<PAGE>
CONSENT STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Consent Statement
[ ] Confidential, for Use of the Commission only (as permitted by rule
14a-6(e)(2))
[ ] Definitive Consent Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to sec.240.14a-11(c) or Rule 14a-12
</TABLE>
VESTCOM INTERNATIONAL, INC.
- -----------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
HARISH K. CHOPRA - and - TIMETRUST, INC.
- -----------------------------------------------------------------
(Name of Person(s) Filing Consent 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:
- -----------------------------------------------------------------
1
<PAGE>
(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:
- -----------------------------------------------------------------
2
<PAGE>
To the Shareholders of Vestcom International, Inc.:
The attached (i) Letter of Harish K. Chopra, (ii) Report on Vestcom
International, Inc. and (iii) attachments thereto (collectively, the "Report")
are being provided to you pursuant to Rule 14a-12 under the Securities Exchange
Act of 1934 as "build-up material" relative to a proxy solicitation or a consent
solicitation presently contemplated by Harish K. Chopra and TimeTrust, Inc. (the
"Solicitators").
THE REPORT IS NOT A PROXY STATEMENT OR A CONSENT STATEMENT. THE
SOLICITORS HAVE FILED A PELIMINARY CONSENT STATEMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") AND EXPECT THAT A DEFINITIVE CONSENT STATEMENT
WILL BE AVAILABLE IN THE NEAR FUTURE. PLEASE READ THE DEFINITIVE CONSENT
STATEMENT CAREFULLY, WHEN IT IS AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE SOLICITORS, THE PROPOSALS THEY WILL BE ASKING THE
SHAREHOLDERS TO APPROVE, AND ANY PERSONS THEY WILL PROPOSE TO BE ELECTED TO
SERVE ON VESTCOM'S BOARD OF DIRECTORS.
YOU MAY OBTAIN A FREE COPY OF THE DEFINITIVE CONSENT STATEMENT, WHEN IT
IS AVAILABLE, AT THE SEC'S WEB SITE AT http://www.sec.gov. A FREE COPY OF THE
REPORT IS ALSO AVAILABLE AT THE SEC'S WEB SITE, OR YOU MAY OBTAIN A FREE COPY OF
THE DEFINITIVE CONSENT STATEMENT (WHEN IT IS AVAILABLE) AND OF THE REPORT FROM
THE SOLICITORS AT TIMETRUST, INC., 1455 FRAZEE ROAD, SUITE 420, SAN DIEGO, CA
92108, (619) 308-0880, FAX (619) 308-0881.
The participants in the solicitation and their holdings of Vestcom's
common stock are:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of
of Participant Of Beneficial Ownership Class
- ---------------- ----------------------- -----------
<S> <C> <C>
1. Harish K. Chopra(1)(3) 742,100 shares of common stock(1)(3) 8.16%(1)(3)
1455 Frazee Road
Suite 420
San Diego, CA 92108
2. Howard April(2) 141,464 shares of common stock(2) 1.56%
1906-5150 MacDonald Avenue
Montreal, Quebec
Canada
H3X 2V7
3. Parker S. Kennedy -0- -0-
1 First American Way
Santa Ana, CA 92707
4. Frank E. Raab -0- -0-
865 S. Figuerera #2500
Los Angeles, CA 90017
5. Robert J. Verrilli 2,500 shares of common stock -0-
1455 Frazee Road
Suite 420
San Diego, CA 92108
6. TimeTrust, Inc. (3) 742,100 shares of common stock(3) 8.16(3)
1455 Frazee Road
Suite 420
San Diego, CA 92108
</TABLE>
- ---------------------------
(1) Includes 184,500 shares held by TimeTrust, Inc. 527,100 shares
of Vestcom common stock held by R-Squared Limited, an
affiliate of TimeTrust, Inc. and 30,400 shares held by Mr.
Chopra personally.
(2) Includes 13,718 shares of Vestcom common stock and 127,746
dividend access shares held by Mr. April which are convertible
into 127,746 shares of Vestcom common stock. Mr. April's son,
Leonard April, holds 112,242 dividend access shares which are
convertible into 112,242 shares of Vestcom common stock, as to
which Howard April disclaims beneficial ownership.
(3) Mr. Chopra and TimeTrust, Inc., are members of a "group" as
defined by Rule 13d under the Securities Exchange Act of 1934,
pursuant to which each is deemed to be the beneficial owner of
the aggregate number of Vestcom common shares beneficially
owned by all members of the group, as a group.
