<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (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 14a-11(c) or Rule 14a-12
AM INTERNATIONAL, 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)(1) 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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
AM INTERNATIONAL, INC.
431 LAKEVIEW COURT
MT. PROSPECT, IL 60056
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1997
To The Stockholders of AM International, Inc.:
The Annual Meeting of Stockholders of AM International, Inc. will be held
at the Riverway Auditorium, 6133 North River Road, Rosemont, Illinois on May 28,
1997 at 2:00 p.m. (Central Daylight Savings Time) for the following purposes:
(1) To elect five members of the Board of Directors to serve until the next
annual meeting or until their successors are elected and qualified;
(2) To consider and act upon a proposal to amend the Company's Second
Restated Certificate of Incorporation to reduce the authorized number
of shares of all classes of capital stock the Company shall have the
authority to issue from fifty million (50,000,000) to ten million
(10,000,000);
(3) To consider and act upon a proposal to amend the Company's Second
Restated Certificate of Incorporation to effect a 1 for 2 1/2 share
reverse stock split of the issued and outstanding shares of the
Company's Common Stock;
(4) To consider and act upon a proposal to amend the Company's Second
Restated Certificate of Incorporation to change the name of the Company
from "AM International, Inc." to "Multigraphics, Inc.";
(5) To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent public accountants for the
fiscal year ending July 31, 1997; and
(6) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on April 28, 1997 has been fixed as the record date
for the meeting. All holders of record of Common Stock on such date are entitled
to notice of and to vote on all proposals presented at the meeting.
Each stockholder, even though he or she now plans to attend the meeting, is
requested to sign and date the enclosed proxy card and to return it without
delay in the enclosed postage-paid envelope. Any stockholder present at the
meeting may withdraw his or her proxy and vote personally on each matter brought
before the meeting.
By Order of the Board of Directors,
Steven R. Andrews, Secretary
Mt. Prospect, Illinois
May 6, 1997
IMPORTANT
TO ASSURE PROPER REPRESENTATION AT THE MEETING, ALL STOCKHOLDERS ARE EARNESTLY
REQUESTED TO FILL IN AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE.
Thank you for acting promptly.
<PAGE> 3
AM INTERNATIONAL, INC.
431 LAKEVIEW COURT
MT. PROSPECT, ILLINOIS 60056
-------------------------------
PROXY STATEMENT
-------------------------------
INFORMATION CONCERNING PROXY
This Proxy Statement is furnished to the stockholders of AM International,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board")
for use at the Annual Meeting of Stockholders of the Company to be held on May
28, 1997 at 2:00 p.m. (Central Daylight Savings Time) and at any adjournment
thereof (the "Meeting"). This Proxy Statement and the form of proxy were
initially mailed to holders of the Company's Common Stock on or about May 6,
1997.
The shares represented by all properly executed and unrevoked proxies
received in proper form in time for the Meeting will be voted as indicated on
the proxy. Any proxy may be revoked at any time before it is voted at the
Meeting (i) by sending a subsequently dated proxy or by giving written notice to
the Company, in each case to the attention of Steven R. Andrews, Secretary, at
the address set forth above, or (ii) by attending the Meeting, withdrawing the
proxy and voting the shares in person.
VOTING RIGHTS
The Company's Common Stock is the only class of voting securities
outstanding. On April 28, 1997, the record date for determining stockholders
entitled to notice of and to vote at the Meeting, the Company had 7,039,921
shares of Common Stock outstanding, including 1,579 treasury shares held by the
Company. Stockholders of record as of the close of business on April 28, 1997
are entitled to one vote for each full share of Common Stock held of record. The
Common Stock does not have cumulative voting rights.
PROXY VOTING
At the Meeting, the stockholders will (1) elect five directors, (2) vote
upon a proposal to reduce the Company's authorized number of shares of capital
stock from fifty million to ten million, (3) vote upon a proposal to effect a 1
for 2 1/2 reverse stock split of the Company's issued and outstanding capital
stock, (4) vote upon a proposal to change the Company's name to "Multigraphics,
Inc.," and (5) vote upon the ratification of the appointment of Arthur Andersen
LLP as the Company's independent accountants for the fiscal year ending July 31,
1997 ("Fiscal 1997"). As of the date of this Proxy Statement, the Board does not
know of any other matters that may come before the Meeting. However, if any
other matters properly come before the Meeting, the proxy holders intend to vote
the proxies received by them at their discretion.
With respect to the election of directors, a stockholder may (a) vote "FOR"
the election of all five of the nominees for director named in this Proxy
Statement, (b) "WITHHOLD" authority to vote for all the nominees, or (c) vote
"FOR" the election of each nominee for director named in this Proxy Statement
other than any nominee with respect to whom the stockholder withholds authority
by writing such nominee's name
1
<PAGE> 4
in the space provided on the proxy card. If a quorum is present at the Meeting,
the five candidates for director receiving the greatest number of votes will be
elected. Withholding authority to vote for a particular nominee will not prevent
that nominee from being elected. Non-votes with respect to the election of
directors will not affect the outcome of the election of directors.
With respect to the proposal to reduce the authorized number of shares of
the Company's capital stock, a stockholder may (a) vote "FOR" the proposal, (b)
vote "AGAINST" the proposal, or (c) "ABSTAIN" from voting on the proposal.
Assuming a quorum is present at the Meeting, the affirmative vote of a majority
of the Common Stock outstanding and entitled to vote on the proposal will be
required for approval. A vote to abstain or non-votes with respect to the
proposal will have the effect of a vote against the proposal.
With respect to the proposal to effect a 1 for 2 1/2 Reverse Stock Split, a
stockholder may (a) vote "FOR" the proposal, (b) vote "AGAINST" the proposal, or
(c) "ABSTAIN" from voting on the proposal. Assuming a quorum is present at the
Meeting, the affirmative vote of a majority of the Common Stock outstanding and
entitled to vote on the proposal will be required for approval. A vote to
abstain or non-votes with respect to the proposal will have the effect of a vote
against the proposal.
With respect to the proposal to change the Company's name, a stockholder
may (a) vote "FOR" the proposal, (b) vote "AGAINST" the proposal, or (c)
"ABSTAIN" from voting on the proposal. Assuming a quorum is present at the
Meeting, the affirmative vote of a majority of the Common Stock outstanding and
entitled to vote on the proposal will be required for approval. A vote to
abstain or non-votes with respect to the proposal will have the effect of a vote
against the proposal.
With respect to the ratification of the appointment of Arthur Andersen LLP
as the Company's independent accountants for Fiscal 1997, a stockholder may (a)
vote "FOR" ratification, (b) vote "AGAINST" ratification, or (c) "ABSTAIN" from
voting on the proposal. Assuming a quorum is present at the Meeting, the
affirmative vote of a majority of the Common Stock represented at the Meeting
and entitled to vote on the appointment of Arthur Andersen LLP as the Company's
independent accountants will be required for approval of the proposal. Non-votes
with respect to the ratification of the appointment of Arthur Andersen LLP will
not affect the outcome of the vote on this matter. A vote to abstain from voting
on the proposal has the effect of a vote against the proposal.
If a proxy indicates that all or a portion of the shares represented by
such proxy are not being voted with respect to a particular matter, such
non-voted shares will not be considered present and entitled to vote on such
matter, although such shares may be considered present and entitled to vote on
other matters and will count for the purpose of determining the presence of a
quorum.
Shares of Common Stock will be voted by the proxy holders as instructed in
the accompanying proxy, if signed and returned to the Company, on each matter
submitted to the stockholders. The Board recommends a vote FOR all five nominees
for director named below, FOR the proposal to reduce the authorized number of
shares of capital stock, FOR the reverse stock split, FOR the proposal to change
the Company's name, and FOR ratification of the appointment of Arthur Andersen
LLP as the Company's independent accountants for Fiscal 1997.
