<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CHAMPION INDUSTRIES, INC.
- ----------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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<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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
CHAMPION INDUSTRIES, INC.
P. O. Box 2968
Huntington, West Virginia 25728
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 15, 1999
-------------------------------
To The Shareholders:
The annual meeting of shareholders of Champion Industries, Inc. will be
held at the Radisson Hotel Huntington, 1001 Third Avenue, Huntington, West
Virginia, on Monday, March 15, 1999, at 12:00 noon for the following purposes:
1. To fix the number of directors at eight (8) and to elect directors to
hold office until the next annual meeting of shareholders.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record of the Common Stock of Champion Industries,
Inc. at the close of business on February 10, 1999, are entitled to notice of
this meeting and to vote at the meeting.
We hope you will attend the meeting and vote your shares in person.
However, since a majority of the outstanding shares must be present in person or
by proxy in order to conduct the meeting, we urge you to date, sign and return
the enclosed proxy as promptly as possible, whether or not you plan to attend
the meeting in person. If you do attend the meeting, you may then withdraw your
proxy if you so desire. The proxy may be revoked at any time prior to its
exercise, but after commencement of the annual meeting, the proxy may be revoked
only in accordance with the order of business adopted for the meeting.
Dated: February 16, 1999 By Order of the Board of Directors
WALTER R. SANSOM, SECRETARY
<PAGE>
CHAMPION INDUSTRIES, INC.
P. O. Box 2968
Huntington, West Virginia 25728
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 15, 1999
INTRODUCTION
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Champion Industries, Inc. (the "Company") for use at the annual
meeting of shareholders to be held on Monday, March 15, 1999, at 12:00 Noon
at the Radisson Hotel Huntington, 1001 Third Avenue, Huntington, West
Virginia, and any adjournment thereof (the "Annual Meeting"). The Company
anticipates that this Proxy Statement and the form of proxy will be sent or
given to shareholders on approximately February 16, 1999.
Only those shareholders of record as of the close of business on
February 10, 1999, are entitled to notice of and to vote at the meeting and
any adjournment thereof. At such time, the Company had and continues to have
only one (1) class of stock outstanding, consisting of 9,713,913 issued and
outstanding shares of common stock, of the par value of One Dollar ($1.00)
per share (the "Common Stock") held by 561 shareholders. The Common Stock
carries no preemptive rights.
The Company's By-laws provide that at each election for directors
every shareholder entitled to vote at such election has as many votes as the
number of shares owned, multiplied by the number of directors to be elected,
and may either accumulate all votes for one candidate or distribute those
votes among as many candidates as the shareholder may choose. For all other
purposes, each share is entitled to one vote.
SOLICITATION OF PROXIES AND VOTING
Solicitation of proxies may be made in person or by mail, telephone,
or facsimile by directors, officers and regular employees of the Company or
its subsidiaries and by proxy solicitation companies. The Company may also
request brokerage houses, banks, and other record holders of the Company's
stock to forward proxy solicitation materials to the beneficial owners of
such stock, and will reimburse such persons for their expenses in connection
therewith. The Company has engaged Corporate Investor Communications, Inc. to
assist in the solicitation of proxies of brokers and financial institutions
and their nominees, for a fee of $3,000, plus reimbursement of reasonable
out-of-pocket expenses. The expense of soliciting proxies will be borne by
the Company.
Shares represented at the meeting by properly executed proxies in
the accompanying form will be voted at the meeting, or any adjournment
thereof, and where the shareholder giving the proxy specifies a choice by
means of the ballot space provided in the form of proxy, the shares will be
voted in accordance with the specifications so made. If no directions are
given by the shareholder, the proxy will be voted in accordance with the
recommendations of the Board of Directors of the Company, for the election of
the Board of Directors' eight (8) nominees for election as directors of the
Company (or, if deemed appropriate by the individuals appointed in the
proxies, cumulatively voted for less than all of the Board's nominees to
ensure the election of as many of the Board's nominees as possible). Any
proxy given for use at the meeting may be revoked at any time before it is
exercised by written notice or subsequently dated proxy received by the
Company, or by oral revocation given by the shareholder in person at the
meeting or any adjournment thereof. The proxies appointed by the Board of
Directors may, in their discretion, vote upon such other matters as may
properly come before the annual meeting.