<PAGE>
Harish K. Chopra
1455 Frazee Road, Suite 420, San Diego, CA 92108
[email protected] (888) 549-7500
February 1, 2000
Dear Vestcom shareholders,
My name is Harish Chopra and I am a shareholder of Vestcom.
Some of you might be aware that we have filed a preliminary proxy
solicitation with the SEC. While we are going through that
process, I wanted to touch base and send you the enclosed report.
The very detailed official proxy solicitation will be sent to you
shortly.
I urge you to read this report and please feel free to contact me
at (888) 549-7500.
Thank you very much.
/s/ Harish K. Chopra
-------------------------
Harish K. Chopra
<PAGE>
Vestcom International, Inc.
(Nasdaq: VESC)
REPORT ON VESTCOM INTERNATIONAL, INC.
Vest0com International, Inc. has been mismanaged and the company's performance
has suffered. The responsibility of Vestcom's poor performance must lie with the
top management. This report was prepared using information available from the
SEC, NASDAQ, other government resources, as well as our interviews with present
and past management of Vestcom.
This report is divided into two major sections. The first section illustrates
the company's factual financial data and qualitative data. The second section of
the report details my plan and my commitment. This section also explains why I
am drawn to Vestcom and how I view the under capitalized strengths of the
company.
SECTION I
FINANCIAL DATA
The performance of the company clearly reveals itself in the Consolidated
Statements of Operations included in the Quarterly Reports published by Vestcom.
A review of these reports demonstrates a steadily declining operating income
trend which peaked at $2,428,600 in Q4 1998 and resulted in quarterly operating
income amounts of $2,269,100, $643,100* and -$988,000* in the fiscal quarters Q1
1999, Q2 1999 and Q3 1999, respectively. A closer look at the elements that
resulted in this operating performance will clearly demonstrate what happened.
*(excluding restructuring charge)
Looking at a number of important aspects of this company, our primary
perspective is from the shareholder's point of view. Vestcom's stock
performance has been terrible. The per share price has ranged from an IPO
price of $13 per share to a high of $22 5/8 per share to its present value as
of 01/31/2000 of $4 1/4 per share. This stock has almost no following, and
the daily trade volume is minimal.
<TABLE>
<CAPTION>
Vestcom Closing Stock Value Per Share (By Month)
- -------------------------------------------------------------------------------
Close
-----
<S> <C>
Nov-99 $3.375
Oct-99 3.00
Sep-99 2.625
Aug-99 3.3125
Jul-99 4.00
Jun-99 3.50
May-99 5.875
Apr-99 6.00
Mar-99 4.875
Feb-99 5.625
Jan-99 6.625
Dec-98 9.00
Nov-98 7.375
Oct-98 7.50
Sep-98 9.25
Aug-98 6.0625
Jul-98 10.375
Jun-98 9.25
May-98 9.8125
Apr-98 11.25
Mar-98 10.4375
Feb-98 10.00
Jan-98 6.50
Dec-97 22.375
Nov-97 20.25
Oct-97 18.125
Sep-97 19.125
Aug-97 13.00 (open)
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
Examining the company's poor financial performance, the four major areas of
scrutiny are:
1. Revenue Growth
2. Cost of Revenue
3. Selling, General, and Administration Expense
4. Interest Expense
REVENUE GROWTH
<TABLE>
<CAPTION>
(In $1,000's)
- ---------------------------------------------------------------------------------------------------------
Q4 1998 Q1 1999 Q2 1999 Q3 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $30,311.3 $31,923.0 $31,393.5 $31,786.4
- ---------------------------------------------------------------------------------------------------------
</TABLE>
We can clearly see that revenues have been basically flat for the last year. The
minor increase between Q4 1998 and Q1 1999 was the effect of the last
acquisition. Contrary to what Mr. Keating has been saying repeatedly, revenue
growth is not occurring. These statements only add to Mr. Keating's lack of
credibility with stockholders and the investment community. Further, if one
looked back at the revenues of the original seven founding companies prior to
the IPO, they were experiencing an annual compounded revenue growth rate of
approximately 12%. It appears that the present top management has managed those
companies into an effective annual revenue growth rate of 0%.