If no instructions are given, the shares will be voted "FOR" the election
of all five nominees for director named below and "FOR" ratification of the
appointment of Arthur Andersen LLP as the Company's independent accountants for
Fiscal 1997.
2
<PAGE> 5
PRINCIPAL STOCKHOLDERS
At April 30, 1997 to the Company's knowledge based on statements filed with
the Securities and Exchange Commission pursuant to Sections 13(d) and 13(g) of
the Securities Exchange Act of 1934 (the "Exchange Act") or upon information
furnished in writing to the Company by the persons or entities involved, the
following were the only persons, entities or groups owning beneficially 5% or
more of the outstanding Common Stock entitled to vote at the Meeting:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
------------------- ------------ ----------
<S> <C> <C>
Lion Advisors, L.P.(3)...................................... 1,875,000 26.6%
Two Manhattanville Road
Purchase, NY
AIF II, L.P.(3)............................................. 600,412 8.5%
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, NY
BEA Associates(4)........................................... 1,290,117 18.3%
153 East 53rd Street
One Citicorp Center
New York, New York 10022
State of Wisconsin Investment Board......................... 669,100 9.5%
P.O. Box 7842
Madison, Wisconsin 53707
Fidelity Bankers Life Insurance Company..................... 645,058 9.2%
1011 Boulder Springs Drive
Richmond, Virginia 2225
Hellmold Associates, Inc.................................... 624,754 8.9%
640 Fifth Avenue
13th Floor
New York, New York 10019
Trust Company of the West................................... 400,584 5.7%
865 South Figueroa
Los Angeles, California 90017
</TABLE>
- -------------------------
(1) Unless otherwise indicated in a note to the table, to the Company's
knowledge, ownership includes sole voting power and sole investment power.
(2) Based on 7,039,921 shares of Common Stock outstanding, including 1,579
treasury shares, as of April 30, 1997 plus shares deemed outstanding
pursuant to Rule 13d-3(d)(1) of the Exchange Act.
(3) The shares shown for Lion Advisors, L.P. are beneficially held for the
Apollo Advisors, L.P., the managing general partner of AIF II, L.P. Lion
Advisors, L.P. is an affiliate of Apollo Advisors, L.P., the managing
general partner of AIF II, L.P. Mr. Moore, a director of the Company, is an
officer of the general partner of each of (i) Lion Advisors, L.P. and (ii)
Apollo Advisors, L.P., the managing general partner of AIF II, L.P. and may
be deemed to beneficially own these shares. Mr. Moore disclaims beneficial
ownership of all of such shares. Mr. Benjamin is a limited partner of each
of Lion Advisors, L.P., Apollo Advisors, L.P. and AIF II, L.P. Mr. Benjamin
disclaims beneficial ownership of all of such shares. See "Security
Ownership of Directors and Executive Officers."
(4) Shares held by BEA Associates for Executive Life Insurance Company of New
York, 123 William Street, New York, NY 10038. Executive Life Insurance
Company has sole voting power and sole investment power for these shares.
3
<PAGE> 6
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the number of shares
of Common Stock that are beneficially owned, directly or indirectly, as of April
30, 1997, by each director, by each executive officer named in the Summary
Compensation Table on page 8 and by all directors and all executive officers
(including the named executive officers) as a group.
Unless otherwise indicated in a note to the table, to the Company's
knowledge, ownership includes sole voting power and sole investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF TOTAL
NAME OF BENEFICIAL OWNER POSITION BENEFICIAL OWNERSHIP(1)(2) OUTSTANDING SHARES
------------------------ -------- -------------------------- -------------------
<S> <C> <C> <C>
Robert E. Anderson, III......... Director 1,917 *
Steven R. Andrews............... Vice President/Secretary 16,991 *
Jeffrey D. Benjamin(3).......... Director 2,000 *
Jerome D. Brady................. Chairman/Pres./CEO 92,672 1.3%
Robert N. Dangremond............ Director 2,300 *
Jeff M. Moore(3)................ Director 2,476,412 35.1%
Thomas D. Rooney................ Vice President/CFO 43,328 *
All directors and executive
officers as a group (8
persons)(1)(2)(3)............. 2,640,870 37.5%
</TABLE>
- -------------------------
* Less than one percent
(1) Two of the Named Executive Officers reflected in the Summary Compensation
Table below have ceased to be employed by the Company and are not included
in this chart. On August 27, 1996, Mr. Nygaard became an officer and
employee of Heidelberg Finishing Systems, Inc. in connection with the sale
of the Company's Sheridan Systems division. On September 13, 1996, Mr.
Roberts resigned as an officer of the Company. Mr. Rooney has succeeded Mr.
Roberts as the President of AM Multigraphics.
(2) Amounts include shares acquirable within 60 days of April 30, 1997 pursuant
to the exercise of currently outstanding stock options granted pursuant to
the Company's 1994 Long-Term Incentive Plan (the "1994 Long Term Incentive
Plan") as follows: Mr. Andrews, 14,000 shares, Mr. Brady, 70,000 shares, Mr.
Rooney, 40,000 shares, Mr. Anderson 1,917 shares, Mr. Moore, 1,000 shares,
and 2,000 shares for each of the remaining non-employee directors.
(3) Includes shares beneficially owned by Lion Advisors, L.P., Apollo Advisors,
L.P. and AIF II, L.P. Mr. Moore is an officer of the general partner of each
of (i) Lion Advisors, L.P. and (ii) Apollo Advisors, L.P., the managing
general partner of AIF II, L.P. Mr. Moore disclaims beneficial ownership of
the indicated shares. Mr. Benjamin is a limited partner of each of Lion
Advisors, L.P., Apollo Advisors L.P. and AF II, L.P. Mr. Benjamin disclaims
beneficial ownership of all such shares.
4
<PAGE> 7
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Five directors are to be elected to hold office until the next annual
meeting and until their successors are elected and qualified.
It is intended that the proxies solicited will be voted for the nominees
named below unless otherwise directed. All nominees except Mr. Rooney are
presently members of the Board of Directors. Each nominee has consented to be
named as a nominee and has indicated his intent to serve on the Board of
Directors if elected. In the event any nominee becomes unavailable, the proxies
solicited will be voted for the balance of those named and, unless the Board of
Directors reduces the number of directors, for such substitute nominee as may be
designated by the Board of Directors. Pursuant to the Company's By-laws, written
notice of other qualifying nominations by stockholders for election to the Board
of Directors must have been received by the Secretary no later than June 28,
1996. As no notice of any such other nominations was received, no other
nominations for the Board of Directors may be made at the Meeting.
INFORMATION CONCERNING NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
ROBERT E. ANDERSON, III, 61
Director of the Company since January 26, 1995. Mr. Anderson is Executive
Vice President, Planning and Development at Owens & Minor, Inc., a
Virginia-based wholesale distributor of medical/surgical supplies and related
products. He has held that position since 1994. Prior thereto, Mr. Anderson held
a number of senior management positions at Owens & Minor, Inc. after its
acquisition of Powers & Anderson in 1967. Mr. Anderson is a director of Mayer
Electric Supply Company, a wholesale distributor of supplies, and a former
director of the Savin Company, a distributor of copier machines.
JEFFREY D. BENJAMIN, 35
Director of the Company since October 13, 1993. Since May 1996, Mr.
