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
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DEVCON INTERNATIONAL CORP.
(Name of Registrant as Specified in Its Charter)
DEVCON INTERNATIONAL CORP.
(Name of Persons(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions apply:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date Filed:
<PAGE>
DEVCON INTERNATIONAL CORP.
1350 EAST NEWPORT CENTER DRIVE, SUITE 201
DEERFIELD BEACH, FLORIDA 33442
------------------------
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1995
------------------------
To the shareholders of
Devcon International Corp.:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders of
Devcon International Corp., a Florida corporation (the 'Company'), will be held
at the Boca Raton Marriott, Boca Center, 5150 Town Center Circle, Boca Raton,
Florida on Friday, June 9, 1995 at 3:00 p.m., local time, for the following
purposes:
1. To elect five persons to the Company's Board of Directors to hold
office until their terms shall expire or until their successors are duly
elected and qualified;
2. To ratify the reappointment of KPMG Peat Marwick, independent
certified public accountants, as the Company's auditor for 1995; and
3. To transact such other business as may properly come before the
meeting and any and all adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 21, 1995 as
the record date for determining those shareholders entitled to notice of and to
vote at the 1995 Annual Meeting and any adjournments or postponements thereof.
Whether or not you expect to be present at the meeting, please sign, date
and return the enclosed proxy card as promptly as possible in the enclosed
pre-addressed stamped envelope.
By Order of the Board of Directors,
/s/ DONALD L. SMITH, JR.
Donald L. Smith, Jr., President
Deerfield Beach, Florida
May 9, 1995
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
1995 ANNUAL MEETING OF SHAREHOLDERS
OF
DEVCON INTERNATIONAL CORP.
------------------------
PROXY STATEMENT
------------------------
DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Devcon International Corp., a Florida corporation (the
'Company'), of proxies from the holders of the Company's Common Stock, par value
$0.10 per share (the 'Common Stock'), for use at the 1995 Annual Meeting of
Shareholders of the Company to be held on June 9, 1995, and any adjournments
thereof (the 'Annual Meeting'), pursuant to the enclosed Notice of Annual
Meeting. It is expected that this Proxy Statement and the enclosed form of proxy
will be first mailed to shareholders of the Company on or about May 9, 1995. The
complete mailing address, including zip code, of the Company's principal
executive offices is 1350 East Newport Center Drive, Suite 201, Deerfield Beach,
Florida 33442.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving a proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date. No revocation will be effective, however, until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone and telegraph. They will receive no
compensation therefor in addition to their regular salaries. The Company may
request banks, brokers and other custodians, nominees and fiduciaries to forward
copies of the proxy material to their principals and to request authority for
the execution of proxies. The Company may reimburse such persons for their
expenses in so doing.
<PAGE>
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:
1. The election of five directors to serve until the next annual
meeting of shareholders or until their successors are duly
elected and qualified;
2. The ratification of the reappointment of KPMG Peat Marwick,
independent certified public accountants, as the Company's
auditor for 1995; and
3. Such other business as may properly come before the Annual
Meeting, including any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) for the election of the five nominees for director named
below, and (b) in favor of all other proposals described on the Notice of Annual
Meeting. In the event a shareholder specifies a different choice by means of the
enclosed proxy, his shares will be voted in accordance with the specification so
made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on April 21, 1995, as
the record date (the 'Record Date') for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date
there were 4,431,177 shares of Common Stock issued and outstanding, all of which
are entitled to be voted at the Annual Meeting. Holders of Common Stock are
entitled to one vote per share on each matter that is submitted to shareholders
for approval.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. In order to be elected, nominees for director
must receive a plurality of the votes cast by holders of shares of Common Stock
voting in person or by proxy at the Annual Meeting. The approval of proposal 2
will require an affirmative vote of the holders of a plurality of the shares of
Common Stock of the Company voting in person or by proxy at the Annual Meeting.
