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 <section> 240.14a-11(c) or
<section> 240.14a-12
AMSCAN HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
_____________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________
5) Total fee paid:
_____________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_____________________
2) Form, Schedule or Registration Statement No.:
_____________________
3) Filing Party:
_____________________
4) Date Filed:
_____________________
<PAGE>
AMSCAN HOLDINGS, INC.
80 Grasslands Road
Elmsford, New York 10523
=============================================
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
To be held on May 22, 1997
=============================================
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Meeting") of Amscan Holdings, Inc., a Delaware corporation (the "Company"),
will be held at The Castle at Tarrytown, 400 Benedict Avenue, Tarrytown, New
York 10591, on Thursday, May 22, 1997 at 10:00 a.m., Eastern Daylight Time, for
the following purposes:
1. To elect one director of the Company to serve until the 2000
Annual Meeting of Stockholders of the Company;
2. To consider and act upon a proposal to ratify the appointment
of KPMG Peat Marwick LLP as independent auditors for the year
1997; and
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 18, 1997
as the record date for determining the holders of Common Stock entitled to
notice of, and to vote at, the Meeting.
You are cordially invited to attend the Annual Meeting. If you expect to
attend, please check the box on the back of the proxy. If you are unable to
attend, or if you wish to vote by proxy, please mark, date, sign and return
promptly the enclosed proxy to the Company in the enclosed envelope. If you
attend the meeting, you may vote in person. Directions to The Castle at
Tarrytown are included on the following page.
By Order of the Board of Directors,
James M. Harrison
Secretary
Elmsford, New York
April 25, 1997
IMPORTANT: Whether or not you plan to attend the Meeting in person, it is
important that your shares be represented and voted at the Meeting.
Accordingly, you are urged to read the enclosed Proxy Statement and
sign, date and return the enclosed proxy promptly in the envelope
provided, which requires no postage if mailed in the United States.
<PAGE>
DIRECTIONS TO THE CASTLE AT TARRYTOWN
400 Benedict Avenue, Tarrytown, New York 10591
Telephone: (914) 631-1980
From Connecticut or Northern Westchester. Merrit Parkway or
Interstate 95 South or Interstate 684 South to Cross Westchester Expressway
(Interstate 287) West. Take Exit 1, bear right onto Route 119 West. At second
light, turn right onto Benedict Avenue. Again at second light turn left into
400 Benedict Avenue (opposite the entrance to Hackley School). Continue all
the way up to The Castle.
From New York City, West Side. West Side Highway becomes Henry
Hudson Parkway becomes Saw Mill River Parkway. Continue north on the Saw Mill
River Parkway to Exit 21W (Route 119 West, Tarrytown). Turn right onto Route
119. Go to the 5th traffic light, turn right onto Benedict Avenue. At second
light turn left into 400 Benedict Avenue (opposite the entrance to Hackley
School). Continue all the way up to The Castle.
From New York City, East Side. FDR Drive/North to Major Deegan
Expressway which becomes the New York State Thruway. Pay toll. Proceed to
Exit 7A (Saw Mill River Parkway). Continue north on Saw Mill River Parkway to
Exit 21W (Route 119 West, Tarrytown). Turn right on Route 119. Go to 5th
traffic light, turn right onto Benedict Avenue. At second light, turn left
into 400 Benedict Avenue (opposite entrance to Hackley School). Continue all
the way up to The Castle.
From Long Island. Throgs Neck Bridge or Whitestone Bridge to New
England Thruway (Interstate 95) North or Hutchinson River Parkway North. Exit
onto Cross Westchester Expressway (Interstate 287) West toward Tappan Zee
Bridge. Take Exit 1, bear right onto Route 119 West. At second light, turn
right onto Benedict Avenue. Again at second light turn left into 400 Benedict
Avenue (opposite entrance to Hackley School). Continue all the way up to The
Castle.
From New Jersey. Garden State Parkway or Palisades Parkway to
Interstate 287/87 East to Tappan Zee Bridge. After toll take first exit, Route
9 Tarrytown. At exit traffic light, turn right onto Route 9 North to fourth
light. Turn right onto Benedict Avenue. At third light, turn right into 400
Benedict Avenue (opposite entrance to Hackley School). Continue all the way up
to The Castle.
<PAGE>
AMSCAN HOLDINGS, INC.
80 Grasslands Road
Elmsford, New York 10523
=================
PROXY STATEMENT
=================
Annual Meeting of Stockholders To Be Held on May 22, 1997
This Proxy Statement is being furnished by the Board of Directors of
Amscan Holdings, Inc. (the "Company") to solicit proxies for use at the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held on May 22,
1997, at 10:00 a.m., Eastern Daylight Time, at The Castle at Tarrytown, 400
Benedict Avenue, Tarrytown, New York 10591.