Benjamin has been a Managing Director at UBS Securities LLC, a securities
investment firm. From January 1996 to May 1996, Mr. Benjamin was a Managing
Director at Bankers Trust Company, a financial services company. From 1992 to
May 1996, Mr. Benjamin was an officer of Apollo Capital Management, Inc. and
Lion Capital Management, Inc., which act as general partners of Apollo Advisors,
L.P. and Lion Advisors, L.P., respectively. Mr. Benjamin is a limited partner of
Apollo Advisors, L.P., which acts as managing general partner of Apollo
Investment Fund, L.P. and AIF II, L.P., securities investment funds, and is a
limited partner of Lion Advisors, L.P., which acts as financial advisor to and
representative for Altus Finance and certain other institutional investors with
respect to securities investments. From 1985 to 1992, Mr. Benjamin was a Vice
President at Salomon Brothers Inc., an investment banking firm. Mr. Benjamin is
a director of Empire Kosher Poultry, Inc.
ROBERT N. DANGREMOND, 53
Director of the Company since February 8, 1993. Since August 1995, Mr.
Dangremond has acted as interim Chief Executive Officer and President of
Forstmann & Company, Inc., a producer of clothing fabrics. From February 1993 to
September 1994, Mr. Dangremond acted as interim Chairman of the Board, Chief
Executive Officer, and President of the Company. Since September 1989 Mr.
Dangremond has been a Principal with Jay Alix & Associates, a consulting firm
specializing in the restructuring of major corporations. From 1982 to 1989 he
was the CFO and Treasurer of Leach & Garner Company, a diversified manufacturing
5
<PAGE> 8
and trading company. Prior thereto, he served as a Vice President and Manager
for Chase Manhattan Bank and a Sales and Marketing Manager for Scott Paper
Company. Mr. Dangremond is also a director of Standard Brands Paint Company,
Envirodyne Industries, Inc. and Forstmann & Company, Inc.
Mr. Dangremond's appointment as interim Chief Executive Officer and
President of Forstmann & Company, Inc. ("Forstmann") and, prior thereto, as
Chairman of the Board, President and Chief Executive Officer of the Company were
each made in connection with turnaround consulting services provided by Jay Alix
& Associates, of which Mr. Dangremond is a principal. On May 17, 1993, the
Company filed a petition under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code"), and on September 29, 1993, a plan of reorganization was
confirmed. On September 22, 1995, Forstmann filed a petition under Chapter 11 of
the Bankruptcy Code.
JEFF M. MOORE, 37
Director of the Company since February 14, 1996. Mr. Moore has been a
limited partner of Apollo Advisors, L.P. and Lion Advisors, L.P., which act as
managing general partner of Apollo Investment Fund, L.P. and AIF II, L.P.
respectively, securities investment funds, and a financial advisor to and
representative for certain institutional investors with respect to securities
investments since 1992. From 1990 until joining Apollo, Mr. Moore was Vice
President -- Investment Management at First Executive Corporation where he was
responsible for the management of a diversified fixed income portfolio. Prior to
1990, Mr. Moore was a Certified Public Accountant at Deloitte & Touche LLP where
he specialized in financial instruments and credit analysis.
THOMAS D. ROONEY, 50
President of AM Multigraphics since August 1996, Vice President of the
Company since February 1986, Chief Financial Officer since August 1993, and
Controller and Chief Accounting Officer of the Company from September 1989 to
August 1993. From 1986 to 1989 Mr. Rooney was President of the Company's former
AM Bruning division, a manufacturer and distributor of equipment, supplies and
services for the engineering graphics market.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors met ten times from August 1, 1995 to July 31, 1996
("Fiscal 1996"). Each director of the Company attended at least 75% of the
meetings of the Board of Directors and the meetings of all committees of which
such director was a member.
The Board of Directors of the Company has the following standing
committees: the Audit Committee and the Management and Compensation Committee
(the "Compensation Committee").
The Audit Committee recommends to the Board of Directors the independent
public accountants to be selected to audit the Company's annual financial
statements. The Audit Committee also reviews the independent public accountants'
planning and results of the audit engagement, the scope and results of the
Company's procedures for internal auditing, the independence of the auditors,
the adequacy of the Company's system of internal accounting controls and the
scope of audit and non-audit services. Members of the Audit Committee are Mr.
William E. Hogan, II (Chairman), who is not standing for reelection, and Mr.
Moore. The Audit Committee met four times in Fiscal 1996.
6
<PAGE> 9
The Compensation Committee administers and makes awards under the Company's
1994 Long Term Incentive Plan, the Executive Incentive Compensation Plan, and
all retirement plans of the Company. The Compensation Committee also studies and
recommends the implementation of all compensation programs for directors,
officers and employees of the Company. Members of the Compensation Committee are
Messrs. Anderson, Benjamin (Chairman), and Dangremond. The Compensation
Committee met three times in Fiscal 1996.
REMUNERATION OF DIRECTORS
Directors are reimbursed for travel and expenses related to attendance at
meetings of the Board of Directors or Board committees. Beginning August 1,
1997, the Board of Directors' cash compensation for non-employee directors will
be reduced from a quarterly retainer of $5,000 to a quarterly retainer of $2,500
plus a grant of shares of Company Common Stock equal in value to the quarterly
cash retainer, valued at the closing price as of the end of each fiscal quarter,
along with a fee of $750 for attendance at meetings which are in addition to
regular meetings, whether in person or by telephone. The reduction in cash
compensation for non-employee directors is intended both to reduce the Company's
overhead and to base a more significant portion of the directors' compensation
on the performance of the Company's stock. Directors who are officers of the
Company receive no additional compensation for their services as directors.
On August 27, 1987, the Board of Directors approved a retirement plan for
outside directors with a minimum of five years of service. Under the plan,
eligible directors commence receiving benefits upon the later of attainment of
age 65 and the actual date of retirement. The benefit payable under the plan is
75% of the annual retainer in effect at the time of retirement, payable in equal
annual installments. The number of annual installments is equal to the number of
years of service, with payments made on the August 1st following the director's
retirement. In 1988, the retirement plan was amended to provide that all outside
directors become eligible immediately upon a change in control of the Company.
The plan also provides for mandatory retirement upon attainment of age 70,
except for all persons over the age of 65 serving as directors at the time of
adoption of the plan. Upon the effective date of the Company's Plan of
Reorganization, the retirement plan for outside directors was assumed as an
executory contract and in August 1996, the third installment of payments was
paid to five former directors in the aggregate amount of $79,500. Annual
payments are expected to continue to certain former directors through the year
2009.
Pursuant to the terms of the Company's 1994 Long Term Incentive Plan,
non-employee directors are automatically granted, on the date of each annual
meeting of stockholders, non-qualified options to purchase 1,000 shares of
Common Stock at an option exercise price per share equal to the fair market
value of a share of Common Stock on the date of grant. Such options are
exercisable in part or in full on the date of grant and expire ten years after
the date of grant. If a non-employee director ceases to be a director of the
Company for any reason, each option held by such holder is exercisable for a
period of three months after the date such holder ceases to be a director or
until the expiration of the term of such option, whichever is shorter.
The Company is not aware of any family relationship between any director or
person nominated or chosen by the Board to become a director or an executive
officer of the Company, its subsidiaries or its affiliates.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE FIVE
NOMINEES FOR DIRECTOR LISTED ABOVE.
