)......... A-5, A-12
Merger.......................................... Section 1.1..................... A-1
Non-Disclosure Agreement........................ Section 2.14.................... A-11
NYSE............................................ Section 1.8(b).................. A-2
Parent.......................................... Preamble........................ A-1
Parent Common Stock............................. Section 1.8(a).................. A-2
Parent Options.................................. Section 1.10(a)................. A-4
Parent Permits.................................. Section 3.10.................... A-15
Parent SEC Reports.............................. Section 3.4..................... A-13
Parent Securities............................... Section 3.2(a).................. A-12
</TABLE>
iv
<PAGE> 153
<TABLE>
<CAPTION>
CROSS REFERENCE
TERM IN AGREEMENT PAGE
- ------------------------------------------------ -------------------------------- ----------
<S> <C> <C>
Proxy Statement................................. Section 2.5..................... A-7
S-4............................................. Section 2.5..................... A-7
SEC............................................. Section 2.4..................... A-7
Secretary of State.............................. Section 1.2..................... A-1
Securities Act.................................. Recitals........................ A-1
Share(s)........................................ Section 1.8(a).................. A-2
Stockholders Agreement.......................... Recitals........................ A-1
Subsidiary...................................... Section 2.1(a).................. A-5
Superior Proposal............................... Section 4.4(b).................. A-20
Surviving Corporation........................... Section 1.1..................... A-1
Taxes........................................... Section 2.13(b)................. A-10
Third Party..................................... Section 6.1(d).................. A-26
Third Party Acquisition......................... Section 6.1(d).................. A-26
</TABLE>
v
<PAGE> 154
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 18, 1997, is among
AMERICAN LIST CORPORATION, a Delaware corporation (the "Company"), SNYDER
COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and SNYDER Z
ACQUISITION, INC., a Delaware corporation and a wholly owned subsidiary of
Parent ("Acquisition").
WHEREAS, the Boards of Directors of the Company, Parent and Acquisition
each have, in light of and subject to the terms and conditions set forth herein,
(i) determined that the Merger (as defined in Section 1.1) is fair to their
respective stockholders and in the best interests of such stockholders and (ii)
approved the Merger in accordance with this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the execution hereof and as a condition to
Parent's and Acquisition's willingness to enter into this Agreement (i) the
Company and Martin Lerner, the President and Chief Executive Officer of the
Company, Donald Damore, the Vice President-Finance of the Company, and Charles
A. Caccia, the Vice President -- Marketing of the Company, respectively, have
entered into Employment Agreements (the "Employment Agreements") attached hereto
as Exhibits A-1, A-2 and A-3 and (ii) certain holders of Shares (as defined in
Section 1.8(a)) are entering into a Stockholders Agreement, a copy of which is
attached hereto as Exhibit B (the "Stockholders Agreement");
WHEREAS, it is intended that the Merger shall be recorded for accounting
purposes as a "pooling-of-interests"; and
WHEREAS, the Company has delivered to Parent a letter identifying all
persons (each, a "Company Affiliate") who are, at the date hereof, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act of 1933, as
amended (the "Securities Act"), and each Company Affiliate has delivered to
Parent a letter in the form attached hereto as Exhibit C (each, an "Affiliate
Letter") relating to (i) the transfer, prior to the Effective Time (as defined
in Section 1.8(a)), of the Shares beneficially owned by such Company Affiliate
on the date hereof, and (ii) the transfer of the shares of Parent Common Stock
(as defined in Section 1.8(a)) to be received by such Company Affiliate in the
Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Company, Parent and Acquisition hereby agree as
follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and the Merger Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), Acquisition
shall be merged with and into the Company (the "Merger"). Following the Merger,
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Acquisition shall cease.
SECTION 1.2. Effective Time. Subject to the terms and conditions set forth
in this Agreement, the Company, Parent and Acquisition will cause a certificate
of Merger (the "Certificate of Merger") with respect to the Merger to be
executed and filed with the Secretary of State of the State of Delaware (the
"Secretary of State") as provided in the DGCL. The Merger shall become effective
on the date the Certificate of Merger has been duly filed with the Secretary of
State or at such date as is agreed between the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
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SECTION 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
of the latest to occur of the conditions set forth in Article 5 (the "Closing
Date"), at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, New York 10153, unless another time, date or place is agreed to in writing
by the parties hereto.
SECTION 1.4. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.5. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of the Company in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with applicable law. The Bylaws of the Company in effect at the
Effective Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 1.6. Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
SECTION 1.7. Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $0.01 per
share, of the Company (individually a "Share" and collectively, the "Shares")
issued and outstanding immediately prior to the Effective Time (other than (i)
Shares held by any subsidiary of the Company and (ii) Shares held by Parent,
Acquisition or any other Subsidiary of Parent) shall, by virtue of the Merger
and without any action on the part of Acquisition, the Company or the holder
thereof, be converted into and shall represent the right to receive the number
of fully paid and nonassessable shares of common stock, $0.001 par value per
share, of Parent ("Parent Common Stock") equal to the Exchange Ratio. The
"Exchange Ratio" shall be determined prior to the Closing Date based on the
Average Final Closing Price (as defined below) in the following manner:
(i) if the Average Final Closing Price equals or exceeds $32.00, the
Exchange Ratio shall be 1.00;
(ii) if the Average Final Closing Price equals or exceeds $28.00 but
is less than $32.00, the Exchange Ratio shall equal the quotient (rounded
to four decimal places) of $32.00 divided by the Average Final Closing
Price;
(iii) if the Average Final Closing Price equals or exceeds $26.00 and
is less than $28.00, the Exchange Ratio shall be 1.14; and
(iv) if the Average Final Closing Price is less than $26.00, the
Exchange Ratio shall equal the quotient (rounded to four decimal places) of
$29.71 divided by the Average Final Closing Price (provided, in the event
the Final Average Closing Price is less than $24.00, that this Agreement
shall not have been terminated pursuant to Section 6.1(c)(iv) or
6.1(d)(v)).
As used herein, "Average Final Closing Price" shall mean the average of the
closing prices (or, if the Parent Common Stock should not trade on any Trading
Day (as hereinafter defined), the average of the high bid and low asked prices
therefor on such day), regular way, per share of Parent Common Stock, as
reported on the New York Stock Exchange ("NYSE") Composite Tape during the
twenty consecutive Trading Days ending on (and including) the third Trading Day
prior to the Effective Time. "Trading Day" means a day on which the NYSE is open
for trading. The multiple of Parent Common Stock represented by the Exchange
Ratio shall be the Merger Consideration.
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<PAGE> 156
(b) At the Effective Time, each outstanding share of the common stock, par
value $0.01 per share, of Acquisition shall be converted into one share of
common stock, par value $0.01 per share, of the Surviving Corporation.
(c) At the Effective Time, each Share held by Parent, Acquisition or any
subsidiary of Parent, Acquisition or the Company immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Acquisition, the Company or the holder thereof, be canceled, retired and
cease to exist and no payment shall be made with respect thereto.
SECTION 1.9. Exchange of Certificates.
(a) As of the Effective Time, Parent shall make available to American Stock
Transfer Company or another bank or trust company designated by Parent and
reasonably acceptable to the Company (the "Exchange Agent"), for the benefit of
the holders of Shares, for exchange in accordance with this Article I, through
he Exchange Agent: (i) certificates representing the appropriate number of
shares of Parent Common Stock and (ii) cash to be paid in lieu of fractional
shares of Parent Common Stock (such shares of Parent Common Stock and such cash
are hereinafter referred to as the "Exchange Fund").
(b) As soon as reasonably practicable and in any event within five (5)
business days after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates") whose shares
were converted into the right to receive shares of Parent Common Stock pursuant
to Section 1.8: (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent and
Acquisition (provided that the Company shall have the right to consent, which
consent shall not be unreasonably withheld, to any such other appointment made
prior to the Effective Time), together with such letter of transmittal, duly
executed, the holder of such Certificate shall receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock and,
if applicable, a check representing the cash consideration to which such holder
may be entitled on account of a fractional share of Parent Common Stock, which
such holder has the right to receive pursuant to the provisions of this Article
I, and the Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of Shares which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock may be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.9, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Section 1.9.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 1.9(f) until the holder of record of such Certificate shall surrender
such Certificate. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.9(f) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
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<PAGE> 157
(d) In the event that any certificate for Shares shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange therefor, upon
the making of an affidavit of that fact by the holder thereof such shares of
Parent Common Stock and cash in lieu of fractional shares, if any, as may be
required pursuant to this Agreement; provided, however, that Parent may, in its
discretion, require the delivery of a suitable bond or indemnity.
(e) All shares of Parent Common Stock issued upon the surrender for
exchange of Shares in accordance with the terms hereof (including any cash paid
pursuant to Section 1.9(c) or 1.9(f)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
(f) No fractions of a share of Parent Common Stock shall be issued in the
Merger, but in lieu thereof each holder of Shares otherwise entitled to a
fraction of a share of Parent Common Stock shall, upon surrender of his or her
certificate or certificates, be entitled to receive an amount of cash (without
interest) determined by multiplying the Average Final Closing Price by the
fractional share interest to which such holder would otherwise be entitled. The
parties acknowledge that payment of the cash consideration in lieu of issuing
fractional shares was not separately bargained for consideration but merely
represents a mechanical rounding off for purposes of simplifying the corporate
and accounting problems which would otherwise be caused by the issuance of
fractional shares.
(g) Any portion of the Exchange Fund which remains undistributed to the
stockholders of the Company for one year after the Effective Time shall be
delivered to Parent, upon demand, and any stockholders of the Company who have
not theretofore complied with this Article I shall thereafter look only to
Parent for payment of their claim for Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to Parent Common Stock.
(h) Neither Parent nor the Company shall be liable to any holder of Shares,
or Parent Common Stock, as the case may be, for such shares (or dividends or
distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
SECTION 1.10. Stock Options. (a) All options (individually, a "Company
Option" and collectively, the "Company Options") outstanding at the Effective
Time under the 1992 Stock Option Plan of the Company (the "Company Plan") shall
remain outstanding following the Effective Time. At the Effective Time, such
Company Options shall, by virtue of the Merger and without any further action on
the part of the Company or the holder of such Company Options, be assumed by
Parent in such manner that Parent (a) is a corporation (or a parent or a
subsidiary corporation of such corporation) "assuming a stock option in a
transaction to which Section 424(a) applied" within the meaning of Section 424
of the Code; or (b) to the extent that Section 424 of the Code does not apply to
any such Company Options, would be such a corporation (or a parent or a
subsidiary corporation of such corporation) were Section 424 applicable to such
option. At the Effective Time, (i) all references in the Company Plan to the
Company shall be deemed to refer to Parent and (ii) as soon as practicable, but
in no event later than 30 days following the Effective Time, Parent shall issue
to each holder of a Company Option a document evidencing the assumption of such
option by Parent in accordance herewith. Each Company Option assumed by Company
(as assumed, the "Parent Options") shall be exercisable upon the same terms and
conditions including, without limitation, vesting, as under the Company Plan and
the applicable option agreement issued thereunder, except that (x) each such
Company Option shall be exercisable for that whole number of shares of Parent
Common Stock (rounded down to the nearest whole share) into which the number of
shares of Company Common Stock subject to such Company Option immediately prior
to the Effective Time would be converted under Section 1.8 of this Agreement;
and (y) the option price per share of Parent Common Stock shall be an amount
equal to the option price per share of the Company Common Stock subject to such
Company Option in effect immediately prior to the Effective Time divided by the
Exchange Ratio (the option price per share, as so determined, being rounded
upward to the nearest full cent). The date of grant of each Parent Option shall
be the date on which the corresponding
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<PAGE> 158
Company Option was granted. A cash payment shall be made for any fractional
share based upon the last reported sale price per share of Parent Common Stock
on the Trading Day immediately preceding the date of exercise.
(b) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Parent Options in accordance with this Section 1.10. As soon as
practicable after the Effective Time, Parent shall file a registration statement
on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), or another appropriate form with respect to the shares of
Parent Common Stock subject to the Parent Options and shall use its best efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as the Parent Options remain outstanding.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition as follows:
SECTION 2.1. Organization and Qualification; Subsidiaries.
(a) The Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would not have
a Material Adverse Effect (as defined below) on the Company. The Company has
heretofore delivered to Acquisition or Parent accurate and complete copies of
the Certificate of Incorporation and Bylaws, as currently in effect, of the
Company. When used in connection with the Company or its Subsidiaries, the term
"Material Adverse Effect" means any change or effect (i) that is or is
reasonably likely to be materially adverse to the properties, business, results
of operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as whole, other than any change or effect arising out of
general economic conditions not specifically related to any businesses in which
the Company is engaged or (ii) that may impair the ability of the Company to
consummate the transactions contemplated hereby. For the purposes of this
Agreement, "Subsidiary" shall mean, when used with reference to any other
entity, any entity more than fifty percent (50%) of the outstanding voting
securities or interests (including membership interests) of which are owned
directly or indirectly by such former entity.
(b) Except as set forth in Section 2.1(b) of the Disclosure Schedule
previously delivered by the Company to Parent (the "Company Disclosure
Schedule"), the Company has no Subsidiaries and does not own, directly or
indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
(c) Each of the Company and its Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect on the Company.
The Company has heretofore delivered to Parent accurate and complete copies
of the Certificate of Incorporation and Bylaws, as currently in effect, of each
of the Company's Subsidiaries.
SECTION 2.2. Capitalization of the Company and Its Subsidiaries.
