PROXY STATEMENT
IN OPPOSITION TO
MANAGEMENT AND THE CURRENT BOARD OF
DIRECTORS
OF
DDL ELECTRONICS, INC.
ANNUAL MEETING OF SHAREHOLDERS
SCHEDULED FOR MAY 31, 1995
Dear Fellow Shareholders in DDL ELECTRONICS, INC.:
This Proxy Statement is being sent to you by a group of your
fellow stockholders,
SCRMM ("Shareholders' Committee to Remove a Moribund
Management"), in connection with
our solicitation of proxies to be used at the Annual Meeting of
Shareholders of DDL Electronics,
Inc. ("DDL"), now set for Wednesday, May 31, 1995, at 10:00 AM
local time in Rosemont,
Illinois. Shareholders of DDL as of April 17, 1995, are entitled
to vote at the forthcoming
Annual Meeting. We seek your proxy to:
1. TAKE CONTROL OF DDL BY THE ONLY METHOD
AVAILABLE -
EXPANDING THE BOARD OF DIRECTORS AND
ELECTING A NEW
MAJORITY - TO BRING AN END TO THE
DISAPPOINTING RESULTS THAT
THE CURRENT BOARD HAS OBTAINED FOR YOU
SINCE THEY HIRED
CURRENT MANAGEMENT 3.5 YEARS AGO, AND
2. ELECT A NEW MAJORITY OF THE BOARD OF
DIRECTORS, WHICH WILL
HAVE AS ITS SOLE OBJECTIVE TO INCREASE THE
SALES, EARNINGS,
BOOK VALUE, CASH FLOW, SHARE TRADING VOLUME
AND SHARE
PRICE OF DDL.
IF YOU OWN YOUR SHARES IN DDL IN THE NAME OF A
BROKERAGE FIRM, YOU
MUST TELL YOUR BROKER HOW TO VOTE YOUR SHARES.
YOUR BROKERS CAN
NOT VOTE AS YOU WISH UNLESS YOU GIVE THEM
SPECIFIC INSTRUCTIONS TO
DO SO. THESE INSTRUCTIONS CAN BE CONVEYED BY
SIGNING, DATING AND
MAILING YOUR GREEN PROXY CARD TODAY.
PLEASE DO NOT RETURN THE PROXY CARD SENT TO
YOU BY DDL
MANAGEMENT. IF YOU HAVE ALREADY RETURNED
DDL'S PROXY, YOU HAVE
THE RIGHT TO REVOKE THIS AUTHORIZATION BY
RETURNING OUR LATER
PROXY. ONLY YOUR LATEST DATED, PROPERLY
EXECUTED PROXY WILL
COUNT AT THE ANNUAL MEETING. THE ONLY WAY YOU
CAN VOTE FOR OUR
NOMINEES IS TO COMPLETE AND RETURN THE
ENCLOSED GREEN PROXY CARD.
We urge you to join us, by giving SCRMM your proxy, to put
a new team in control of
the Board of Directors of DDL. VOTE FOR an end to the
performance of the past three and a
half years. VOTE FOR placing control of DDL in the hands of
your fellow shareholders who
have the same desires as you to see the sales, earnings, book
value, and stock price of DDL
increase. We have no doubt that our proposed slate of Directors
will accomplish considerably
better results for DDL shareholders than we have seen under
the current Board of Directors.
VOTE FOR THE FOLLOWING PROPOSALS:
PROPOSAL 1: NOMINEES FOR ELECTION AS DIRECTORS
The DDL's Board of Directors is presently composed of four
Directors, divided into
three classes of Directors who serve for three-year terms: one in
Class I (whose term of office
expires in 1996), two in Class II (whose term of office expired in
1994) , and one in Class III
(whose term of office expires in 1995). The two Class II
Directors to be elected at the Annual
Meeting scheduled for May 31 will serve until the 1997 Annual
Meeting of Shareholders, and
thereafter until their successors shall have been elected and
qualified.
In opposition to the two incumbent Class II Directors put
forward for re-election by
DDL, SCRMM proposes two experienced and exceptionally
well-qualified nominees. If elected,
these two nominees would hold two of the four seats on the
Board of Directors as presently
constituted.
Each nominee has consented to serve as a director of DDL if
elected. SCRMM does not
expect that either of the nominees will be unable to stand for
election but, in the event that a
vacancy in the slate of nominees should occur unexpectedly, the
Shares represented by the
enclosed GREEN Proxy Card will be voted for a substitute
candidate selected by SCRMM.
The following information concerning business address, age,
and principal occupation
has been furnished by SCRMM's nominees.
Bernee D. L. Strom
3230 335th Street
Waukee, Iowa 50263<PAGE>
Ms. Strom is currently President of USA Digital Radio, a
partnership of Gannett Corporation, Westinghouse, and CBS.
She
chairs the Board of Directors of Quantum Development
Corporation, a business analysis and optimization consulting
and
technology company. She is also a board member of Software
Publishing Corporation, a NASDAQ traded company and on the
Board of Advisors of J.L. Kellogg graduate school of
management
at Northwestern University. Ms. Strom has twenty years of
business experience, including being a founder and shareholder
of
Gemstar Development Corporation; senior executive of the Los
Angeles Herald Examiner; former senior management
consultant
with Deloitte, Haskins & Sells. Ms. Strom holds a Masters in
Mathematics from New York University, and an M.B.A. from
UCLA. Ms. Strom is 47 years old.<PAGE>
Erven Tallman
72420 Beverly Way
Rancho Mirage, California
92260<PAGE>
Mr. Tallman has over 45 years of business experience as a
founder,
owner, director and operator of a variety of businesses, including
one which he sold to DDL in 1979. Mr. Tallman was a founder,
director, and president of the following companies: Norco
Industries, a privately held industrial distribution company;
Tallman Construction, a company ultimately owned by Imasco,
one
of Canada's largest publicly-traded corporations; Tallman
Industries, an electronic royalty company. Since 1990, Mr.