7
<PAGE> 10
EXECUTIVE COMPENSATION
(a) Summary Compensation Table
The following table reflects information with respect to the annual
compensation for services in all capacities to the Company for the fiscal years
ended July 31, 1996, July 31, 1995, and July 31, 1994, of those persons who were
during the fiscal year ended July 31, 1996, (i) the Chief Executive Officer and
(ii) the other four most highly compensated executive officers of the Company
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------- -------------------------
SECURITIES
OTHER UNDERLYING
NAME AND ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY BONUS COMP(2) SARS COMP(3)
--------------------- ---- ------ ----- ------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jerome D. Brady..................... 1996 $350,000 $ 0 $ 33,916 0 $ 14,507
President and Chief 1995 297,500 421,250 12,373 140,000 8,226
Executive Officer 1994 N/A N/A N/A N/A N/A
Thomas D. Rooney.................... 1996 199,500 0 29,949 0 10,095
Vice President and 1995 190,000 65,132 27,560 0 280,121
Chief Financial Officer 1994 185,859 231,443 30,455 50,000 13,752
David A. Roberts(4)................. 1996 225,000 0 19,150 0 10,440
President -- AM Multigraphics and 1995 108,173 60,000 69,995 60,000 4,573
Vice President (Company) 1994 N/A N/A N/A N/A N/A
Ulrik T. Nygaard.................... 1996 190,000 0 3,304 0 7,621
President -- Sheridan 1995 148,980 57,062 853 20,000 31,010
Systems and Vice 1994 148,980 124,171 108,312 0 11,072
President (Company)
Steven R. Andrews................... 1996 183,750 0 22,223 0 8,423
Vice President, General 1995 175,000 59,990 106,564 0 4,308
Counsel and Secretary 1994 N/A N/A N/A 35,000 N/A
</TABLE>
- -------------------------
(1) The titles shown are the capacities in which each executive officer served
at the end of Fiscal 1996. On September 19, 1994, the Company hired Jerome
D. Brady as Chairman, President and Chief Executive Officer; on January 30,
1996 the Company hired David A. Roberts; and on June 27, 1994, the Company
hired Steven R. Andrews. On August 27, 1996, Mr. Nygaard ceased to be an
officer and employee of the Company as a result of the sale of the Company's
Sheridan Systems division. On September 13, 1996, Mr. Roberts resigned as an
officer of the Company. Mr. Rooney has succeeded Mr. Roberts as the
President of AM Multigraphics.
(2) The amounts include taxes reimbursed during the fiscal year of $19,531 to
Mr. Brady, $16,344 to Mr. Rooney, $7,693 to Mr. Roberts and $9,768 to Mr.
Andrews. During fiscal year 1995, the Company paid relocation expenses of
$91,640 for Mr. Andrews and $65,383 for Mr. Roberts. During fiscal year
1994, the Company paid relocation expenses of $107,815 for Mr. Nygaard. Also
included are amounts attributable to executive medical plan expenses,
disability insurance and car allowances.
8
<PAGE> 11
(3) The amounts in this column for Fiscal 1996 include (i) premiums paid by the
Company for executive life insurance of $6,684 for Mr. Brady, $4,077 for Mr.
Rooney, $3,806 for Mr. Roberts, $754 for Mr. Nygaard and $2,504 for Mr.
Andrews and (ii) matching contributions under the Company's 401(k) plans of
$7,823 for Mr. Brady, $6,018 for Mr. Rooney, $6,634 for Mr. Roberts, $6,867
for Mr. Nygaard and $5,920 for Mr. Andrews.
(4) Amounts shown do not include a payment of $175,000 to Mr. Roberts on
September 13, 1996 in satisfaction and settlement of any and all rights Mr.
Roberts might have had under any agreements with the Company or under
various benefit and bonus plans maintained by the Company.
(b) Stock Option/SAR Grants
No stock options or SARs were awarded to the Named Executive Officers
during Fiscal 1996.
(c) Option Values
The following table shows the number and value of unexercised stock options
held by the Named Executive Officers as of July 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FISCAL YEAR-END(A) AT FISCAL YEAR-END(A)(B)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J.D. Brady.................. 0 $0 70,000 70,000 $0 $0
T.D. Rooney................. 0 0 30,000 20,000 0 0
S.R. Andrews................ 0 0 14,000 21,000 0 0
D.A. Roberts................ 0 0 30,000 30,000 0 0
U.T. Nygaard................ 0 0 6,200 13,800 0 0
</TABLE>
- -------------------------
(a) No SARs were outstanding as of July 31, 1996.
(b) Based on the closing market price of the Common Stock of $1.875 on July 31,
1996. As of July 31, 1996 all the outstanding options of the Company were
out-of-the money.
(d) Employment and Other Agreements
The Company entered into an employment agreement with Mr. Brady, effective
as of September 19, 1994. The agreement with Mr. Brady provided that he would
serve as Chairman, President and Chief Executive Officer of the Company until
September 19, 1996, at which time his employment term would be automatically
extended for successive one-year periods unless either party notifies the other
that the term will not be extended at least one year prior to the termination
date. The Company's obligations to Mr. Brady under this agreement have been
satisfied in connection with the various actions taken pursuant to Mr. Brady's
Change-in-Control Agreement, as described below.
9
<PAGE> 12
Change-In-Control Agreements
In July 1995, the Board authorized the Company to enter into agreements
with each of Jerome D. Brady, President and Chief Executive Officer, Thomas D.
Rooney, Vice President and Chief Financial Officer, David A. Roberts, Vice
President and President of AM Multigraphics, and Steven R. Andrews, Vice
President, General Counsel and Secretary, to secure their continued service in
the event of any "Change-in-Control" (collectively, the "Change-in-Control
Agreements"). Mr. Roberts' Change-in-Control agreement terminated upon his
resignation on September 13, 1996. The Change-in-Control Agreements provide, in
the event of a "Change-in-Control," that such officers will receive a "Retention
Bonus" ($800,000 for Mr. Brady, $250,000 for Mr. Rooney and $200,000 for Mr.
Andrews). A "Change-in-Control" occurred on August 27, 1996 when the sale of
substantially all of the Company's Sheridan Systems assets was consummated. The
Retention Bonuses for Messrs. Brady, Rooney and Andrews which accrued following
the sale of Sheridan Systems were paid in December 1996. In addition, if there
is a Qualifying Termination after a Change-in-Control (under the
Change-in-Control Agreements), the officer is entitled to receive a lump sum
cash amount equal to two times the officer's highest rate of annual base salary
in effect at any time after the date of the execution of the Change-in-Control
Agreement (which amount is reduced over time following the Change-in-Control),
together with a pro rata portion of bonus for the year and payments of certain
accrued benefits. A "Qualifying Termination" means, among other things, a
termination by the officer for any reason on the date six months following
consummation of the sale of Sheridan Systems, which date was February 27, 1997.
On March 3, 1997, the Company and Messrs. Brady, Andrews, and Rooney,
respectively, agreed on the manner in which the Company's obligations pursuant
to the Change-in-Control Agreements (as well as Mr. Brady's employment
agreement) would be satisfied. All cash payments due to Messrs. Brady and
Andrews under the Change-in-Control Agreements were paid on March 18, 1997, in
the amount of $622,933 for Mr. Brady and $355,655 for Mr. Andrews, and the
Company made the SRP payments described below. Mr. Rooney agreed to continue his
services with the Company on the terms described below. Messrs. Brady and
Andrews agreed to continue their services with the Company on a month-to-month
basis at their current salary, but without car allowance and certain other
benefits, to assist in certain transition matters and in preparing for the
Company's annual meeting. Either the Company or Messrs. Brady or Andrews,
respectively, may terminate the applicable employment arrangement at any time.
In satisfaction of the Company's obligations under the Change-in-Control
Agreements, the Company will continue medical, dental and life insurance
benefits for Messrs. Brady and Andrews, respectively, until the earlier of
September 3, 1998 or the date on which such officer obtains comparable coverage
under another employer's plans.