SOLICITATION OF PROXIES
All shares represented by duly executed proxies in the enclosed form
which are received by the Company prior to the Meeting will be voted at the
Meeting in accordance with the instructions contained on the proxy. There are
boxes on the proxy card to vote for or to withhold authority to vote for the
director nominee and to vote for or against or to abstain from voting on the
proposal to ratify the selection of independent auditors. If no instructions
are given, the persons named in the accompanying proxy intend to vote FOR the
nominee named herein as a director of the Company and FOR the ratification of
the selection of independent auditors.
Any stockholder may revoke a proxy at any time prior to its exercise (i)
by delivery of a later-dated proxy, (ii) by giving written notice of revocation
to the Secretary of the Company at the address set forth above at any time
before such proxy is voted or (iii) by voting in person at the Meeting. No
proxy will be voted if the stockholder attends the Meeting and elects to vote
in person.
A copy of the 1996 Annual Report of the Company containing financial
statements for the fiscal year ended December 31, 1996 is also enclosed. This
Proxy Statement and the enclosed form of proxy and 1996 Annual Report are first
being mailed to stockholders on or about April 25, 1997.
The Board of Directors does not know of any matter other than the
election of one director and the ratification of the selection of independent
auditors that is expected to be presented for consideration at the Meeting
RECORD DATE, OUTSTANDING VOTING SECURITIES AND VOTES REQUIRED
The Company's common stock, $0.10 par value per share (the "Company's
Common Stock"), is the only outstanding class of voting securities of the
Company. The record date for determining who is entitled to vote at the
Meeting is the close of business on April 18, 1997 (the "Record Date"). As of
the Record Date, 21,120,476 shares of the Company's Common Stock were
outstanding. Each holder of the Company's Common Stock on the Record Date can
cast one vote per share at the Meeting on each matter voted on.
<PAGE>
Holders of a majority of the shares entitled to vote must be present at
the Meeting, in person or by proxy, so that a quorum may be present for the
transaction of business. For purposes of determining a quorum, broker non-
votes and abstentions will be considered present. The affirmative vote of the
holders of a plurality of the shares of the Company's Common Stock present at
the Meeting, in person or by proxy, is necessary for the election of directors
of the Company and of a majority of such holders is necessary for ratifying the
selection of independent auditors. Abstentions from a proposal, as well as
broker non-votes, are not considered as part of the shares present for voting
purposes on that proposal.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of
Directors of three classes as nearly equal in number as practicable. Directors
are elected for three-year terms. At the Meeting, one person will be elected
to serve as a director for a three-year term expiring at the Annual Meeting of
Stockholders to be held in 2000. The Board's nominee is John Tugwell, who is
currently a director of the Company. Allyn H. Powell and Gerald C. Rittenberg
are currently serving as directors of the Company for a term expiring at the
Annual Meeting of Stockholders in 1998, and John A. Svenningsen and Frank A.
Rosenberry are currently serving as directors of the Company for a term
expiring at the Annual Meeting of Stockholders in 1999.
Mr. Tugwell has consented to be nominated and, if elected, to serve as a
director of the Company. Information about Mr. Tugwell and each incumbent
director is listed below. Unless otherwise indicated in the footnotes below,
each director has an address c/o the Company, 80 Grasslands Road, Elmsford, New
York 10523.
Names of Incumbent Directors and Certain Information about Them
Nominee For Election For Term Expiring at the 2000 Annual Meeting
SHARES
PRINCIPAL OCCUPATIONS, BENEFICIALLY
OTHER DIRECTORSHIPS, OWNED AND
NAME AND YEAR FIRST AND POSITIONS WITH PERCENT OF
BECAME A DIRECTOR AGE THE COMPANY CLASS(1)(2)
John Tugwell(a)(b)(d) 56 Mr. Tugwell has served as 300
1997 the President and Chief (less than 1%)
Executive Officer of
Fleet Bank National
Association since
May 1996. Formerly,
Mr. Tugwell served
as the Chairman, Chief
Executive of National
Westminster Bancorp. Mr.
Tugwell serves on the
boards of several
economic and charitable
organizations including
New York Clearing House
Committee, Boy Scouts of
America and Cancer Care of
New Jersey.