(a) The authorized capital stock of the Company consists of: 20,000,000
Shares, of which, as of March 17, 1997, 4,411,678 Shares were issued and
outstanding. All of the Shares have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. As of March 17, 1997, 84,730 Shares
were reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding
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<PAGE> 159
Company Stock Options issued pursuant to the Company Plan. Since December 11,
1996, no shares of the Company's capital stock have been issued other than
pursuant to Company Stock Options already in existence on such date, and, since
October 16, 1996, no stock options have been granted. Except as set forth above,
there are outstanding (i) no shares of capital stock or other voting securities
of the Company, (ii) no securities of the Company or its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) except as set forth in Section 2.2(a)(iii) of
the Company Disclosure Schedule, no options or other rights to acquire from the
Company or its Subsidiaries, and no obligations of the Company or its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company, and (iv) except as set forth in Section 2.2(a)(iv) of the Disclosure
Schedule no equity equivalents, interests in the ownership or earnings of the
Company or its Subsidiaries or other similar rights (including stock
appreciation rights) (collectively, "Company Securities"). There are no
outstanding obligations of the Company or its Subsidiaries to repurchase, redeem
or otherwise acquire any Company Securities. Except as set forth in Section
2.2(a) of the Company Disclosure Schedule, there are no stockholder agreements
(other than the Stockholders Agreement), voting trusts or other agreements or
understandings to which the Company is a party or to which it is bound relating
to the voting or registration of any shares of capital stock of the Company.
(b) All of the outstanding capital stock of each of the Company's
Subsidiaries is owned directly by the Company, free and clear of any Lien (as
defined below) or any other limitation or restriction (including any restriction
on the right to vote or sell the same, except as may be provided as a matter of
law). There are no securities of the Company or its Subsidiaries convertible
into or exchangeable for, no options or other rights to acquire from the Company
or its Subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly, of any capital stock or other ownership interests in, or
any other securities of, any Subsidiary of the Company. There are no outstanding
contractual obligations of the Company or its Subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any Subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including, without limitation, any
security) any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
(c) The Shares constitute the only class of securities of the Company or
its Subsidiaries registered or required to be registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 2.3. Authority Relative to This Agreement; Consents and Approvals.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and, subject to stockholder approval, to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company (the
"Company Board") and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the then outstanding
Shares). This Agreement has been duly and validly executed and delivered by the
Company and constitutes a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) The Company Board has duly and validly approved, and taken all
corporate actions required to be taken by the Board for the consummation of, the
transactions, including the Merger, contemplated hereby and resolved to
recommend that the stockholders of the Company approve and adopt this Agreement;
provided, however, that such approval and recommendation may be withdrawn,
modified or amended in the event that the Company Board by majority vote
determines in its good faith judgment, after consultation with and based upon
the advice of independent legal counsel, that it is required to do so in order
to comply with its fiduciary duties to stockholders under applicable law.
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<PAGE> 160
SECTION 2.4. SEC Reports; Financial Statements. The Company has filed all
required forms, reports and documents with the Securities and Exchange
Commission (the "SEC") since January 1, 1994, each of which has complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act, each as in effect on the dates such forms, reports and documents
were filed. The Company has heretofore delivered to Parent, in the form filed
with the SEC (including any amendments thereto), (i) its Annual Reports on Form
10-K for each of the fiscal years ended February 28, 1994, February 28, 1995 and
February 29, 1996, (ii) all definitive proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
January 1, 1992 and (iii) all other reports or registration statements filed by
the Company with the SEC since January 1, 1992, including all exhibits included
or incorporated by reference therein (the "Company SEC Reports"). None of such
forms, reports or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference therein (but
excluding Exhibits), contained, when filed (subject to the amendments filed in
connection therewith in the case of the Company's registration statement on Form
S-1 filed in 1996), any untrue statement of a material fact or omitted to state
a material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of the Company included in the Company SEC Reports complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto and fairly
present, in conformity with generally accepted accounting principles applied on
a consistent basis ("GAAP") (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). Since February 29, 1996, there has not been any change,
or any application or request for any change, by the Company or any of its
Subsidiaries in accounting principles, methods or policies for financial
accounting or tax purposes (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
SECTION 2.5. Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock in the Merger (the
"S-4") will, at the time the S-4 becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) the proxy statement relating to the meeting of the Company's stockholders
to be held in connection with the Merger (the "Proxy Statement") will, at the
date mailed to stockholders and at the times of the meeting of stockholders to
be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event with respect to the Company, its officers and
directors or any of its Subsidiaries should occur which is required to be
described in an amendment of, or a supplement to, the S-4 or the Proxy
Statement, the Company shall promptly so advise Parent and such event shall be
so described, and such amendment or supplement (which Parent shall have a
reasonable opportunity to review) shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The Proxy
Statement, insofar as it relates to the meeting of the Company's stockholders to
vote on the Merger, will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
SECTION 2.6. Consents and Approvals; No Violations. Except as set forth in
Section 2.6 of the Company Disclosure Schedule and except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the filing and recordation of the
Certificate of Merger as required by the DGCL, no filing with or notice to, and
no permit, authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such
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filings or give such notice would not have a Material Adverse Effect on the
Company. Neither the execution, delivery and performance of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws (or similar governing
documents) of the Company or any of its Subsidiaries, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except in the case
of (ii) or (iii) for violations, breaches or defaults which would not have a
Material Adverse Effect on the Company.
SECTION 2.7. No Default. None of the Company or its Subsidiaries is in
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term, condition
or provision of (i) its Certificate of Incorporation or Bylaws (or similar
governing documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company,
its Subsidiaries or any of their respective properties or assets, except in the
case of (ii) or (iii) for violations, breaches or defaults that would not have a
Material Adverse Effect on the Company.
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by the Company in the Company SEC Reports and
except as set forth in Section 2.8 of the Company Disclosure Schedule, (i) as of
November 30, 1996, none of the Company or its Subsidiaries had any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
and whether due or to become due or asserted or unasserted, which is required to
be and which is not fully reflected in, reserved against or otherwise described
in the consolidated balance sheet of the Company (including the notes thereto)
as of such date or which could reasonably be expected to have a Material Adverse
Effect on the Company and (ii) since November 30, 1996, the business of the
Company and its Subsidiaries has been carried on only in the ordinary and usual
course, none of the Company or its Subsidiaries has incurred any liabilities of
any nature, whether or not accrued, contingent or otherwise, which could
reasonably be expected to have, and there have been no events, changes or
effects with respect to the Company or its Subsidiaries having or which could
reasonably be expected to have, a Material Adverse Effect on the Company.
SECTION 2.9. Litigation. Except as publicly disclosed by the Company in the
Company SEC Reports or in Section 2.9 of the Company Disclosure Schedule, there
is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties or assets which (a) if
adversely determined, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company or (b) as of the date
hereof, questions the validity of this Agreement or any action to be taken by
the Company in connection with the consummation of the transactions contemplated
hereby or could otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as publicly disclosed by the Company,
none of the Company or its Subsidiaries is subject to any outstanding order,
writ, injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on the
Company or would prevent or delay the consummation of the transactions
contemplated hereby.
SECTION 2.10. Compliance with Applicable Law. Except as publicly disclosed
by the Company in the Company SEC Reports, the Company and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which could not reasonably
be expected to have a Material Adverse Effect on the Company. Except as publicly
disclosed by the Company in the Company SEC Reports, the Company and its
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Subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply could not reasonably be expected to have a
Material Adverse Effect on the Company. Except as publicly disclosed by the
Company in the Company SEC Reports or as otherwise disclosed to Parent on the
date hereof, the businesses of the Company and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity except that no representation or warranty is made in this Section 2.10
with respect to Environmental Laws (as defined in Section 2.12(a)) and except
for violations or possible violations which do not, and, insofar as reasonably
can be foreseen, in the future will not, have a Material Adverse Effect on the
Company. Except as publicly disclosed by the Company in the Company SEC Reports,
no investigation or review by any Governmental Entity with respect to the
Company or its Subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor, to the best knowledge of the Company, has any Governmental
Entity indicated an intention to conduct the same, other than, in each case,
those which the Company reasonably believes will not have a Material Adverse
Effect on the Company.
SECTION 2.11. Employee Plans. Except as set forth in Section 2.11 of the
Company's Disclosure Schedule (the "Company Employee Plans"), copies of the
governing documents for which have been provided to Parent, there are no
"employee benefit plans" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained or contributed to
by the Company or its Subsidiaries. The Company Employee Plans are in compliance
with the applicable provisions of ERISA and the Code, except for instances of
non-compliance that could not reasonably be expected to have a Material Adverse
Effect on the Company.
SECTION 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by the Company in the Company SEC Reports,
(i) each of the Company and its Subsidiaries is in compliance with all
applicable federal, state and local laws and regulations relating to pollution
or protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that could not
reasonably be expected to have a Material Adverse Effect on the Company, which
compliance includes, but is not limited to, the possession by the Company and
its Subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof; (ii) none of the Company or its Subsidiaries has received
written notice of, or, to the knowledge of the Company, is the subject of, any
action, cause of action, claim, investigation, demand or notice by any person or
entity alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim") that could reasonably be expected to have a Material
Adverse Effect on the Company; and (iii) to the knowledge of the Company, there
are no circumstances that are reasonably likely to prevent or interfere with
such material compliance in the future.
(b) Except as publicly disclosed by the Company in the Company SEC Reports,
there are no Environmental Claims which could reasonably be expected to have a
Material Adverse Effect on the Company that are pending or, to the knowledge of
the Company, threatened against the Company or its Subsidiaries or, to the
knowledge of the Company, against any person or entity whose liability for any
Environmental Claim the Company or either of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
SECTION 2.13. Tax Matters. (a) Except as disclosed in writing to Parent and
Acquisition:
(i) The Company and its Subsidiaries have timely filed, or been
included in, all material federal, state, local and foreign Tax Returns (as
defined below) to be filed by them.
(ii) Except to the extent adequately reserved for in accordance with
GAAP, all income and franchise Taxes (as defined below) and material other
Taxes due and payable by the Company and any of its Subsidiaries have been
timely paid in full. The consolidated financial statements contained in the
most recent Company SEC Reports reflect an adequate reserve for all Taxes
payable by the Company and its Subsidiaries for all taxable periods and
portions thereof through the date of such financial statements.
(iii) No material deficiencies for any Taxes have been proposed,
asserted or assessed in writing against the Company or any of its
Subsidiaries that have not been fully paid or adequately provided for in
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the appropriate financial statements of the Company and its Subsidiaries.
No material issues relating to Taxes have been raised in writing by any
governmental authority during any presently pending audit or examination.
(iv) The Company and its Subsidiaries have withheld all material Taxes
required to have been withheld and paid by them on their behalf in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, and such withheld
Taxes have either been duly paid to the proper governmental authority or
set aside in accounts for such purpose.
(v) None of the Company or any of its Subsidiaries has taken or agreed
to take any action that would prevent or impede the Merger from qualifying
as a tax-free reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
(vi) None of the Company or any of its Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible
corporations.
(vii) None of the Company or any of its Subsidiaries has made any
payments, nor is any of them obligated to make any payments, and is not a
party to any agreement that could obligate it to make any payments that
will not be deductible under Section 280G of the Code or would constitute
compensation in excess of the limitation set forth in Section 162(m) of the
Code.
(viii) None of the Company or any of its Subsidiaries is a party to
any Tax allocation or sharing agreement or arrangement (whether or not in
writing), except among themselves.
(ix) None of the Company or any of its Subsidiaries has executed or
entered into a closing agreement that could affect its Tax liability for
any period after the Closing Date pursuant to Section 7121 of the Code or
any similar provision of state, local or foreign law.
(x) None of the Company or any of its Subsidiaries has agreed to or is
making adjustments pursuant to Section 481(a) of the Code that could affect
its Tax liability for any period after the Closing Date by reason of change
in accounting method initiated by the Company or any of its Subsidiaries
nor to the knowledge of the Company has the IRS proposed any such
adjustment or change in accounting method, or has any application pending
with any taxing authority requesting permission for any changes in
accounting methods that relate to the business or operations of the Company
or any of its Subsidiaries.
(b) For purposes of this Agreement, the following definitions shall apply:
"Tax" or "Taxes" means any federal, state, local or foreign net or
gross income, franchise, profits, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium (including taxes
under Section 59A of the Code), capital stock, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax, governmental fee or like assessment or
charge of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not, imposed by any governmental authority or
arising under any tax law (including by reason of several and/or transferee
liability).
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
SECTION 2.14. Intangible Property. The Company and it Subsidiaries own or
possess adequate licenses or other valid rights to use all material patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and information used or
held for use in connection with the business of the Company and its Subsidiaries
as currently conducted or as contemplated to be conducted, and the Company is
unaware of any assertion or claim challenging the validity of any of the
foregoing which, individually or in the aggregate, would have a Material Adverse
Effect on the Company. The conduct of the business of the Company and its
Subsidiaries as heretofore and currently conducted has not and does not conflict
in any way with any patent, patent right, license, trademark, trademark right,
trade name, trade name
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right, service mark or copyright of any third party that, individually or in the
aggregate, would have a Material Adverse Effect on the Company. To the knowledge
of the Company, there are no infringements of any proprietary rights owned by or
licensed by or to the Company or any subsidiary which, individually or in the
aggregate, would have a Material Adverse Effect on the Company.
Each person listed in Section 2.14 of the Company's Disclosure Schedule has
executed a confidentiality, non-disclosure agreement and/or invention assignment
agreement (each, a "Non-Disclosure Agreement"). Such Non-Disclosure Agreements
constitute valid and binding agreements enforceable in accordance with their
respective terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
SECTION 2.15. Opinion of Financial Adviser. Prudential Securities
Incorporated (the "Financial Adviser") has delivered to the Board its written
opinion, dated the date of this Agreement, to the effect that, as of such date,
the Merger Consideration is fair to the holders of Shares from a financial point
of view, a signed, true and complete copy of which opinion has been delivered to
Parent, and as of the date hereof such opinion has not been withdrawn or
modified.
SECTION 2.16. Brokers. No broker, finder or investment banker (other than
Prudential Securities Incorporated, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates or stockholders (including the
Company Affiliates).
SECTION 2.17. [Intentionally Omitted]
SECTION 2.18. Material Contracts.