Abstentions are considered as shares present and entitled to vote for purposes
of determining the outcome of any matter submitted to the shareholders for a
vote, but are not counted as votes cast 'for' or 'against' any matter. The
inspector of elections will treat shares referred to as 'broker or nominee
non-votes' (shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power on a particular
matter) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome of
any matter as to which the proxies reflect broker or nominee non-votes, shares
represented by such proxies will be treated as not present and not entitled to
vote on that subject matter and therefor would not be considered by the
inspectors as shares entitled to vote on that subject matter and therefor would
not be considered by the
2
<PAGE>
inspector when counting votes cast on the matter (even though those shares are
considered entitled to vote for quorum purposes and may be entitled to vote on
other matters). If less than a majority of the outstanding shares of Common
Stock are represented at the meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice.
SECURITY OWNERSHIP
The following table sets forth as of the Record Date the number of shares
beneficially owned and the percentage of ownership of the Company's Common Stock
by (i) each person known to the Company to own beneficially more than 5 percent
of the outstanding Common Stock, (ii) each director of the Company, (iii) each
of the four executive officers of the Company who had annual salary and bonus
for 1994 in excess of $100,000 (the 'Named Executive Officers'), including the
President and Chief Executive Officer, and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(2)
-----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES PERCENT
- - ------------------------------------------------------------------------------------- --------- -------
<S> <C> <C>
Donald L. Smith, Jr.(3).............................................................. 1,214,431 26.95%
Robert A. Steele(4).................................................................. 240,000 5.40%
Alec P. Courtelis(5)................................................................. 13,742 *
Richard L. Hornsby(6)................................................................ 7,275 *
Robert L. Kester(7).................................................................. 11,600 *
Walter B. Barrett(8)................................................................. 6,600 *
Donald L. Smith, III(9).............................................................. 95,039 2.14%
Dimensional Fund Advisors, Inc.(10).................................................. 243,200 5.49%
Quest Advisory and Charles M. Royce Group(11)........................................ 410,400 9.26%
Tweedy, Browne Company L.P. and TBK Partners, L.P.(12)............................... 364,300 8.22%
All directors and executive officers as a group (8 persons)(13)...................... 1,633,687 35.59%
<FN>
- - ------------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the beneficial owners is 1350 East Newport Center Drive,
Suite 201, Deerfield Beach, Florida 33442.
(2) Unless otherwise indicated, each person or group has sole voting and investment power with respect to all
such shares.
(3) Includes 75,000 shares issuable upon exercise of options that are presently exercisable.
(4) Includes 10,000 shares issuable upon exercise of options that are presently exercisable.
(5) Does not include 20,001 shares held in trust for the adult children of Mr. Courtelis by Mr. Courtelis' wife
and an unrelated party to which shares Mr. Courtelis disclaims beneficial ownership. Includes 10,000 shares
issuable upon exercise of options that are presently exercisable. Mr. Courtelis' address is 701 Brickell
Avenue, Suite 1400, Miami, Florida 33131.
3
<PAGE>
(6) Includes 5,775 shares issuable upon exercise of options that are presently exercisable. Does not include (i)
21,600 shares subject to options held by Mr. Hornsby that are not presently exercisable and (ii) 30,000
shares issuable upon exercise of an option that is not presently exercisable, granted by Mr. Donald L. Smith,
Jr., to Mr. Hornsby to purchase shares of Mr. Smith's Common Stock at an exercise price of $2.33 per share.
(7) Includes 10,000 shares issuable upon exercise of options that are presently exercisable.
(8) Shares are owned jointly by Mr. Barrett and his wife. Includes 5,000 shares issuable upon exercise of options
that are presently exercisable. Does not include 15,000 shares issuable upon exercise of options that are not
presently exercisable.
(9) Includes (w) 40,964 shares directly owned, (x) 3,125 shares directly owned by Mr. Smith's wife, to which
latter shares Mr. Smith disclaims beneficial ownership, (y) 42,400 shares beneficially owned that are held in
trust by Donald L. Smith, III for the benefit of his minor children, to which latter shares Mr. Smith
disclaims beneficial ownership and (z) 8,550 shares issuable upon exercise of options that are presently
exercisable. Does not include 14,400 shares issuable upon exercise of options that are not presently
exercisable.
