CUTCO INDUSTRIES, INC.
125 South Service Road
Jericho, New York
________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on March 26, 1997
To the Holders of Common Stock:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders (the
"Meeting") of CutCo Industries, Inc., a New York corporation (the "Company"),
will be held on March 26, 1997 at 9:30 A.M. (local time) at the offices of the
Company, 125 South Service Road, Jericho, New York, for the following
purposes:
1. To elect three (3) directors to the Board of Directors of the Company;
and
2. To transact such other business as properly may be brought before the
Meeting.
Shareholders of record as of the close of business on February 20, 1997
will be entitled to notice of and to vote at the Meeting and any postponement
or adjournment thereof. The stock transfer books of the Company will not be
closed.
Enclosed is the Company's Annual Report to Shareholders for the Company's
fiscal year ended June 30, 1996, along with a proxy statement and proxy. You
are cordially invited to attend the Meeting in person, if possible.
Shareholders who do not expect to attend the Meeting are requested to sign and
return the enclosed proxy in the envelope provided. Your proxy may be revoked
in the manner described in the accompanying proxy statement at any time before
it has been voted at the Meeting.
By Order of the Board of Directors
Marvin W. Marcus,
Jericho, New York Chairman of the Board
February 23, 1997
_____________________________________________________________
IMPORTANT:The prompt return of proxies will save the Company the expense of
further requests for proxies in order to insure a quorum. A self-addressed
envelope, requiring no postage if mailed within the United States, is enclosed
for your convenience.
PROXY STATEMENT
--------------
CutCo Industries, Inc.
125 South Service Road
Jericho, New York
Annual Meeting of Shareholders
To be held March 26, 1997
-------------
INTRODUCTION
This proxy statement is furnished to shareholders of CutCo Industries,
Inc., a New York corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company (the "Board") of proxies
to be used at the Annual Meeting of Shareholders of the Company (the
"Meeting") to be held on March 26, 1997, at 9:30 A.M. at the principal
executive offices of the Company, 125 South Service Road, Jericho, New York
11753, for the purposes set forth in the Notice of Meeting. It is anticipated
that this proxy statement and accompanying material will first be mailed to
shareholders on or about February 24, 1997.
Matters to be Considered at the Meeting
At the Meeting, the shareholders of the Company will be asked to elect
three (3) directors of the Company, each of whom is to serve a two (2) year
term, and to transact such other business as properly may be brought before
the Meeting.
Voting at the Meeting
Shareholders of record entitled to vote at the Meeting and any
postponement or adjournment thereof will be determined as of the close of
business on February 20, 1997. At that date there were outstanding and
entitled to vote 780,625 shares of the Company's common stock, par value $.10
per share ("Common Shares"). Each Common Share entitles the holder thereof to
one vote. The presence in person or by properly executed proxy of the holders
of a majority of the outstanding Common Shares entitled to vote at the Meeting
is necessary to constitute a quorum at the Meeting. The affirmative vote of a
plurality of the Common Shares voted at the Meeting is required for the
election of the directors.
Management recommends that shareholders vote FOR the election of
Management's three (3) nominees to the Board.
Proxies
All Common Shares represented at the Meeting by properly executed proxies
received prior to or at the Meeting will be voted at the Meeting in accordance
with the instructions on the proxies. If no instructions are indicated,
proxies will be voted FOR the election of Management's three (3) nominees to
the Board. If any other matters properly are brought before the Meeting for
action, the persons named in the enclosed form of proxy and acting thereunder
will have discretion to vote on such matters in accordance with their best
judgment. The proxy committee appointed by the Board consists of Marvin W.
Marcus, Michael P. Kramer, and John H. Daniels.
Any proxy may be revoked by the person giving it at any time before it is
voted. Proxies may be revoked by (i) filing with the Secretary of the Company
at or before the taking of the vote at the Meeting a written notice of
revocation bearing a later date than the date of the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company or (iii) attending the Meeting and stating the
intention to vote in person to the Secretary of the Meeting and voting in
person (although attendance at the Meeting will not in and of itself
constitute revocation of a proxy). Any written notice revoking a proxy should
be delivered to CutCo Industries, Inc., 125 South Service Road, Jericho, New
York 11753, Attention: Secretary.