Tallman has served as founder and President of Phone Alert
Corporation and Pactall Corporation, a software development
company for automated wireless integrated systems. Since
1991,
Mr. Tallman is a founder and currently General Managing
Partner
of Inland Empire Properties, Ltd., a large privately-held
commercial and industrial development company. He is also a
founder and Chief Executive Officer of E.B. Tall, Inc. Mr.
Tallman is 67 years old, and a shareholder in DDL.<PAGE>
None of the nominees has ever been convicted in a criminal
proceeding (excluding traffic
violations or similar misdemeanors). None of the nominees has
been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order
enjoining further violations of,
or prohibiting activities subject to, federal or state securities
laws or finding any violation of
such laws. Additional information concerning nominees who
own stock in DDL is provided in
Appendix A hereto.
SCRMM urges you to sign, date and return the enclosed
GREEN proxy card to vote
for the election of SCRMM's nominees as Directors.
PROPOSAL NO. 2: AMENDMENT OF THE BYLAWS TO
SET THE NUMBER OF DIRECTORS AT SEVEN
Section 3.02 of DDL's Bylaws deals with the number and
term of office of members of the
Board of Directors. According to identical copies of the Bylaws
provided by DDL's Chief
Executive Officer in June 1994, and in January 1995 by
Disclosure Information Services, Inc.,
Section 3.02 provides:
"SECTION 3.02 Number and Term of Office. The
number of directors shall
be seven (7). Directors need not be stockholders. Each
of the directors of the
Corporation shall hold office until his successor shall
have been duly elected and
shall qualify or until he shall resign or shall have been
removed in the manner
hereinafter provided." (Emphasis supplied)
This notwithstanding, DDL has set the size of the current Board
of Directors at four. The
October 28, 1993, proxy statement of DDL, relating to the last
Annual Meeting of Shareholders
held in December 1993, says that the Board of Directors "in
accordance with DDL's Bylaws,
reduced the size of the Board of Directors to three. . . ." A
Company press release subsequently
announced that the size of the Board of Directors had been
increased to four with the addition of
Mr. Coyne, an employee of DDL.
The size of the Board has been shrinking and growing
more inbred. In recent years,
with each available vacancy the current Board of Directors has
reduced the overall size of
the Board so that no new member was elected. We believe that
this has deprived DDL of
new ideas and expertise on the Board of Directors, qualities
which DDL desperately needs.
Accordingly, pursuant to Bylaw Section 8.03, SCRMM
proposes that the shareholders adopt
the following Proposal to amend Bylaw Section 3.02:
"PROPOSAL NO. 2:
Effectively immediately upon adoption by the
Shareholders, Section 3.02 of DDL's
Bylaws are amended as follows:
Text of Amendment
SECTION 3.02 Number and Term of Office. The
number of directors shall
be not less than seven (7). Directors need not be
stockholders. Each of the
directors of the Corporation shall hold office until his
successor shall have been
duly elected and shall qualify or until he shall resign or
shall have been removed
in the manner hereinafter provided.' (New language
shown in italics)
Immediately following adoption of this amendment to the
Bylaws, there shall be an
election of the number of new Directors required to comply
with the Bylaw provision that
there be no less than the seven (7) members of the Board.
Persons elected will be
classified on the basis of the number of votes received. The
two nominees receiving the
highest number of votes case will become members of Class
I, with terms expiring at the
annual meeting of shareholders in 1996; the nominee
receiving the next highest number of
votes will be elected as a member of Class III, with a term
expiring at the annual meeting
of shareholders in 1995. "
Provided that a quorum of a majority of the outstanding
shares of DDL's Common Stock is
present, the affirmative vote of a majority of the shares present
and voting is required in order for
Proposal No. 2 to be adopted.
PROPOSAL 3: NOMINEES FOR ELECTION AS NEW
DIRECTORS ON THE SEVEN MEMBER BOARD
Assuming that the Shareholders adopt Proposal No. 2
setting the number of Directors at
seven, effective immediately upon adoption, it will then be
necessary for the Annual Meeting to
elect three new Board members.
The election will be conducted in accordance with the
provisions of DDL's Certificate of
Incorporation and Bylaws governing the election of Directors.
Specifically, Stockholders are
entitled to cumulate their votes in the election of Directors by
casting for the election of one
nominee a number of votes equal to the number of Directors to
be elected (i.e., three) multiplied
by the number of shares owned by the Stockholder, or may
distribute such votes on the same
principle among as many candidates as the Stockholder sees fit.
If a proxy is marked for the
election of Directors, it may, at the discretion of the proxy
holders, be voted cumulatively in the
election of Directors.
If a quorum is present at the meeting, the nominees for
election as Directors who receive the
greatest number of votes cast at the meeting by shares present
in person or by proxy and entitled
to vote thereon, shall be elected as Directors.
SCRMM has a slate of experienced and highly qualified
nominees for these three seats on the
Board.
Each nominee named below has consented to serve as a
director of DDL if elected. In the
event that a vacancy in the slate of nominees should occur
unexpectedly, the Shares voted for
that nominee as represented by the enclosed GREEN Proxy
Card will be voted for a substitute
candidate selected by SCRMM.
The nominees have provided the following information
concerning business address, age, and
principal occupation.
Name and Business Address<PAGE>
Principle Occupation for Past Five Years<PAGE>
Melvin Foster
Melvin Foster & Associates
15 Court Square
Boston, Massachusetts 02108<PAGE>
Attorney and Investor. Mr. Foster has
been a practicing attorney in
Boston, Massachusetts since 1971. Between 1951 and 1968, he
served as an operations executive of Robert Hall Clothes, a
subsidiary of United Merchant Manufacturers. He received his
M.B.A. from Boston University in 1951, and his J.D. from
Boston
University in 1971. Mr. Foster is 68 years old, and a
shareholder in
DDL.<PAGE>
Don A. Raig
555 Saturn Boulevard
Suite B-444
San Diego, California 92154<PAGE>
Attorney, Trustee, and Investor.