(10) The address for Dimensional Fund Advisors, Inc. ('Dimensional') is 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401. Dimensional, a registered investment advisor, is deemed to have beneficial
ownership of 243,200 shares (Dimensional has sole dispositive power over all such shares and sole voting
power with respect to 207,000 of such shares), all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and the DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such shares. The information with
respect to Dimensional is based solely on a Form 13G dated January 30, 1995.
(11) The address for Quest Advisory Corp., Quest Management Company and Charles M. Royce is 1414 Avenue of the
Americas, New York, New York 10019. Includes 374,000 shares with respect to which Quest Advisory Corp. has
sole voting and sole dispositive power and 36,400 shares with respect to which Quest Management Co. has sole
voting and sole dispositive power. Charles M. Royce may be deemed to be a controlling person of Quest
Advisory Corp. and Quest Management Co. and as such may be deemed to beneficially own such shares. Mr. Royce
has disclaimed beneficial ownership of such shares. The information with respect to this group is based
solely on a Form 13G dated February 21, 1995.
(12) The address for Tweedy, Browne Company L.P. and TBK Partners, L.P. is 52 Vanderbilt Avenue, New York, New
York 10017. Includes 304,075 shares with respect to which Tweedy, Browne Company, L.P. has sole voting power,
3,000 shares to which TBK Partners, L.P. has sole voting and dispositive power, and 361,300 shares to which
Tweedy, Browne Company, L.P. has shared dispositive power. Certain of the general partners of Tweedy, Browne
Company, L.P. may be deemed to have sole power to vote certain shares owned by Tweedy, Browne Company L.P.
TBK Partners, L.P. and Tweedy, Browne Company L.P. have each disclaimed beneficial ownership of shares held
by each other. The information with respect to Tweedy, Browne Company L.P. and TBK Partners, Ltd. is based
solely on a Form 13D, dated January 24, 1994 and Amendment No. 1 to Form 13D, dated February 2, 1994.
4
<PAGE>
(13) Includes 10,575 shares owned by Mr. Obenauf, the Company's Vice President--Engineering; plus 34,425 shares
issuable upon exercise of options held by Mr. Obenauf, all of which are presently exercisable.
</FN>
</TABLE>
ELECTION OF DIRECTORS
NOMINEES
The Company's Restated Articles of Incorporation and Bylaws provide that
the number of directors to serve on the Board of Directors shall be fixed by the
shareholders, and if not so fixed, shall be three. The Company's shareholders
have previously fixed the number of directors at five. Each director elected at
the Annual Meeting will serve as director for a term expiring at the 1995 Annual
Meeting of Shareholders, expected to be held in June 1995, or until his
successor has been duly elected and qualified. Messrs. Smith, Hornsby,
Courtelis, Kester and Steele have been nominated for election as directors and
proxies will be voted for such persons absent contrary instructions.
The Board of Directors does not believe that any nominee will refuse to act
or be unable to accept election. In the event, however, that a nominee for
director is unable to accept election or if any other unforeseen contingencies
should arise, it is intended that proxies will be voted for the remaining
nominees and for such other person as may be designated by the Board of
Directors, unless it is directed by a proxy to do otherwise.
Each of the nominees for election as a director of the Company is a current
member of the Board of Directors. Mr. Smith has served as a director since 1951,
Mr. Kester has served as a director since 1972, Messrs. Hornsby and Courtelis
have served as directors since 1975 and Mr. Steele has served as a director
since 1989.