COST OF REVENUE
<TABLE>
<CAPTION>
(In $1,000's)
- ---------------------------------------------------------------------------------------------------------
Q4 1998 Q1 1999 Q2 1999 Q3 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cost of Revenues 19,014.4 20,473.0 21,120.0 22,393.6
- ---------------------------------------------------------------------------------------------------------
</TABLE>
While sales were basically flat, cost of revenues have increased significantly
each quarter over the past four quarters to an incredible 70.5% in Q3 1999. If
one compares the cost of revenues for the seven founding companies, including
the public company overhead, the cost of revenues (in December 1997) was 61.5%.
If the 9% increase in cost of revenues (70.5% - 61.5%) can be avoided, the
company will add approximately $11,300,000 to operating income ($125.4 M x 9%)
over the next year. Imagine how useful this cash could be right now. If we
simply retained these funds it would add $.77 to earnings per share, which would
produce approximately an additional $15.40 to the market value of each share.
2
<PAGE>
SGA EXPENSES
<TABLE>
<CAPTION>
(In $1,000's)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Q4 1998 Q1 1999 Q2 1999 Q3 1999
-------- -------- -------- --------
SGA 8,868.3 9,180.9 9,630.4 10,381.7
- -------------------------------------------------------------------------------
</TABLE>
During this same four-quarter period of little or no sales growth, selling,
general and administrative expenses continuously grew each quarter from 29.3% in
Q4 1998 to 32.7% in Q3 1999. It is interesting to note that since December 1997,
SGA as a percent of sales (29.5%) was fairly consistent even though revenues
were growing. Apparently, the top management saw fit to significantly add to the
overhead during the same period that sales growth was stagnating. If the company
could have maintained SGA expenses at 29.5%, it would have added approximately
$4,000,000 to operating income, and following the same logic used above, added
$2,400,000 to the bottom line and $5.35 to the market value per share.
INTEREST EXPENSES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Q4 1998 Q1 1999 Q2 1999 Q3 1999
-------- -------- -------- --------
Interest Expenses $250,000* $367,022 $459,748 $773,000
- -------------------------------------------------------------------------------
*Estimated
</TABLE>
The top management has burdened the company with a huge debt obligation at a
time when interest rates have reached their highest level in years, and seem to
be heading higher. At the current level of expenditure ($773,000 in Q3 1999) the
company will be paying approximately $3,100,000 per year. We must deal with this
heavy burden of debt before interest rates rise and cause a more severe cash
problem.
The table below depicts the Quarterly Statements of Operations for the
company for the past four quarters:
<TABLE>
<CAPTION>
(In $1,000's)
- -------------------------------------------------------------------------------
Q4 1998 Q1 1999 Q2 1999 Q3 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $30,311.3 $31,923.0 $31,393.5 $31,786.4
Cost of Revenues 19,014.4 20,473.0 21,120.0 22,393.6
Gross Profit 11,296.9 11,450.0 10,273.5 9,392.8
SGA 8,868.3 9,180.9 9,630.4 10,381.7
Operating Income $2,428.6 $2,269.1 $643.1* $(988.9)*
- -------------------------------------------------------------------------------
</TABLE>
* Income from operations before restructuring charges of $3,987,880 in Q2
1999 and $1,930,144 in Q3 1999.
3
<PAGE>
QUALITATIVE DATA
The following statements are indicative of the poor performance of the company
under the control of top management. I have had discussions with numerous senior
managers, both previously employed as well as currently employed at Vestcom. The
accuracy of these statements is verified by the consistency of the comments made
to me by the senior managers.
INABILITY TO EXECUTE STRATEGY: The present top management is not capable of
improving the shareholder value of Vestcom. The original strategy is still sound
and the industry is viable with opportunity for growth in the foreseeable
future. Top management, however, has been unable to execute that strategy and
grow the company. In review of the most recent 10Q, it is apparent the company
is not turning around and instead seems to be spiraling downward.
POOR COMMUNICATION/MICROMANAGEMENT: Instead of properly communicating decisions
and then delegating responsibility and authority to localized management, top
management insists on being involved with most decisions that should be made at
the local management level. Within the company there is a strong feeling of
alienation between local and top management as a result of poor communication
and micromanagement.
POOR DECISIONS REGARDING FACILITIES: There has been an excessive amount of money
spent on infrastructure. Many senior managers believe they will not be
profitable because of the burden of corporate overhead, which includes new
larger facilities which are currently underutilized. These infrastructure
decisions are being made without any real focus on sales or marketing.