Votes, whether in person or by proxy, will be counted and tabulated
by judges of election appointed by the Board of Directors of the Company, in
conjunction with an independent, third-party vote tabulation firm. The
presence of a majority of the outstanding shares of Common Stock in person or
by proxy is necessary to constitute a quorum. Abstentions and broker
non-votes will not be counted as votes either "for" or "against" any matters
coming before the
<PAGE>
Annual Meeting, but will be counted toward determining the
presence or absence of a quorum. Votes withheld in connection with the
election of one or more of the nominees for director will not be counted as
votes cast for such individuals. In the election of directors, those nominees
receiving the eight (8) highest number of votes shall be elected, even if
such votes do not constitute a majority.
ELECTION OF DIRECTORS
PROPOSAL NO. 1 IN THE ACCOMPANYING FORM OF PROXY
The proxies granted by the shareholders will be voted at the meeting
for the resolution, unless contrary direction is indicated, establishing the
number of directors at eight (8) and the election of the eight (8) nominees
listed below. The proxies cannot be voted for a greater number of persons.
The nominees elected as directors are to serve until the next annual meeting
of shareholders and until their successors are duly elected and have
qualified. The By-laws provide, however, that between annual meetings, the
Board of Directors, by a majority vote, may increase the number of directors
and may appoint such persons as they may select, by a majority vote, to fill
any vacancies.
While it is not anticipated that any of the nominees will be unable
to serve, if for any reason one or more shall be unable to do so, the proxies
will be voted for any nominees selected by management of the Company. The
persons listed below have been nominated by the Board of Directors for
election as directors. Each of the nominees is currently a director of the
Company. The name, age, principal occupation and business experience of each,
all positions and offices held by each with the Company or any of its
subsidiaries and any period during which he has served as such are set forth
below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION AND OFFICES WITH COMPANY AND
YEAR BECAME DIRECTOR PRINCIPAL OCCUPATIONS FOR PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert H. Beymer - 71 President of First Sentry Bank, Huntington, West Virginia from 1996 to
Director - 1992 present; General Partner, Eastern Heights Shopping Center, Ltd., from
1976 to present; Consultant to One Valley Bank of Huntington
(Huntington, West Virginia) from 1986 to 1993; President of First
Guaranty Bank (Hammond, Louisiana) from December 1992 to June 1994;
Director of Stationers, Inc. (a Company subsidiary) from 1990 to
present.
- ---------------------------------------------------------------------------------------------------------------------------------
Philip E. Cline - 65 President, Chief Executive Officer and Director, Broughton Foods Company
Director - 1992 since January, 1997; Interim President and Chief Executive Officer,
Broughton Foods Company from November, 1996 to December, 1996;
Consultant from January, 1996 to November, 1996, Executive Vice
President (1995 to 1996), Vice President and Treasurer (1968 to 1995) of
J. H. Fletcher & Co. (manufacturer of underground mining equipment);
Director of Banc One West Virginia Corporation (formerly Key Centurion
Bancshares, Inc.) from 1983 to present.
- ---------------------------------------------------------------------------------------------------------------------------------
Harley F. Mooney, Jr. - 70 Brig. Gen. U.S. Army (Ret.); Managing Partner, Mooney-Osborne &
Director - 1992 Associates (management consulting) from 1985 to present; Director of
Stationers, Inc. (a Company subsidiary) from 1989 to present;
consultant to Stationers, Inc. from 1988 to 1990; consultant to The Harrah
and Reynolds Corporation since 1988; Director of Ohio River Bank, Ironton,
Ohio from 1995 to present; Chairman of the Board of Directors,
Caspian Industries (manufacturing) since 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION AND OFFICES WITH COMPANY AND
YEAR BECAME DIRECTOR PRINCIPAL OCCUPATIONS FOR PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Todd L. Parchman - 44 Partner, Parchman, Vaughan & Company (investment bankers) since May,
Director - 1993 1996; Senior Vice President (from 1990 to May, 1996) and Director (from
1994 until May, 1996), Ferris, Baker Watts, Incorporated.
- ---------------------------------------------------------------------------------------------------------------------------------
A. Michael Perry - 62 President (from 1983 to December 1993), Chief Executive Officer (from
Director - 1992 1983 to present) and Chairman of Board from November 1993 to present of
Banc One West Virginia Corporation (formerly Key Centurion Bancshares,
Inc.).