Mr. Raig is a practicing attorney in San Diego, California.
In addition to the oversight of personal
investments and as a fiduciary, Mr. Raig has served as a
member of
the board of directors of a number of private companies. Mr.
Raig is
53 years old, and a shareholder in DDL.<PAGE>
Robert G. Wilson
1620-1185 West Georgia Street
Vancouver, British Columbia
V6E 4E6 CANADA<PAGE>
Mr. Wilson currently engages in a private business consulting
practice, which advises companies experiencing financial and
organizational difficulties. His consulting practice focuses on
planning, budget-setting, and general troubleshooting.
Previously,
Mr. Wilson was with the House of Seagrams in Montreal,
Quebec, as
Assistant to the Vice President for Finance (1968-70); 1970-79,
Mr.
Wilson built up a series of four General Motors dealerships, five
automobile leasing and rental companies, a heavy equipment
leasing
company, and a major tire wholesaler and retailer; during this
same
period, he held interests in an oil drilling company, an oil field
equipment company, and other businesses; in 1987, Mr. Wilson
was
a principal in the highly successful start-up of Brandover
Enterprises,
Ltd., a Seattle-based public company listed on the Toronto Stock
Exchange. Mr. Wilson has served as a director of Malibu Grand
Prix
Corp. (1984-91), Pioneer Food Corp. (1990-91), Brandover
Enterprises, Ltd. (1989-present), Amusements International,
Ltd.
(1992-present), Bonkers Indoor Playgrounds, Inc.
(1993-present),
Interactive Telesis, Inc. (1993-95). Mr. Wilson is 53 years old,
and a
shareholder in DDL.
<PAGE>
None of the nominees has been convicted in a criminal
proceeding (excluding traffic
violations or similar misdemeanors) during the past ten years.
None of the nominees has been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree
or final order enjoining further
violations of, or prohibiting activities subject to, federal or state
securities laws or finding any
violation of such laws. Additional information concerning those
nominees who own stock in
DDL is set forth in Appendix A hereto.
SCRMM urges you to sign, date and return the enclosed
GREEN proxy card to vote for
the election of SCRMM's nominees as Directors.
VOTING OF PROXIES
Unless otherwise indicated, the persons named in the
accompanying GREEN Proxy Card will
vote properly executed, dated, and duly returned proxies (1)
FOR the election of Bernee D.L.
Strom and Erven Tallman as Class II Directors, (2) FOR the
amendment of Bylaw 3.02 to set the
membership of the Board of Directors at not less than seven,
effective immediately upon
adoption, and to require the immediate election of three new
members of the Board of Directors
following adoption of the Bylaw amendment, (3) FOR the
election of Melvin Foster, Don A.
Raig, and Robert G. Wilson as members of the Board of
Directors to serve for a term of up to
three years, depending upon the number of votes received, until
the 1997 annual meeting of
shareholders and until their successors are elected and
qualified, and (4) in accordance with their
judgment on such other business as may be properly presented
to the meeting and any
adjournment or postponement thereof.
GREEN Proxy Cards should be signed, dated and returned
in the postage-paid envelope
provided. Execution of the enclosed GREEN Proxy Card will not
affect a shareholder's right to
attend the Annual Meeting and vote in person. A shareholder
who has given a proxy may
revoke it at any time before such proxy is voted either by a later
dated proxy or by voting
in person at the Annual Meeting. Attendance at the Annual
Meeting will not in and of itself
constitute a revocation. If you were a shareholder on the Record
Date, you will retain your
voting rights in connection with the Annual Meeting even if you
sell or sold such Shares after
the Record Date. Accordingly, it is important that you vote the
Shares held by you on the
Record Date or grant a proxy to vote such Shares whether or not
you still own the stock.
Shareholders cannot select Directors from among those
proposed by DDL and SCRMM.
Therefore, if you wish to support SCRMM's nominees, your last
dated, properly executed
proxy must be a GREEN Proxy Card.
YOUR INVESTMENT IS AT THE BOTTOM OF THE
BARREL. WHO IS RESPONSIBLE?
Your DDL investment has hit the bottom of the barrel and
stayed there. The majority of the
present Board of Directors and management team has been in
control at DDL since January 1992
(approximately 3.5 years or 1,200 days). The stock's
performance during this period speaks for
itself no matter what criteria you would like to choose.
SCRMM has prepared an array of statistical and graphical
data, from standard sources, in
order to assist you in making an informed opinion regarding the
stewardship of your company.
The data is presented in two forms and requires some
explanation:
1. DDL SPECIFIC DATA: Because DDL has had a
negative net worth, large write-offs,
significant asset sales, bond-to-stock conversions, and
other non-recurring transactions, many
of the standard measures of financial performance are not
relevant. Consequently, we have
focused on incontestable numbers such as revenues,
operating income, book value per share
and, course, stock price:
Table 1: Eight Standard Measurements of DDL's Performance
While Under
Current Management
Year (Fiscal Year Ends June 30)
1992
1993
1994
1995
(9 mo)
Sales
58.5
57.9
48.5
22.7
Sales per Share
8.73
5.73
3.21
1.44
Operating Income ( 000,000)
(8.9)
(5.1)
(6.9)
(3.3)
Total Shares Outstanding ( 000)
6635
11973
14469
15909
Book Value per Share
(.92)
(.08)
(.34)
(.12)
Cash Flow per Share
(2.18)
(.12)
(.18)
N/A
Average Stock Price
1.3125
1.6875
1.4675
1.375
Average Daily Share Volume
15,900
42,000
31,800
15,800
_______________
Calendar year
The picture this data paints is one of a rapidly shrinking
company but with an
increasing number of shares outstanding. Its survival for
the last three years has
depended on the conversion of $12 million of bonds into
common stock and the exercise
of $3,500,000 of warrants rather than any operating
successes.