5
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD WITH THE COMPANY
- - ----------------------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Donald L. Smith, Jr...................... 73 Chairman of the Board, President and Chief Executive Officer
Richard L. Hornsby....................... 59 Executive Vice President and Director
Henry C. Obenauf......................... 65 Vice President--Engineering
Walter B. Barrett........................ 37 Vice President--Finance, Chief Financial Officer and Treasurer
Donald L. Smith, III..................... 42 Vice President--Construction Operations
Robert L. Kester......................... 75 Director
Alec P. Courtelis........................ 67 Director
Robert A. Steele......................... 79 Director
</TABLE>
Donald L. Smith, Jr., a co-founder of the Company, has served as its
Chairman of the Board, President and Chief Executive Officer since its formation
in 1951.
Richard L. Hornsby was appointed the Company's Executive Vice President in
March 1989. Mr. Hornsby served as Vice President of the Company from August 1986
to February 1989. From September 1981 until July 1986 he was Financial Manager
of R.O.L., Inc. and L.O.R., Inc., companies primarily engaged in various private
investment activities. He has been a director of the Company since 1975 and
served as Vice President--Finance from 1972 to 1977.
Henry C. Obenauf was appointed Vice President--Engineering of the Company
in March 1989, after having served as Vice President of the Company since 1977.
Mr. Obenauf has been employed by the Company for over 21 years.
Walter B. Barrett has served as Vice President--Finance, Chief Financial
Officer and Treasurer since May 1991. Prior to that and from August 1985 he
served as Treasurer and Chief Financial Officer of James A. Cummings, Inc., a
large South Florida general contractor.
Donald L. Smith, III, was appointed Vice President--Construction Operations
for the Company in December 1992. Prior to that and from March 1992, he served
as Assistant Vice President of Construction Operations--South Florida and
Caribbean of the Company. Mr. Smith joined the Company in 1976 and has served in
various supervisory and managerial positions with the Company since that time.
Robert L. Kester, a director of the Company since 1972, is a private
investor and is Chairman of the Board of Big Sky Western Bank in Big Sky,
Montana. Mr. Kester retired from active employment with Florida Coast Bank of
Pompano Beach, Florida after its acquisition by Barnett Bank of Florida in 1984.
6
<PAGE>
Alec P. Courtelis, a director of the Company since 1975, has been engaged
in the real estate development business in south Florida for more than 21 years.
In addition, Mr. Courtelis is Chairman of the Board of TGIF Texas, Inc., a
public company that leases restaurants to operators, and is a director of IBP,
Inc., a New York Stock Exchange company that is a processor of meat products.
Robert A. Steele, a director of the Company since May 1989, has been
Chairman of the Board, Chief Executive Officer and a principal shareholder of
SFM Leasing Company, Inc. and RAMS Leasing Company, Inc. since 1972. Both
companies were engaged in the heavy truck and equipment leasing business.
Currently, these companies are primarily engaged in various investment
activities. Mr. Steele has also been managing partner of Steele Associates, Ltd.
since 1981 and SFM Realty Associates since 1985, both of which are primarily
engaged in various investment activities.
The Company's directors hold office until the next annual meeting of
shareholders and until their successors have been duly elected and qualified.
The Company's officers are elected annually by the Board of Directors and serve
at the discretion of the Board. There are no arrangements or understandings with
respect to the selection of officers or directors. The Company pays each
director other than Mr. Smith an annual retainer of $4,000. Non employee
directors who serve on the Compensation Committee or Audit Committee are paid an
annual fee of $1,000 or $500, depending on the level of responsibility they
assume.
Pursuant to the 1992 Directors' Stock Option Plan (the 'Directors' Plan'),
the Company's non-employee directors were granted options to purchase 8,000
shares of Common Stock upon the approval of the Directors' Plan by shareholders.
A new non-employee director would receive a similar option upon the commencement
of service as a director. In addition, each non-employee director is granted
options to purchase 1,000 shares of Common Stock after each annual meeting of
the Company, pursuant to the Directors' Plan. For purposes of the Directors'
Plan, a director is a non-employee director if he does not receive regular
compensation from the Company or its subsidiaries other than directors fees and
reimbursement for expenses, even if such director is an officer of a subsidiary
of the Company.