- ---------------------------------------------------------------------------------------------------------------------------------
Marshall T. Reynolds - 62 President and Chief Executive Officer and Chairman of the Board of
President, Chief Executive Officer, Director Directors of Company from 1992 to present; President and general manager
and Chairman of the Board of Directors - 1992 of The Harrah and Reynolds Corporation, predecessor of the Company from
1964 (and sole shareholder from 1972) to present; Chairman of the
Board of Directors, Broughton Foods Company since November 1996;
Director (from 1983 to November 1993) and Chairman of the Board of
Directors (from 1983 to November 1993) of Banc One West Virginia
Corporation (formerly Key Centurion Bancshares, Inc.).
- ---------------------------------------------------------------------------------------------------------------------------------
Neal W. Scaggs - 62 President, Baisden Brothers, Inc. (retail and wholesale hardware) from
Director - 1992 1963 to present; Director of Banc One West Virginia Corporation
(formerly Key Centurion Bancshares, Inc.) from 1984 to present.
- ---------------------------------------------------------------------------------------------------------------------------------
Glenn W. Wilcox, Sr. - 67 Chairman of the Board of Directors of Wilcox Travel Agency, Inc. since
Director - 1997 1953; Chairman of the Board of Directors (since 1974) and President
(from 1974 to 1997) of Blue Ridge Printing Co., Inc; Chairman of the
Board of Directors of Tower Associates, Inc. (real estate development)
from 1989 to 1998.
</TABLE>
Mr. Reynolds is chairman of the board of directors of Premier
Financial Bancorp, Inc., of Georgetown, Kentucky and a director of Abigail
Adams National Bancorp, Inc., of Washington, DC, each of which has a class of
securities registered pursuant to the Securities Exchange Act of 1934.
Mr. Reynolds is chairman of the board of directors, Mr. Cline is
president, chief executive officer and a director and Mr. Scaggs is a
director of Broughton Foods Company, of Marietta, Ohio, which has a class of
securities registered pursuant to the Securities Exchange Act of 1934.
Mr. Reynolds and Mr. Beymer are directors of First Guaranty Bank,
of Hammond, Louisiana, which has a class of securities registered pursuant
to the Securities Exchange Act of 1934.
Mr. Perry is a director of Arch Coal, Inc., which has a class of
securities registered pursuant to the Securities Exchange Act of 1934.
Ferris, Baker Watts, Incorporated, of which Mr. Parchman was an
officer and director until May, 1996, served as representative of the several
underwriters involved in the January, 1993 public offering of Company Common
Stock. Pursuant to agreement among Mr. Reynolds, the Company and Ferris,
Baker Watts, Incorporated, Mr. Parchman was appointed to the Company's Board
of Directors at the closing of such offering.
<PAGE>
DIRECTOR MEETINGS, COMMITTEES AND ATTENDANCE
The Board of Directors has two standing committees, a Compensation
Committee and an Audit Committee.
The Compensation Committee reviews and recommends to the Board the
compensation and employee benefits of officers of the Company and administers
the 1993 Stock Option Plan. The Compensation Committee did not meet during
fiscal year 1998, and currently consists of Messrs. Beymer, Mooney and Perry.
The Audit Committee meets with the Company's financial management
and independent auditors and reviews the accounting principles and the scope
and control of the Company's financial reporting practices, and makes reports
and recommendations to the Board with respect to audit matters. The Audit
Committee met four (4) times during fiscal year 1998, and currently consists
of Messrs. Cline, Parchman and Scaggs.
The Board does not have a nominating committee, as nominations are
made by the Board as a whole.
During fiscal year 1998, there were 10 meetings of the Company Board
of Directors. All directors attended 75% or more of the aggregate of meetings
of the Board and their committees held during their respective terms.
OWNERSHIP OF SHARES
PRINCIPAL SHAREHOLDER
No person is known to the Company to be the beneficial owner of more
than 5% of the Company Common Stock at January 15, 1999 except as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Marshall T. Reynolds 4,741,127 shares (1) 49%
2450 1st Avenue
Huntington, West Virginia 25728
</TABLE>
- ---------------
(1) 4,738,687 shares through a controlled corporation, The Harrah and
Reynolds Corporation ("Harrah and Reynolds"), of which Mr. Reynolds is
the sole shareholder; 2,440 shares are held by Mr. Reynolds' wife.