Proxy Solicitation
Proxies are being solicited by and on behalf of the Company. All
expenses of this solicitation, including the cost of preparing and mailing
this proxy statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies may be solicited by directors,
officers and employees of the Company in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not
be additionally compensated, but may be reimbursed for out-of-pocket expenses
in connection with such solicitation.
Arrangements also will be made with custodians, nominees and fiduciaries
for the forwarding of proxy solicitation material to beneficial owners of
Common Shares held of record by such custodians, nominees and fiduciaries, and
the Company may reimburse such custodians, nominees and fiduciaries for
reasonable expenses incurred in connection therewith.
Shareholders are urged to read and carefully consider the information
presented in this proxy statement.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth information at February 1, 1997,
concerning ownership of the Company's Common Shares by each person who owns of
record, or is known to the Company to own beneficially, more than 5% of the
Company's Common Shares.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(1) of Class
Sole Voting and Shared Voting and
Investment Power Investment Power
Marvin W. Marcus - 0 - 338,713(2) 40.7%
P.O. Box 265
Jericho, New York
Don vonLiebermann - 0 - 338,713(2) 40.7%
P.O. Box 265
Jericho, New York
- - --------------------------------------------------------------------
Footnotes for the preceding and following tables appear after the following
table.
Management
The following table sets forth information at February 1, 1997 concerning
ownership of the Company's Common Shares by all directors and nominees and
highly compensated executive officers, individually, and all officers and
directors of the Company as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(1) of Class
- - ------------------- ------------------------ --------
Sole Voting and Shared Voting and
Investment Power Investment Power
---------------- -----------------
Marvin W. Marcus - 0 - 338,713(2) 40.7%
P.O. Box 265
Jericho, New York
Don vonLiebermann - 0 - 338,713(2) 40.7%
P.O. Box 265
Jericho, New York
Michael P. Kramer 26,646(3) - 0 - 3.3%
P.O. Box 265
Jericho, New York
Richard C. Anthony 2,250(4) - 0 - .3%
118 East 92nd Street
New York, New York
John H. Daniels 6,250(4) - 0 - .8%
29 Kodiak Drive
Woodbury, New York
Vincent K. DePierro 2,250(4) - 0 - .3%
13 Grays Farm Road
Westport, Connecticut
Ira H. Goldberg 2,250(4) 2,200(5) .6%
220 Fifth Avenue
New York, New York
All officers and
directors as a group
(8 persons) 39,646 340,913 44.4%
- - --------------------------------------------------------------------
Footnotes to the two preceding tables follow immediately.
(1) Each named person or group is deemed to be the beneficial owner of
securities that may be acquired within sixty days through the exercise of
options, warrants and rights, if any, and such securities are deemed to be
outstanding for the purpose of computing the percentage of the class
beneficially owned by such person or group. Such securities are not deemed to
be outstanding for the purpose of computing the percentage of the class
beneficially owned by any other person or group. Accordingly, the indicated
number of shares includes shares issuable upon exercise of options (including
employee stock options) held by such person or group.
(2) Messrs. Marcus and vonLiebermann entered into an agreement pursuant to
which they agreed to vote all of the shares owned by either of them upon
mutual agreement with respect to matters relating to an acquisition of the
Company. Accordingly, this number includes 166,866 shares owned by Mr.
vonLiebermann individually and 117,241 shares owned by Mr. Marcus
individually. Also includes 26,000 Common Shares and 26,000 Common Shares
issuable upon exercise of currently exercisable options held by Messrs.
vonLiebermann and Marcus, respectively. Also includes 1,000 shares,
representing Mr. Marcus' pro rata portion of shares owned by a partnership in
which Mr. Marcus is a partner. Also includes an aggregate of 606 shares held
by Mr. vonLiebermann as custodian for his children in which he has voting and
investment power, but no present economic interest. Mr. vonLiebermann
disclaims beneficial ownership of these shares. Includes 1,000 shares owned
directly or indirectly by Mr. Marcus' wife but does not include 3,400 shares
owned by Mr. Marcus' adult children or 31,034 shares owned by other relatives
of Mr. Marcus, in all of which shares Mr. Marcus has no present economic
interest or voting power and as to which he disclaims beneficial ownership.