HUMAN RESOURCES: The "revolving door" perception of new hires is the result of
ineffective hiring practices. In addition, there is a strong feeling that there
is a poor sales compensation program. It is also believed that much of the
talent that came with the founding companies has been eliminated.
POOR STRATEGY: The strategic decisions made by top management can have massive
impact on any company and its performance. Poor strategic decisions in Vestcom
cost the company over $18,000,000 a year. This amount is comprised of the impact
from $11.3M from cost of revenue, $4M from SGA, and $3.1M from interest.
POOR LEADERSHIP: There is a strong sentiment in the company that top management:
Lacks clear cut strategic vision;
Lacks the ability to communicate the vision and achieve buy-in;
Lacks the ability to motivate management to implement the vision.
Management thinks they know best, even though they don't. There is a strong
feeling that management is good at losing key talent that came with the founding
companies.
4
<PAGE>
SECTION II
Let's be clear about this. I am presenting a way to transform Vestcom from the
under-performing company I see today into a star performer. This report was
prepared without the benefit of hard data other than what could be gleaned from
public record. Before any action is taken we would take the time to visit with
all the regional managers, validate my ideas, develop a new plan, and/or refine
the company's existing plan, and only then execute it.
MY PLAN
LOCAL EMPOWERMENT: The original concept of Vestcom International, Inc. "...to
operate on a decentralized basis with each acquired company's local management
continuing to exercise responsibility for customer relationships and day-to-day
operating decisions" is still a valid business model. Somewhere in the company's
short history this model was invalidated and the company began to centralize
decision making by consolidating operations in larger regional facilities. Too
many decisions are required to be processed through the corporate headquarters
in West Caldwell, N.J. We intend to go back to empowering local management to
take responsibility for marketing, customer service and operations in their
local areas.
NATIONAL SALES STRATEGY AND FOLLOW-THROUGH: On the other hand, for Vestcom to
reach its highest potential it must aspire to be a diversified provider of
critical document services to large nationally based customers. A strategy must
be in place to offer our national customers responsive, high quality service
that is coordinated on a national scale. A corporate team will be established to
service national accounts with the authority to coordinate performance, delivery
and customer service from our decentralized operating divisions.
CORPORATE CENTRALIZATION: Essentially, Vestcom is a locally based business with
strong personal ties, developed over the years, between our local management and
our customers. However, there are certain functions that should be centralized
to take advantage of economies of scale, control and top management scrutiny.
Activities such as purchasing, finance and research and development should be
centralized, most likely in or near the corporate headquarters. National sales
done on a vertical market basis may prove to be a valuable component to success.
STREET KNOWLEDGE: Stockholder value is not solely based on earnings but also on
management's credibility with the investment community to execute their plan.
For the company stock to succeed, it is imperative that:
1. Management must be successful;
2. Analysts must follow the stock; and
3. Top management feed information to the public continuously and timely
so the company will garner its fair share of the Wall Street spotlight.
TECHNOLOGY: It is clear that the first priority of new management is to stop the
erosion of vital cash flow and our valued management talent. Once this is
accomplished, we would aggressively
5
<PAGE>
advance the company's current state of technology, which appears to us to be
seriously lacking. My strong belief is that the business of Vestcom would
benefit enormously from using the Internet and especially from a concept we have
been developing that would take advantage of Vestcom's strong position in
critical document management and open up a new line of service to end-users or
retail customers. This Internet concept would be developed on a priority basis
once the current crisis has been overcome.
WHY VESTCOM
Before I discuss Vestcom as a company, let me share my thoughts with you on the
future of the statement rendering business. I am very committed to and excited
about the Internet application of the statement rendering business. Unlike the
current EBPP application that is well on its way to development, most statement
rendering companies, including Vestcom, are leaving much on the table as they
think about how rendering fits into EBPP. Presently, consumers are notified by
email that a statement is available. They are required to go to the EBPP web
site to access their statements for review and payment. Consumers will not
accept this inconvenience. They will demand that their statements go to a
centralized site, like their current mailbox. Requiring consumers to go to
multiple billing sites is not going to be an option.