3,579,687 shares are pledged as collateral to secure loans made to Mr.
Reynolds in the ordinary course of business by several commercial
banks. Any disposition of such pledged shares upon a default by Mr.
Reynolds under such loans could result in a change of control of the
Company. The Company has no reason to believe that any such default
will occur.
<PAGE>
SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS
The following table sets forth certain information concerning ownership
of Company Common Stock as of January 15, 1999 by (i) each of the directors and
nominees, (ii) each executive officer named in the Summary Compensation table
contained herein, and (iii) all directors and executive officers as a group.
Except as otherwise noted, each beneficial owner listed below has sole voting
and investment power with respect to the shares listed next to the owner's name.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENTAGE OF CLASS
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert H. Beymer 5,244 (1) *
Philip E. Cline 8,227 *
Harley F. Mooney, Jr. 14,990 *
Todd L. Parchman 1,267 *
A. Michael Perry 12,206 *
Marshall T. Reynolds 4,741,127 (2) 49%
Neal W. Scaggs 48,827 (3) *
Glenn W. Wilcox, Sr. 125,000 1%
Toney K. Adkins 20,026 (4)(8) *
J. Mac Aldridge 40,827 (5)(9) *
R. Douglas McElwain 28,870 (6)(9) *
Michael D. McKinney 41,065 (7)(9) *
All directors and executive officers as a
group (19 persons) (10) 5,214,533 52.7%
</TABLE>
- ---------------
* The percentage of shares of Company Common Stock beneficially
owned by these persons is less than 1%.
(1) Includes 2,316 shares owned by wife; reporting person has no
voting or investment power with respect to those 2,316 shares.
(2) Includes 4,738,687 shares owned by a controlled corporation;
2,440 shares owned by wife, with respect to which reporting
person has no voting or investment power.
(3) Shares joint voting and investment power with wife.
(4) Joint voting and investment power shared with wife with
respect to 12,206 shares.
(5) Joint voting and investment power shared with wife with
respect to 29,296 shares.
(6) Joint voting and investment power shared with wife with
respect to 12,456 shares.
(7) Includes 7,812 shares held by wife; 312 shares held by adult
child, with respect to which reporting person has no voting or
investment power.
(8) Includes presently exercisable options to purchase 7,625
shares of Common Stock pursuant to 1993 Stock Option Plan.
(9) Includes presently exercisable options to purchase 11,531
shares of Common Stock pursuant to 1993 Stock Option Plan.
(10) Includes presently exercisable options to purchase an aggregate
of 94,108 shares of Common Stock pursuant to 1993 Stock Option
Plan. These shares are not included for purposes of computing
the percentage of Common Stock held by all directors and
executive officers as a group.
<PAGE>
COMPENSATION OF DIRECTORS AND OFFICERS
COMPENSATION OF DIRECTORS
Company directors who are not employees of the Company are paid
a director's fee of $500 per Company Board meeting attended and $100 per
committee meeting attended. In addition, Company directors Robert H.
Beymer and Harley F. Mooney, Jr. were each paid directors' fees of $500 per
Stationers, Inc. Board meeting attended, for total Stationers, Inc.
directors' fees of $6,000 each in fiscal year 1998. The Company reimbursed
directors Todd L. Parchman and Glenn W. Wilcox, Sr. for their travel
expenses incurred in attendance at monthly Board meetings, aggregating
$5,941 and $2,456, respectively, in fiscal year ended October 31, 1998.
The Company's Blue Ridge Printing Co., Inc. subsidiary ("Blue
Ridge") is party to a Deferred Compensation Agreement dated July 1, 1993, and
a Split-Dollar Life Insurance Agreement dated July 1, 1992 with Company
director Glenn W. Wilcox, Sr., who was the principal shareholder and chairman
of the board of directors of Blue Ridge prior to the Company's acquisition of
Blue Ridge in May of 1997. Pursuant to the Deferred Compensation Agreement,
if Mr. Wilcox is employed by Blue Ridge upon attaining age 69, Blue Ridge has
agreed to pay him (or his designated beneficiary in the event of his death
after retirement prior to receiving all benefits) an annual retirement
benefit of $50,000 for ten years. If Mr. Wilcox ceases to be employed prior
to age 65 as a result of disability, he or his designated beneficiary will
receive a reduced amount. Blue Ridge may prepay its obligations in whole or
part at a discounted rate.