Other Agreements
The Company and each of Messrs. Brady, Rooney and Andrews entered into
agreements regarding supplemental retirement benefits ("SRP"). These agreements
generally provided, subject to certain exceptions, that upon normal retirement
at age 65, such persons are entitled to receive a fixed monthly cash payment for
life of 3 1/2% of their final average monthly compensation times their years of
service (up to a maximum of 15 years), provided, however, that such supplemental
benefits be reduced by the actuarial value of all other retirement benefits
payable to such person from all the Company's other sponsored retirement
programs. These agreements were terminated on March 18, 1997 in connection with
the satisfaction of the Company's obligations under the Change-in-Control
Agreements and lump sum payments were made in the amount of $261,952 to Mr.
Brady, $739,634 to Mr. Rooney and $78,600 to Mr. Andrews.
The Company and Mr. Rooney have reached an understanding that Mr. Rooney
will serve as CEO and President of the Company following the Meeting at a salary
of $225,000, together with continuation of
10
<PAGE> 13
Mr. Rooney's current bonus plan (with a target level of 40% of his base salary)
and benefits. Additional Long Term Incentives under the Company's 1994 Long Term
Incentive Plan have not yet been awarded. In the event Mr. Rooney's employment
is terminated, Mr. Rooney will receive a severance payment equal to 21 months of
his previous salary, outplacement services and continuation of benefits for the
lesser of two years or the date on which Mr. Rooney obtains comparable coverage
under another employer's plan.
REPORT OF THE COMPENSATION COMMITTEE
As referenced previously, the Company filed for protection under Chapter 11
of the U.S. Bankruptcy Code on May 17, 1993. On October 13, 1993, the Company's
Plan was consummated and accordingly, the Company's Bankruptcy Proceeding
effectively terminated (other than as to the resolution of disputed claims) and
a new Board of Directors was appointed. All compensation matters were subject to
the jurisdiction of the Bankruptcy Court from May 17, 1993 to October 13, 1993.
On October 29, 1993 the new Board of Directors appointed a Compensation
Committee consisting of three outside directors. During Fiscal 1996, the
Compensation Committee continued to evaluate the Company's compensation plans.
In March, 1996 the present members of the Compensation Committee were elected.
Among its responsibilities, the Compensation Committee reviews the compensation
of executive officers of the Company and makes recommendations to the Board
concerning executive compensation matters. The foundation of the executive
compensation program is based on guiding principles that ensure that senior
managers are rewarded appropriately for their contributions to the Company's
profitability and growth while supporting the Company's business objectives and
stockholder interests. Companies used in comparative analyses for the purpose of
determining each executive officer's salary are selected periodically with the
assistance of professional compensation consultants. Selection of such companies
is based on a variety of factors, including industry classification. The
companies used in these comparative analyses include some of the companies in
the Peer Group used in the Performance Graph, as well as other companies.
In reviewing future compensation arrangements, the Compensation Committee
will evaluate its recommendations based upon the following objectives:
- Executive Compensation Programs shall support the attainment of the
Company's short-term and long-term strategic and financial objectives.
- Total compensation shall represent competitive levels of compensation
when compared to the financial performance and compensation levels of
executives of comparable companies against which the Company competes for
management talent.
- Performance-related pay shall be a significant component of total
compensation placing a significant portion of an executive officer's
compensation at risk.
Based on available data, the Company believes the base salaries of its
executives are set at or slightly below the levels of comparable companies in
the Company's industry. Individual salary increases are awarded at the
discretion of the Compensation Committee.
Cash bonuses and long-term incentive compensation of executives are
designed to compensate at market levels. For Fiscal 1996, the executives'
short-term cash bonus awards were contingent upon achievement of operating
income and net income goals, and no amounts were paid under the plan. Amounts
paid under the Executive Incentive Compensation Plan to the Named Executive
Officers are set forth in the "Bonus" column of the Summary Compensation Table.
11
<PAGE> 14
(a) CEO Compensation
On September 19, 1994, the Company hired J. D. Brady as Chairman, President
and Chief Executive Officer at an annual salary of $350,000. In determining the
base salary of Mr. Brady, the Committee considered his salary level comparable
to positions at comparable companies in the industry. Mr. Brady is eligible to
earn a bonus with a target level of 40% of his base salary. Given the changes in
the strategic direction of the Company in Fiscal 1996, no changes were made in
Mr. Brady's compensation and no additional awards granted under the 1994 Long
Term Incentive Plan for such year. As previously mentioned, no incentive bonuses
were paid in Fiscal 1996 to any employees, including Mr. Brady and the other
executive officers.
Mr. Rooney will become the Chief Executive Officer and President of the
Company immediately after the Meeting, on the terms outlined above. In
determining the base salary of Mr. Rooney, the Committee considered his salary
level comparable to positions at comparable companies in the industry.
In response to the provisions included in the Omnibus Budget Reconciliation
Act of 1993 ("1993 Revenue Act"), tax deductibility is only one of the factors
that is taken into consideration in designing the executive compensation
program. It is the present intent of the Company to take the necessary steps to
conform its compensation to comply with the 1993 Revenue Act; however, the
Compensation Committee may implement programs that provide for non-deductible
compensation in the event that it is deemed in the best interests of the Company
and its stockholders.
(b) Compensation Policies and Plans
A. Base Salary
The Company's overall salary structure is reviewed annually, using
outside executive compensation surveys, to ensure that it remains
competitive. Base salaries of its executives are set at approximately the
50th percentile of comparable companies. Positions are classified within
the salary structure on the basis of assigned responsibilities. The salary
mid-point of a grade assigned to a position is the salary level that
approximates the Company's judgment, based on an evaluation of the latest
survey information available, as to appropriate compensation levels.
Individual base salaries generally are reviewed annually; however,
salaries are not necessarily increased each year. Decisions relating to
salary increases are based upon guidelines furnished by senior management,
but are awarded in the discretion of the Compensation Committee. Salary
increases are granted based on each executive's performance as well as
position in the applicable salary range.
B. Incentive Compensation Plans
The Company maintains an annual Executive Incentive Compensation Plan
("EICP") which is administered by the Compensation Committee. In addition
to the executive officers, approximately 27 management employees
participate in the EICP based upon recommendations of the executive
officers of the Company and approval by the Compensation Committee, with
target bonuses of up to 40% of base salary and a cap of 200% of the target
levels. The plan also allows discretionary payments in an amount equal to
3% of the actual bonus pool to nonparticipants in the plan. Payments under
the EICP are measured by a combination of company performance and
individual performance, but actual awards are subject to the discretion of
the Board of Directors. Operating performance targets are established at
the beginning of each year by the Compensation Committee and vary depending
upon the needs of the Company's business. Generally, the operating
performance targets are a function of net income, revenue,
12
<PAGE> 15
cash flow, and certain operational objectives. In Fiscal 1996, performance
targets were based on operating income and net income. No individual awards
were earned for Fiscal 1996.
C. Long Term Incentives
The Company maintains the 1994 Long Term Incentive Plan as a
stock-based means of compensating executive officers and all management
employees. The 1994 Long Term Incentive Plan provides for the grant of
incentive and non-qualified stock options, stock appreciation rights,
restricted stock awards and performance plan awards. The Compensation
Committee administers the 1994 Long Term Incentive Plan and has sole
discretion to determine those employees to whom awards will be granted, the
number of awards and the time periods during which the awards may be
exercised. Awards made under the 1994 Long Term Incentive Plan are intended
to provide key employees with additional incentives designed to enhance the
profitable growth of the Company as well as the value of the Company's
Common Stock.