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<PAGE>
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE AT THE 1998 ANNUAL MEETING
SHARES
PRINCIPAL OCCUPATIONS, BENEFICIALLY
OTHER DIRECTORSHIPS, OWNED AND
NAME AND YEAR FIRST AND POSITIONS WITH PERCENT OF
BECAME A DIRECTOR AGE THE COMPANY CLASS(1)(2)
Gerald C. Rittenberg 44 Mr. Rittenberg has served as 639,970
1996 the President of the Company (3.0%)(3)
since October 1996, the
month during which the
Company was incorporated,
and as the President of
Amscan Inc., the Company's
principal subsidiary, since
April 1996. From 1991 to
April 1996, he was Executive
Vice President- Product
Development of Amscan Inc.
and from 1990 to 1991 he was
Vice President-Product
Development of Amscan Inc.
Allyn H. Powell(a)(b)(c) 61 Mr. Powell has served as 1,000
1997 President and Chief (less than 1%)
Executive of Cuthbertson
Imports, an importer and
distributor of fine china
and gifts for the past
twenty-two years.
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE AT THE 1999 ANNUAL MEETING
SHARES
PRINCIPAL OCCUPATIONS, BENEFICIALLY
OTHER DIRECTORSHIPS, OWNED AND
NAME AND YEAR FIRST AND POSITIONS WITH PERCENT OF
BECAME A DIRECTOR AGE THE COMPANY CLASS(1)(2)
John A. Svenningsen(c)(d) 65 Mr. Svenningsen has served 15,163,077
1996 as the Chairman of the Board (71.8%)(4)
of Directors and Chief
Executive Officer of the
Company since October 1996,
and served as Secretary of
the Company from October
1996 to mid-February 1997. Mr.
Svenningsen is the Chairman
of the Board of Directors and
Chief Executive Officer of
Amscan Inc. He has served as
Chief Executive Officer of
Amscan Inc. since 1958 and
served as President from
1958 to April 1996.
Frank A. 59 Mr. Rosenberry is currently 3,500
Rosenberry(a)(b)(c)(d) a consultant. He served as (less than 1%)
1997 President and Chief Executive
Officer of The C.R. Gibson
Company, a manufacturer and
distributor of paper gift
products, from 1988 to 1995.
- ---------------------
(1) The Company knows of no person other than John A. Svenningsen who owns
more than 5% of the Company's Common Stock.
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<PAGE>
(2) A "beneficial owner" of a security for purposes of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, includes any person who, directly
or indirectly, has or shares voting power and/or investment power, although not
necessarily the economic benefit, with respect to that security. Information
regarding beneficial ownership is given as of April 7, 1997. Unless otherwise
indicated, each person listed has sole voting and investment power with respect
to the shares shown opposite his name. None of the directors or nominees has
the right to acquire shares within 60 days upon the exercise of options.
(3) Includes 93,380 shares owned by certain trusts for the benefit of Mr.
Rittenberg's children for which Mr. Rittenberg is a co-trustee.
(4) Includes 138,461 shares owned by certain trusts for the benefit of Mr.
Svenningsen's children for which Mr. Svenningsen is a co-trustee.
(a) Member of the audit committee of the Board of Directors
(b) Member of the stock option committee of the Board of Directors
(c) Member of the nominating committee of the Board of Directors
(d) Member of the compensation committee of the Board of Directors
As of April 7, 1997, William S. Wilkey, Senior Vice President - Sales and
Marketing of the Company, and James M. Harrison, Chief Financial Officer and
Secretary of the Company, each beneficially owned 5,000 shares (less than 1%)
of the Company's Common Stock. Each of Messrs. Wilkey and Harrison has sole
voting and investment power with respect to such shares of the Company's Common
Stock. Neither of Messrs. Wilkey or Harrison has the right to acquire shares
of Common Stock within 60 days upon the exercise of options.
As of April 7, 1997, the directors and executive officers of the Company
as a group (7 persons) beneficially owned an aggregate of 15,816,847 shares (or
75.0%) of the Company's Common Stock. Of this total, individual members of the
group have sole voting and investment power over 15,583,006 shares and shared
voting and/or investment power over 233,841 shares.
MEETINGS OF THE BOARD OF DIRECTORS;
COMMITTEES OF THE BOARD OF DIRECTORS
During 1996, the Board of Directors of the Company held one meeting and
acted four times by written consent. There are currently four standing
committees of the Board of Directors: the Audit Committee, the Stock Option
Committee, the Nominating Committee and the Compensation Committee. During
1996, each current director who was a director during the most recent fiscal
year attended all meetings of the Board and of committees on which he served.
The Audit Committee is responsible for recommending to the Board of
Directors the selection of independent auditors, consulting with the auditors
on the plan of audit, reviewing with the auditors the proposed audited
financial statements of the Company and reviewing and consulting on the
adequacy of the Company's internal controls. The Audit Committee was
established in February 1997.
The Stock Option Committee is responsible for administering the Company's
1996 Stock Option Plan for Key Employees (the "Stock Option Plan"). The Stock
Option Committee was established in November 1996 and consisted solely of Mr.