(3) Includes 16,000 Common Shares underlying options owned by Mr. Kramer that
are either presently exercisable or exercisable within sixty (60) days.
(4) Includes 2,250, 2,250, 2,250 and 2,250 Common Shares underlying options
owned by each of Messrs. Anthony, Daniels, DePierro and Goldberg,
respectively, and that are either presently exercisable or exercisable within
sixty (60) days. Mr. Daniels and his spouse hold 4,000 shares as joint
tenants.
(5) Includes 2,200 Common Shares owned by Mr. Goldberg's wife and
father-in-law, as joint tenants with right of survivorship. Mr. Goldberg
holds a power-of-attorney to vote those Common Shares, but disclaims
beneficial ownership thereof.
Fiscal Year End Option Values
The following table sets forth information at the 1996 fiscal year end,
concerning the number of securities underlying unexercised options held by the
executive officers and directors of the Company identified in the Summary
Compensation Table:
Number of Securities
Underlying Unexercised
Name of Holder Options/SARs at Fiscal Year End (#)
- - -------------- ------------------------------------
Exercisable Unexercisable
----------- -------------
Marvin W. Marcus 26,000 0
Don vonLiebermann 26,000 0
Michael P. Kramer 14,500 11,500
Based solely upon a review of any Forms 3 and 4 and amendments thereto
furnished to the Registrant under Rule 16a-3(d) during its most recent fiscal
year and any Form 5 and amendments thereto furnished to the Registrant with
respect to its most recent fiscal year, and any written representations that
no such Forms 3, 4, 5 or amendments to any of them, was required during the
most recent fiscal year, the Registrant believes that no person who at any
time during the fiscal year was a director, officer, or beneficial owner of
more than 10% of any class of equity securities of the Registrant, failed to
file on a timely basis reports required by Section 16(a) during the most
recent fiscal year or prior years.
ELECTION OF DIRECTORS
General
The number of directors to be elected at the meeting is three (3). The
Board of Directors consists of a Class I, with four (4) directors, and a Class
II, with three (3) directors. At the Company's annual shareholder meeting
held on April 20, 1995, all three (3) of the incumbent Class II directors,
Messrs. vonLiebermann, Goldberg and DePierro were elected as Class II
directors for a two (2) year term. At the Company's annual shareholder
meeting held on May 15, 1996, the four (4) incumbent Class I directors,
Messrs. Marcus, Anthony, Kramer and Daniels, were elected for a term of two
years expiring at the Annual Meeting of Shareholders that will follow the
Company's fiscal year ending June 30, 1997. At the Meeting, Messrs.
vonLiebermann, Goldberg and DePierro are being nominated as Class II
directors, and will be elected to two (2) year terms, now scheduled to expire
at the Annual Meeting of Shareholders that will follow the Company's fiscal
year ending June 30, 1998. Each director elected at an annual meeting of
shareholders shall be elected for a two (2) year term regardless of whether
such director is a Class I or Class II director. All of the current directors
were elected by a vote of shareholders at a meeting for which proxies were
solicited.
There were six (6) regularly scheduled and special meetings of the Board
held during the fiscal year ended June 30, 1996. All directors of the Company
attended at least 75% of such meetings, except for Messrs. DePierro and
Daniels, who attended three (3) of the six (6) meetings. The Company does not
have audit, nominating or compensation committees, or committees performing
similar functions, on its Board.
The three (3) nominees for election as directors at the Meeting are the
incumbent directors Messrs. vonLiebermann, Goldberg and DePierro, each of whom
is described in the section of this Proxy Statement entitled "Management."