(a) Section 2.18(a) of the Company Disclosure Schedule lists all of the
following contracts to which the Company or any of its Subsidiaries is a party
or by which any of their respective properties or assets are bound: (i)
employment, consulting, non-competition, severance, golden parachute or
indemnification contract (including, without limitation, any contract to which
the Company or any of its Subsidiaries is a party involving employees of the
Company or any of its Subsidiaries); (ii) licensing, merchandising or
distribution agreements; (iii) contracts granting a right of first refusal or
first negotiation; (iv) partnership or joint venture agreements; (v) agreements
for the acquisition, sale or lease of material properties or assets of the
Company (by merger, purchase or sale of assets or stock or otherwise) entered
into since January 1, 1992; (vi) contracts or agreements with any Governmental
Entity; (vii) other contracts which materially affect the business, properties
or assets of the Company and its Subsidiaries taken as a whole which are not
otherwise disclosed in this Agreement or were entered into other than in the
ordinary course of business; and (viii) all commitments and agreements to enter
into any of the foregoing (collectively, together with any such contracts
entered into in accordance with Section 4.1 hereof, the "Contracts"). The
Company has delivered or otherwise made available to Parent true, correct and
complete copies of the Contracts listed in Section 2.18(a) of the Company
Disclosure Schedule, together with all amendments, modifications and supplements
thereto and all side letters to which the Company is a party affecting the
obligations of any party thereunder.
(b) Except as set forth in Section 2.18(b) of the Company Disclosure
Schedule:
(i) Each of the Contracts is valid and enforceable in accordance with
its terms, and there is no default under any Contract so listed either by
the Company or, to the knowledge of the Company, by any other party thereto
which could have a Material Adverse Effect, and no event has occurred that
with the lapse of time or the giving of notice or both would constitute a
default thereunder by the Company or, to the knowledge of the Company, any
other party which could have a Material Adverse Effect.
(ii) No party to any such Contract has given notice to the Company of
or made a claim against the Company with respect to any material breach or
material default thereunder.
(c) With respect to those Contracts that were assigned or subleased to the
Company by a third party, all necessary consents to such assignments or
subleases have been obtained.
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SECTION 2.19. Pooling of Interests. The representations of the Company in
its letter dated March 18, 1997 to Grant Thornton are to its knowledge true and
correct.
SECTION 2.20. Disclosure. No representation or warranty by the Company
contained in this Agreement and no statement contained in any certificate
delivered by the Company to Acquisition or Parent pursuant to this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
when taken together in light of the circumstances in which they were made.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the Company as
follows:
SECTION 3.1. Organization.
(a) Each of Parent, Acquisition and each other Subsidiary of Parent is a
corporation or partnership duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
power and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would not have
a Material Adverse Effect (as defined below) on Parent. When used in connection
with Parent or Acquisition or any other Subsidiary of Parent, the term "Material
Adverse Effect" means any change or effect (i) that is or is reasonably likely
to be materially adverse to the properties, business, results of operations or
condition (financial or otherwise) of Parent and its Subsidiaries, taken as a
whole, other than any change or effect arising out of general economic
conditions not specifically related to any businesses in which Parent and its
Subsidiaries are engaged or (ii) that may impair the ability of Parent and/or
Acquisition to consummate the transactions contemplated hereby.
(b) Except as set forth in Section 3.1(b) of the Parent Disclosure
Schedule, the Parent has no Subsidiaries and does not own, directly or
indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
(c) Parent has heretofore delivered to the Company accurate and complete
copies of the Certificate of Incorporation and Bylaws, as currently in effect,
of Parent and Acquisition. Each of Parent and its Subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on Parent.
SECTION 3.2. Capitalization of Parent and Its Subsidiaries.
(a) The authorized capital stock of Parent consists of (i) 120,000,000
shares of Parent Common Stock, of which, as of March 17, 1997, 35,051,062 shares
of Parent Common Stock were issued and outstanding and (ii) 5,000,000 shares of
preferred stock, $0.001 par value per share, none of which is issued or
outstanding. All of the shares of Parent Common Stock have been validly issued,
and are fully paid, nonassessable and free of preemptive rights. As of March 17,
1997, 4,649,000 shares of Parent Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding options. Except as described in the Parent SEC Reports, as set forth
above or as described in Section 3.2(a) of the Parent Disclosure Schedule, as of
the date hereof, there are outstanding (i) no shares of capital stock or other
voting securities of Parent, (ii) no securities of Parent or its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of Parent, (iii) no options or other rights to acquire from Parent or
its Subsidiaries and no obligations of Parent or its Subsidiaries to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of Parent, and (iv) no equity
equivalents, interests in the ownership or earnings of Parent or its
Subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Parent Securities"). There are no outstanding obligations
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of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Parent Securities. There are no stockholder agreements, voting trusts or
other agreements or understandings to which Parent is a party or to which it is
bound relating to the voting of any shares of capital stock of Parent.
(b) All of the outstanding capital stock of Parent's Subsidiaries
(including Acquisition) is owned by Parent, directly or indirectly, free and
clear of any Lien or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of Parent or its Subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
Parent or its Subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly, of any capital stock or other ownership interests in, or
any other securities of, any Subsidiary of Parent. There are no outstanding
contractual obligations of Parent or its Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of Parent.
(c) The Parent Common Stock constitutes the only class of equity securities
of Parent or its Subsidiaries registered or required to be registered under the
Exchange Act.
SECTION 3.3. Authority Relative to This Agreement. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and by Parent as the sole
shareholder of Acquisition, and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes a
valid, legal and binding agreement of each of Parent and Acquisition,
enforceable against each of Parent and Acquisition in accordance with its terms.
SECTION 3.4. SEC Reports; Financial Statements. Parent has filed all
required forms, reports and documents with the SEC since September 30, 1996,
each of which has complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such forms, reports and documents were filed. Parent has heretofore
delivered to the Company, in the form filed with the SEC (including any
amendments thereto), all reports or registration statements filed by Parent with
the SEC since September 24, 1996, including all exhibits included or
incorporated by reference therein (the "Parent SEC Reports"). None of such
forms, reports or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference therein (but
excluding Exhibits), contained, when filed (subject to amendments filed in
connection therewith in the case of Parent's registration statement on form S-1
filed in 1996), any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of Parent included in the Parent SEC Reports complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto and fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of Parent and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and changes in financial
position for the periods then ended (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments). Since September
30, 1996, there has not been any change, or any application or request for any
change, by the Company or any of its Subsidiaries in accounting principles,
methods or policies for financial accounting or tax purposes.
SECTION 3.5. Information Supplied. None of the information supplied or to
be supplied by Parent or Acquisition for inclusion or incorporation by reference
in (i) the S-4 will, at the time the S-4 becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) the Proxy Statement will, at the date mailed to stockholders
and at the times of the meeting of stockholders to be held in connection with
the Merger, contain
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any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect to
Parent, its officers and directors or any of its Subsidiaries should occur which
is required to be described in an amendment of, or a supplement to, the S-4 or
the Proxy Statement, Parent shall promptly so advise the Company and such event
shall be so described, and such amendment or supplement (which the Company shall
have a reasonable opportunity to review) shall be promptly filed with the SEC.
The S-4 will comply as to form in all material respects with the provisions of
the Securities Act and the rules and regulations thereunder.
SECTION 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, and the filing and recordation of the
Certificate of Merger as required by the DGCL, no filing with or notice to, and
no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by Parent or Acquisition of this
Agreement or the consummation by Parent or Acquisition of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on Parent. Neither the
execution, delivery and performance of this Agreement by Parent or Acquisition
nor the consummation by Parent or Acquisition of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws (or similar governing
documents) of Parent or Acquisition or any of Parent's Subsidiaries, (ii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or Acquisition or
any of Parent's Subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent or
Acquisition or any of Parent's Subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not have a Material Adverse Effect on Parent.
SECTION 3.7. No Default. None of Parent or any of its Subsidiaries is in
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term, condition
or provision of (i) its Certificate of Incorporation or Bylaws (or similar
governing documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent or any of
its Subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent, its
Subsidiaries or any of their respective properties or assets, except in the case
of (ii) or (iii) for violations, breaches or defaults that would not have a
Material Adverse Effect on Parent.
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by Parent in the Parent SEC Reports, as of
September 30, 1996, none of Parent or its Subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, and
whether due or to become due or asserted or unasserted, which is not fully
reflected in, reserved against or otherwise described in the consolidated
balance sheet of Parent and its consolidated Subsidiaries (including the notes
thereto) as of such date or which could reasonably be expected to have a
Material Adverse Effect on Parent. Except as publicly disclosed by Parent in the
Parent SEC Reports, since September 30, 1996, the business of Parent and its
Subsidiaries has been carried on only in the ordinary and usual course, none of
Parent or its Subsidiaries has incurred any liabilities of any nature, whether
or not accrued, contingent or otherwise, and whether due or to become due or
asserted or unasserted, which could reasonably be expected to have, and there
have been no events, changes or effects with respect to Parent or its
Subsidiaries having or which could reasonably be expected to have, a Material
Adverse Effect on Parent.
SECTION 3.9. Litigation. Except as publicly disclosed by Parent in the
Parent SEC Reports, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of Parent, threatened against Parent or any of its
Subsidiaries or any of their respective properties or assets which (a) if
adversely
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determined, could reasonably be expected to have a Material Adverse Effect on
Parent or (b) as of the date hereof, questions the validity of this Agreement or
any action to be taken by Parent in connection with the consummation of the
transactions contemplated hereby or could otherwise prevent or delay the
consummation of the transactions contemplated by this Agreement. Except as
publicly disclosed by Parent in the Parent SEC Reports, none of Parent or its
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which, insofar as can be reasonably foreseen in the future, could reasonably be
expect to have a Material Adverse Effect on Parent or would prevent or delay the
consummation of the transactions contemplated hereby.
SECTION 3.10. Compliance with Applicable Law. Except as publicly disclosed
by Parent in the Parent SEC Reports, Parent and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Parent Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which could not reasonably
be expected to have a Material Adverse Effect on Parent. Except as publicly
disclosed by Parent in the Parent SEC Reports, Parent and its Subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure so
to comply could not reasonably be expected to have a Material Adverse Effect on
Parent. Except as publicly disclosed by Parent, the businesses of Parent and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity except that no representation or warranty
is made in this Section 3.10 with respect to Environmental Laws and except for
violations or possible violations which do not, and, insofar as reasonably can
be foreseen, in the future will not, have a Material Adverse Effect on Parent.
Except as publicly disclosed by Parent in the Parent SEC Reports, no
investigation or review by any Governmental Entity with respect to Parent or its
Subsidiaries is pending or, to the best knowledge of Parent, threatened, nor, to
the best knowledge of Parent, has any Governmental Entity indicated an intention
to conduct the same, other than, in each case, those which Parent reasonably
believes will not have a Material Adverse Effect on Parent.
SECTION 3.11. Environmental Laws and Regulations.
(a) Except as publicly disclosed by Parent in the Parent SEC Reports, (i)
each of Parent and its Subsidiaries is in compliance with all Environmental
Laws, except for non-compliance that could not reasonably be expected to have a
Material Adverse Effect on Parent, which compliance includes, but is not limited
to, the possession by Parent and its Subsidiaries of all material permits and
other governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof; (ii) none of Parent or its
Subsidiaries has received written notice of, or, to the knowledge of Parent, is
the subject of, any Environmental Claim that could reasonably be expected to
have a Material Adverse Effect on Parent; and (iii) to the knowledge of Parent,
there are no circumstances that are reasonably likely to prevent or interfere
with such material compliance in the future.
(b) Except as publicly disclosed by Parent in the Parent SEC Reports, there
are no Environmental Claims which could reasonably be expected to have a
Material Adverse Effect on Parent that are pending or, to the knowledge of
Parent, threatened against Parent or its Subsidiaries or, to the knowledge of
Parent, against any person or entity whose liability for any Environmental Claim
Parent or its Subsidiaries has or may have retained or assumed either
contractually or by operation of law.
SECTION 3.12. Tax Matters. Except as disclosed in writing to the Company:
(i) Parent and its Subsidiaries have timely filed, or been included
in, all material federal, state, local and foreign Tax Returns to be filed
by them.
(ii) Except to the extent adequately reserved for in accordance with
GAAP, all income and franchise Taxes and material other Taxes due and
payable by Parent and any of its Subsidiaries have been timely paid in
full. The consolidated financial statements contained in the most recent
Parent SEC Reports reflect an adequate reserve for all Taxes payable by
Parent and any of its Subsidiaries for all taxable periods and portions
thereof through the date of such financial statements.
(iii) No material deficiencies for any Taxes have been proposed,
asserted or assessed in writing against Parent or any of its Subsidiaries
that have not been fully paid or adequately provided for in the
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appropriate financial statements of Parent and its Subsidiaries. No
material issues relating to Taxes have been raised in writing by any
governmental authority during any presently pending audit or examination.
(iv) Parent and its Subsidiaries have withheld all material Taxes
required to be withheld and paid by them on their behalf in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, and such withheld Taxes have either been
duly paid to the proper governmental authority or set aside in accounts for
such purpose.
(v) None of Parent or any of its Subsidiaries has taken or agreed to
take any action that would prevent or impede the Merger from qualifying as
a tax-free reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
(vi) None of Parent or any of its Subsidiaries has filed a consent
under Section 341(f) of the Code concerning collapsible corporations.
(vii) None of Parent or any of its Subsidiaries has made any payments,
nor is any of them obligated to make any payments, and is not a party to
any agreement that could obligate it to make any payments that will not be
deductible under Section 280G of the Code or would constitute compensation
in excess of the limitation set forth in Section 162(m) of the Code.
(viii) None of Parent or any of its Subsidiaries is a party to any Tax
allocation or sharing agreement or arrangement (whether or not in writing),
except among themselves.
(ix) None of Parent or any of its Subsidiaries has executed or entered
into a closing agreement that could affect its Tax liability for any period
after the Closing Date pursuant to Section 7121 of the Code or any similar
provision of state, local, or foreign law.
(x) None of Parent or any of its Subsidiaries has agreed to or is
making adjustments pursuant to Section 481(a) of the Code that could affect
its Tax liability for any period after the Closing Date by reason of change
in accounting method initiated by Parent or any of its Subsidiaries nor to
the knowledge of Parent has the IRS proposed any such adjustment or change
in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of Parent or any of its Subsidiaries.