2. DDL COMPARED TO PEER GROUPS: Because DDL
does not exist in a vacuum, we
feel it is important to compare the performance of DDL to
its peers. A large and respected
financial data base firm (Bridge Information Systems)
classifies companies into industry
segments. DDL is classified in industry 255 (Electrical
Components and Parts). Its peer
group consists of 30 firms that are listed on the New York
Stock Exchange and 50 that are
traded on NASDAQ's National Market System.
The peer groups appear to have done pretty well over the
past three and one-half years.
Not so for DDL.
The graph below depicts the 10 year price movement of
DDL stock compared to the DDL
peer groups. (Current outside members of the Board of
Directors have served on this Board
since 1986.) Notice the dramatic percentage rise in the industry
stock prices since 1991. DDL's
percentage stock price change has not kept pace. The gap
between DDL and its peers has
widened as DDL continues to underperform its industry peer
group even with a management
change at the end of 1991. This is not a record for DDL's
management to be proud of -- and it
certainly does not reflect a turnaround during the period that
Mr. Cook has been Chief Executive
Officer.
Next, consider the graph of Quarterly Sales Growth
Compared to Prior Year. Again, we see
this alarming trend - the NYSE industry peer group shows a
substantial and regular percentage
increase since 1992, while DDL's sales growth, after a positive
trend in 1993, has dropped and
dropped and dropped dramatically since the beginning of 1994.
Finally, review the ranking of your company, DDL, with its
peer group:
Measure
DDL
Ranking in Peer
Group
Median - 50% of
the Peer Group is
Above this Value
5 Year
Compounded
Revenue Growth
(Decline)Rate
- -17%
Bottom 4%
14.1%
Gross Profit
Margin
3.5%
Bottom 1%
24.5%
Average Daily
Trading Value -
Last 30 days
$189,750
Bottom 9%
$2,736,125
Absolute Stock
Price 4/21/95
1.375
Bottom 1%
13
Market
Capitalization
$22 million
Bottom 20%
$82 million
52-Week Stock
Price Change
22.2%
Top 45%
17.1%
26 Week Stock
Price Change
-26.7%
Bottom 7%
6.8%
Who is responsible for keeping DDL out of the bottom of the
barrel? Who is
responsible for maintaining revenues and stock indices at least
similar to the industry?
The Board of Directors and management are responsible. It is
the Board of Directors'
responsibility to ensure that management performs.
WHAT DO YOU THINK OF THE JOB THEY HAVE DONE SO FAR?
The current Board of Directors and management (as a team)
have watched over the
continuing abysmal performance of DDL for at least 3.5 years.
They have had almost 1200 days
to turn around DDL's performance and increase the value of
your investment. Instead, they have
watched your shares trade at prices approaching liquidation
value and watched the average daily
trading volume decline to 15,800, from 42,000 in 1993, while the
number of outstanding shares
more than doubled.
These pictures speak volumes.
While past results are never a certain indicator of future
results, they are used by educated
men and women in their decision making process. The past
results of the current Board of
Directors and their management team speak for themselves.
WHAT DOES THE MARKET THINK?
In addition to these statistics, there is another indicator of
the performance of the current
Board of Directors and their management team: the market
itself. On a daily basis, buyers and
sellers come together to determine the value of assets such as
your investment in DDL -- using
hard, cold cash, they vote on the prospects for the company.
Over the past three and one-half
years, the market has voted on the prospects for DDL. Their
vote places DDL's average share
price in the lowest one percent of its New York Stock Exchange
peer group. We believe that the
market has voted thumbs down on the current Board of
Directors and their management team's
likelihood of success with our company.
We all should be concerned with the force of this thumbs
down vote, echoed by the average
daily trading value of shares traded over the last thirty days
which ranks us in the bottom ten
percent of peer group stocks traded. If the value of our DDL
shares is to increase, there have to
be interested buyers in sufficient numbers to drive up the share
price. We suggest that this low
share trading volume reflects investor's lack of interest in and a
lack of confidence in the current
Board of Directors and their management team. If investors had
any confidence in the potential
success of the present Board of Directors and their management
team, then the stock we all own
would not be trading near its liquidation value.
We agree with the market. After working with this current
management team, we have
lost confidence in their ability either to formulate or to
implement a sound strategic plan.
We have lost confidence that the current Board of Directors or
its management team can
either identify the most promising and attractive candidates or
follow through with the
consummation of a merger, acquisition or consolidation which
will be beneficial to the
shareholders of DDL.
Take this opportunity, VOTE THIS PROXY and remove the
current Board who is
responsible for the results depicted above.
WHAT IS SCRMM?
WHAT WILL SCRMM DO FOR YOU AND AT WHAT COST?
SCRMM is a group of your fellow shareholders who have
banded together under the name of
the Shareholders' Committee to Remove a Moribund
Management ("SCRMM"). Collectively,
the members of SCRMM own, or beneficially own, 3,950,956
shares of stock in DDL
Electronics, Inc., constituting 25.9 percent of the shares entitled
to vote at the forthcoming
Annual Meeting scheduled for May 31.
The members of SCRMM are not corporate gadflies. We are
responsible business people and
investors with a unity of interests with you and most of the
other shareholders in DDL. We want
DDL to be a successful company. We want the stock price to go up.
SCRMM is offering the shareholders the opportunity to elect
a slate of Directors that will be
able to lead DDL in a new direction -- upward. We believe that
the urgency of a change is painfully obvious.
First ask, "What has SCRMM done for DDL to date?" The
answer is enlightening - members
have helped keep DDL alive by providing cash and converting
millions of dollars in corporate
bonds into stock. The impact of this group's involvement is
telling. Look at the following chart
showing the price action of DDL, annotated with SCRMM
member's actions on behalf of DDL:
It is more than fair for you to ask "What exactly will
SCRMM do for me, a shareholder,
if it is successful in its efforts to remove those responsible for the
mediocre and altogether
unimpressive performance of DDL over the past three and
one-half years?" Our agenda is as
follows:
1. We have put forward a slate of Directors with substantial
business, corporate management,
legal and accounting experience, four of whom are
substantial shareholders in DDL. They
want what you want.