The proxies solicited hereby will not be voted for a greater number of
persons than the number of nominees named herein. The information contained
herein concerning the director nominees proposed by the Board has been
furnished to the Company by such nominees. The three (3) nominees receiving
the most votes at the Meeting will be elected as directors. In the event any
of the nominees should become unavailable or unwilling to accept election, it
is intended that the persons named in the proxy will vote for the election, in
the place and stead of such nominees, of a substitute who shall be designated
by the Board. The Board has no reason to believe that it will be necessary to
designate any substitute nominee.
MANAGEMENT
Set forth below is information, including a brief description of
principal occupation and employment during the past five years, with respect
to each director, nominee for director and executive officer of the Company.
Each such person is a United States citizen.
MARVIN W. MARCUS, age 72, has been Chairman of the Board of Directors of
the Company since October 1, 1986 and Vice President-Financial Planning since
May 1984. Mr. Marcus has also been a director of the Company since 1970.
From 1970 until April 1984, he served as Secretary/Treasurer and Chief
Financial Officer of the Company. He is a certified public accountant and for
more than twenty years has been a principal in the accounting firm of Gettry,
Marcus, Stern & Lehrer, CPA, P.C., formerly known as Gettry, Marcus & Co.,
located in New York, New York.
DON VONLIEBERMANN, age 59, has been President of the Company since
October 1, 1986, and a director since 1975. Mr. vonLiebermann had been Vice
President, and thereafter Executive Vice President, of the Company from 1970
until he became President of the Company.
MICHAEL P. KRAMER, age 51, has served as Vice President-Finance and
Treasurer of the Company since May 1984 and as a director of the Company since
November 1984.
JOHN H. DANIELS, age 68, has been a partner in the Mineola, New York law
firm of John H. Daniels since 1958. Mr. Daniels is a director and past
president of the Nassau Lawyers Association and owns and manages commercial
real estate in New York State. Mr. Daniels is the brother-in-law of Marvin W.
Marcus.
RICHARD C. ANTHONY, age 58, is currently a private investor and real
estate consultant. He served as Executive Vice President of The Peregrine
White Company, Inc., engaged in the real estate business, from 1987 to 1993.
VINCENT K. DEPIERRO, age 59, has been an independent publisher sales
representative since April 1995. From February 1987 through April 1995, he
served as the Associate Publisher of Parents Magazine, Division of Gruner Plus
Jahr.
IRA H. GOLDBERG, age 59, is a certified public accountant and for more
than twenty years has been a principal in the accounting firm of Gettry,
Marcus, Stern & Lehrer, CPA, P.C., formerly known as Gettry, Marcus & Co.,
located in New York, New York. Marvin W. Marcus is also a principal of such
firm.
LOUISE BATES, age 48, has been Secretary of the Company since November
1995. She also has been Executive Assistant to the President of the Company
since 1988. Previously, from 1984 through 1988, Ms. Bates was CutCo's
Director of Administrative Services. She has held other administrative
positions at CutCo since 1981.
EXECUTIVE AND DIRECTOR COMPENSATION
The following table shows information regarding compensation paid for
services rendered in all capacities to the Company and its subsidiaries during
the fiscal years ended June 30, 1994, 1995 and 1996, to the three (3) highest
paid persons who are officers or directors of the Company (being the only such
persons whose aggregate annual compensation exceeds $100,000). A fee of $500
per meeting is paid to non-employee members of the Board for attendance in
person at Board meetings.
Summary Compensation Table
Securities
Name and Salary ($) Underlying Other
Principal Position Year (2)(3) Option Grants Compensation
- - ------------------ ---- ---------- ------------- ------------
Don vonLiebermann, 1996 202,000 20,000 (1)
President 1995 240,796 -- (1)
1994 246,582 6,000 (1)
Marvin W. Marcus 1996 184,500 20,000 (1)
Chairman of the Board 1995 240,796 -- (1)
and Vice President - 1994 246,582 6,000 (1)
Financial Planning
Michael P. Kramer 1996 143,573 20,000 (1)
Vice President - 1995 155,756 -- (1)
Finance 1994 155,868 6,000 (1)
________________________________________________________________________
(1) The Company provided and maintained automobiles for use by Marvin W.