SECTION 3.13. Intangible Property. Parent and its Subsidiaries own or
possess adequate licenses or other valid rights to use all material patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and information used or
held for use in connection with the business of Parent and its Subsidiaries as
currently conducted or as contemplated to be conducted, and Parent is unaware of
any assertion or claim challenging the validity of any of the foregoing which,
individually or in the aggregate, would have a Material Adverse Effect on
Parent. The conduct of the business of Parent and its Subsidiaries as heretofore
and currently conducted has not and does not conflict in any way with any
patent, patent right, license, trademark, trademark right, trade name, trade
name right, service mark or copyright of any third party that, individually or
in the aggregate, would have a Material Adverse Effect on Parent. To the
knowledge of Parent there are no infringements of any proprietary rights owned
by or licensed by or to Parent or any Subsidiary which, individually or in the
aggregate, would have a Material Adverse Effect on Parent.
SECTION 3.14. Brokers. No broker, finder or investment banker (other than
Donaldson, Lufkin & Jenrette) is entitled to any brokerage, finder's or other
fee or commission or expense reimbursement in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
Parent or Acquisition.
SECTION 3.15. Pooling of Interests. The assurances of Parent in its letter
dated March 14, 1997 to AA are to Parent's knowledge true and correct.
SECTION 3.16. Disclosure. No representation or warranty by Parent contained
in this Agreement and no statement contained in any certificate delivered by
Parent to the Company pursuant to this Agreement contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
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statements contained herein or therein not misleading when taken together in
light of the circumstances in which they were made.
ARTICLE 4
COVENANTS
SECTION 4.1. Conduct of Business of the Company. Except as contemplated by
this Agreement or as set forth in Section 4.1 of the Company's Disclosure
Schedule, during the period from the date hereof to the Effective Time, the
Company will, and will cause each of its Subsidiaries to, conduct its operations
in the ordinary course of business consistent with past practice and, to the
extent consistent therewith, with no less diligence and effort than would be
applied in the absence of this Agreement, seek to preserve intact its current
business organizations, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time, neither the Company nor any of its Subsidiaries
will, without the prior written consent of Parent:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights), except for the issuance of Shares upon the exercise
of options outstanding under the Company's 1992 Stock Option Plan and
listed in Section 2.2(a) of the Company's Disclosure Schedule, in
accordance with the terms of such Plan and options as in effect on the date
hereof;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, make any other actual, constructive or deemed distribution
in respect of any shares of its capital stock or otherwise make any
payments to stockholders in their capacity as such or redeem or otherwise
acquire any of its securities or any securities of any of its Subsidiaries,
except for the regular quarterly dividend on the Shares not in excess of
$.30 per share per quarter;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of business
consistent with past practice and in amounts not material to the Company
and its Subsidiaries, taken as a whole, and except for obligations of the
wholly owned subsidiary of the Company; (iii) make any loans, advances or
capital contributions to, or investments in, any other person (other than
to a Subsidiary of the Company or customary loans or advances to employees
in the ordinary course of business consistent with past practice and in
amounts not material to the maker of such loan or advance); (iv) pledge or
otherwise encumber shares of capital stock of the Company or its
Subsidiaries; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(g) except as may be required by law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agree-
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ment, trust, plan, fund or other arrangement for the benefit or welfare of
any director, officer or employee in any manner, or increase in any manner
the compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any plan and arrangement as in effect as of
the date hereof (including, without limitation, the granting of stock
appreciation rights or performance units);
(h) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its Subsidiaries taken as a whole, or enter into any commitment
or transaction outside the ordinary course of business consistent with past
practice;
(i) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off
notes or accounts receivable other than in the ordinary course of business
or as required by GAAP;
(k) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) other than in the
ordinary course of business consistent with past practice, enter into any
contract or agreement or amend any of the Contracts or the agreements
referred to in Section 2.16, provided that in no event shall the Company or
any of its Subsidiaries amend, modify or extend any of the agreements set
forth in Section 2.18(a) of the Company's Disclosure Schedule; (iii)
authorize any new capital expenditure or expenditures which, individually,
is in excess of $30,000 or, in the aggregate, are in excess of $100,000; or
(iv) enter into or amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited hereunder;
(l) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of claims, liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its Subsidiaries or incurred in the ordinary
course of business consistent with past practice;
(m) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(n) make or revoke any material tax election or settle or compromise
any tax liability material to the Company and its Subsidiaries taken as a
whole; or
(o) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(n) or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect.
SECTION 4.2. Conduct of Business of Parent. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time, Parent
will not, without the prior written consent of Company:
(a) amend its Certificate of Incorporation (except to increase its
authorized capital stock) or Bylaws;
(b) combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock
or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any
of its securities, or (unless a proportionate adjustment shall be made to
Merger Consideration) split its shares of capital stock;
(c) adopt a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization of Parent; or
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(d) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(c) or any action which would make
any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect.
SECTION 4.3. Preparation of S-4 and the Proxy Statement. Parent will, as
promptly as practicable, prepare and file with the SEC the S-4, containing a
proxy statement/prospectus and a form of proxy, in connection with the
registration under the Securities Act of the shares of Parent Common Stock
issuable upon conversion of the Shares and the other transactions contemplated
hereby. The Company will, as promptly as practicable, prepare and file with the
SEC the Proxy Statement that will be the same proxy statement/prospectus
contained in the S-4 and a form of proxy, in connection with the vote of the
Company's stockholders with respect to the Merger. Parent and the Company will,
and will cause their accountants and lawyers to, use their best efforts to have
or cause the S-4 declared effective as promptly as practicable, including,
without limitation, causing their accountants to deliver necessary or required
instruments such as opinions and certificates, and will take any other action
required or necessary to be taken under federal or state securities laws or
otherwise in connection with the registration process, it being understood and
agreed that Schulte Roth & Zabel LLP, counsel to the Company, will render the
tax opinion referred to in Section 5.2(d) on (i) the date the preliminary Proxy
Statement is filed with the SEC and (ii) the date the S-4 is filed with the SEC.
Each of the Company and, if applicable, Parent will use its best efforts to
cause the Proxy Statement to be mailed to its stockholders at the earliest
practicable date.
SECTION 4.4. Other Potential Acquirors. (a) The Company, its affiliates and
their respective officers, directors, employees, representatives and agents
shall immediately cease any existing discussions or negotiations, if any, with
any parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or its
Subsidiaries or any business combination with the Company or its Subsidiaries.
The Company may, directly or indirectly, furnish information and access, in each
case only in response to unsolicited requests therefor, to any corporation,
partnership, person or other entity or group pursuant to confidentiality
agreements, and may participate in discussions and negotiate with such entity or
group concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction involving the Company or any Subsidiary or division of the
Company, if such entity or group has submitted a written proposal to the Company
Board relating to any such transaction and the Company Board determines in its
good faith judgment, after consultation with and based upon the advice of
independent legal counsel, that it is required to do so to comply with its
fiduciary duties to stockholders under applicable law. The Company Board shall
provide a written notice to Parent and Acquisition describing in reasonable
detail the material terms and conditions of any such proposal as promptly as
reasonably practicable following prompt consideration thereof by the Company
Board and shall keep Parent and Acquisition advised thereafter of material
developments with respect thereto as promptly as reasonably practicable. Except
as set forth above, neither the Company nor any of its affiliates shall, nor
shall the Company authorize or permit any of its or their respective officers,
directors, employees, representatives or agents to directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group (other than Parent and Acquisition, any affiliate or associate
of Parent and Acquisition or any designees of Parent and Acquisition) concerning
any merger, sale of assets, sale of shares of capital stock or similar
transaction involving the Company or any Subsidiary or division of the Company;
provided, however, that nothing herein shall prevent the Company Board from
taking, and disclosing to the Company's stockholders, a position contemplated by
Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any
tender offer; provided, further, that nothing herein shall prevent the Company
Board from making such disclosure to the Company's stockholders as, in the good
faith judgment of the Company Board, after consultation with and based upon the
advice of independent legal counsel, is required to comply with its fiduciary
duties to stockholders under applicable law.
(b) Except as set forth in this Section 4.4, the Company Board shall not
approve or recommend, or cause the Company to enter into any agreement with
respect to, any Third Party Acquisition (as defined in Section 6.1).
Notwithstanding the foregoing, if the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that it is necessary to do so in order to comply with
its fiduciary duties to stockholders under applicable law, the Company Board may
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approve or recommend a Superior Proposal (as defined below) or cause the Company
to enter into an agreement with respect to a Superior Proposal, but in each case
only after a reasonable period following delivery of a written notice to Parent
and Acquisition containing the information specified in Section 4.4(a) hereof
including the identity of the person making such Superior Proposal. In addition,
if the Company proposes to enter into an agreement with respect to any Third
Party Acquisition, it shall concurrently with entering into such an agreement
pay, or cause to be paid, to Parent the fee required by Section 6.3(a) hereof.
For purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the Shares then outstanding or all or
substantially all the assets of the Company and otherwise on terms which the
Company Board determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the Merger.
SECTION 4.5. Letters of Accountants. The Company shall use its best efforts
to cause to be delivered to Parent a letter of Grant Thornton LLP, the Company's
independent auditors, and Parent shall use its best efforts to cause to be
delivered to the Company a letter of Arthur Andersen LLP ("AA"), Parent's
independent auditors, in each case dated a date within two business days before
the date on which the S-4 shall become effective and addressed to the recipients
thereof, in form and substance reasonably satisfactory to such recipients and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4.
SECTION 4.6. Meeting. The Company shall call a meeting of its stockholders
to be held as promptly as practicable for the purpose of voting upon this
Agreement and related matters. The Company and Acquisition will, through their
respective Boards of Directors recommend to their respective stockholders
approval of such matters; provided, however, that the Company Board may withdraw
its recommendation if the Company Board by a majority vote determines in its
good faith judgment, after consultation with and based upon the advice of
independent legal counsel, that it is required to do so to comply with its
fiduciary duties to stockholders under applicable law. The Company and Parent
shall coordinate and cooperate with respect to the timing of such meetings and
shall use their best efforts to hold such meetings on the same day and as soon
as practicable after the date hereof.
SECTION 4.7. Stock Exchange Listing. Parent shall use its best efforts to
cause the shares of Parent Common Stock to be issued in the Merger and the
shares of Parent Common Stock to be reserved for issuance upon exercise of
Company Stock Options to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
SECTION 4.8. Access to Information.
(a) Between the date hereof and the Effective Time, the Company will give
Parent and Acquisition and their authorized representatives reasonable access to
all employees, plants, offices, warehouses and other facilities and to all books
and records of the Company and its Subsidiaries, will permit Parent and
Acquisition to make such inspections as Parent and Acquisition may reasonably
require and will cause the Company's officers and those of its Subsidiaries to
furnish Parent and Acquisition with such financial and operating data and other
information with respect to the business, properties and personnel of the
Company and its Subsidiaries as Parent or Acquisition may from time to time
reasonably request, provided that no investigation pursuant to this Section
4.8(a) shall affect or be deemed to modify any of the representations or
warranties made by the Company.
(b) Between the date hereof and the Effective Time, Parent shall furnish to
the Company and its authorized representatives reasonable access to such
material information relating to the business and financial condition of Parent
as the Company may reasonably request, provided that such information shall not
include detail with respect to employee compensation and benefit matters or
information subject to confidentiality restrictions binding on Parent.
(c) Each of the parties will hold and will cause its consultants and
advisors to hold in confidence all documents and information concerning the
other parties hereto furnished in connection with the transactions
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contemplated by this Agreement pursuant to the terms of that certain
Confidentiality Agreement entered into between the Company and Parent dated
February 5, 1997.
SECTION 4.9. Additional Agreements; Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement, including, without limitation, (i) cooperation in the
preparation and filing of the Proxy Statement and the S-4, any filings that may
be required under the HSR Act, and any amendments to any thereof; (ii)
contesting any legal proceeding relating to the Merger; and (iii) the execution
of any additional instruments, including the Certificate of Merger, necessary to
consummate the transactions contemplated hereby. Subject to the terms and
conditions of this Agreement, Parent and Acquisition agree to use all reasonable
efforts to cause the Effective Time to occur as soon as practicable after the
shareholder vote or votes with respect to the Merger. In case at any time after
the Effective Time any further action is necessary to carry out the purposes of
this Agreement, the proper officers and directors of each party hereto shall
take all such necessary action.
SECTION 4.10. Consents. Parent, Acquisition and the Company each will use
all reasonable efforts to obtain consents of all third parties and Governmental
Entities necessary, proper or advisable for the consummation of the transactions
contemplated by this Agreement.
SECTION 4.11. Public Announcements. Parent, Acquisition and the Company, as
the case may be, will consult with one another before issuing any press release
or otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger.
Immediately following the execution and delivery hereof the Company will
announce the suspension of its previously announced stock purchase program.
SECTION 4.12. Indemnification; Directors' and Officers' Insurance.
(a) Parent and Acquisition agree that all rights to indemnification or
exculpation now existing in favor of the directors, officers, employees and
agents of the Company and its Subsidiaries as provided in their respective
Certificates of Incorporation or Bylaws (or other similar governing instruments)
or otherwise in effect as of the date hereof with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect for a period of six (6) years from the Effective Time;
provided, however, that all rights to indemnification in respect of any claim (a
"Claim") asserted or made within such period shall continue until the
disposition of such Claim. To the maximum extent permitted by the DGCL, such
indemnification shall be mandatory rather than permissive and the Surviving
Corporation shall advance expenses in connection with such indemnification to
the fullest extent permitted under applicable law, provided that the person to
whom expenses are advanced provides an undertaking to repay such advances if it
is ultimately determined that such person is not entitled to indemnification);
provided, however, the indemnification provided hereunder shall not be greater
than the indemnification permissible pursuant to the Company's or its
Subsidiaries' respective Certificates of Incorporation and Bylaws (or other
similar governing instruments), as in effect as of the date hereof.