Donald L. Smith, III is the son of Donald L. Smith, Jr., the Company's
Chairman, President and Chief Executive Officer. Aside from the foregoing, there
are no family relationships between any directors or executive officers of the
Company. Certain other children of Donald L. Smith, Jr., are employed by the
Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1994, the Board of Directors took
certain actions by unanimous written consent and held eight meetings. During
1994, no incumbent director attended fewer than 75 percent of the aggregate of
(i) the number of meetings of the Board of Directors held during the period he
served on the Board, and (ii) the number of meetings of committees of the Board
of Directors held during the period he served on such committee, except for Mr.
Courtelis, who attended one meeting of the Board of Directors and no meetings of
the Compensation Committee. The Board of Directors has two standing committees,
the Audit Committee and the Compensation Committee.
7
<PAGE>
Messrs. Kester, Hornsby and Steele are members of the Audit Committee,
which met one time during 1994. The duties and responsibilities of the Audit
Committee include (a) recommending to the full Board the appointment of the
Company's auditors and any termination of engagement, (b) reviewing the plan and
scope of audits, (c) reviewing the Company's significant accounting policies and
internal controls, and (d) having general responsibility for all related
auditing matters.
Messrs. Kester, Courtelis and Steele are members of the Company's
Compensation Committee (which met two times during 1994). This committee
administers the 1992 Stock Option Plan and has the power and authority to (a)
determine the persons to be awarded options and the terms thereof and (b)
construe and interpret the 1992 Stock Option Plan. This Committee also is
responsible for the final review and determination of executive compensation.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to, earned by or paid
to the Company's Chief Executive Officer and each of the other three executive
officers of the Company who had an annual salary and bonus in 1994 in excess of
$100,000 (collectively, the 'Named Executive Officers'). The Company has not
granted any restricted stock awards or stock appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------
------------------------------------- AWARDS PAYOUTS
OTHER ANNUAL ----------- ----------- ALL OTHER
NAME AND FISCAL COMPENSATION LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS (#) PAYOUTS ($) ($)(2)
- - ----------------------------------- ------ ---------- --------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald L. Smith, Jr. 1994 $ 260,000 -- -- -- -- $ 4,800
Chairman of the Board, 1993 260,000 -- -- -- -- 61,028
President and 1992 260,000 -- -- -- -- 193,547
Chief Executive Officer
Richard L. Hornsby 1994 $ 165,000 $ -- $ 9,000 -- -- $ 70,736
Executive Vice President 1993 165,000 -- 4,000 -- -- 71,715
1992 161,538 15,000 4,000 -- -- 70,567
Walter B. Barrett 1994 $ 110,227 $ 5,000 $ 5,000 -- -- --
Vice President-Finance, 1993 100,000 -- -- -- -- --
Chief Financial Officer 1992 82,330 1,500 -- 20,000 -- --
and Treasurer
Donald L. Smith, III 1994 $ 96,104 $ 12,500 $ 5,000 -- -- $ 10,558
Vice President- 1993 82,703 1,500 -- -- -- 9,355
Construction Operations 1992 62,769 1,500 -- -- -- 8,724
<FN>
- - ------------------------
(1) Does not include the dollar value of personal benefits, such as the cost of
automobiles and health insurance, the aggregate value of which for each
named executive officer was less than 10% of such executive officer's salary
and bonus. Includes $4,000 a year for Mr. Hornsby, representing a retainer
paid to all directors other than Mr. Smith and $5,000 per year for Messrs.
Hornsby, Barrett and Donald L. Smith, III for service on a management policy
committee.
(2) Represents (i) the cost of term and non term life insurance coverage
for Messrs. Smith, Hornsby, and Donald L. Smith, III in fiscal 1992 and
1993 and Messrs. Hornsby and Donald L. Smith, III in 1994 pursuant to a
split dollar life insurance policy on the life of the executive officer
and (ii)[nb]the Company's match of a 401(k) contribution made by each
named executive officer. The Company will be reimbursed for its non term
premium payments at such time as benefits are paid under the policies or
the policies are terminated and the cash proceeds distributed. Donald L.