Svenningsen until February 1997 when the current members were elected.
The Nominating Committee is responsible for reviewing the performance of
the directors of the Company and for making recommendations to the Board of
Directors concerning the nomination of individuals to serve as directors of the
Company. The Nominating Committee was established in February 1997. The
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<PAGE>
Nominating Committee will consider nominees recommended by stockholders. The
procedures to be followed by a stockholder in submitting recommendations
require, subject to applicable law, that such stockholder submit such
nomination, together with the information about the proposed nominee which
would need to be included in a proxy statement, to the Company's principal
executive office. The nomination and related information must be received at
the Company's main office not less than 60 nor more than 90 days prior to the
proxy solicitation applicable to a meeting of stockholders at which directors
are to be elected, or where such solicitation is not being made, not less than
70 nor more than 90 days prior to the date of the meeting.
The Compensation Committee's function is to approve and recommend to the
Board of Directors the compensation arrangements for key management personnel
of the Company and its subsidiaries. The Compensation Committee is also
responsible for making recommendations to the Board of Directors regarding the
adoption of compensation plans for the benefit of directors, officers and other
key employees of the Company and its subsidiaries. The Compensation Committee
was established in February 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership of the Company's securities with the Securities and Exchange
Commission. Officers, directors and greater than ten percent beneficial owners
are required by applicable regulations to furnish the Company with copies of
all forms they file pursuant to Section 16(a). Based solely upon a review of
the copies of the forms furnished to the Company, and written representations
from certain reporting persons that no Form 5's were required, the Company
believes that during 1996, all filing requirements under Section 16(a)
applicable to its officers, directors and ten percent beneficial owners were
complied with in a timely manner.
REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was formed in
February 1997 and consists of John A. Svenningsen, Frank A. Rosenberry and John
Tugwell. The Compensation Committee is responsible for recommending to the
Board of Directors the Company's executive compensation programs.
Compensation for 1995 and 1996 paid by the Company to its chief executive
officer and the other executive officers named in the Summary Compensation
Table was determined by Mr. Svenningsen as the sole director. Compensation
arrangements in effect with Gerald C. Rittenberg and William S. Wilkey during
these years were substantially modified in connection with the Company's
initial public offering and should not be considered indicative of the future
actions which might be taken by the Compensation Committee. Any action taken
by the Compensation Committee would take into account the employment agreements
between the Company and certain of its officers, including Mr. Svenningsen, Mr.
Rittenberg, Mr. Wilkey and Mr. Harrison.
One of the Company's equity-based incentive programs is the Company's
Stock Option Plan. The realizable value of the stock options granted to
executive officers under the Stock Option Plan is tied to the value of the
Company's Common Stock, thus providing additional incentive for executives to
increase stockholder value. Options granted under the Stock Option Plan
generally have a term of ten years and vest over four years.
In addition to the Stock Option Plan, the Company has adopted its
Employee Stock Ownership Plan (the "ESOP") which covers substantially all of
its full-time employees, including its executive officers. The proceeds of
contributions to the ESOP are used to purchase shares of the Company's Common
Stock, thereby
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<PAGE>
increasing the executive's ownership position in the Company and providing
further incentive for the executive to enhance stockholder value.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
earned for the past two years for the Chief Executive Officer and each other
executive officer of the Company as of December 31, 1996, whose aggregate
salary and bonus for 1996 exceeded $100,000. The amounts shown include
compensation for services in all capacities that were provided to the Company
or its subsidiaries. Unless otherwise indicated, amounts shown were paid by
the Company's principal subsidiary, Amscan Inc.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) COMPENSATION(3)
John A. Svenningsen 1996 $315,609 $0(4) $ 5,939
Chief Executive 1995 $289,399 $0(4) $10,614
Officer and Chairman
of the Board
Gerald C.
Rittenberg 1996 $211,000 $2,800,000(5) $21,895
President 1995 $200,269 $1,682,000(5) $ 4,317
William S. Wilkey 1996 $181,000 $1,036,000(6) 100,000 $21,679
Senior Vice 1995 $172,500 $ 757,000(6) $ 4,317
President Sales
and Marketing
James M. Harrison 1996(7) $ 62,500 $ 50,000 50,000 $0
Chief Financial
Officer
- ----------------------
(1) Represents amounts earned with respect to the years indicated, whether
paid or accrued.
(2) Reflects options granted pursuant to the Stock Option Plan at an exercise
price equal to the fair market value on the date of grant.
(3) Represents contributions by the Company under the Profit Sharing and
Savings Plan maintained by the Company's principal subsidiary, Amscan
Inc., and under the ESOP, as well as insurance premiums paid by the
Company with respect to term life insurance for the benefit of the named
executive officer.