(b) Parent shall cause the Surviving Corporation to maintain in effect for
not less than three years from the Effective Time policies of the directors' and
officers' liability and fiduciary insurance substantially on the terms pursuant
to which Parent's directors currently are insured with respect to claims arising
from facts or events occurring prior to the Effective Time to the extent
required to cover the types of actions and omissions with respect to which
Parent's directors are currently insured (provided that the Surviving
Corporation shall not be required to pay an annual premium for such insurance in
excess of 200% of the premiums paid as of the Effective Date for such insurance
("Current Premium"), and if such premiums for such insurance would at any time
exceed 200% of the Current Premium, the Parent shall cause Surviving Corporation
to maintain policies of insurance which, in Parent's good faith determination,
provide the maximum coverage available at an annual premium equal to 200% of the
Current Premium).
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
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(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Parent assume the
obligations set forth in this section.
(d) The provisions in this Section 4.12 (i) are intended to be for the
benefit of, and shall be enforceable by, each person entitled to indemnification
hereunder, and each such person's heirs and representatives and (ii) are in
addition to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
SECTION 4.13. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Acquisition, and Parent and Acquisition shall give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time, (ii) any
material failure of the Company, Parent or Acquisition, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder, (iii) any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or both,
would become a default, received by it or any of its Subsidiaries subsequent to
the date of this Agreement and prior to the Effective Time, under any contract
material to the financial condition, properties, businesses or results of
operations of it and its Subsidiaries taken as a whole to which it or any of its
Subsidiaries is a party or is subject, (iv) any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement, or
(v) any material adverse change in their respective financial condition,
properties, businesses, results of operations or prospects, taken as a whole,
other than changes resulting from general economic conditions; provided,
however, that the delivery of any notice pursuant to this Section 4.13 shall not
cure such breach or noncompliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 4.14. Pooling. The Company and Parent each agrees that it will not
take any action which could prevent the Merger from being accounted for as a
"pooling-of-interests" for accounting purposes and the Company will bring to the
attention of Parent, and Parent will bring to the attention of the Company, any
actions, or agreements or understandings, whether written or oral, to act that
could be reasonably likely to prevent Parent from accounting for the Merger as a
"pooling-of-interests." Concurrently herewith, AA has delivered to Parent a
letter to the effect that Parent qualifies for pooling-of-interests accounting
and Grant Thornton has delivered to the Company a letter to the effect that the
Company qualifies for pooling-of-interests accounting. Parent shall use
commercially reasonable efforts to have AA deliver updating confirmation of AA's
letter to Parent, and the Company shall use commercially reasonable efforts to
have Grant Thornton deliver updating confirmation of Grant Thornton's letter to
the Company, in each case upon the filing of the S-4 and upon the mailing of the
Proxy Statement. The Company and Parent each shall use commercially reasonable
efforts to cause their respective accountants to cooperate fully with the other
in connection with the delivery of such confirmations.
SECTION 4.15. Tax-Free Reorganization Treatment. The Company, and Parent
and Acquisition shall each execute and deliver to Schulte Roth & Zabel LLP,
counsel to the Company, and to Weil, Gotshal & Manges LLP, counsel to Parent and
Acquisition, a certificate substantially in the form attached hereto as Exhibits
D and E, respectively, at such time or times as reasonably requested by such law
firms in connection with their delivery of opinions with respect to the
transactions contemplated hereby, and shall provide a copy of such certificate
to the Company and to Parent and Acquisition, respectively. None of the Company,
Parent or Acquisition shall take or cause to be taken any action which would
cause to be untrue (or fail to take or cause not to be taken any action which
would cause to be untrue) any of the representations in Exhibits D and E.
SECTION 4.16. Employment Benefits. Parent shall, for a period of at least
one year following the Closing, use commercially reasonable best efforts to
continue to provide to employees of the Surviving Corporation the Company's
Oxford health plan as currently in effect or, if the continuation of such plan
is not possible or commercially practicable, benefits at least as favorable as
those currently provided under the
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Oxford plan. With respect to any employee benefit plans provided to employees of
the Company by the Parent after the Closing Date (the "Parent Employee Plans"),
Parent shall grant all employees of the Surviving Company who become
participants in such plans credit for all services with the Company prior to the
Closing Date for purposes of eligibility and vesting for which such services
were recognized by the Company. To the extent the Parent Employee Plans provide
medical or dental welfare benefits after the Closing Date, Parent shall cause
all pre-existing condition exclusions and actively at work requirements to be
waived to the extent allowable under the Company Employee Plans and Parent shall
provide that any expenses incurred on or before the Closing Date shall be taken
into account under the Parent Employee Plans to the extent satisfied under the
Company Employee Plans for purposes of satisfying the applicable deductible,
coinsurance and maximum out-of-pocket provisions for such employees and their
covered dependents. On and after the Closing Date, Parent shall cause the
medical or dental welfare benefit plans covering employees of the Company to
provide continuation coverage (within the meaning of Section 4980B of the Code)
to employees of the Company who terminated prior to the Closing Date and their
dependents.
SECTION 4.17. Company Affiliates. (a) The Company has identified to Parent
each Company Affiliate and each Company Affiliate has delivered to Parent on or
prior to the date hereof, a written agreement (i) that such Company Affiliate
will not sell, pledge, transfer or otherwise dispose of any shares of Parent
Common Stock issued to such Company Affiliate pursuant to the Merger, except in
compliance with Rule 145 promulgated under the Securities Act or an exemption
from the registration requirements of the Securities Act and (ii) that such
Company Affiliate will not thereafter sell or in any other way reduce such
Company Affiliate's risk relative to any shares of Parent Common Stock received
in the Merger (within the meaning of the SEC's Financial Reporting Release No.
1, "Codification of Financing Reporting Policies," sec. 201.01 47 F.R. 21028
(April 15, 1982)), until such time as financial results (including combined
sales and net income) covering at least 30 days of post-merger operations have
been published, except as permitted by Staff Accounting Bulletin No. 76 issued
by the SEC.
(b) Parent shall use its best efforts to publish no later than 30 days
after the end of the first calendar month after the Effective Time in which
there are at least 30 days of financial results for post-merger operations, the
financial results required by Section 4.17(a) above.
SECTION 4.18. SEC Filings. Each of Parent and the Company shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or any of its Subsidiaries with the SEC or any other state or
federal Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
SECTION 4.19. Guarantee of Performance. Parent hereby guarantees the
performance by Acquisition of its obligations under this Agreement and the
indemnification obligations of the Surviving Corporation pursuant to Section
4.12(a) hereof.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger is
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Merger;
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(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired, and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received;
(d) the S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop
order and Parent shall have received all state securities laws or "blue
sky" permits and authorizations necessary to issue shares of Parent Common
Stock in exchange for the Shares in the Merger;
(e) Parent shall have received an opinion from AA stating that the
Merger will be accounted for under GAAP as a "pooling-of-interests," and
such opinion shall not have been withdrawn or modified in any material
respect; and
(f) the Employment Agreements shall be in full force and effect.
SECTION 5.2. Conditions to the Obligations of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) the representations of Parent and Acquisition contained in this
Agreement or in any other document delivered pursuant hereto shall be true
and correct in all material respects at and as of the Effective Time with
the same effect as if made at and as of the Effective Time, and at the
Closing Parent and Acquisition shall have delivered to the Company a
certificate to that effect;
(b) each of the obligations of Parent and Acquisition to be performed
at or before the Effective Time pursuant to the terms of this Agreement
shall have been duly performed in all material respects at or before the
Effective Time and at the Closing Parent and Acquisition shall have
delivered to the Company a certificate to that effect;
(c) the shares of Parent Common Stock issuable to the Company
stockholders pursuant to this Agreement and such other shares required to
be reserved for issuance in connection with the Merger shall have been
authorized for listing on the NYSE upon official notice of issuance;
(d) the opinion of Schulte Roth & Zabel LLP, counsel to the Company,
to the effect that (i) the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code; (ii) each of Parent, Acquisition, and the Company will be a party to
the reorganization within the meaning of Section 368(b) of the Code; and
(iii) no gain or loss will be recognized by shareholders of the Company
with respect to shares of Parent Common Stock received in the Merger in
exchange for Shares, except with respect to cash received in lieu of
fractional shares;
(e) Parent shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease or other agreement or instrument, except those
for which failure to obtain such consents and approvals would not, in the
reasonable opinion of the Company, individually or in the aggregate, have a
Material Adverse Effect on Parent; and
(f) there shall have been no events, changes or effects with respect
to Parent or its Subsidiaries having or which could reasonably be expected
to have a Material Adverse Effect on Parent.
SECTION 5.3. Conditions to the Obligations of Parent and Acquisition. The
respective obligations of Parent and Acquisition to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations of the Company contained in this Agreement or
in any other certificate delivered pursuant hereto shall be true and
correct in all material respects at and as of the Effective Time with the
same effect as if made at and as of the Effective Time, and at the Closing
the Company shall have delivered to Parent and Acquisition a certificate to
that effect;
(b) each of the obligations of the Company to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or
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before the Effective Time and at the Closing the Company shall have
delivered to Parent and Acquisition a certificate to that effect;
(c) each Company Affiliate and each stockholder that is a party to the
Stockholders Agreement shall have performed his or its respective
obligations under the applicable Affiliate Letter and/or the Stockholders
Agreement (if applicable), and Parent shall have received a certificate
signed by each of them to such effect;
(d) the Company shall have obtained the consent or approval of each
person whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Company or any Subsidiary of the
Company under any loan or credit agreement, note, mortgage, indenture,
lease or other agreement or instrument, except for those for which failure
to obtain such consents and approvals would not, in the reasonable opinion
of Parent, individually or in the aggregate, have a Material Adverse Effect
on the Company; and
(e) there shall have been no events, changes or effects with respect
to the Company or its Subsidiaries having or which could reasonably be
expected to have, a Material Adverse Effect on the Company.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time, but prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition and the Company;
(b) by Parent and Acquisition or the Company if (i) any court of
competent jurisdiction in the United States or other United States
governmental authority shall have issued a final order, decree or ruling or
taken any other final action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action is or
shall have become nonappealable or (ii) the Merger has not been consummated
by August 15, 1997; provided that no party may terminate this Agreement
pursuant to this clause (ii) if such party's failure to fulfill any of its
obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date;
(c) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Acquisition set forth
in this Agreement, or if any representation or warranty of Parent or
Acquisition shall have become untrue, in either case such that the
conditions set forth in Section 5.2(a) would be incapable of being
satisfied by August 15, 1997 (or as otherwise extended), (ii) there shall
have been a breach by Parent or Acquisition of any of their respective
covenants or agreements hereunder having a Material Adverse Effect on the
Parent or materially adversely affecting (or materially delaying) the
consummation of the Merger, and Parent or Acquisition, as the case may be,
has not cured such breach within twenty business days after notice by the
Company thereof, provided that the Company has not breached any of its
obligations hereunder, (iii) the Company enters into a definitive agreement
relating to a Superior Proposal in accordance with Section 4.4(b), provided
that such termination under this clause (iii) shall not be effective unless
the Company has complied with all of the provisions of such Section 4.4(b)
and until payment of the fee required by Section 6.3(a) hereof; or (iv) the
Average Final Closing Price shall be less than $20.00.
(d) by Parent and Acquisition if (i) there shall have been a breach of
any representation or warranty on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
become untrue, in either case such that the conditions set forth in Section
5.3(a) would be incapable of being satisfied by August 15, 1997 (or as
otherwise extended), (ii) there shall have been a breach by the Company of
its covenants or agreements hereunder having a Material Adverse Effect on
the Company or materially adversely affecting (or materially delaying) the
consummation of the Merger, and the Company has not cured such breach
within twenty business days
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after notice by Parent or Acquisition thereof, provided that neither Parent
or Acquisition has breached any of their respective obligations hereunder,
(iii) the Company enters into a definitive agreement relating to any Third
Party Acquisition (as defined below), (iv) the Company Board shall have
withdrawn, modified or changed its approval or recommendation of this
Agreement or the Merger, shall have recommended to the Company's
stockholders a Third Party Acquisition, or shall have adopted any
resolution to effect any of the foregoing, (v) the Average Final Closing
Price shall be less than $24.00, or (vi) the Company shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed
to obtain the requisite vote of its stockholders.
"Third Party Acquisition" means the occurrence of any of the following
events (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than Parent, Acquisition or any affiliate thereof
(a "Third Party"); (ii) the acquisition by a Third Party of more than 20% of the
total assets of the Company and its Subsidiaries, taken as a whole; or (iii) the
acquisition by a Third Party of 20% or more of the outstanding Shares.
SECTION 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders, other
than the provisions of this Section 6.2 and Sections 4.8(c), 6.3 and 7.10
hereof. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
SECTION 6.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated pursuant to
Section 6.1(c)(iii), Section 6.1(d)(iii) or Section 6.1(d)(iv), Parent and
Acquisition would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate Parent and Acquisition for
such damages, the Company shall pay to Parent as liquidated damages, which
amount shall be payable as the amount of $5,000,000 (less any amounts previously
paid to Parent, Acquisition and their affiliates pursuant to Section 6.3(b))
immediately upon demand or, in case of any termination pursuant to Section
6.1(c)(iii) or 6.1(d)(iii), at the time specified in Section 4.4(b). It is
specifically agreed that the amount to be paid pursuant to this Section 6.3(a)
represents liquidated damages and not a penalty.
(b) Upon the termination of this Agreement pursuant to Sections 6.1(d)(i),
(ii), (iii), (iv) or (vi), the Company shall reimburse Parent, Acquisition and
their affiliates (not later than ten business days after submission of
statements therefor) for all actual documented out-of-pocket fees and expenses,
actually and reasonably incurred by any of them or on their behalf in connection
with the Merger and the consummation of all transactions contemplated by this
Agreement (including, without limitation, fees payable to investment bankers,
counsel to any of the foregoing, and accountants), in an aggregate amount not to
exceed $1,000,000.