In the event Mr. Wilcox dies while employed by Blue Ridge prior to
commencement of payments under the Deferred Compensation Agreement, no
benefits will be payable thereunder, but death benefits will be paid under
the Split-Dollar Life Insurance Agreement. Pursuant to that Agreement, Blue
Ridge pays annual premiums on a policy of life insurance owned by Mr. Wilcox.
At Mr. Wilcox's death, or termination of the Agreement, as therein provided,
Blue Ridge is entitled to receive from the proceeds of such policy the
aggregate premiums paid by it less that portion of the annual premium taxable
to Mr. Wilcox, with Mr. Wilcox or his beneficiaries being entitled to the
balance of proceeds.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended October 31,
1998, 1997 and 1996, the cash compensation paid by the Company and its
subsidiaries, as well as certain other compensation paid or accrued for those
years, to each of the five most highly compensated executive officers of the
Company in all capacities in which they served:
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation
Awards
- -----------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (g) (i)
All Other
Name and Principal Position Year Salary Bonus Options(1) Compensation(2)
($) ($) (#) ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Marshall T. Reynolds, 1998 150,000 -0- -0- 156
President and Chief 1997 150,000 -0- -0- 78
Executive Officer, Chairman 1996 150,000 -0- -0- 134
of the Board of Directors
Toney K. Adkins 1998 50,016 50,000 2,000 1,917
Vice President-Administration 1997 50,016 -0- 2,500 150
1996 45,848 -0- 3,125 150
J. Mac Aldridge, 1998 50,016 104,258 2,000 3,085
Vice President, Division Manager 1997 50,016 104,913 2,500 150
1996 50,016 102,909 3,125 150
R. Douglas McElwain, 1998 50,016 134,424 2,000 1,042
Vice President, Division Manager 1997 50,016 94,581 2,500 150
1996 50,467 80,000 3,125 150
Michael D. McKinney 1998 50,016 58,745 2,000 1,000
Vice President, General Sales Manager 1997 50,016 58,745 2,500 150
1996 50,016 58,745 3,125 150
</TABLE>
- ---------------
(1) All options are granted at the market price of Company Common Stock on
the date of the grant. Pursuant to the anti-dilution provisions of the
Company's 1993 Stock Option Plan, all share amounts and exercise prices
have been adjusted, as appropriate, for stock dividends and stock
splits paid on Company Common Stock through October 31, 1998.
(2) This item consists of matching contributions by the Company to its
401(k) Plan on behalf of each of the named executives to match pre-tax
elective deferral contributions (included under Salary) made by each to
such plan. Participation in the 401(k) Plan is open to any employee age
21 or older on January 1 and July 1 of each year following the first
day of the thirteenth month of employment. For periods prior to
December 31, 1997, participants could contribute up to 2% of their
annual compensation, up to a maximum of $300 per year. Subject to
limitations contained in the Internal Revenue Code, effective January
1, 1998, participants may contribute 1% to 15% of their annual
compensation and the Company contributes 100% of the participant's
contribution not to exceed 2% of the participant's annual compensation.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR - 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
% of total
Number of options Potential realizable value at
securities granted to Exercise assumed annual rates of
underlying employees price Expiration stock price appreciation
options granted in fiscal year ($/share) date for option term (2)
----------------------- -------------------------------------
Name Type (1) # 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Marshall T. Reynolds ISO -0-
President and Chief NQSO -0-
Executive Officer, TOTAL -0- N/A N/A N/A N/A N/A
Chairman of the Board
of Directors
Toney K. Adkins ISO 2,000
Vice President- NQSO -0-
Administration TOTAL 2,000 4.8% $18.50 12/15/2002 10,220 22,580
J. Mac Aldridge ISO 2,000
Vice President, NQSO -0-
Division Manager TOTAL 2,000 4.8% $18.50 12/15/2002 10,220 22,580
R. Douglas McElwain ISO 2,000
Vice President, NQSO -0-
Division Manager TOTAL 2,000 4.8% $18.50 12/15/2002 10,220 22,580
Michael D. McKinney ISO 2,000
Vice President, NQSO -0-
General Sales Manager TOTAL 2,000 4.8% $18.50 12/15/2002 10,220 22,580
</TABLE>
- ---------------
(1) Incentive Stock Option (ISO) or Non-qualified Stock Option (NQSO).