D. Retirement Plans
The Company maintains retirement programs for approximately 712 U.S.
based employees and the Named Executive Officers participate on the same
basis as all other eligible employees. The programs are comprised of a
profit sharing plan and 401(k) savings plans. Contributions by the Company
to the profit sharing plans are discretionary with the Board of Directors.
For Fiscal 1996, no contribution was made to the profit sharing plan. For
the Named Executive Officers, the sum of amounts listed in the "Salary" and
"Bonus" columns of the Summary Compensation Table on page 8 is included as
compensation for the purposes of calculation of profit sharing
contributions. The 401(k) savings plans permit participants to defer a
portion of their eligible compensation subject to limitations established
by federal law. The Company makes matching contributions of 60 cents per
each dollar of deferred compensation up to 6% of eligible compensation. For
Fiscal 1996, the Company contributed approximately $2.0 million to the
401(k) savings plans to a total of 1204 employees, which included 492
active Sheridan Systems employees who are no longer employed by the
Company. It is the present intention of the Company to continue to maintain
the profit sharing plans and 401(k) savings plans.
E. Other Benefits
Certain sales and management employees, including the Named Executive
Officers, receive a car allowance ranging from $300 up to $600 per month.
The amount is grossed up for taxes in the case of executive officers.
Additionally, executive officers receive certain personal benefits
customary in the industry, including financial planning and income tax
preparation.
MANAGEMENT AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Jeffrey D. Benjamin, Chairman
Robert N. Dangremond
Robert E. Anderson, III
13
<PAGE> 16
PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative
stockholder return on its Common Stock to the Standard & Poor's 500 Composite
Index and a Peer Group Index for the period from December 6, 1993 (the date on
which the Common Stock opened for trading on the American Stock Exchange)
through July 31, 1996.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD AM PEER GROUP BROAD
(FISCAL YEAR COVERED) INTERNATIONAL MARKET
INC
<S> <C> <C> <C>
12/6/93 100.00 100.00 100.00
1993 101.32 95.47 101.21
1994 94.74 89.52 102.55
1995 61.18 130.21 141.09
1996 46.05 154.36 173.48
</TABLE>
The Peer Group selected by the Company is composed of 24* publicly held
companies which participate in one or more industry groups which are similar to
the Company. The companies included in the Peer Group are as follows:
AFP Imaging Corporation
Canon Inc. (ADR)
Chyron Corporation
Cohu Inc.
Concord Camera Corporation
Danka Business System (ADR)
David White Inc.
Eastman Kodak Company
Electrocom Automation
Fuji Photo Film (ADR)
General Binding Corporation
Gradco Systems, Inc.
HMG Worldwide Corporation
Matthews Studio Equipment (GR)
Oce-Van Der Grinten N.V.
Photo Control Corporation
Photo Matrix Inc.
Pitney Bowes Inc.
Polaroid Corporation
Prime Source Corporation
Showscan Entertainment
Spatialight Inc.
THT Inc.
Xerox Corporation
* Anacomp Inc., Information International Inc. and Smith-Corona Corporation
have been removed from the Peer Group; these companies were delisted in
September and October of 1996. Momentum Corporation is now known as Prime
Source Corporation. Sayette Group, Inc. is now known as Spatialight Inc.
Xscribe Corporation is now known as Photo Matrix Inc.
14
<PAGE> 17
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive officers and any persons holding ten percent or more of the
Company's Common Stock are required to report their ownership of the Company's
Common Stock and any changes in that ownership to the Securities and Exchange
Commission (the "Commission") and the American Stock Exchange. Specific due
dates for these reports have been established, and the Company is required to
report in this Proxy Statement any known failure to file by these dates during
Fiscal 1996. All of these filing requirements were satisfied by the directors
and officers of the Company. In making this statement, the Company has relied on
the written representations of its incumbent directors and officers and copies
of the reports filed with the Commission and sent to the Company.
15
<PAGE> 18
PROPOSAL NO. 2
REDUCTION OF NUMBER OF SHARES OF CAPITAL STOCK
The Second Restated Certificate of Incorporation of the Company authorizes
the issuance of a total of 50,000,000 shares of capital stock, of which
40,000,000 shares are reserved for issuance as Common Stock and 10,000,000
shares are reserved for issuance as Preferred Stock. On April 28, 1997, the
record date for the Annual Meeting, 7,039,921 shares of Common Stock were issued
and outstanding, including 1,579 treasury shares held by the Company. As of that
date, no shares of Preferred Stock were issued and outstanding.
At a meeting held on April 10, 1997, the Board of Directors adopted a
resolution proposing and declaring the advisability of an amendment to the
Company's Second Restated Certificate of Incorporation decreasing the authorized
number of shares of capital stock from 50,000,000 shares to 10,000,000 shares
with 9,500,000 shares being reserved for issuance as Common Stock and 500,000
shares being reserved for issuance as Preferred Stock. The Board of Directors
directed that this proposed amendment be considered at the Annual Meeting on May
28, 1997. Article Fourth of the Second Restated Certificate of Incorporation, as
proposed to be amended, is set forth in full in Appendix A to this Proxy
Statement. Approval of this amendment requires the affirmative vote of a
majority of all outstanding shares of the Company's Common Stock entitled to
vote at the Annual Meeting.
The reduction in authorized shares of capital stock will allow the Company
to reduce certain franchise tax expenses. The Company is a Delaware corporation
and is subject to an annual franchise tax payment under Delaware law. While the
Company cannot predict the precise savings it will have each year, the Company
estimates that it will pay approximately $66,000 in franchise taxes for Fiscal
1997, but if the authorized number of shares of capital stock were reduced to
10,000,000, the tax would be less than $17,000, or a savings of over $49,000.
Although the Company cannot predict with absolute accuracy the savings it will
effect in future years by reducing the authorized capital stock, it believes the
savings will continue to be comparable.
The Board of Directors believes that following approval of the reduction in
the authorized shares of capital stock of the Company there will be sufficient
authorized, but unissued, shares to provide the Company with the flexibility it
might need in the future. The Board of Directors of the Company currently has no
negotiations, understandings, agreements, or arrangements concerning the
issuance of any equity securities.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE COMPANY'S
SECOND RESTATED CERTIFICATE OF INCORPORATION REDUCING THE AUTHORIZED NUMBER OF
SHARES OF CAPITAL STOCK.
16
<PAGE> 19
PROPOSAL NO. 3
REVERSE STOCK SPLIT
GENERAL
On April 10, 1997, the Board of Directors adopted a resolution proposing
and declaring the advisability of an amendment to the Second Restated
Certificate of Incorporation of the Company to effect a 1 for 2 1/2 reverse
stock split of the issued and outstanding shares of the Company's Common Stock
(the "Reverse Stock Split"). If the Reverse Stock Split is approved by the
requisite vote of the Company's stockholders, the Reverse Stock Split will be
deemed effective upon the filing of a Certificate of Amendment with the Delaware
Secretary of State, which effective date (the "Effective Date") is expected to
occur shortly after the Meeting, and each share of Common Stock outstanding
immediately prior to the Reverse Stock Split ("Old Shares") shall automatically
be converted into two-fifths of a validly issued, fully paid and nonassessable
share of Common Stock and each share of Common Stock into which shares are
converted shall have a par value of $.025 ("New Shares"). Each certificate
representing one or more Old Shares shall represent a number of New Shares equal
to the shares evidenced thereby prior to such effectiveness multiplied by
two-fifths. No fractional shares of Common Stock shall be issued. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall pay cash (without interest) equal to the product of such fraction
(determined based on the aggregate number of shares held by such holder)
multiplied by the average of the closing sale price of a share of Common Stock
as reported on the American Stock Exchange on the effective date hereof and
rounding the result to the nearest $.01. Upon surrender of each certificate for
Old Shares, a certificate representing the New Shares will be issued and
forwarded to the stockholders. However, each certificate representing Old Shares
will continue to be valid and represent New Shares equal to two-fifths the
number of Old Shares (subject to the treatment of fractional shares).