(c) Upon the termination of this Agreement pursuant to Sections 6.1(c)(i)
or (ii), Parent shall reimburse the Company and its affiliates (not later than
ten business days after submission of statements therefor) for all actual
documented out-of-pocket fees and expenses, actually and reasonably incurred by
any of them or on their behalf in connection with the Merger and the
consummation of all transactions contemplated by this Agreement (including,
without limitation, fees payable to investment bankers, counsel to any of the
foregoing, and accountants, in an aggregate amount not to exceed $1,000,000).
(d) Except as specifically provided in this Section 6.3, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby. The cost of printing the S-4 and the Proxy Statement shall
be borne equally by the Company and Parent.
SECTION 6.4. Amendment. This Agreement may be amended by action taken by
the Company, Parent and Acquisition at any time before or after approval of the
Merger by the stockholders of the Company (if required by applicable law) but,
after any such approval, no amendment shall be made which requires the approval
of such stockholders under applicable law without such approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of the
parties hereto.
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SECTION 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto (for these purposes, Parent and Acquisition shall together be
deemed one party and the Company shall be deemed the other party) may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
either party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 7.2. Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise; provided,
however, that Acquisition may assign any or all of its rights and obligations
under this Agreement to any Subsidiary of Parent, but no such assignment shall
relieve Acquisition of its obligations hereunder if such assignee does not
perform such obligations.
SECTION 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
<TABLE>
<S> <C>
if to Parent or Acquisition: Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive, 15th Fl.
Bethesda, MD 20817
Attention: Chief Executive Officer
Facsimile: (301) 571-7930
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Norman D. Chirite, Esq.
Facsimile: (212) 310-8007
if to the Company to: American List Corporation
330 Old Country Road
Mineola, NY 11501
Attention: Chief Executive Officer
Facsimile: (516) 248-6364
with a copy to: Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY
Attention: Marc Weingarten, Esq.
Facsimile: (212) 593-5955
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
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SECTION 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law thereof.
SECTION 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 7.7. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.12, 4.16 and 7.2,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 7.8. Severability. If any term or other provision of this Agreement
is invalid, illegal or unenforceable, all other provisions of this Agreement
shall remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
SECTION 7.9. Specific Performance. The parties hereto acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and, subject to Section 7.8, shall be in addition to any other
remedies, which any party may have under this Agreement or otherwise.
SECTION 7.10. Brokers. The Company agrees to indemnify and hold harmless
Parent and Acquisition, and Parent and Acquisition agree to indemnify and hold
harmless the Company, from and against any and all liability to which Parent and
Acquisition, on the one hand, or the Company, on the other hand, may be
subjected by reason of any brokers, finders or similar fees or expenses with
respect to the transactions contemplated by this Agreement to the extent such
similar fees and expenses are attributable to any action undertaken by or on
behalf of the Company, or Parent or Acquisition, as the case may be.
SECTION 7.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
<TABLE>
<S> <C> <C>
ATTEST: AMERICAN LIST CORPORATION
By: /s/ DEBORAH FREEDMAN By: /s/ MARTIN LERNER
- --------------------------------------------- ---------------------------------------------
Name: Deborah Freedman Name: Martin Lerner
Title: Associate Title: President and Chief
Schulte Roth & Zabel LLP Executive Officer
ATTEST: SNYDER COMMUNICATIONS, INC.
By: /s/ DAVID B. PAUKEN By: /s/ MICHELE D. SNYDER
- --------------------------------------------- ---------------------------------------------
Name: David B. Pauken Name: Michele D. Snyder
Title: Assistant Secretary/ Title: Vice Chairman and
Chief Accounting Officer Chief Operating Officer
ATTEST: SNYDER Z ACQUISITION, INC.
By: /s/ DAVID B. PAUKEN By: /s/ MICHELE D. SNYDER
- --------------------------------------------- ---------------------------------------------
Name: David B. Pauken Name: Michele D. Snyder
Title: Assistant Secretary Title: Vice Chairman and
Chief Operating Officer
</TABLE>
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<PAGE> 183
EXHIBIT B
[PRUDENTIAL SECURITIES LOGO]
PRIVATE AND CONFIDENTIAL
March 18, 1997
The Board of Directors
American List Corporation
330 Old Country Road
Mineola, NY 11501
Members of the Board:
We understand that American List Corporation, a Delaware corporation (the
"Company"), Snyder Communications, Inc., a Delaware corporation ("Snyder"), and
Snyder Acquisition, Inc., a Delaware corporation, and a wholly-owned subsidiary
of Snyder (the "Acquisition Sub"), propose to enter into an Agreement and Plan
of Merger (the "Agreement"). Pursuant to the Agreement, the Acquisition Sub
shall merge with and into the Company and the Company shall be the surviving
corporation (the "Merger"). In the Merger each outstanding share of Common
Stock, par value $0.01 per share, of the Company (the "Company Common Stock")
will be converted into the right to receive the number of shares of Common
Stock, par value $0.001 per share, of Snyder (the "Snyder Common Stock") equal
to the Exchange Ratio. The "Exchange Ratio" shall be determined based on the
average closing price (the "Average Final Closing Price") per share of Snyder
Common Stock as reported by the New York Stock Exchange during the twenty
consecutive trading days ending on, and including, the third trading day prior
to the effective time of the Merger. The Exchange Ratio shall be determined in
the following manner:
(i) if the Average Final Closing Price equals or exceeds $32.00, the
Exchange Ratio shall be 1.00;
(ii) if the Average Final Closing Price equals or exceeds $28.00 but
is less than $32.00, the Exchange Ratio shall equal the quotient of $32.00
divided by the Average Final Closing Price;
(iii) if the Average Final Closing Price equals or exceeds $26.00 but
is less than $28.00, the Exchange Ratio shall be 1.14; and
(iv) if the Average Final Closing Price is less than $26.00, the
Exchange Ratio shall be the quotient of $29.71 divided by the Average Final
Closing Price. Snyder has the right to terminate the Agreement if the
Average Final Closing Price is less than $24.00. The Company has the right
to terminate the Agreement if the Average Final Closing Price is less than
$20.00.
You have requested our opinion as to the fairness from a financial point of
view of the Exchange Ratio to the stockholders of the Company.
In conducting our analysis and arriving at the opinion expressed herein, we
have reviewed such materials and analyzed such financial and other factors as we
deemed relevant under the circumstances, including:
(i) a draft dated March 17, 1997 of the Agreement;
(ii) certain publicly-available historical financial and operating
data of the Company including, but not limited to, (a) the Annual Reports
to Stockholders and Annual Reports on Form 10-K of the
PRUDENTIAL SECURITIES ADDRESS
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<PAGE> 184
[PRUDENTIAL SECURITITES SMALLER LOGO]
Company for the fiscal years ended February 1994 through 1996, (b) the
Quarterly Reports on Form 10-Q for the quarters ended May 31, August 31,
and November 30, 1996, (c) the Proxy Statement for the Annual Meeting of
Stockholders held on August 5, 1996 and (d) the Company's Prospectus, dated
March 8, 1996, relating to the sale of 1,610,000 shares of the Company
Common Stock;
(iii) certain publicly-available historical financial and operating
data for Snyder including, but not limited to, (a) the Financial Statements
for the year ended December 31, 1996, (b) the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, (c) Snyder's Prospectus, dated
September 24, 1996, relating to the initial public offering of Snyder
Common Stock and (d) a press release dated February 10, 1997 announcing
financial results for the fiscal year ended December 31, 1996;
(iv) certain information relating to the Company, including projected
income statements for the fiscal years ending February 1997, 1998 and 1999,
prepared by the management of the Company;
(v) certain information relating to Snyder, including financial
forecasts for the fiscal years ending December 31, 1997 and 1998, prepared
by the management of Snyder;
(vi) publicly available financial, operating and stock market data
concerning certain companies engaged in businesses we deemed comparable to
the Company and Snyder, respectively, or otherwise relevant to our inquiry;
(vii) the financial terms of certain recent transactions we deemed
relevant to our inquiry;
(viii) the historical stock prices and trading volumes of the Company
Common Stock and Snyder Common Stock; and
(ix) such other financial studies, analyses and investigations that we
deemed appropriate.
We have assumed, with your consent, that the draft of the Agreement which
we reviewed (as referred to above) will conform in all material respects to that
document when in final form.
We have met with the senior management of the Company and Snyder to discuss
(i) the prospects for their respective businesses, (ii) their estimates of such
businesses' future financial performance, (iii) the financial impact of the
Merger on the respective companies and (iv) such other matters that we deemed
relevant.
In connection with our review and analysis and in arriving at our opinion,
we have relied upon the accuracy and completeness of the financial and other
information provided to us by the Company and Snyder and have not undertaken any
independent verification of such information or any independent valuation or
appraisal of any of the assets or liabilities of the Company or Snyder. With
respect to certain financial forecasts, provided to us by the Company for the
Company and Snyder for Snyder, we have assumed that such information (and the
assumptions and bases therefor) represents each respective management's best
currently available estimate as to the future financial performance of the
Company and of Snyder. Our opinion is predicated on the Merger qualifying (i) as
a reorganization within the meaning of Section 368 (a) of the Internal Revenue
Code of 1986, as amended, and (ii) for "pooling-of-interests" accounting
treatment. Further, our opinion is necessarily based on economic, financial and
market conditions as they exist and can only be evaluated as of the date hereof.
In connection with our advisory assignment, we have not been authorized by
the Company or its Board of Directors to solicit, nor have we solicited,
indications of interest from third parties for the acquisition of all or any
part of the Company. Our opinion does not address nor should it be construed to
address the relative merits of the Merger and alternative business combinations
with third parties. In addition, this opinion does not in any manner address the
prices at which the Snyder Common Stock will actually trade following
consummation of the Merger.
B-2
<PAGE> 185
[PRUDENTIAL SECURITITES SMALLER LOGO]
As you know, we have been retained by the Company to render this opinion
and provide other financial advisory services in connection with the Merger and
will receive a fee for such services, which fee is contingent upon the
consummation of the Merger. In the ordinary course of business we may actively
trade the shares of the Company Common Stock and the Snyder Common Stock for our
own account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
This letter and the opinion expressed herein are for the use of the Board
of Directors of the Company. This opinion does not constitute a recommendation
to the stockholders of the Company as to how such stockholders should vote or as
to any other action such stockholders should take regarding the Merger. This
opinion may not be reproduced, summarized, excerpted from or otherwise publicly
referred to or disclosed in any manner, without our prior written consent;
except that the Company may include this opinion in its entirety in any proxy
statement or information statement relating to the Merger sent to the Company's
stockholders.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Exchange Ratio is fair to the stockholders of the Company
from a financial point of view.
Very truly yours,
[PRUDENTIAL SECURITIES SIGNATURE]
PRUDENTIAL SECURITIES INCORPORATED
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<PAGE> 186
EXHIBIT C
STOCKHOLDERS AGREEMENT
AGREEMENT, dated March 18, 1997 (this "Agreement"), by and among SNYDER
COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and each of the other
parties signatory hereto (each, a "Stockholder" and, collectively, the
"Stockholders").
WITNESSETH:
WHEREAS, concurrently herewith, Parent, SNYDER Z ACQUISITION, INC., a
Delaware corporation and a direct wholly-owned subsidiary of Parent ("Merger
Sub"), and AMERICAN LIST CORPORATION, a Delaware corporation (the "Company"),
are entering into an Agreement and Plan of Merger (as such agreement may
hereafter be amended from time to time, the "Merger Agreement;" capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement) pursuant to which Merger Sub will be merged with and
into the Company (the "Merger");
WHEREAS, each of the Stockholders Beneficially Owns (as defined herein) the
number of shares, par value $.01 per share, of common stock of the Company (the
"Shares" or "Company Common Stock") set forth opposite such Stockholder's name
on Schedule I hereto;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the Stockholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock. Each Stockholder hereby
agrees that during the period commencing on the date hereof and continuing until
the first to occur of the Effective Time and termination of the Merger Agreement
in accordance with its terms, at any meeting of the holders of Company Common
Stock, however called, or in connection with any written consent of the holders
of Company Common Stock, such Stockholder shall vote (or cause to be voted) the
Shares held of record or Beneficially Owned (as defined below) by such
Stockholder, whether heretofore owned or hereafter acquired, (i) in favor of
approval of the Merger Agreement and any actions required in furtherance thereof
and hereof; (ii) against any action or agreement that would result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement (after giving
effect to any materiality or similar qualifications contained therein); and
(iii) except as otherwise agreed to in writing in advance by Parent, against the
following actions (other than the Merger and the transactions contemplated by
the Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company; (B) a
sale, lease, transfer or disposition of any assets outside the ordinary course
of business or any assets which in the aggregate are material to the Company and
its Subsidiaries taken as a whole, or a reorganization, recapitalization,
dissolution or liquidation of the Company; (C) (1) any change in a majority of
the persons who constitute the board of directors of the Company; (2) any change
in the present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or By-Laws; (3) any other material change in the
Company's corporate structure or business; or (4) any other action which, in the
case of each of the matters referred to in clauses (C) (1), (2) or (3), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by this Agreement and the Merger Agreement. Such Stockholder shall
not enter into any agreement or understanding with any Person (as defined below)
the effect of which would be inconsistent or violative of the provisions and
agreements contained herein. For purposes of this Agreement, "Beneficially Own"
or "Beneficial Ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include
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securities Beneficially Owned by all other Persons with whom such Person would
constitute a "group" as within the meanings of Section 13(d)(3) of the Exchange
Act. For purposes of this Agreement, "Person" shall mean an individual,
corporation, partnership, joint venture, association, trust, unincorporated
organization or other entity.