These options were granted on December 15, 1997, and vested
immediately. Options have a term of five years and are exercisable at
any time during such five years as to any or all options, conditioned
upon optionee's employment by Company at time of exercise (or exercise
within 90 days following termination of employment due to death,
disability or voluntary retirement).
(2) Potential gains are net of exercise price, but before taxes associated
with exercise. These amounts represent assumed annual rates of
appreciation, at 5% and 10%, for the 5 year option term, based on
Securities and Exchange Commission rules, and do not represent the
Company's estimate or projection of the price of the Company's Common
Stock in the future. Additionally, these values do not take into
account certain provisions of the options providing for termination of
the options following termination of employment. Actual gains, if any,
on stock option exercises depend upon the actual future performance of
the Company's Common Stock. Accordingly, the potential realizable
values set forth in this table may not be achieved.
<PAGE>
The following table shows the number of shares covered by both
exercisable and non-exercisable stock options as of October 31, 1998. Also
reported are the values for "in-the-money" options which represent the positive
spread between the exercise price of any such existing stock options and the
fiscal year-end price of Company Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($) (2)
Name Shares
Acquired on Value Exercisable/ Exercisable/
Exercise (#) Realized ($) (1) Unexercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marshall T. Reynolds
President and Chief
Executive Officer,
Chairman of the
Board of Directors -0- -0- -0- -0-
Toney K. Adkins
Vice President-Administation
-0- -0- -0- -0-
J. Mac Aldridge
Vice President,
Division Manager 4,883 $26,222 11,531/0 -0-
R. Douglas McElwain
Vice President,
Division Manager 4,883 $26,222 11,531/0 -0-
Michael D. McKinney
Vice President,
General Sales Manager 4,883 $26,222 11,531/0 -0-
</TABLE>
- ---------------
(1) Aggregate market value of the shares covered by the option less the
aggregate price paid by the executive.
(2) Market value of shares covered by in-the-money options on October 31,
1998 (based on $10.25 per share, the closing price of Company Common
Stock on the NASDAQ Stock Market on October 31, 1998), less option
exercise prices. Options are in-the-money if the market value of the
shares covered thereby is greater than the option exercise price. All
options are granted at the market price of Company common stock on the
date of the grant. Pursuant to the anti-dilution provisions of the
Company's 1993 Stock Option Plan, all share amounts and exercise prices
have been adjusted, as appropriate, for stock dividends and stock
splits paid on Company common stock through October 31, 1998.
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Mr. Reynolds' $150,000 salary for fiscal year 1998 was equal to the
base salary established in his former employment agreement with the Company.
This salary was based upon Mr. Reynolds' extensive experience in the commercial
printing industry and the desirability of maintaining the availability of his
services for the Company. It is not tied to any objective standards of Company's
stock performance or earnings in fiscal year 1998. The Compensation Committee
believes the base salary is appropriate in light of, among other factors, the
Company's revenue growth of approximately 14%, net income growth of
approximately 10%, and return on equity of approximately 12% for the year as
well as Mr. Reynolds' efforts in successfully leading the Company and in
directing its acquisition program in 1998. Mr. Reynolds' former employment
agreement provided that he will receive such annual bonus as may be determined
by the Compensation Committee. He requested that the Compensation Committee not
consider or grant any such bonus for fiscal year 1998, and no bonus was granted.
With respect to the salaries and other compensation of the Company's
executive officers (other than Mr. Reynolds), the Compensation Committee
believes that Mr. Reynolds, as Chief Executive Officer, is in the best position
to establish such compensation and acts upon his recommendations. The Company's
compensation package for executive officers consists of base salary plus the
opportunity to earn a cash bonus and discretionary stock options. The base
salaries are set at levels Mr. Reynolds believes sufficient to attract and
retain qualified executives. Cash bonuses are based upon net profit of each of
the Company's divisions for which each executive officer is responsible, as well
as Mr. Reynolds' assessment of the executive's individual performance and level
of responsibility. Stock options are intended to attract and retain executive
management by affording them an opportunity to receive additional compensation
based upon performance of the Company's Common Stock, and are based upon Mr.