The proposed amendment to Article Fourth of the Second Restated Certificate
of Incorporation, as amended to effect the Reverse Stock Split, is set forth in
full in Appendix A to this Proxy Statement.
VOTE REQUIRED
Approval of the Reverse Stock Split amendment requires the affirmative vote
of a majority of all outstanding shares of the Company's Common Stock entitled
to vote at the Annual Meeting.
PURPOSES AND EFFECTS OF THE REVERSE STOCK SPLIT
The purpose of the Reverse Stock Split is to increase the marketability and
liquidity of the Common Stock.
The Common Stock is listed for trading on the American Stock Exchange. On
the Record Date, the reported closing price of the Common Stock was 2-7/8 per
share. It is expected that the price of the Common Stock will decrease as a
result of the dividend (the "Dividend") of $2.00 per Old Share currently
contemplated to be declared and paid in May. This decrease could adversely
affect the liquidity and marketability of the Common Stock.
The Board believes that a decrease in the number of shares of Common Stock
outstanding without any material alteration of the proportionate economic
interest in the Company represented by individual shareholdings may increase the
trading price of such shares to a price more appropriate for an exchange-listed
security, although no assurance can be given that the market price of the Common
Stock will rise in proportion to the reduction in the number of outstanding
shares resulting from the Reverse Stock Split.
17
<PAGE> 20
The Board also believes that the per share price of the Common Stock,
especially after giving effect to the Dividend, may limit the effective
marketability of the Common Stock because of the reluctance of many brokerage
firms and institutional investors to recommend lower-priced stocks to their
clients or to hold them in their own portfolios. Certain policies and practices
of the securities industry may tend to discourage individual brokers within
those firms from dealing in lower-priced stocks. Some of those policies and
practices involve time-consuming procedures that make the handling of lower
priced stocks economically unattractive. The brokerage commission on a sale of
lower-priced stock may also represent a higher percentage of the sale price than
the brokerage commission on a higher-priced issue. Any reduction in brokerage
commissions resulting from a Reverse Stock Split may be offset, however, in
whole or in part, by increased brokerage commissions required to be paid by
stockholders selling "odd lots" created by such Reverse Stock Split.
In addition, the Board believes that a Reverse Stock Split may be necessary
in order to increase the trading price of the Company's Common Stock to levels
acceptable to the American Stock Exchange (the "Exchange"), and may be
necessitated in order to maintain the listing of the Common Stock on the
Exchange.
However, no assurance can be given that any or all of these effects will
occur. Stockholders should note that the Board of Directors cannot predict what
effect the Reverse Stock Split will have on the market price of the Common
Stock.
CHANGES AFFECTING CAPITAL STOCK
The par value of the Common Stock will be increased from $.01 to $.025 per
share following the Reverse Stock Split, and the number of Common Stock
outstanding will be reduced from 7,039,921 (including 1,579 treasury shares) to
approximately 2,816,000, without giving effect to the elimination of fractional
shares.
The Common Stock is currently registered under Section 12(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, as a
result, the Company is subject to the periodic reporting and other requirements
of the Exchange Act. The Reverse Stock Split will not affect the registration of
the Common Stock under the Exchange Act.
IMPLEMENTATION OF REVERSE STOCK SPLIT
As soon as practicable after the effective date of the Reverse Stock Split,
the Company will send a letter of transmittal to each holder of record of Old
Shares. The letter of transmittal will contain instructions for the surrender of
certificate(s) representing Old Shares to First Chicago Trust Company of New
York, the Company's exchange agent (the "Exchange Agent"). Upon proper
completion and execution of the letter of transmittal and return thereof to the
Exchange Agent, together with the certificate(s) representing Old Shares, a
stockholder will be entitled to receive a certificate representing the number of
New Shares of Common Stock into which his Old Shares have been reclassified and
changed as a result of the Reverse Stock Split and cash, without interest, in
lieu of fractional shares of Common Stock.
Stockholders should not submit any certificates until requested to do so.
No new certificate will be issued to a stockholder until he has surrendered his
outstanding certificate(s) together with the properly completed and executed
letter of transmittal to the Exchange Agent.
18
<PAGE> 21
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the Reverse Stock Split. The Company, however, believes that
because the Reverse Stock Split is not part of a plan to periodically increase a
stockholder's proportionate interest in the assets or earnings and profits of
the Company, the Reverse Stock Split will have the following federal income tax
effects:
1. A stockholder will not recognize gain or loss on the exchange,
except with respect to cash received in lieu of fractional shares. In the
aggregate, the stockholder's basis in the New Shares (before adjustment for
cash received in lieu of fractional shares) will equal such stockholder's
basis in the Old Shares.
2. A stockholder's holding period for the New Shares will be the same
as the holding period of the Old Shares exchanged therefor.
3. Stockholders who receive cash in lieu of fractional New Shares will
be treated as having received such fractional New Shares pursuant to the
exchange and then as having sold those fractional shares for cash. Such
stockholders will recognize gain or loss with respect to such fractional
New Shares in an amount equal to the difference between the tax basis
allocated to such fractional New Shares and the cash received in respect
thereof. Assuming that the Common Stock is held as a capital asset, any
such gain or loss will be capital gain or loss and will constitute
long-term capital gain or loss if the holding period of such fractional New
Shares (as determined above) exceeds one year.
4. The Reverse Stock Split will constitute a reorganization within the
meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended, and the Company will not recognize any gain or loss as a result of
the Reverse Stock Split.
MISCELLANEOUS
The Board of Directors may abandon the proposed Reverse Stock Split at any
time prior to the Effective Date of the Reverse Stock Split if for any reason
the Board of Directors deems it advisable to abandon the proposal. The Board of
Directors may consider abandoning the proposed Reverse Stock Split if it
determines, in its sole discretion, that the Reverse Stock Split would adversely
affect the ability of the Company to raise capital or the liquidity of the
Common Stock, among other things.
RECOMMENDATION AND VOTE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE COMPANY'S
SECOND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT.
19
<PAGE> 22
PROPOSAL NO. 4
CHANGE OF CORPORATE NAME
At a meeting held on April 10, 1997, the Board of Directors adopted a
resolution proposing and declaring the advisability of an amendment to the
Company's Restated Certificate of Incorporation to change the name of the
Company to "Multigraphics, Inc." The Board of Directors believes that the new
name will promote public recognition of the Company and enable the public and
those already familiar with the Company to recognize the Company's holdings
following the sale of Sheridan Systems. The Board of Directors directed that
this proposed amendment be considered at the Annual Meeting on May 28, 1997.
Approval of this amendment requires the affirmative vote of a majority of all
outstanding shares of the Company's Common Stock entitled to vote at the Annual
Meeting.
If the proposed amendment is approved, Article First of the Second Restated
Certificate of Incorporation would be amended to read as follows:
"The name of the corporation is MULTIGRAPHICS, INC."
Under Delaware law, a change of corporate name does not require shareholder
approval. Nevertheless, the Board of Directors believes it is appropriate to
have the benefit of the shareholders' views on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDING THE SECOND RESTATED
CERTIFICATE OF INCORPORATION OF THE COMPANY TO CHANGE THE NAME OF THE COMPANY.