2. Our slate of Directors will conduct an assessment of DDL's
assets, liabilities and operating
position, seeking to generate an immediate increase in
corporate sales revenues and the
elimination of any non-productive corporate expenses.
3. Our slate of Directors will put in place a management team
which will aggressively manage
DDL so that you have a chance to receive higher returns on
your investment in DDL.
4. Our slate of Directors will work to restore credibility and
develop a following for our
company among institutional investors, money managers and
other professional investors so
that the price of your shares has a better opportunity to
appreciate in value.
5. Our slate of Directors will reevaluate the lucrative stock
option and restricted stock award
benefit plans put in place by the current Board of Directors
and their management team and, if
they so determine, propose to stockholders that these plans
be significantly modified or
terminated.
6. Our slate of Directors will employ their skills and the skills
of other experts to fully utilize
our company's assets in a series of one or more business
combinations which improve the
performance of DDL and the value of your shares of stock.
7. As they develop and implement a new strategic plan, our
slate of Directors will always place
your interests as shareholders first.
WHAT SPECIFIC STEPS ARE NECESSARY TO CHANGE
CONTROL OF DDL?
Preliminarily, you need to know that the Certificate of
Incorporation and Bylaws of DDL
provide for cumulative voting and staggered terms for its
Directors. The cumulative voting
provision permits each stockholder to multiply the number of
Directors standing for election by
the number of shares of stock that he owns, and cast some or all
of his votes for any one or more
of the Directors standing for election. The staggered terms for
Directors means that only a
portion of the Directors stand for election at any one time; in the
case of DDL, there are three
classes of Directors with members of each class serving a
three-year term.
Cumulative voting and staggered terms for Directors are
protective measures designed to
provide corporate management insulation from the voting power
of the shareholders. They are
intended to make it very difficult to effect a change in corporate
control, i.e. to change a majority
of the Board of Directors. This may be true even in situations in
which the stockholders
represent a clear majority of the outstanding stock of DDL.
In this instance, since there are four members on the present
Board, and only two Directors
are standing for election this year, it is necessary for your fellow
stockholders at SCRMM not
only to put forth its own slate of two Directors in opposition to
the re-election of management's
two candidates but also to amend the Bylaws to expand the
Board to seven members. If our
nominees are also elected to the three new seats on the
expanded Board, five of the seven
members of the Board of Directors will be new members. A
majority of the Board of Directors
should have the power to set corporate policy and to guide
corporate management, including any
necessary changes in the current management team.
PROXY SOLICITATION; EXPENSES
Proxies may be solicited by members of SCRMM and their
nominees by mail, telephone,
telecopier and personal solicitation. Regular employees of
Fortuna and Karen Brenner
Investment Advisor may be used to solicit proxies, and when
used, will not receive additional
compensation for this work. Banks, broker houses and other
custodians, nominees and
fiduciaries will be requested to forward the soliciting matter of
SCRMM to their customers for
whom they hold shares, and SCRMM will reimburse them for
their reasonable out-of-pocket
expenses.
SCRMM has retained Beacon Hill Partners, Inc., 90 Broad
Street, New York, New York,
10004, assist in the solicitation of proxies. SCRMM has agreed
to pay Beacon Hill Partners,
Inc., a fee of up to $14,000, and to reimburse it for its
reasonable out-of-pocket expenses.
Approximately 15 people will be used by Beacon Hill Partners,
Inc. in its solicitation efforts.
The entire expense of preparing, assembling, printing a mailing
this Proxy Statement and related
materials and the cost of soliciting proxies for the nominees
proposed by SCRMM will be borne
by SCRMM.
SCRMM anticipates that its total expenditures relating to
the solicitation will be
approximately $75,000 (excluding costs represented by salaries
and wages of regular employees
of Fortuna and Karen Brenner Investment Advisor); total
expenditures to date have been
approximately $25,000. All expenses of the solicitation will be
borne by the members of
SCRMM in a manner to be determined by them. SCRMM will
seek reimbursement from DDL
for those expenses and does not intend to seek shareholder
approval for such reimbursement at a
subsequent meeting unless such approval is required under
Delaware law.
The members of SCRMM have incurred certain professional
fees and expenses in the
solicitation of your proxy; if SCRMM prevails in this matter,
then it is the intention of SCRMM
to seek reimbursement from DDL for the monies that it has
advanced, insofar as permitted under
the laws of the State of Delaware.
OTHER MATTERS
SCRMM is not aware of any other matters scheduled to be
presented at the Annual Meeting.
If any other matters properly come before the meeting, the
persons named in the enclosed
GREEN Proxy Card will have discretionary authority to vote all
proxies with respect to such
matters in accordance with their judgment.
WHAT SHOULD YOU DO NEXT?
IT SHOULD BE OBVIOUS . . . JOIN US!
We strongly urge you to join us by (1) NOT returning the
proxy cards sent to you by the
current Board of Directors of DDL and, more importantly, by (2)
voting FOR the Shareholders'
slate of Director nominees by signing, dating, and mailing the
enclosed GREEN Proxy Card
today. It is clearly time for a change.
We welcome you aboard and should you have any questions
on when or how to vote your
shares, you should feel free to call our proxy solicitors at
1-800-755-5001.
Sincerely,
Your Fellow Shareholders at SCRMM
May 1, 1995
<PAGE>
APPENDIX A
Members of SCRMM include Karen Beth Brenner, Richard
Fechtor, Don R. Raig, Ronald J. Vannuki,
and Fortuna Investment Partners, L.P. The discussion below
presents the ownership, including beneficial
ownership as defined in Rule 13d-3 promulgated by the
Securities and Exchange Commission, of DDL
stock by members of SCRMM, as well as nominees for election to
DDL's Board of Directors.