2. Other Covenants, Representations and Warranties. Each Stockholder hereby
represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the Beneficial Owner of
the number of Shares set forth opposite such Stockholder's name on Schedule
I hereto. On the date hereof, the Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the Shares owned
of record or Beneficially Owned by such Stockholder. Such Stockholder has
(i) sole voting power and sole power to issue instructions with respect to
the matters set forth in Section 1 hereof, sole power of disposition, sole
power of conversion, sole power to demand appraisal rights and sole power
to agree to all of the matters set forth in this Agreement, in each case
with respect to all of the Shares set forth opposite such Stockholder's
name on Schedule I hereto and denoted by footnote 1, with no limitations,
qualifications or restrictions on such rights or (ii) shared voting power
and shared power to issue instructions with respect to the matters set
forth in Section 1 hereof, shared power of disposition, shared power of
conversion, shared power to demand appraisal rights and shared power to
agree to all of the matters set forth in this Agreement, in each case
shared with another Stockholder party to this Agreement and in each case
with respect to all of the Shares set forth opposite such Stockholder's
name on Schedule 1 hereto and denoted by footnote 2.
(b) Power; Binding Agreement. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance
of this Agreement by such Stockholder will not violate any other agreement
to which such Stockholder is a party including, without limitation, any
voting agreement, stockholder agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest of
any trust of which such Stockholder is Trustee who is not a party to this
Agreement and whose consent is required for the execution and delivery of
this Agreement or the consummation by such Stockholder of the transactions
contemplated hereby. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Stockholder's spouse, enforceable against such person in
accordance with its terms.
(c) No Conflicts. (A) No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby
and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the
provisions hereof shall (1) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which such Stockholder is a party or by which
such Stockholder or any of such Stockholder's properties or assets may be
bound, or (2) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to such Stockholder or any of such
Stockholder's properties or assets.
(d) No Finder's Fees. Other than existing financial advisory and
investment banking arrangements between the Company and Prudential
Securities Incorporated, no broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated by the Merger Agreement based upon
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<PAGE> 188
arrangements made by or on behalf of such Stockholder or any of its
affiliates or, to the knowledge of such Stockholder, the Company or any of
its affiliates.
(e) Other Potential Acquirors. Such Stockholder (i) shall immediately
cease any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or its
Subsidiaries or any business combination with the Company or its
Subsidiaries, in his, her or its capacity as such, and (ii) from and after
the date hereof until termination of the Merger Agreement, unless and until
the Company is permitted to take such actions under Section 4.4 of the
Merger Agreement, shall not, in such capacity, directly or indirectly,
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance), or take any other action to
facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any such transaction
or acquisition, or agree to or endorse any such transaction or acquisition,
or authorize or permit any of such Stockholder's agents to do so. Such
Stockholder shall provide a written notice to Parent and Merger Sub
describing in reasonable detail the material terms and conditions of any
such proposal as promptly as reasonably practicable following receipt
thereof by such Stockholder (in its capacity as such) and shall keep Parent
and Acquisition advised thereafter of material developments with respect
thereto as promptly as reasonably practicable.
(f) Restriction on Transfer, Proxies and Non-Interference. Such
Stockholder shall not, directly or indirectly: (i) except as contemplated
by the Merger Agreement, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or consent to
the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment
or other disposition of, any or all of such Stockholder's Shares or any
interest therein; (ii) grant any proxies or powers of attorney, deposit any
Shares into a voting trust or enter into a voting agreement with respect to
any Shares; or (iii) take any action that would make any representation or
warranty of such Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling such Stockholder from performing such
Stockholder's obligations under this Agreement.
(g) Reliance by Parent. Such Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the
Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
3. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful and commercially
reasonable action as may be necessary or desirable to consummate and make
effective the transactions contemplated by this Agreement.
4. Stop Transfer; Restrictive Legend. (a) Each Stockholder agrees with, and
covenants to, Parent that such Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement. In the event of a stock
dividend or distribution, or any change in the Company Common Stock by reason of
any stock dividend, split-up, recapitalization, combination, exchange of shares
or the like, the term "Shares" shall be deemed to refer to and include the
Shares as well as all such stock dividends and distributions and any shares into
which or for which any or all of the Shares may be changed or exchanged.
(b) Upon the written request of Parent, all certificates representing any
of such Stockholder's Shares shall contain the following legend:
"The securities represented by this certificate, including certain
voting and transfer rights with respect thereto, are subject to the terms
of a Stockholders Agreement, dated March 18, 1997, among SNYDER
COMMUNICATIONS, INC., the Issuer and the parties listed on the signature
pages thereto, a copy of which is on file in the principal office of the
Issuer."
5. Termination. Except as otherwise provided herein, the covenants and
agreements contained herein with respect to the Shares shall terminate upon the
earliest of (a) termination of the Merger Agreement in
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<PAGE> 189
accordance with its terms, (b) the Effective Time or (c) at the election of the
Stockholders, if the Company's Board of Directors would have the right to
terminate the Merger Agreement under Section 6.1(c)(iv) thereof.
6. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Stockholder
signs solely in his or her capacity as the record and/or beneficial owner of
such Stockholder's Shares.
7. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersede all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the other party, provided that
Parent may assign, in its sole discretion, its rights and obligations hereunder
to any direct or indirect wholly owned subsidiary of Parent, but no such
assignment shall relieve Parent of its obligations hereunder if such assignee
does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, with respect to any
one or more Stockholders, except upon the execution and delivery of a written
agreement executed by the relevant parties hereto; provided that Schedule I
hereto may be supplemented by Parent by adding the name and other relevant
information concerning any Stockholder of the Company who agrees to be bound by
the terms of this Agreement without the agreement of any other party hereto, and
thereafter such added stockholder shall be treated as a "Stockholder" for all
purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
<TABLE>
<S> <C>
If to any Stockholder: At the addresses set forth
on Schedule I hereto
with a copy to: Schulte Roth & Zabel LLP 900 Third Avenue New
York, NY Attention: Marc Weingarten, Esq.
Telephone: (212) 758-0404 Facsimile: (212)
593-5955
If to Parent or Merger Sub: Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive, 15th Floor
Bethesda, MD 20817
Telephone: (301) 468-1010
Facsimile: (301) 571-7930
Attention: Chief Executive Officer
</TABLE>
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<PAGE> 190
<TABLE>
<S> <C>
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Norman D. Chirite, Esq.
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
(l) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
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<PAGE> 191
IN WITNESS WHEREOF, Parent and each Stockholder have caused this Agreement
to be duly executed as of the day and year first above written.
SNYDER COMMUNICATIONS, INC.
By: /s/ MICHELE D. SNYDER
------------------------------------
Name: Michele D. Snyder
Title: Vice Chairman and
Chief Operating Officer
/s/ MARTIN LERNER
--------------------------------------
Martin Lerner
D.H. BLAIR INVESTMENT BANKING CORP.
By: /s/ J. MORTON DAVIS
--------------------------------------
Name: J. Morton Davis
Title: Chairman and Chief
Executive Officer
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<PAGE> 192
SCHEDULE I TO
STOCKHOLDERS AGREEMENT
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES OWNED
- ------------------------------------------------------------------------ ----------------------
<S> <C>
Martin Lerner........................................................... 223,525*(1)
D.H. Blair Investment Banking Corp...................................... 711,021(1)
</TABLE>
- ---------------
(1) Stockholder has sole power with respect to such shares. See Section 2(a)(i)
of this Agreement.
* Excludes 3,564 shares held by spouse as to which beneficial ownership is
disclaimed.
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<PAGE> 193
AMERICAN LIST CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
JULY 11, 1997
COMMON STOCK
The undersigned hereby appoints Mr. Martin Lerner and Mr. Donald Damore, and
any of them, attorneys and proxies, with power of substitution and revocation,
to vote, as designated below, all shares of Common Stock that the undersigned is
entitled to vote, with all powers that the undersigned would possess if
personally present at the special meeting (including all adjournments thereof)
of stockholders of American List Corporation (the "Meeting") to be held on July
11, 1997, at 9:00 a.m. local time at the Long Island Marriott Hotel, 101 James
Doolittle Boulevard, Uniondale, New York 11553.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
SEE REVERSE
SIDE
<PAGE> 194
[X]
PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE
The Board of Directors recommends a vote FOR Proposal 1.
1. Proposal 1.
Approval and Adoption of the Merger and Agreement and Plan of Merger, dated as
of March 18, 1997, among American List Corporation, Snyder Communications,
Inc. and Snyder Z Acquisition, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The shares represented by this Proxy when properly executed will be voted in
the manner directed herein by the undersigned stockholder. If no direction is
given, the shares represented by this Proxy will be voted FOR Proposal 1. In
addition, the proxies may vote in their discretion on such other matters as may
properly come before the meeting.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT OF
AMERICAN LIST CORPORATION.
-------------------------------------
Signature(s)
-------------------------------------
Title/Authority
DATED: , 1997
NOTE: Please sign as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executive, administrator, trustee,
custodian, guardian or corporate
officer, please give your full title
as such. If a corporation, please
sign in full corporate name by
authorized officer. If a partnership,
please sign in partnership name by
authorized person. The proxies are
authorized in their discretion, to
vote such shares upon any other
business that may properly come
before the Meeting and all
adjournments and postponements
thereof.
<PAGE> 195
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") empowers a Delaware corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of such corporation or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. Such indemnification may
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided that such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. A Delaware corporation is permitted to indemnify directors, officers,
employees and other agents of such corporation in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the person to be indemnified has been
adjudged to be liable to the corporation. Where a director, officer, employee or
agent of the corporation is successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to above or in defense of any claim,
issue or matter therein, the corporation must indemnify such person against the
expenses (including attorneys' fees) which he or she actually and reasonably
incurred in connection therewith.
Snyder's Bylaws provide that Snyder shall indemnify, to the full extent and
under the circumstances permitted by the DGCL in effect from time to time, any
past, present or future director or officer, made or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding, by
reason of the fact that such person is or was a director, officer, employee or
agent, or was serving in such capacities at another entity at the specific
request of Snyder, on the same conditions provided by the DGCL. Snyder's Bylaws
further provide that Snyder shall indemnify any such person in any threatened,
pending or completed action or suit by or on behalf of Snyder under similar
conditions, except that no indemnification is permitted without judicial
approval if the person to be indemnified has been adjudged to be liable to
Snyder. In addition, Snyder's Bylaws provide that the Board of Directors may
also grant indemnification to any individual other than an officer or director,
as it may determine in its sole discretion.
As permitted by Section 102(b)(7) of the DGCL, Snyder's Certificate of
Incorporation contains a provision eliminating the personal liability of a
director to Snyder or its stockholders for monetary damages for breach of
fiduciary duty as a director, subject to certain exceptions.
Snyder maintains policies insuring its officers and directors against
certain civil liabilities, including liabilities under the Securities Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 18, 1997, among American List
Corporation, the Registrant and Snyder Z Acquisition, Inc.(1)
2.2 Recommended Offer by the Registrant for Brann Holdings Limited, dated March 21,
1997.(1)
2.3 Agreement and Plan of Merger among the Registrant, Snyder Acquisition Corp., MMD,
Inc. and the stockholders of MMD, Inc., dated as of January 6, 1997.(2)
3.1 Certificate of Incorporation of the Registrant.(3)
</TABLE>
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<PAGE> 196
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------
<C> <S>
3.2 By-laws of the Registrant.(3)
4.1 Instruments defining the rights of securityholders: Reference is made to exhibits
3.1 and 3.2.
4.2 Form of certificate evidencing shares of Common Stock of the Registrant.(3)
4.3 Exchange Agreement by and among the Registrant, Snyder Marketing Services, Inc.,
each of the stockholders of Snyder Marketing Services, Inc. and each of the
limited partners of Snyder Communications, L.P., dated September 4, 1996.(3)
5 Opinion of Weil, Gotshal & Manges LLP as to the legality of the Common Stock of
the Registrant.
8 Tax opinion of Schulte Roth & Zabel LLP.
10.1 Stockholders Agreement, dated March 18, 1997, by and among the Registrant and
each of the other parties signature thereto.(1)
10.2 Employment Agreement between Martin Lerner, American List Corporation and the
Registrant, dated March 18, 1997.(1)
10.3 Affiliate Letters from certain affiliates of American List Corporation to the
Registrant, dated March 18, 1997.(1)
10.4 Lock-up letter from certain affiliates of the Registrant to the Registrant and J.
Morton Davis, dated March 18, 1997.(1)
10.5 1996 Stock Incentive Plan of the Registrant.(3)
10.6 Professional Services Agreement, dated February 1996, as amended, between the
Registrant and AT&T Communications Inc.(3)
10.7 Services Agreement between Snyder Communications, L.P. and U.S. News and World
Report, L.P., effective as of June 30, 1996.(3)
10.8 Registration Rights Agreement, dated September 4, 1996, between the Registrant
and Daniel M. Snyder, Michele D. Snyder, U.S. News College Marketing, L.P. and
each of the 1995 Investors (as defined therein).(3)
10.9 Registration Rights Agreement, dated as of March 21, 1997, among the Registrant
and the Shareholders of Brann Holdings Limited listed on the signature pages
thereto.(1)
10.10 Lease Agreement, Democracy Center, Bethesda, Maryland, dated July 30, 1992, as
amended, between the Registrant and Democracy Associates Limited Partnership.(3)
10.11 Employment Agreement between the Registrant and Daniel M. Snyder.(3)
10.12 Employment Agreement between the Registrant and Michele D. Snyder.(3)
21 Subsidiaries of the Registrant.
23.1 Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5).
23.2 Consent of Schulte Roth & Zabel LLP (included in Exhibit 8).
23.3 Consent of Grant Thornton LLP.
23.4 Consent of Arthur Andersen LLP.
23.5 Consent of Price Waterhouse, Chartered Accountants and Registered Auditors.
24 Power of Attorney (included as part of the signature page of this Registration
Statement).
</TABLE>
- ---------------
(1) Previously filed as an exhibit to the Registrant's Current Report on Form
8-K, dated March 31, 1997, and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Current Report on Form
8-K, dated January 16, 1997, and incorporated herein by reference.
(3) Previously filed as an exhibit to the Registrant's Registration Statement on
Form S-1, as amended, dated September 23, 1996, and incorporated herein by
reference.