Reynolds' assessment of each executive officer's overall performance.
Members of the Compensation Committee:
Robert H. Beymer
Harley F. Mooney, Jr.
A. Michael Perry
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the annual change in cumulative total
shareholder return on the Company's common stock for the five year period ended
October 31, 1998, with the cumulative total return of the Russell 2000 Index and
a peer group index. This graph assumes the reinvestment of all dividends, if
any, paid on such securities and an investment of $100 on October 29, 1993. The
companies in the peer group index are: American Business Products, Inc., Banta
Corporation, Cadmus Communications Corp., New England Business Service, Outlook
Graphics Corp., Standard Register Company and United Stationers, Inc. Graphics
Industries, Inc. has been removed from the peer group because it was acquired
during the past fiscal year. There is no assurance that the Company's common
stock performance will continue in the future with the same or similar trends as
depicted in the below graph.
COMPARISON OF CUMULATIVE TOTAL RETURN
[CHART]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
CHAMPION INDUSTRIES, INC. RUSSELL 2000 INDEX PEER GROUP INDEX
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10/29/93 100 100 100
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
10/31/94 210 98 102
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
10/31/95 223 114 143
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
10/31/96 300 129 138
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
10/31/97 313 164 189
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
10/31/98 180 143 258
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
TRANSACTIONS WITH DIRECTORS, OFFICERS,
AND PRINCIPAL SHAREHOLDERS
INTERCOMPANY TRANSACTIONS
The Company has certain relationships and transactions with Harrah and
Reynolds and its affiliated entities. Management believes that all existing
agreements and transactions described herein between the Company and Harrah and
Reynolds and its affiliates are on terms no less favorable to the Company than
those available from unaffiliated parties. Management's belief is premised upon
its review of real estate appraisals obtained from unrelated third parties and
of market rentals of properties comparable to those leased by the Company. The
transactions described below have been approved in accordance with the Company's
disinterested director voting policy.
REALTY LEASES
Harrah and Reynolds, Marshall T. Reynolds or affiliated entities and
Company officers own the fee interest in certain real estate used by the Company
in its business, and lease this real estate to the Company. All realty leases
are "triple net," whereby the Company pays for all utilities, insurance, taxes,
repairs and maintenance, and all other costs associated with the properties. The
properties leased, and certain of the lease terms, are set forth below.
<TABLE>
<CAPTION>
ANNUAL EXPIRATION
PROPERTY LESSOR SQUARE FEET RENTAL OF TERM
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2450 1st Avenue ADJ Corp. (1) 85,000 $116,400 2008
Huntington, West Virginia
1945 5th Avenue Harrah and Reynolds 37,025 60,000 2007
Huntington, West Virginia
615-619 4th Avenue ADJ Corp. (1) and 59,641 21,600 2003
Huntington, West Virginia Harrah and Reynolds
405 Ann Street Printing Property Corp. (2) 36,614 57,600 2003
Parkersburg, West Virginia
1563 Hansford Street BCM Company, Ltd. (3) 21,360 49,920 2003
Charleston, West Virginia
890 Russell Cave Road Printing Property Corp. (2) 20,135 57,600 2000
Lexington, Kentucky
</TABLE>
- ---------------
(1) ADJ Corp. is a West Virginia corporation. Two-thirds of the outstanding
capital stock of ADJ Corp. is owned by Marshall T. Reynolds' two sons,
one of whom resides with Mr. Reynolds. One-third of the outstanding
capital stock is owned by the son of director A. Michael Perry.
(2) Printing Property Corp. is a West Virginia corporation wholly-owned by
Mr. Reynolds.
(3) BCM Company, Ltd. is a general partnership owned by Michael D. McKinney,
William M. Campbell and L. David Brumfield, executive officers of the
Company.
<PAGE>
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 a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during fiscal year 1998,
all filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with, except that one (1) report,
covering one (1) transaction, was filed late by each of Philip E. Cline and
Joseph C. Worth, III.
INDEPENDENT AUDITORS
The consolidated financial statements of the Company for the year
ended October 31, 1998 have been audited by Ernst & Young LLP, independent
auditors. A representative of Ernst & Young LLP will be present at the annual
meeting of shareholders in order to respond to appropriate questions and to
make any other statement deemed appropriate.