As of the date of this Proxy Statement, and consistent with
the Rule 13d-3 definition of "beneficial
owner", members of SCRMM and nominees for the Board of
Directors have the following interests in the
stock of DDL Electronics, Inc.:
1. Karen Beth Brenner is a registered investment advisor in
Newport Beach, California, with limited
discretionary authority over some clients' accounts. Karen Beth
Brenner acquired a total of 16,400 shares
of the Common Stock in transactions in four of her retirement
plans. Clients of Brenner Investment
Adviser purchased a total of 301,605 shares of the Common
Stock in a series of purchases for a total price
of $549,232.
In addition, clients of Brenner Investment Adviser acquired
1,139,839 shares of the Common Stock
through bond conversion of DDL's convertible debt securities in
December, 1992 and through exercise on
July 29, 1993 of stock warrants, which had been received in the
conversion. The total cost of acquiring
these convertible securities and warrants (which were converted
and exercised) was $1,300,024. The
sources of the funds for these purchases were other funds in the
respective client's accounts some of
which may have been derived from then recent sales of other
securities.
Included in the above client group are immediate family
members of Karen Brenner who have
acquired 309,053 shares of the Common Stock for a total
purchase price of $371,580. The source of the
funds for these purchases of the Common Stock were each
family member's private funds.
2. Richard Fechtor is a registered representative and director
of Fechtor, Detwiler & Co, Inc., Boston,
Massachusetts, a securities brokerage firm. Richard Fechtor
acquired a total of 443,050 shares (jointly
held with spouse Pauline Fechtor) in transactions to his own
account for which he paid a total purchase
price for these shares of $450,000. The source of the funds for
these purchases of the Common Stock
were his private funds.
In addition, immediate family members of Richard Fechtor,
but neither dependents nor living in his
household, acquired 132,500 shares of the Common Stock for a
total purchase price of $181,000. The
source of the funds for these purchases of the Common Stock
were each family member's private funds.
Clients of Richard Fechtor have acquired a total of 1,889,883
shares of the Common Stock in a series
of purchases for a total price of $3,307,295. Mr. Fechtor does
not have voting or disposition authority
with respect to these accounts; accordingly, this stock is not
included among the shares for which Mr.
Fechtor is considered to have beneficial ownership.
3. Don A. Raig is an attorney-at-law who practices in San
Diego, California. Don A. Raig as an
individual acquired a total of 46,965 shares of the Common
Stock (21,000 as a joint tenant with Colleen
Buskirk) in transactions to his own account for a total price of
$85,110. The source of the funds for these
purchases of the Common Stock were his private funds.
Don A. Raig, as the trustee of four private trusts, has also
acquired with funds from said trusts a total
of 473,010 shares of Common Stock for an aggregate purchase
price of $742,628.
4. Ronald J. Vannuki is a registered representative at Strome
Susskind Securities, L.P., in Santa Monica,
California. Mr. Vannuki is also president of Fortuna Capital
Management, Inc., a California corporation,
Santa Monica, California, and general partner of Fortuna
Investment Partners, L.P. Fortuna, in the course
of its business, used a total of $1,414,775 of its working capital
to acquire 957,260 shares of the Common
Stock in several separate transactions.
Ronald J. Vannuki acquired a total of 3,500 (1,500 as
custodian for his minor son Randon Vannuki)
shares of the Common Stock for which he paid $5,244. The
source of the funds for Mr. Vannuki's
purchases of the Common Stock were funds in his IRA and
private funds.
In addition, immediate family members of Ron Vannuki
acquired 15,150 shares of the Common Stock
for a total purchase price of $18,938. The source of the funds for
this purchase was the private funds of
the family member.
In addition clients of Mr. Vannuki's former brokerage firm,
Drake Capital Securities, Inc., own
1,241,227 shares of the Common Stock which were purchased
for the aggregate sum of $1,696,866. Mr.
Vannuki has no voting or disposition authority over these shares
and, accordingly, none of theses shares
are included among those for which Mr. Vannukiis considered to
have beneficial ownership.
5. Melvin Foster is a lawyer in Boston, Massachusetts. Mr.
Foster owns 113,000 shares of Common
Stock, acquired in a series of purchases totalling $169,500.
Additionally, Mr. Foster owns 51,500 shares
in a profit-sharing plan, and 10,000 shares in a Keough Plan,
purchased for an aggregate price of $92,250.
Mr. Foster, as custodian for his minor son, is the beneficial
owner of 13,000 shares purchased for
$19,500. .
6. Erven Tallman is a businessman of diverse interests living
in Rancho Mirage, California. Mr. Tallman
owns 152,732 shares of stock, acquired in a series of purchases
totalling $229,098.
7. Robert G. Wilson is a businessman of diverse interests living
in Vancouver, British Columbia. Mr.
Wilson owns 566,427 shares of stock, acquired in a series of
purchases totalling $849,641.
<PAGE>
The table below sets forth all Shares purchased or sold by
members of SCRMM or nominees for the
Board of Directors within the past two years, the dates on which
such purchases were made, and the
amount of such purchases.
Purchases and Sales of DDL Electronics, Inc. During the Last
Two Years.
Date
Purchased
Number of
Shares
Total
Cost
Fortuna Investment Partners, L. P.