II-2
<PAGE> 197
(b) Financial Statement Schedule
<TABLE>
<CAPTION>
SCHEDULE NO. DESCRIPTION
- ------------- --------------------------------------------------------------
<C> <S>
99 Schedule of Valuation and Qualifying Accounts to Consolidated
Financial Statements of Snyder Communications, Inc.
</TABLE>
(c) See exhibits 5 and 8 in Item 21(a) above.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of this chapter at the start of
any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Act need not be furnished, provided, that the registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary
to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Act or Rule 3-19 of
this chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(b)(1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for
II-3
<PAGE> 198
by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned registrant hereby undertakes that every prospectus
(i) that is filed pursuant to paragraph (1) immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933, as amended, and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, as amended, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as
amended, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, as amended, and
will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.
(e) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-4
<PAGE> 199
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bethesda, State of Maryland, on this 18th day of
June, 1997.
SNYDER COMMUNICATIONS, INC.
By: /s/ MICHELE D. SNYDER
------------------------------------
Michele D. Snyder
Vice Chairman, President, Chief
Operating Officer and Director
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Michele D. Snyder and A. Clayton Perfall,
and each and either of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including, without limitation, post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- -------------------------------- --------------
<C> <S> <C>
/s/ DANIEL M. SNYDER Chairman of the Board of June 18, 1997
- ---------------------------------------- Directors and Chief Executive
DANIEL M. SNYDER Officer
/s/ MICHELE D. SNYDER Vice Chairman, President, Chief June 18, 1997
- ---------------------------------------- Operating Officer and Director
MICHELE D. SNYDER
/s/ A. CLAYTON PERFALL Chief Financial Officer and June 18, 1997
- ---------------------------------------- Director
A. CLAYTON PERFALL
/s/ DAVID B. PAUKEN Chief Accounting Officer June 18, 1997
- ----------------------------------------
DAVID B. PAUKEN
/s/ MORTIMER B. ZUCKERMAN Director June 18, 1997
- ----------------------------------------
MORTIMER B. ZUCKERMAN
/s/ FRED DRASNER Director June 18, 1997
- ----------------------------------------
FRED DRASNER
/s/ PHILIP GUARASCIO Director June 18, 1997
- ----------------------------------------
PHILIP GUARASCIO
/s/ MARK E. JENNINGS Director June 18, 1997
- ----------------------------------------
MARK E. JENNINGS
</TABLE>
II-5
<PAGE> 200
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of March 18, 1997, among
American List Corporation, the Registrant and Snyder Z Acquisition,
Inc.(1)
2.2 Recommended Offer by the Registrant for Brann Holdings Limited, dated
March 21, 1997.(1)
2.3 Agreement and Plan of Merger among the Registrant, Snyder Acquisition
Corp., MMD, Inc. and the stockholders of MMD, Inc., dated as of
January 6, 1997.(2)
3.1 Certificate of Incorporation of the Registrant.(3)
3.2 By-laws of the Registrant.(3)
4.1 Instruments defining the rights of securityholders: Reference is made
to exhibits 3.1 and 3.2.
4.2 Form of certificate evidencing shares of Common Stock of the
Registrant.(3)
4.3 Exchange Agreement by and among the Registrant, Snyder Marketing
Services, Inc., each of the stockholders of Snyder Marketing Services,
Inc. and each of the limited partners of Snyder Communications, L.P.,
dated September 4, 1996.(3)
5 Opinion of Weil, Gotshal & Manges LLP as to the legality of the Common
Stock of the Registrant.
8 Tax opinion of Schulte Roth & Zabel LLP.
10.1 Stockholders Agreement, dated March 18, 1997, by and among the
Registrant and each of the other parties signature thereto.(1)
10.2 Employment Agreement between Martin Lerner, American List Corporation
and the Registrant, dated March 18, 1997.(1)
10.3 Affiliate Letters from certain affiliates of American List Corporation
to the Registrant, dated March 18, 1997.(1)
10.4 Lock-up letter from certain affiliates of the Registrant to the
Registrant and J. Morton Davis, dated March 18, 1997.(1)
10.5 1996 Stock Incentive Plan of the Registrant.(3)
10.6 Professional Services Agreement, dated February 1996, as amended,
between the Registrant and AT&T Communications Inc.(3)
10.7 Services Agreement between Snyder Communications, L.P. and U.S. News
and World Report, L.P., effective as of June 30, 1996.(3)
10.8 Registration Rights Agreement, dated September 4, 1996, between the
Registrant and Daniel M. Snyder, Michele D. Snyder, U.S. News College
Marketing, L.P. and each of the 1995 Investors (as defined
therein).(3)
10.9 Registration Rights Agreement, dated as of March 21, 1997, among the
Registrant and the Shareholders of Brann Holdings Limited listed on
the signature pages thereto.(1)
10.10 Lease Agreement, Democracy Center, Bethesda, Maryland, dated July 30,
1992, as amended, between the Registrant and Democracy Associates
Limited Partnership.(3)
10.11 Employment Agreement between the Registrant and Daniel M. Snyder.(3)
10.12 Employment Agreement between the Registrant and Michele D. Snyder.(3)
21 Subsidiaries of the Registrant.
23.1 Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5).
23.2 Consent of Schulte Roth & Zabel LLP (included in Exhibit 8).
</TABLE>
<PAGE> 201
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------
<C> <S> <C>
23.3 Consent of Grant Thornton LLP.
23.4 Consent of Arthur Andersen LLP.
23.5 Consent of Price Waterhouse, Chartered Accountants and Registered
Auditors.
24 Power of Attorney (included as part of the signature page of this
Registration Statement).
</TABLE>
- ---------------
(1) Previously filed as an exhibit to the Registrant's Current Report on Form
8-K, dated March 31, 1997, and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Current Report on Form
8-K, dated January 16, 1997, and incorporated herein by reference.
(3) Previously filed as an exhibit to the Registrant's Registration Statement on
Form S-1, as amended, dated September 23, 1996, and incorporated herein by
reference.
<TABLE>
<CAPTION>
SCHEDULE NO.
- ------------
<C> <S>
99 Schedule of Valuation and Qualifying Accounts to Consolidated Financial
Statements of Snyder Communications, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 5
[WEIL, GOTSHAL & MANGES LLP LETTERHEAD]
June 18, 1997
Board of Directors
Snyder Communications, Inc.
Two Democracy Centre
6903 Rockledge Drive
Bethesda, MD 20817
Re: Snyder Communications, Inc.
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to Snyder Communications, Inc., a Delaware
corporation (the "Company") in connection with the preparation of and filing
with the Securities and Exchange Commission of the Company's Registration
Statement on Form S-4 (as amended, the "Registration Statement") under the
Securities Act of 1933, as amended, relating to the common stock, par value
$0.001 per share, of the Company (the "Common Stock") to be issued pursuant to
the Agreement and Plan of Merger, dated March 18, 1997 (the "Merger
Agreement"), by and among the Company, Snyder Z Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company ("Acquisition"), and
American List Corporation, a Delaware corporation ("American List"), whereby
Acquisition will be merged with and into American List.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction of the Registration Statement, the
Merger Agreement, and such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such
inquiries of such officers and representatives as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
<PAGE> 2
Snyder Communications, Inc.
June 18, 1997
Page 2
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers and representatives of the Company and upon the representations and
warranties of the Company contained in the Merger Agreement.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that the shares of Common Stock to be issued
pursuant to the Merger Agreement have been duly authorized and, when issued as
contemplated by the Merger Agreement, will be validly issued, fully paid and
nonassessable and free of preemptive rights pursuant to law or the Company's
Certificate of Incorporation.
The opinions expressed herein are limited to the corporate laws of the
State of Delaware and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. We further consent to any and all references to our
firm in the Proxy Statement/Prospectus which is a part of said Registration
Statement. Except as noted in this paragraph, this opinion may not be used or
relied upon by any other person, nor may this letter or any copies thereof be
furnished to a third party, filed with a governmental agency, quoted, cited, or
otherwise referred to without our prior written consent.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
<PAGE> 1
EXHIBIT 8
[SCHULTE ROTH & ZABEL LLP LETTERHEAD]
June 18, 1997
Board of Directors
American List Corporation
330 Old Country Road
Mineola, NY 11501
Gentlemen:
You have requested our opinion concerning certain Federal
income tax issues relating to the Agreement and Plan of Merger, dated as of
March 18, 1997 (the "Merger Agreement"), by and among American List
Corporation, a Delaware corporation (the "Company"), Snyder Communications,
Inc., a Delaware corporation ("Parent"), and Snyder Z Acquisition, Inc., a
Delaware corporation ("Mergersub"). The Merger Agreement provides for the
merger of Mergersub, a wholly owned subsidiary of Snyder formed for this
purpose, with and into the Company (the "Merger"). Capitalized terms not
otherwise defined in this letter shall have the meanings ascribed to them in
the Merger Agreement.
In rendering this opinion we have examined the Merger
Agreement, certain representation letters from Parent and the Company (the
"Representation Letters") and such other documents as we have deemed necessary.
In that connection we have assumed (1) the authenticity, accuracy and
completeness of all such agreements, letters and other documents; (2) that the
Merger will be effective under applicable state laws; and (3) that the Merger
Agreement accurately describes the terms of the Merger. We have also assumed
that neither the Company nor Parent will notify us prior to the effective date
of the Merger that any representation contained in its Representation Letter is
not true, accurate and complete. In rendering our opinion, we have not
undertaken independent investigation of the accuracy of those assumptions or of
the statements set forth in the Representation Letters.
<PAGE> 2
American List Corporation
June 18, 1997
Page 2
Our opinion is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, other administrative authorities
and judicial decisions, all as of the date of this letter. All of the
foregoing are subject to change and any such change (which could be
retroactive) could affect the opinions contained in this letter.
This opinion is our legal judgment as to certain of the
Federal income tax consequences of the Merger. Our opinion is not binding on
the Internal Revenue Service or any court. The opinion is limited to the
specific conclusions set forth below and does not address foreign, state, local
estate or other potential tax consequences of the Merger. Further, the opinion
does not address Federal income tax consequences applicable to persons subject
to special tax rules, such as holders of Shares who own such Shares as the
result of the exercise of incentive stock options.
On the basis of the foregoing, for Federal income tax
purposes, we are of the opinion that:
1. The Merger will constitute a tax-free reorganization under
Section 368(a) of the Code and Parent, the Company and Mergersub will each be a
party to the reorganization within the meaning of Section 368(b) of the Code.
2. None of Parent, Mergersub or the Company will recognize
gain or loss in connection with the Merger.
3. The holders of Shares of the Company will not recognize
gain or loss upon their receipt of Parent Common Stock (except to the extent of
cash received in lieu of a fractional share of Parent Common Stock).
4. The tax basis of Parent Common Stock received in the
Merger will be the same as the tax basis of Company Shares surrendered and
exchanged therefor reduced by any basis allocable to a fractional share for
which cash is received.
5. The holding period for the shares of Parent Common Stock
received in the Merger by holders of Company Shares will include the holding
period during which such holders held their Shares, provided that such Shares
are held as capital assets at the effective date of the Merger.
6. A holder of Shares who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss equal to
the difference between the cash payment received and the stockholder's tax
basis in the Shares exchanged therefor. Such gain or loss will be capital gain
or loss provided that such Shares were held as capital assets at the time of
the Merger, and will be long term capital gain or loss if such Shares were held
for more than one year at such time.
<PAGE> 3
American List Corporation
June 18, 1997
Page 3
Except as set forth above, we express no opinion as to the tax
consequences to any party, whether federal, state, local or foreign, or of any
transaction related to the Merger contemplated by the Merger Agreement.
We hereby consent to the filing of this opinion as an Exhibit
to Parent's Registration Statement on Form S-4, which includes the Solicitation
Statement/Prospectus that describes the Merger, and to the reference to the
firm under the caption "THE MERGER -- Certain Federal Income Tax Consequences"
and under the caption "Legal Matters" in the Solicitation Statement/Prospectus
which is part of the Registration Statement.
Sincerely Yours,
/s/ SCHULTE ROTH & ZABEL LLP
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Registrant:
Name of Subsidiary Jurisdiction
Snyder Marketing Services, Inc. Delaware
Snyder Communications, L.P. Delaware
MMD, Inc. New Jersey
Brann Holdings Limited United Kingdom
Good Neighbor Direct, Inc. Massachusetts
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 11, 1997 accompanying the consolidated
financial statements of American List Corporation included in the Proxy
Statement of American List Corporation and the Prospectus and Registration
Statement on Form S-4 of Snyder Communications, Inc. We consent to the use of
the aforementioned report in the Proxy Statement, Prospectus and Registration
Statement on Form S-4, and to the use of our name under the captions "Selected
Consolidated Financial Data of American List" and "Experts".
/s/ GRANT THORNTON LLP
Melville, NY
June 18, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
June 18, 1997
Washington, D.C.
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Snyder Communications, Inc. of our report
dated May 30, 1997, relating to the financial statements of Brann Holdings
Limited, which appears in such Prospectus. We also consent to the reference to
us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse
Chartered Accountants
and Registered Auditors
Bristol, England
June 18, 1997
<PAGE> 1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Snyder Communications, Inc.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Snyder Communications, Inc. included in
this Form S-4 Filing and have issued our report thereon dated May 30, 1997. Our
audits were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. Schedule 99 included in this Form S-4 is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion based on our audit and the report of other auditors, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Washington, D.C.
May 30, 1997
<PAGE> 2
SCHEDULE NO. 99
SNYDER COMMUNICATIONS, INC.
SCHEDULE II
ALLOWANCE FOR DOUBTFUL ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
DEDUCTIONS FROM RESERVE
BALANCE AT ADDITIONS CHARGED TO FOR PURPOSES FOR WHICH TRANSLATION BALANCE AT
BEGINNING OF YEAR COST AND EXPENSE RESERVE WAS CREATED ADJUSTMENT END OF YEAR
----------------- -------------------- ----------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1994.............. $206,870 $222,856 $ 7,400 $10,891 $433,217
1995.............. 433,217 229,343 124,066 (5,178) 533,316
1996.............. 533,316 339,124 143,756 51,179 779,863
</TABLE>