The Board of Directors selects the independent auditors for the
Company each year. The Board of Directors intends to continue the services of
Ernst & Young LLP for the fiscal year ending October 31, 1999.
OTHER BUSINESS
PROPOSAL #2 IN THE ACCOMPANYING FORM OF PROXY
At present, the Board of Directors knows of no other business to be
presented by or on behalf of the Company or its Board of Directors at the
meeting. If other business is presented at the meeting, the proxies shall be
voted in accordance with the recommendation of the Board of Directors.
Shareholders are urged to specify their choices, and date, sign,
and return the enclosed proxy in the enclosed envelope, to which no postage
need be affixed if mailed in the Continental United States. Prompt response
is helpful, and your cooperation will be appreciated.
<PAGE>
PROPOSALS BY SHAREHOLDERS
Proposals by shareholders for possible inclusion in the Company's
proxy materials for presentation at the next annual meeting of shareholders
must be received by the Secretary of the Company no later than October 19,
1999. In addition, the proxy solicited by the Board of Directors for the next
annual meeting of shareholders will confer discretionary authority to vote on
any shareholder proposal presented at that meeting, unless the Company is
provided with the notice of such proposal no later than January 2, 2000. The
Company's By-laws provide that any shareholder wishing to present a
nomination for the office of director must do so in writing delivered to the
Company at least 14 days and not more than 50 days prior to the first
anniversary of the preceding year's annual meeting, and that written notice
must meet certain other requirements. For further details as to timing of
nominations and the information required to be contained in any nomination,
see Article III, Section 10 of the Company's By-laws, a copy of which may be
obtained from the Secretary of the Company upon written request delivered to
P. O. Box 2968, Huntington, West Virginia 25728.
FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY
IS BEING SOLICITED, UPON THE REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 31,
1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH
REPORT SHOULD BE DIRECTED TO DAVID B. MCCLURE, CHIEF FINANCIAL OFFICER,
CHAMPION INDUSTRIES, INC., P. O. BOX 2968, HUNTINGTON, WEST VIRGINIA 25728.
Dated: February 16, 1999 By Order of the Board of Directors
WALTER R. SANSOM, SECRETARY
<PAGE>
CHAMPION INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS, MARCH 15, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Kirby J. Taylor and Robert L. Shell, Jr., and
each of them, with full power of substitution, proxies of the undersigned to
vote all shares of the Common Stock of Champion Industries, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the Radisson Hotel Huntington, 1001
Third Avenue, Huntington, West Virginia, on March 15, 1999, and at any
adjournments thereof, as indicated below.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE ANNUAL MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY
ON THOSE NAMED IN THIS PROXY TO VOTE WITH RESPECT TO THE ELECTION OF ANY
PERSON AS DIRECTOR WHERE THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE
WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
THIS PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on this proxy. When shares are
held by joint tenants, both should sign. When signing as attorney-in-fact,
executor, administrator, trustee, committee, personal representative or
guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
HAS YOUR ADDRESS CHANGED?
<PAGE>
PLEASE MARK VOTES AS IN THIS EXAMPLE
CHAMPION INDUSTRIES, INC.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date:
-------------------------
- ------------------------------- ----------------------------------
Shareholder sign here Co-owner sign here
DETACH CARD
<TABLE>
<CAPTION>
1. Election of Directors. For All Withheld For All Except
Nominees
- --------------------------------------- ---------------------------- -------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Robert H. Beymer A. Michael Perry
- --------------------------------------- ---------------------------- -------------- ------------ -------------------
Philip E. Cline Marshall T. Reynolds
- --------------------------------------- ---------------------------- -------------- ------------ -------------------
Harley F. Mooney, Jr. Neal W. Scaggs
- --------------------------------------- ---------------------------- -------------- ------------ -------------------
Todd L. Parchman Glenn W. Wilcox, Sr.
- --------------------------------------- ---------------------------- -------------- ------------ -------------------
- --------------------------------------- ---------------------------- -------------- ------------ -------------------
</TABLE>
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of
the nominee(s). Your shares will be voted for the remaining nominee(s).
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or at any
adjournment(s) thereof.
Mark box at right if any address change has been noted on the reverse
side of this card. / /
DETACH CARD
1