20-Apr-93
175,000
$245,875
20-Apr-93
189,580
$351,745
20-May-93
1,000
$2,040
20-May-93
500
$988
21-May-93
500
$963
21-May-93
800
$1,565
25-May-93
2,000
$3,875
16-Jul-93
20,040
$54,593
01-Sep-93
6,200
$11,960
03-Sep-93
200
$435
03-Sep-93
9,100
$17,452
08-Sep-93
100
$248
09-Sep-93
600
$1,180
10-Sep-93
20,000
$40,625
21-Sep-93
1,000
$1,810
22-Sep-93
9,000
$16,045
30-Sep-93
6,400
$11,417
18-Oct-93
20,000
$33,125
20-Oct-93
200
$360
22-Oct-93
900
$1,402
22-Oct-93
16,740
$25,637
03-Nov-93
3,000
$4,615
04-Nov-93
2,900
$4,462
04-Nov-93
3,000
$4,615
09-Nov-93
8,600
$12,108
17-Nov-93
5,000
$7,050
18-Nov-93
1,000
$1,430
19-Nov-93
3,600
$4,633
30-Nov-93
46,400
$59,417
14-Dec-93
5,000
$6,425
22-Dec-93
5,400
$6,262
29-Dec-93
23,500
$33,043
30-Dec-93
6,500
$9,158
31-Dec-93
500
$790
31-Dec-93
1,500
$2,133
31-Dec-93
2,200
$3,116
29-Apr-94
5,000
$6,400
29-Apr-94
5,000
$5,775
13-May-94
25,000
$21,063
13-May-94
65,000
$58,825
18-May-94
13,000
$12,578
18-May-94
5,000
$5,150
19-May-94
20,000
$20,600
20-May-94
5,000
$5,150
23-May-94
10,000
$10,300
26-May-94
1,500
$1,451
27-May-94
1,000
$968
27-May-94
5,000
$5,775
27-May-94
14,000
$14,420
24-Jun-94
2,000
$2,310
24-Jun-94
6,000
$6,180
24-Jun-94
10,000
$9,675
03-Jan-95
27,800
$42,534
12-Jan-95
20,000
$33,100
17-Jan-95
2,400
$3,372
19-Jan-95
15,000
$21,950
19-Jan-95
35,000
$53,550
28-Mar-95
15,000
$19,200
29-Mar-95
10,000
$14,050
30-Mar-95
21,600
$30,348
31-Mar-95
20,000
$28,100
Vannuki, Clients
30-Jul-93
113,133
$254,549
Fechtor Family
19-Apr-93
45,000
$59,061
23-Apr-93
75,000
$131,250
21-May-93
11,000
$5,500
18-Jul-93
3,000
$2,280
21-Jul-93
1,000
$625
29-Dec-93
2,000
$3,030
31-Dec-93
10,000
$13,834
31-Mar-94
14,500
$18,926
31-May-94
1,000
$1,030
Raig
08-Aug-94
249,375
$374,063
18-Aug-94
7,000
$10,500
02-Oct-94
5,000
$10,625
17-Oct-94
9,000
$17,750
20-Oct-94
32,500
$68,563
21-Oct-94
3,000
$6,375
26-Oct-94
8,000
$16,625
01-Nov-94
32,700
$68,525
02-Nov-94
28,800
$61,200
18-Nov-94
5,000
$8,750
20-Nov-94
13,000
$27,625
21-Nov-94
13,500
$23,188
22-Nov-94
5,000
$8,125
23-Nov-94
5,000
$8,125
25-Nov-94
5,000
$7,500
28-Nov-94
10,000
$14,375
29-Nov-94
5,000
$6,875
16-Dec-94
10,000
$1,250
19-Dec-94
5,000
$6,250
29-Dec-94
8,100
$10,988
30-Dec-94
10,000
$13,750
21-Mar-95
30,500
$34,313
22-Mar-95
4,200
$4,988
24-Mar-95
15,300
$17,413
Brenner, Clients
21-Apr-93
800
$1,050
21-Apr-93
400
$537
06-May-93
16,670
$25,005
07-May-93
34,080
$25,500
28-May-93
40,440
$75,827
23-Jun-93
20,000
$45,000
23-Jun-93
12,800
$24,000
30-Jun-93
2,000
$4,502
30-Jun-93
2,000
$4,502
30-Jun-93
2,000
$4,502
30-Jun-93
10,000
$22,502
27-Jul-93
3,000
$3,060
29-Jul-93
33,340
$50,001
29-Jul-93
50,010
$75,015
11-Aug-93
16,670
$25,005
11-Aug-93
2,500
$5,940
11-Aug-93
2,500
$5,940
11-Aug-93
19,233
$28,850
11-Aug-93
60,012
$90,018
11-Aug-93
3,334
$5,001
30-Aug-93
30,000
$67,502
31-Aug-93
5,000
$11,252
01-Sep-93
1,500
$2,888
03-Sep-93
500
$1,063
10-Sep-93
2,500
$5,002
13-Sep-93
2,500
$5,002
29-Sep-93
10,000
$18,752
30-Sep-93
95,000
$178,125
01-Oct-93
26,700
$50,332
07-Oct-93
5,000
$9,035
07-Oct-93
5,000
$9,035
26-Oct-93
5,000
$7,702
29-Oct-93
52,000
$84,502
01-Nov-93
25,000
$41,877
29-Nov-93
60,000
$75,602
03-Dec-93
26,000
$36,012
21-Dec-93
58,000
$80,332
29-Dec-93
9,000
$9,565
26-Apr-94
2,000
$2,252
26-Apr-94
2,000
$2,252
07-Jul-94
27,000
$40,652
25-Aug-94
4,500
$6,240
25-Aug-94
4,500
$6,240
22-Nov-94
55,000
$87,658
Dates
Sold
Number of
Shares
Total
Proceeds
Vannuki, Clients
20-Apr-93
185,000
$235,373
28-Apr-93
30,000
$56,248
23-Jun-93
120,000
$266,248
14-Jul-93
15,000
$31,873
08-Sep-93
20,000
$39,598
09-Sep-93
30,000
$60,000
14-Sep-93
20,000
$39,080
17-Sep-93
10,000
$18,748
23-Sep-93
2,000
$3,748
22-Sep-93
10,000
$18,123
29-Sep-93
45,300
$83,685
04-Oct-93
12,200
$22,804
20-Oct-93
1,800
$3,694
25-Oct-93
16,000
$26,000
Fechtor Family
05-Aug-94
5,000
$7,456
09-Aug-94
1,000
$1,469
Brenner, Clients
19-Apr-94
4,000
$3,998
14-Jul-94
27,000
$40,347
18-Aug-94
4,000
$5,477
18-Aug-94
5,000
$6,846
13-Sep-94
500
$840
13-Sep-94
2,000
$3,359
13-Sep-94
1,500
$2,519
25-Oct-94
12,800
$23,001
25-Oct-94
9,000
$16,173
25-Oct-94
1,000
$1,797
28-Oct-94
25,000
$49,998
04-Nov-94
25,000
$49,998
06-Jan-95
55,000
$89,373
As of the date of this Proxy Statement, May 1, 1995, no
shares have been purchased after the Record
Date.