Marcus, Don vonLiebermann and Michael P. Kramer in connection with Company
business during fiscal years 1994, 1995 and 1996. The aggregate annual cost
to the company for these automobiles was approximately $48,000. To the extent
these automobiles were used for other than Company business, the cost of
rental and maintenance may be considered compensation to the above-named
individuals. No value for personal use of automobiles by such individuals
has been included in the compensation table set forth above.
(2) The current annual salary for each of Messrs. Marcus, vonLiebermann and
Kramer is $184,500, $202,000 and $143,573, respectively. (See Employment
Agreements, below, for information concerning deferrals by Messrs. Marcus and
vonLiebermann with respect to salary increases.)
(3) Does not include $32,400, $32,400, and $32,400 paid to the accounting firm
of Gettry, Marcus, Stern & Lehrer, CPA, P.C. (formerly known as Gettry, Marcus
& Co.), in which Messrs. Marcus and Goldberg are principals, for services
rendered by the firm during the fiscal years ended June 30, 1996, 1995, and
1994, respectively, in the preparation of federal, state and local tax returns
and performance of other accounting services for the Company and its
subsidiaries, inclusive of disbursements.
Employment Agreements
Each of Messrs. Marcus, vonLiebermann and Kramer has entered into an
Employment Agreement with the Company dated April 24, 1991, each of which has
been amended from time to time, as most recently amended on August 14, 1996 by
written agreement. Each of the Employment Agreements is now scheduled to
expire on July 31, 1997. Those Employment Agreements provided for initial
annual salaries of $246,582, $246,582, and $129,162, for Messrs. Marcus,
vonLiebermann and Kramer, respectively (subject to cost of living increases
during certain years of the terms thereof). Effective January 1, 1996,
pursuant to an oral modification to each of the Employment Agreements that was
made on November 16, 1995 (and subsequently memorialized in the August 14,
1996 amendments), each of Messrs. Marcus, vonLiebermann and Kramer agreed to
reduce the amount of their annual salary, prospectively, by $75,000, $40,000
and $25,000, respectively. Prior to such reductions, the adjusted annual
salaries of Messrs. Marcus, vonLiebermann and Kramer were $222,000, $222,000
and $156,073, respectively (which, in the case of Messrs. Marcus and vonLieberma
nn, reflected a prior agreed-upon salary reduction). Pursuant to the August
14, 1996 amendments to the Employment Agreements, Mr. Kramer's salary was
increased, effective August 1, 1996, by increasing the monthly installments of
salary payable to Mr. Kramer by $1,041.67, which, on an annualized basis,
represents fifty (50%) percent of the $25,000 annual reduction to which Mr
Kramer previously had agreed. Similarly, the monthly installments of salary
payable to Marcus and vonLiebermann were increased, effective August 1, 1996,
under those August 14, 1996 amendments by $3,125 and $1,666.67, respectively,
which, on an annualized basis, represents fifty (50%) percent of the annual
reductions to which each of Messrs. Marcus and vonLiebermann previously had
agreed, effective January 1, 1996.
Each of Messrs. Marcus and vonLiebermann had deferred receipt of $55,435
of annual salary, which amount represents the aggregate of the cost of living
adjustments to which they are entitled for the period from August 1991 through
October 31, 1994. Under prior understandings between the Company and its
executive officers, such deferred salary had accrued interest at a rate equal
to the prime rate offered from time to time by the Company's primary bank
lender. Such deferred salary with interest would have been payable upon the
termination of the deferring party's employment with the Company. The Company
and Messrs. Marcus and vonLiebermann agreed that, effective January 1, 1996,
all interest would cease to accrue on such deferred compensation, and each of
Messrs. Marcus and vonLiebermann would receive such deferred compensation,
together with previously accrued interest, in twelve (12) consecutive equal
monthly installments of $5,469 each, the first of which was paid by the
Company on January 31, 1996. The aggregate of deferred compensation and
accrued interest payable to each of Messrs. Marcus and vonLiebermann prior to
payment of that first installment was $65,628. All such installments have
been paid to Messrs. Marcus and vonLiebermann.
The Employment Agreements contain customary provisions for benefits,
reimbursement of expenses, disability, non-disclosure and non-competition
(except for Mr. Kramer's agreement, which has no non-competition provision).