Someone will, and sooner rather than later, offer an Internet statement
rendering solution that allows consumers to receive their statements in one
location. The companies that are rendering paper statements already will have
the advantage of capturing these Internet customers because they are providing a
paper solution for this problem. They are in a perfect position to be the
ultimate Internet solution provider to these same customers. However, they must
understand this strategy and be aggressive in pursuing it. If one is able to get
there first, and control a very large paper statement rendering business, then
the potential rewards are enormous.
Vestcom is a choice company. Most of its business is repetitive. Compared to its
competitors, it is clean in that it is more purely a statement rendering
business. Vestcom has an excellent customer list. It has recently added new
printing equipment (even though a very poor near term strategic decision).
Vestcom's financial problems are not beyond repair, because they are the result
of bad decisions by current top management, which can be corrected. Once back on
track, Vestcom provides a great vehicle to grow in mass, and be a leader in a
revolutionary methodology for rendering statement images using the Internet.
Vestcom is a choice company in growing shareholder value, because it is beaten
up so badly. If the mistakes that are being made stop, then the stock price has
no place to go but up. There is considerable growth potential in the current
customer base. The original strategy is a good one; cross selling, moving the
services up closer to the data.
I am betting on Vestcom.
6
<PAGE>
MY COMMITMENT TO THE SHAREHOLDERS
LEADERSHIP: My commitment is to success. I believe very solidly in my ability to
know what makes people strong and effective. One of my strengths is motivating
others. I am a hands-on manager who trusts people and allows them to do their
best. I have a very keen need to do the best for our customers and everyone
inside the company will understand that need.
By default, I demand of myself and others to use intellect first, instead of
throwing cash at problems. I manage cash flow and spending very closely. I
believe in taking the necessary pain in hiring the right people, giving them all
the tools to succeed, defining their goals very clearly, and then letting them
run on their own to take the necessary action to manage their responsibilities.
It is the only way to build an effective and reliable management team. If there
are problems, I do not delay implementing the necessary fixes.
For a summary of my professional experience see ATTACHMENT A.
CASH: I can supply upfront cash to the company. This cash infusion could be
inserted directly into the company through a new stock issue or some sort of
convertible debt vehicle. Though an additional reserve of cash will not alone
solve the current problems of Vestcom, it can facilitate in the containment
process and most of all give us time to solve problems before matters
deteriorate further.
AFFILIATIONS: I have affiliations with other large public companies, which can
be used as client resources. Presently, I serve as Chairman of the Board of an
important subsidiary of First American Financial Corporation and have direct
personal relationships with top executives within the paper-intense title
insurance industry.
SHAREHOLDERS: My commitment to you is to change how all shareholders perceive
Vestcom. We can divide the shareholders in three groups:
<TABLE>
<S> <C>
Group I. Inside shareholders, excluding Joel Cartun, hold
about 32.5% of the shares. From this presentation I
hope it is clear how this group evaluates the top
management and the performance of the stock.
Group II. The institutional investors hold about 43.3% of
the shares. Based on my conversations, it is clear
that they are very unhappy with the performance of
the company and the stock price.
Group III. The remaining shareholders, the retail group, hold
the remaining shares. Some of their opinions are
clear from the most recent public message board
postings on Yahoo. See ATTACHMENT B.
</TABLE>
7
<PAGE>
We have taken a substantial stock position in Vestcom and presently are the
fourth largest shareholder. I believe this speaks volumes to our commitment
since we are aligning our future financial profit with the shareholders of
Vestcom. The effort it will take to turn around the performance of Vestcom is
substantial and not without significant risk. Under the current management the
risk is increasing as time passes.
As shareholders, we have substantial wealth tied up in Vestcom. My experience
tells me we can turn this company around.
8
<PAGE>
Attachment A
HARISH K. CHOPRA
PROFESSIONAL EXPERIENCE
Mr. Chopra's 23-year business career began with satellite image research and
development at NASA's Jet Propulsion Laboratory. He has held senior management
and technical management positions with Digital Equipment Corporation,
Volt-Delta Resources, and 3M Corporation. Mr. Chopra received a Bachelor of
Science Degree in Computer Science from California State University, Los
Angeles.
Mr. Chopra's successful experience as President/CEO extends through numerous
types and sizes of companies. Two companies he founded and managed have been
sold. Recently he sold DataTree Corporation to First American Financial Corp., a
public company on the NYSE with revenues exceeding $3 billion a year. Currently,
he serves as Chairman of the Board of DataTree.