PROPOSAL NO. 5
EMPLOYMENT OF PRINCIPAL INDEPENDENT PUBLIC ACCOUNTANTS
Acting upon the recommendation of the Audit Committee, the Board of
Directors has chosen the firm of Arthur Andersen LLP as the Company's
independent public accountants to audit the consolidated financial statements of
the Company for the fiscal year ending July 31, 1997, subject to ratification by
the stockholders. The firm of Arthur Andersen LLP has audited the Company's
consolidated financial statements annually since fiscal 1982. The Company knows
of no direct or material indirect financial interest of Arthur Andersen LLP in
the Company, or of any connection with the Company in the capacity of promoter,
underwriter, voting trustee, officer or employee. If the stockholders do not
ratify the employment of Arthur Andersen LLP, the selection of independent
public accountants will be reconsidered by the Board of Directors.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting and will have an opportunity to make a statement if he or she desires to
do so and will also be available to respond to appropriate questions raised at
the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Stockholder proposals submitted for presentation at the 1998 Annual Meeting
of Stockholders must be received by the Corporate Secretary of the Company at
its principal executive offices no later than June 30, 1997.
20
<PAGE> 23
EXPENSES OF SOLICITATION
The costs of preparing, assembling and mailing the Notice of Annual Meeting
of Stockholders and the Proxy Statement will be borne by the Company. In
addition to solicitation by mail, the Company will request banks, brokers and
other custodians, nominees and fiduciaries to supply proxy materials to the
beneficial owners of the Company's stock and will reimburse them for their
expenses. Certain directors, officers and other employees of the Company, not
specially employed for the purpose, may solicit proxies, without additional
remuneration, by personal interview, mail, telephone or telegraph. In addition,
the Company has retained Corporate Investors Communications, Inc. to assist with
the solicitation for a fee of $2,500 plus expenses.
OTHER BUSINESS
It is not intended that any business other than that set forth in the
Notice of Annual Meeting and described in this Proxy Statement will be brought
before the Meeting. If any other matters are properly presented for action at
the Meeting, it is intended that the persons named in the accompanying proxy
will vote or refrain from voting in accordance with their best judgment on such
matters after consultation with the Board of Directors.
By Order of the Board of Directors,
Steven R. Andrews, Secretary
Mt. Prospect, Illinois
May 6, 1997
21
<PAGE> 24
APPENDIX A
PROPOSAL NO. 2
If approved, Article Fourth of the Second Restated Certificate of
Incorporation would read as follows:
"Fourth: The total number of shares of all classes of capital stock
which the Company shall have the authority to issue is ten million
(10,000,000) shares, of which nine million five hundred thousand
(9,500,000) shall be shares of Common Stock of the par value of $0.01
($0.025 if proposal no. 3 is adopted) per share (the "Common Stock") and
five hundred thousand (500,000) shares shall be shares of Preferred Stock
of the par value of $0.01 per share (the "Preferred Stock").
All shares to be issued must be voting securities and, as to all
classes of such voting securities, voting power shall be appropriately
distributed among such classes by the Board of Directors of the Company on
a proportional one vote per share basis. With respect to any class of
securities having a preference superior to another class of securities with
respect to dividends or other rights, such superior class of securities
must contain adequate provision for the election of directors representing
such preferred class of securities in the event of failure to pay such
dividends. No stockholder shall have any preemptive right to purchase or
subscribe for any or all additional issues of stock with the Company or any
or all classes or series thereof, whether now or hereafter authorized, or
for any securities of the Company convertible into such stock.
Subject to the limitations prescribed by law and the provisions of
this Article Fourth, any number of series of Preferred Stock may be issued
from time to time with such voting powers and in such series and in such
amounts, with such designations, dividend rates, dividend rights,
redemption rights, conversion rights, rights upon dissolution or
liquidation, other preferences and relative, participating, optional or
other special rights and qualifications, limitations or restrictions
thereof, as shall for each series thereof be fixed by resolution of the
Board of Directors adopted prior to the time shares of any such series are
first issued. The Board of Directors is hereby expressly granted the
authority to fix any one or more of such matters by resolution so adopted
and to cause a Certificate of Designations to be filed reflecting the terms
thereof."
PROPOSAL NO. 3
If approved, Article Fourth of the Second Restated Certificate of
Incorporation would be amended to insert the following after the first sentence
thereof:
"Every share of Common Stock of the Corporation issued as of the date
and time that this Amendment becomes effective (including any shares held
by the Corporation as treasury shares) shall automatically be converted
into two-fifths of a validly issued, fully paid and nonassessable share of
Common Stock and each share of Common Stock into which shares are converted
shall have a par value of $0.025. Upon the effectiveness of this Amendment,
each certificate representing one or more shares of Common Stock
immediately prior to such effectiveness shall represent a number of shares
of Common Stock (subject to the treatment of fractional share interests as
described below) equal to the shares evidenced thereby prior to such
effectiveness multiplied by two-fifths. Holders of certificates
representing shares of Common Stock immediately prior to such effectiveness
shall be entitled to receive, upon delivery of such certificates to the
Corporation or to its agent a certificate or certificates representing the
number of shares of Common Stock (subject to the treatment of fractional
share interests as described
A-1
<PAGE> 25
below) previously evidenced by the certificates so tendered multiplied by
two-fifths. No fractional shares of Common Stock shall be issued. In lieu
of any fractional shares to which the holder would otherwise be entitled,
the Corporation shall pay cash (without interest) equal to the product of
such fraction (determined based on the aggregate number of shares held by
such holder) multiplied by the average of the closing sale price of a share
of Common Stock as reported on the American Stock Exchange on the effective
date hereof and rounding the result to the nearest $.01."
A-2
<PAGE> 26
AM INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING ON MAY 28, 1997
The undersigned hereby constitutes and appoints Jerome D. Brady, Thomas
P D. Rooney and Steven R. Andrews, and each of them, his true and lawful
R agents and proxies with full power of substitution in each, to represent
O the undersigned at the Annual Meeting of Stockholders of AM
X INTERNATIONAL, INC., to be held at the Riverway Auditorium, 6133 North
Y River Road, Rosemont, Illinois on May 28, 1997, and at any adjournment
thereof, on all matters coming before said meeting.
<TABLE>
<S> <C>
Election of Directors, Nominees: COMMENTS: (change of address)
Robert E. Anderson, III, Jeffrey D. Benjamin, ---------------------------------------------
Robert N. Dangremond, Jeff M. Moore, ---------------------------------------------
Thomas D. Rooney ---------------------------------------------
---------------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES ON THE REVERSE SIDE. IF YOU DO NOT MARK ANY
BOXES, YOUR PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 27
PLEASE MARK YOUR
VOTES AS IN THIS
X EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ELECTION OF DIRECTORS, AND FOR PROPOSALS 2,
3, 4 AND 5.
------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF DIRECTORS, AND
FOR PROPOSALS 2, 3, 4 AND 5.
------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of [ ] [ ] [ ] Change of Address/
Directors Reduction of Comments on Reverse Side
(See Reverse) Authorized
Number of Please mark this box if you
Shares will personally be attending the
For, except vote withheld from the meeting. [ ]
following nominee(s):
-----------------------------------
FOR AGAINST ABSTAIN
3. Approval of Reverse Stock Split [ ] [ ] [ ]
FOR AGAINST ABSTAIN
4. Approval of Change of Corporate Name [ ] [ ] [ ]
FOR AGAINST ABSTAIN
5. Approval of Independent Accountants [ ] [ ] [ ]
</TABLE>
-------------------------------------------------------------------------------
Please date and sign exactly as
name appears hereon. Joint
owners should each sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
-------------------------------
1997
-------------------------------
SIGNATURE(S) DATE