(4) Prior to the initial public offering of the Common Stock which was
consummated in December 1996 certain entities which are now subsidiaries
of the Company elected to be taxed as Subchapter S corporations under the
Internal Revenue Code. Mr. Svenningsen received $11,009,000 and
$15,841,000 in 1995 and 1996, respectively. Such amounts represented
distributions to him as a Subchapter S shareholder and, with respect to
1996, additional distributions of accumulated capital and
previously-taxed earnings in conjunction with the initial public
offering.
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<PAGE>
(5) Represents bonuses earned by Mr. Rittenberg pursuant to his prior
employment agreement with Amscan Inc. which terminated in December
1996 in connection with the Company's initial public offering.
(6) Represents bonuses earned by Mr. Wilkey pursuant to an employment
agreement with Amscan Inc. which expired on December 31, 1996.
(7) Mr. Harrison became an employee and Chief Financial Officer on August 1,
1996.
OPTION GRANTS TABLE
The following table sets forth information concerning stock options which
were granted during 1996 to the executive officers named in the Summary
Compensation Table. The options were granted pursuant to the Stock Option
Plan.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term
(a) (b) (c) (d) (e) (f) (g)
% of
Total
Options
Granted to Expiration
Options Employees in Exercise Date of
Name Granted(1) Fiscal Year Price Options 5% 10%
William S. December
Wilkey 100,000 23.5% $12 19, 2006 $754,673 $1,912,491
James M. December
Harrison 50,000 11.8% $12 19, 2006 $377.337 $956,245
(1) All stock options listed in this column are exercisable ratably over four
years beginning one year from the date of the grant, and expire ten years after
the date of the grant. To the extent permitted under the Internal Revenue
Code, such options are incentive stock options.
FISCAL YEAR-END OPTION VALUES
Number of Unexercised Options at
Year End (Exercisable/Non-Exercisable)
William S. Wilkey 100,000
James M. Harrison 50,000
At December 31, 1996, the fair market value of the Company's Common Stock
was $12 per share, an amount equal to the exercise price of each of the options
granted to Mr. Wilkey and Mr. Harrison. As a result, none of such options was
"in the money" at December 31, 1996.
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<PAGE>
No options were exercised in the most recent fiscal year.
Set forth below are descriptions of the Company's employment agreements
with John A. Svenningsen, Gerald C. Rittenberg, William S. Wilkey and James M.
Harrison.
JOHN A. SVENNINGSEN. Mr. Svenningsen entered into an employment
agreement with the Company for a term of three years commencing on December 24,
1996. Pursuant to the terms of this Agreement, Mr. Svenningsen serves as Chief
Executive Officer and Chairman of the Board of Directors of the Company. The
agreement provides for a base annual salary of $300,000, which will be
increased by 5% each successive year during the term of the agreement. The
Company may terminate Mr. Svenningsen's employment upon Mr. Svenningsen's death
or for "cause." Upon termination of employment, Mr. Svenningsen may not, for a
period of three years, be employed by or associated in any manner with any
other business which is competitive with the Company.
GERALD C. RITTENBERG. Mr. Rittenberg entered into an employment with the
Company for a term of three years commencing on December 24, 1996. Under the
terms of this agreement Mr. Rittenberg is employed as President of the Company
at a base annual salary of $220,000. Mr. Rittenberg's salary will be increased
by 5% each successive year during the term of the agreement. This agreement
may be terminated by the Company upon the death of Mr. Rittenberg or for
"cause." The agreement also provides that upon termination of employment, Mr.
Rittenberg may not be employed by, or be associated in any manner with, any
other business which is competitive with the Company for a period of three
years.
Mr. Rittenberg's agreement was made in conjunction with an agreement
among Amscan Inc., Mr. Svenningsen and Mr. Rittenberg whereby Mr. Rittenberg
agreed to terminate his prior employment agreement which provided for Mr.
Rittenberg to receive (a) a bonus in an amount equal to 10% of the aggregate
net profits of Amscan Inc. and certain affiliates (as defined in the
agreement), (b) 5% of the net selling price upon the sale of Amscan Inc. or the
sale by Mr. Svenningsen of substantially all of his stock in Amscan Inc. and
(c) in the event of an initial public offering of the stock of Amscan Inc.,
shares of the stock of Amscan Inc. equal to 5% of the shares of stock of Amscan
Inc. issued and outstanding immediately following the consummation of the
initial public offering. In exchange for the relinquishment of such rights,
Mr. Rittenberg received a cash payment of $3.4 million and a number of shares
of stock of Amscan Inc., which shares he exchanged for 660,000 shares of Common
Stock representing approximately 3% of the Company's Common Stock outstanding
after consummation of the initial public offering. The Company has granted Mr.