Similar to Vestcom International, Inc., DataTree provides business critical
documents, but in an electronic image format. DataTree also has international
operations along with many regional operations throughout the United States.
These operational centers use expensive imaging equipment that operates 24 hours
a day seven days a week. Unlike Vestcom, Data Tree's local management is
empowered to make decisions in their respective areas without the unnecessary
influence of executive management. DataTree has centralized decision-making in
national sales, technology, and finance. Unlike Vestcom, DataTree has had a
10-year financial history of progressive growth in both "top line" revenues and
"bottom" line earnings. Data Tree is a success story that we believe can be
repeated with Vestcom under Mr. Chopra's experienced leadership.
Mr. Chopra's extensive experience includes the workout management of
Smith/Norris Corporation, a software company. In this situation, he was asked to
participate as a CEO in order to maximize shareholder value.
Other experiences include his involvement as a venture capitalist. He typically
invests through a syndicate with other major venture firms. Mr. Chopra's
investments encompass diverse areas such as software, imaging, leisure-movies
and manufacturing. The leisure-movie company, Mr. Chopra as Executive Producer,
will show the feature film "Eastside" in December 1999 and another company is
now preparing for its Initial Public Offering.
9
<PAGE>
Attachment B
management changes
by: plug 122664
10/20/1999 12:32 pm EDT
Msg: 173 of 178
several senior level managers have been fired in the last 2 weeks and one
whole sales division absorbed into another at Vestcom -- consolidation time
and I do believe Joel Cartun is looking to sell it off -- in pieces or in
whole -- I do not think he has the stomach for this anymore and it is
reflecting in his management decisions. dump at 3 1/2 if it gets that high.
Too bad, it was a good service
10
<PAGE>
Vestcom
hedgefund5 (28/M/California)
11/11/1999 8:38 am EST
Msg: 177 of 178
I just reviewed VESC's third quarter numbers and find it terribly
disappointing.
Perhaps management is purposely running the business into the ground so
that once the stock price gets low enough they can do a management led LBO.
There is no other explanation. They can not be this incompetent. Lason, FYI,
Mail Well and other private lettershops/printers/presorters/imaging companies
are all doing extremely well. Business for them can not be better. So why are
the results of VESC so Management is the problem.
Management can continue to blame the one time restructuring charges and their
consolidation efforts, but even they admit that Costs of Goods Sold and S,G &
A are going up too quickly. Why can't they control those expenses.
I can not wait to see Vestcom's balance sheet.
Why is there no conference call? Because management is hiding like cowards.
They are incompetent.
The only people who should be more embarrassed then management is the members
of the Board of Directors. Why have they done nothing. If they have written
off this company they should just resign. Otherwise it is time they take some
kind of forceful action.
11
<PAGE>
hedgefund5: The mystery of VESTCOM
by: pajacobsen (32/M/Maryland)
11/11/1999 2:32pm EST
Msg: 178 of 178
I myself am disappointed with the result (although not surprised). It looks
like management (mis)managed to take a group of individually profitable
business entities, join them together and make them money losers.
I also am very interested in seeing the balance sheet for VESC (I think the
cash situation may become a problem in 2000 and that is why they made it a
point to mention the Vestcom also extension of the credit facility).
I don't think management is trying to run the price of the stock down (and
actually today the market reacted to the bad news by raising the share price
(go figure-perhaps this is really an internet stock).
I think that management is simply over their head here. Remember that they
spring from smaller private companies. One morning they woke up and found
themselves running a +100M public company requiring completely different
skillset. As to the lack of conference call: I don't think they understand
the need (remember 1) that coming from a private company, they may not
appreciate the need, and 2)since a large portion of the stock is held by
insiders, the majority of the stockholders already has the information they
need). If you call their IR person and request one, perhaps you will see one
for the following quarters.
I remind you of my previous post where I stated my belief that management
essentially "forgot" the consolidation-part of the buy-and-consolidate
business that VESC was supposed to be (essentially I think they forgot it
'cause buying companies are more fun when you get lots of money from an IPO;
it's like being in the sandbox with lots of sand and no parental
supervision). My guess is that they ran out of money and all of a sudden had
to deal with the more mundane tasks of consolidating and that's why we
suddenly see a large writeoff.
I for one will be patient and see what happens, but I do expect a 25-35% drop
in VESC over the next 3-6 months.
12