Under the January 1, 1996 amendments to the Employment Agreements, each of
Messrs. Marcus, VonLiebermann and Kramer agreed to terminate, effective
January 1, 1996, his rights, under his respective Employment Agreement, to (i)
terminate the Employment Agreement in the event of a change in control of the
Company (as defined in the Employment Agreement), unless he is offered
continued employment pursuant to a written employment agreement on terms and
at a compensation level at least as favorable to him as those set forth in
Employment Agreement, (ii) receive, in the event of such a termination by
reason of a change in control of the Company, a lump sum severance payment
from the Company in an amount equal to 2.99 times the employee's average
annual compensation over the five taxable years preceding the year in which
the change of control occurs, and (iii) continued medical insurance coverage
under the Company's existing policies (to the extent that the value thereof is
not deemed income to the employee under the Internal Revenue Code of 1986, as
amended), for a period of three years after termination of employment. Those
waivers of rights, effective January 1, 1996, were memorialized in the August
14, 1996 amendments to the Employment Agreements.
Stock Option Plans
The Company has a stock option plan for officers, directors and employees
of the Company and its subsidiaries that was adopted on October 16, 1987 (the
"1987 Plan") and a stock option plan for officers, directors and employees of
the Company and its subsidiaries that was adopted on November 15, 1990 (the
"1990 Plan").
Options granted under each Plan to employees may be either incentive
stock options or non-qualified stock options at the discretion of the Board.
Options granted under each Plan to non-employee directors must be
non-qualified stock options. Non-qualified stock options are not intended to
qualify for incentive stock option plan treatment.
Each such Plan gives sole discretion to the Board to grant options to
purchase the Company's Common Shares at not less than the market value of the
shares on the date of grant. Options granted under each Plan must expire no
later than ten years (five years, if the grant is on or after January 1, 1987
and the grantee is a director or holder of 10% of the voting stock of the
Company), after the date of grant.
During fiscal 1996, no options were exercised under any of the Plans.
During fiscal 1996, options to acquire 5,000 shares of the Company's Stock
previously granted under the Plans expired. Furthermore, during fiscal 1996,
options to purchase 96,000 shares were granted under the 1987 Plan, and
options to purchase 10,000 shares were granted under the 1990 Plan, including
options granted to Messrs. Marcus, vonLiebermann and Kramer, each to acquire
20,000 shares, and options granted to the outside directors, each to acquire
2,500 shares.
As of June 30, 1996, there were 2,000 shares available for option grants
under the 1987 Plan, and 50,000 shares were available as the subject of
options to purchase under the 1990 Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See footnote (3) of the summary compensation table under "Executive and
Director Compensation," for a discussion of amounts paid by the Company during
fiscal 1996 to Gettry, Marcus, Stern & Lehrer, CPA, P.C., a New York City
accounting firm in which Messrs. Marcus and Goldberg are partners.
With respect to the fees paid by the Company for services, as described
in the preceding paragraph, Management believes that such fees are
substantially comparable to the fees that would have been paid to unaffiliated
parties providing such services to the Company.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Grant Thornton LLP has been selected by the Board to audit
the Company's books and records for the current fiscal year.
It is expected that a representative of Grant Thornton LLP will be
present at the Meeting and will have the opportunity to make a statement,
should he so desire, and answer appropriate questions from shareholders.
SHAREHOLDER PROPOSALS
The next Annual Meeting of Shareholders of the Company is expected to be
held in January 1998. Any shareholder who wishes to present a proposal for
inclusion in the proxy statement for action at such meeting must comply with
the rules and regulations of the Commission then in effect. Such proposal
must be received by the Secretary, CutCo Industries, Inc., 125 South Service
Road, P.O. Box 265, Jericho, New York 11753, not later than August 1, 1997.
MISCELLANEOUS
As of the date of this statement, the Board has no knowledge of any
business to be presented for consideration at the Meeting other than that
described above.
By Order of the Board of Directors
Marvin W. Marcus, Chairman
Don vonLiebermann, President
Dated: Jericho, New York
February 23, 1997