Rittenberg certain rights to require the Company to register the offer and sale
of the Company's Common Stock owned by Mr. Rittenberg under the Securities Act
of 1933.
WILLIAM S. WILKEY. Mr. Wilkey entered into an employment agreement which
commenced on January 1, 1997. Under the terms of this agreement Mr. Wilkey is
employed as Senior Vice President-Sales and Marketing of the Company for a
period of five years. Mr. Wilkey will receive an initial base salary of
$200,000 for 1997, which will be increased by 5% each successive year during
the term of the agreement. In addition, Mr. Wilkey is entitled to receive an
annual bonus which will be determined by a formula which takes into account the
amount by which sales and profits are increased on a year to year basis. Mr.
Wilkey's agreement also provides that upon termination of employment he may not
for a period of three years be employed by, or associated in any manner with,
any business which is competitive with the Company. This agreement may be
terminated by the Company upon the death or permanent disability of Mr. Wilkey
or for "cause." Mr. Wilkey's previous employment agreement, which expired on
December 31, 1996, provided that in addition to a base salary, he was entitled
to receive an amount equal to 5% of the aggregate net profits of Amscan Inc.
and certain affiliates.
JAMES M. HARRISON. Mr. Harrison entered into an agreement with Amscan
Inc. whereby he is employed as the Chief Financial Officer of Amscan Inc. The
agreement, which commenced August 1, 1996, provides for a base salary of
$150,000 and a guaranteed bonus for the first year of $50,000. Pursuant to an
agreement dated as of February 1, 1997 which will become effective June 1,
1997, Mr. Harrison will be
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<PAGE>
employed as the Chief Financial Officer of the Company for a term of four
years. The term will automatically be extended for successive one-year periods
unless either party gives 12 months' notice of an intent not to extend the
term. Mr. Harrison will receive an initial base salary of $215,000 for 1997,
which will be increased by 5% each successive year during the term of the
agreement. In addition, Mr. Harrison will be entitled to an annual bonus equal
to a percentage of his base salary for the year. The percentage will be equal
to three times the increase in the Company's Net Income (as defined in the
agreement) over its Net Income for the immediately preceding year. Mr.
Harrison's agreement also provides that upon termination of employment he may
not for a period of three years be employed by, or associated in any manner
with, any business which is competitive with the Company. This agreement may
be terminated by the Company upon the death or permanent disability of Mr.
Harrison or for "cause." If the agreement is terminated by the Company for any
other reason, Mr. Harrison is entitled to his base salary for the balance of
the term of the agreement, but in no event less than 12 months' base salary and
a pro rated portion of the bonus he would otherwise have been entitled to for
the year in which termination occurs. If the Company terminates Mr. Harrison's
employment following a Potential Change of Control (as defined) other than
because of Mr. Harrison's death or because of Special Cause or Special
Disability (as defined), Mr. Harrison would be entitled to a lump-sum payment
(the "Change of Control Termination Payment") equal to three times the sum of
his then base salary and the average bonus for the three full years prior to
termination. In the event of certain transactions relating to a Change of
Control of the Company, Mr. Harrison would be entitled to a payment (the
"Change of Control Payment") based on a formula. The Change of Control Payment
would be equal to $500,000 for each $1 by which the price per share paid in the
Change of Control transaction exceeds a 90-day average price of the Company's
Common Stock, subject to certain minimum and maximum amounts. If Mr.
Harrison's employment is terminated following a Change in Control, Mr. Harrison
would be entitled to receive an amount equal to the excess, if any, of the
Change of Control Termination Payment over the Change of Control Payment.
COMPENSATION OF DIRECTORS
Employee directors receive no additional compensation for serving on the
Board of Directors or its committees. The Company compensates directors who
are not employees of the Company in the amount of $1,000 for each meeting of
the Board of Directors attended and $1,000 for each meeting of the Audit
Committee and the Nominating Committee attended. In addition, the Board of
Directors has determined that each director of the Company at or near the end
of each year will receive as additional compensation for service as a director
during such year, a number of shares of the Company's Common Stock equal to the
director's fees paid to such director in cash for meetings attended during such
fiscal year divided by the fair market value of a share of the Company's Common
Stock on the date of issuance. All directors will be reimbursed for expenses
incurred in attending Board of Directors and committee meetings.
PERFORMANCE GRAPH
Since the Company's Common Stock began trading on the NASDAQ National
Market on December 19, 1996, a graph indicating the relative performance of the
Company's Common Stock price to other standard measures has not been included.
Any such graph would provide no meaningful information since, as of
December 31, 1996, the Company's Common Stock had been publicly traded for a
period of only 13 days (including only eight trading days).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Company had no compensation committee. John A.