Except as otherwise set forth in this Appendix A, neither
SCRMM nor any of its members nor any
"associate" of any of the foregoing persons or any other person
who may be deemed a "participant" in the
Proxy Solicitation is the beneficial or record owner of any
Shares. Except as otherwise set forth in this
Appendix A, neither SCRMM nor any of its members nor any
"associate" of any of the foregoing persons
or any other person who may be deemed a "participant" in the
Proxy Solicitation has purchased or sold
any Shares within the past two years, borrowed any funds for
the purpose of acquiring or holding any
Shares or is or was within the past year a party to any contract
or arrangement or understanding with any
person with respect to any Shares. There has not been any
transaction since the beginning of DDL's last
fiscal year and there is not currently any proposed transaction
to which DDL is a party, in which SCRMM
or any of its members or any "associate" or immediate family
member of any of the foregoing persons or
any other person who may be deemed a "participant" in the
Proxy Solicitation had or will have a direct
material interest.<PAGE>
[ Back Page ]
IMPORTANT
Your vote is important. No matter how many or how few
DDL shares you own, please vote FOR the
Committee's nominees by signing, dating and mailing the
enclosed GREEN Proxy Card today. SCRMM
urges you NOT to return any proxy cards sent to you by the
Board of Directors of DDL.
If you have already returned a Board of Directors' proxy
card before receiving this Proxy Statement, you
have every right to change your vote by signing and returning
the enclosed GREEN Proxy Card. Only your
latest dated properly executed proxy will count at the Annual
Meeting.
If you own your DDL Shares in the name of a brokerage
firm, your broker cannot vote such Shares unless
he receives your specific instructions. Please sign, date and
return the enclosed GREEN Proxy Card in the
postage-paid envelope that has been provided.
If you have any questions about how to vote your DDL
shares, please call our proxy solicitor:
Beacon Hill Partners
90 Broad Street
New York, NY 10004
Telephone: 1-800-755-5001
<PAGE>
APPENDIX B
PROXY CARD
DDL ELECTRONICS, INC.
Proxy for Annual Meeting of Shareholders
May 31, 1995
THIS PROXY IS SOLICITED IN OPPOSITION TO THE
BOARD OF DIRECTORS OF DDL ELECTRONICS,
INC.
The undersigned hereby appoints Karen Beth Brenner, Richard
Fechtor, and Ronald J.Vannuki as Proxies (each of
them with full power to act without the other), each with the
power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse, all
the shares of Common Stock of DDL Electronics, Inc.
(the "Company") held of record by the undersigned on April 17,
1995 at the Annual Meeting of Shareholders to held
on May 31, 1995, or at any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s).
If no direction is made, this proxy will be voted FOR each of the
listed proposals, and in accordance with their
judgment on such other business as may be properly presented
to the meeting and any adjournment or postponement
thereof.
1. Election of Class II Directors to continue in office until 1997:
FOR ________ WITHHOLD ________
Committee Nominees: Bernee D. L. Strom and Erven Tallman.
2. Amendment of Section 3.02 of the Bylaws to set the
membership of the Board of Directors at not less than seven
(7), effective immediately upon adoption:
FOR ________ AGAINST ________
3. Assuming the adoption of Proposal No. 2, election of three (3)
new members of the Board of Directors to serve a
term of up to three years, depending upon the number of votes
received:
FOR ________ WITHHOLD ________
Committee Nominees: Melvin Foster, Don A. Raig, Robert G.
Wilson
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature: /s/ Date:
Please sign exactly as your name appears herein. Jointowners
should each sign.
When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
<SUPPLEMENTAL MATERIAL>
<PAGE>
Opposition Proxy for DDL Electronics, Inc.
Are you happy with your investment in DDL?
We, a group of fellow shareholders, are NOT HAPPY!
Chart showing price performance over
10 year period for DDL Elecronics, Inc.
and its peer groups on the NYSE and
NASDAQ. The source of the data is
Bridge Information Systems, Inc.
If you feel as we do, JOIN US!
Together, We Can Change The Course Of Our Investment
VOTE THIS PROXY TODAY!!!
Sign, date, and mail this proxy to:
Beacon Hill Partners, Inc.
90 Broad Street - Seventeenth Floor
New York, N.Y. 10004
1-800-755-5001
This is your chance personally to effect a proactive change in a
company that is not
providing adequate return on your investment. Take control of
the Board of Directors.
Send in your proxy today. If you have already returned a Board
of Directors' proxy card,
you can change your vote by signing and returning the enclosed
GREEN Proxy Card.
Only your latest dated properly executed proxy will count at the
Annual Meeting.
[Back of the foregoing page]
IMPORTANT
Your vote is important. No matter how many or how few
DDL shares you own, please vote FOR
SCRMM's nominees to the Board of Directors by signing, dating
and mailing the enclosed GREEN Proxy
Card today. Your fellow shareholders urge you NOT to return
any proxy cards sent to you by the Board of
Directors of DDL.
If you have already returned a Board of Directors' proxy
card before receiving this Proxy Statement, you
have every right to change your vote by signing and returning
the enclosed GREEN Proxy Card. Only your
latest dated, properly executed proxy will count at the Annual
Meeting.
If you own your DDL Shares in the name of a brokerage
firm, your broker cannot vote such Shares unless
he receives your specific instructions. Please sign, date and
return the enclosed GREEN Proxy Card in the
postage-paid envelope that has been provided.
If you have any questions about how to vote your DDL
shares, please call our proxy solicitor:
Beacon Hill Partners
90 Broad Street
New York, NY 10004
Telephone: 1-800-755-5001