Svenningsen, the Chairman of the Board and Chief Executive Officer of the
Company, participated in deliberations concerning executive compensation. The
current members of the Compensation Committee are John A. Svenningsen , Frank
A. Rosenberry and John Tugwell. See "Certain Relationships and Related
Transactions."
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases certain of its facilities from Mr. Svenningsen or from
entities that Mr. Svenningsen either owns directly or in which he has a direct
or indirect beneficial interest. The Company pays rent and expenses for those
facilities on terms which it believes are at least as favorable to the Company
as the terms which would have been available for leases negotiated with
unaffiliated persons at the inception of each lease. Mr. Svenningsen has
indicated that he will recuse himself from any decision of the Board of
Directors of the Company relating to the terms and conditions of any such
leases, or any renewals thereof.
In March 1996, the Company began leasing approximately 45,000 square feet
for the Company's administrative headquarters in an office building of
approximately 90,000 square feet in Elmsford, New York. The building is owned
by a limited liability company which is 79%-owned by a trust established for
the benefit of Mr. Svenningsen's children, 20%-owned by a trust established for
the benefit of Mr. Svenningsen's sister's children and 1%-owned by a
corporation owned by Mr. Svenningsen. Rent expense relating to this lease was
$752,000 for the year ended December 31, 1996. This lease, as amended,
provides for annual rent of $1,003,000 and has a term which expires on February
28, 2001. In addition, the Company has options to renew for three five-year
periods at market rental. Prior to March 1996, the Company's headquarters had
been in a facility owned by Mr. Svenningsen. Rent expense related to that
facility was $196,000 for the year ended December 31, 1996.
The Company leases a 212,000 square foot warehouse in Temecula,
California from Mr. Svenningsen. Rent expense related to this warehouse was
$1,186,000 for the year ended December 31, 1996. The expiration date of this
lease, as amended, is February 28, 2000; however, the Company has options to
renew at market rental for two additional five-year periods.
The aggregate rent paid to Mr. Svenningsen or the entities owned directly
or indirectly by him for 1996 was $2,134,000. Future minimum lease payments to
Mr. Svenningsen and such entities for 1997, 1998, 1999, 2000 and 2001 are
$2,246,000, $2,309,000, $2,374,000, $1,239,000 and $167,000, respectively.
The Company and Mr. Svenningsen have entered into an agreement pursuant
to which Mr. Svenningsen may seek reimbursement from the Company for any income
tax obligation attributable to any period prior to the organization of the
Company in December 1996 (including any gross-up for additional taxes), but
only to the extent that such tax is attributable to income that was not
distributed to Mr. Svenningsen. Alternatively, in the event that the status of
Amscan Inc. and certain other subsidiaries of the Company, including Am-Source,
Inc., JCS Realty Corp. or SSY Realty Corp. as a Subchapter S corporation is not
respected, the Company may seek reimbursement from Mr. Svenningsen, but only to
the extent that Mr. Svenningsen is entitled to a tax refund attributable to
amounts he previously included in income in his capacity as a stockholder of
such corporations.
Ya Otta Pinata, a California corporation which is now 100% owned by
Mr. Svenningsen ("Ya Otta"), manufactures pinatas which historically have
been sold by the Company's sales force with no commissions charged to Ya Otta.
After the organization of the Company, the Company's sales force continued to
sell pinatas manufactured by Ya Otta and on any sales after such
organization, the Company receives a 5% sales commission. For the year ended
December 31, 1996, sales by Ya Otta were approximately $3,650,000.
The Company has entered into a revolving credit agreement with several
banks, including Fleet Bank National Association ("Fleet"). Mr. Tugwell is
President and Chief Executive Officer of Fleet. Such revolving credit
agreement expires on September 20, 2000 and is collateralized by a first lien
on certain of the assets of the Company. The revolving credit agreement
provides for interest on the borrowings to be based on either a prime borrowing
rate or LIBOR plus 0.875%, whichever is lower. Fleet provides 41.66% of the
credit under the revolving credit agreement. At December 31, 1996, the Company
was indebted to Fleet in the amount of $12,061,000.
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The Company has agreed to indemnify each director pursuant to an
Indemnification Agreement with such director from and against any and all
expenses, losses, claims, damages and liabilities incurred by such director for
or as a result of actions taken or not taken while such director was acting in
his or her capacity as a director of the Company.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP as independent
auditors for the year 1997 and/or until their successors are selected, subject
to stockholder ratification of such appointment. KPMG Peat Marwick LLP has
served as the independent auditor for the Company or its predecessors since
1993. Representatives of KPMG Peat Marwick LLP will be present at the Meeting
and will have an opportunity to make a statement if they desire to do so, and
such representatives are expected to be available to respond to appropriate
questions raised orally at the Meeting or submitted in writing prior thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR 1997.
OTHER MATTERS
The Board of Directors knows of no other matters to be voted on at the
Meeting. If any other matter or matters are properly brought before the
Meeting or any adjournment thereof, it is the intention of the persons named in
the accompanying form of proxy to vote such proxies in accordance with their
best judgment.
STOCKHOLDER PROPOSALS
Proposals by eligible stockholders of the Company intended to be
presented at the Annual Meeting of Stockholders to be held in 1998 must be
addressed to the Company at its address on the first page of this Proxy
Statement. Such proposals must be received no later than December 26, 1997 for
inclusion in the Proxy Statement and form of proxy for that meeting. In
addition, the By-Laws of the Company require stockholders seeking to bring
business before an annual meeting, or to nominate candidates for election as
directors, must provide notice thereof not less than 60 days nor more than 90
days prior to the date of the proxy solicitation. These notice provisions are
in addition to any other notice requirements provided by applicable law or
regulation.
EXPENSES AND SOLICITATION
The Company will pay the cost of soliciting proxies, including expenses
for the preparation and mailing of this Proxy Statement and all papers which
now accompany or may hereafter supplement it. Solicitation of proxies will be
primarily by mail. However, proxies may also be solicited by directors,
officers and regular employees of the Company (who will not be specifically
compensated for soliciting proxies) by telephone or otherwise. The Company
will request brokerage houses and other custodians, nominees and fiduciaries to
forward proxy material to the beneficial owners of the Company's Common Stock,
and the Company will reimburse them for their expenses.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON FURNISHED A COPY OF THIS
PROXY STATEMENT, UPON HIS OR HER WRITTEN REQUEST, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO, FOR 1996. SUCH WRITTEN REQUEST MUST INCLUDE A GOOD FAITH
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<PAGE>
REPRESENTATION THAT, AS OF APRIL 18, 1997 (THE RECORD DATE), THE PERSON MAKING
THE REQUEST WAS A BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE AT THE 1997
ANNUAL MEETING OF THE COMPANY'S STOCKHOLDERS AND MUST BE DIRECTED TO:
Mr. James M. Harrison, Secretary
Amscan Holdings, Inc.
80 Grasslands Road
Elmsford, New York 10583
COPIES OF SAID FORM 10-K FURNISHED WITHOUT CHARGE WILL NOT INCLUDE ALL OF THE
EXHIBITS THERETO, IF ANY, BUT WILL INCLUDE A LIST DESCRIBING ALL OF THE
EXHIBITS NOT INCLUDED, COPIES OF WHICH WILL BE AVAILABLE AT A COST OF ONE
DOLLAR PER PAGE.
By Order of the Board of Directors,
James M. Harrison
Secretary
Elmsford, New York
April 25, 1997
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<PAGE>
AMSCAN HOLDINGS, INC.
80 Grasslands Road, Elmsford New York 10523
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS FOR MEETING OF STOCKHOLDERS TO
BE HELD MAY 22, 1997.
The undersigned hereby appoints John A. Svenningsen, Gerald C. Rittenberg
and James M. Harrison, and each of them, as proxies for the undersigned with
full powers of substitution to vote all shares of the Common Stock of Amscan
Holdings, Inc. (the "Company") which the undersigned may be entitled to vote at
the 1997 Annual Meeting of Stockholders of the Company to be held at the The
Castle at Tarrytown, 400 Benedict Avenue, Tarrytown, New York 10591, at 10:00
a.m., Eastern Daylight Time, on May 22, 1997 or any adjournment thereof as
follows:
(Continued on reverse side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS SPECIFIED, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS 1 AND 2.
1. The election of one director of the Company to serve until the 2000
Annual Meeting of Stockholders of the Company:
FOR nominee John Tugwell [ ]
WITHHOLD AUTHORITY for nominee John Tugwell [ ]
2. Proposal to ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the year ending December 31, 1997:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion the proxies are authorized to vote upon such
other business as may properly come before the 1997 Annual Meeting of
Stockholders or any adjournment thereof.
To help our preparations for the
meeting, please check here if you
plan to attend. [ ]
The undersigned acknowledges receipt of the Notice of Meeting and Proxy
Statement.
Signature ---------------------------------------------------------(L.S.)
Signature ---------------------------------------------------------(L.S.)
Dated -----------------------, 1997
Please sign exactly as your name(s)
appear(s) hereon. When signing as
attorney, executor, administrator, trustee,
guardian or for a corporation, please give
your full title as such. If shares are
owned jointly, both owners should sign.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