Smith, Jr.'s policy was cancelled in 1994.
</FN>
</TABLE>
9
<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning unexercised
stock options held by the Named Executive Officers as of the end of the 1994
year. No stock appreciation rights have been granted or are outstanding.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE --------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald L. Smith, Jr................... -- -- 75,000 -- $444,000 $ --
Richard L. Hornsby.................... -- -- 5,775 21,600 34,188 127,872
Walter B. Barrett..................... -- -- 5,000 15,000 (2) (2)
Donald L. Smith, III.................. -- -- 8,550 14,400 50,616 85,248
<FN>
- - ------------------------
(1) The closing price for the Company's Common Stock as reported on the National
Association of Securities Dealers Automated Quotation System ('NASDAQ') on
December 31, 1994 was $8.25. Value is calculated by multiplying (a) the
difference between $8.25 and the option exercise price by (b) the number of
shares of Common Stock underlying the option.
(2) Exercise price exceeded closing price at December 31, 1994.
</FN>
</TABLE>
OPTION GRANTS AND LONG-TERM INCENTIVE AWARDS
No options or long-term incentive awards were granted to the Named
Executive Officers during 1994.
CERTAIN TRANSACTIONS
Robert A. Steele (a director and shareholder of the Company) has a 2%
interest in an oceangoing bulk cement ship in which the Company has a 98%
interest.
The Company leases a 4.4 acre parcel of real property from Mr. Smith,
pursuant to which Mr. Smith received $46,500 in annual rent in 1994.
In 1989, an Antiguan subsidiary of the Company obtained a minority interest
in a partnership that acquired a manufacturer of acoustical ceiling tiles in
Matamoros, Mexico and that is engaged in the sale, distribution and marketing of
such tiles. The subsidiary invested approximately $1.2 million in the
partnership for a 29 percent interest and two of the Company's officers and
directors, Messrs. Smith, Jr. and Hornsby, obtained an 11 percent interest for
which they paid $450,000. In January 1994, another Antiguan subsidiary of the
Company became the new general partner of the partnership and was assigned all
the rights and assumed all the liabilities of the former Antiguan subsidiary
with respect to the partnership. In
10
<PAGE>
connection with an amendment of the partnership agreement, the Antiguan
subsidiary and the Company, as applicable, contributed a note receivable of
$505,000 from the partnership into equity and contributed approximately $235,000
of equipment to the partnership. The Antiguan subsidiary's ownership interest in
the partnership was increased to 57.98 percent. The ownership interest of
Messrs. Smith, Jr. and Hornsby was reduced to 6.47 percent.
The Company has borrowed $3.4 million from Donald L. Smith, Jr. One note
has an outstanding balance of approximately $3.2 million, is unsecured, bears
interest at the prime interest rate and is due in full on January 1, 1996. The
other note has a balance of $260,000, is secured by equipment, bears interest at
8 percent per annum and is due in monthly principal installments of $10,000,
plus interest through February 1997.
A subsidiary of the Company pays approximately $12,800 per year in rent to
The Courtelis Company, a company of which Mr. Courtelis is a principal.
In April 1993, an unaffiliated customer of the Company had not made certain
payments to the Company on one of its construction contracts because the
customer had not obtained financing necessary to make the payments. The Company
then committed to loan the customer $2.3 million, of which $2.1 million was
advanced, and secured the loan with first and second mortgages on various
parcels of land located in Collier County, Florida. A majority of the proceeds
of the loan were used to repay the Company and its subcontractors on the
project. The interest rate on the loan was the lesser of 25 percent per annum or
the highest rate permitted by law. The loan was due in August 1993 but the
customer did not obtain the financing necessary to repay the Company. Most of
the proceeds for the Company's loan to the customer were obtained through a loan
in the amount of $1,775,000 from a corporation in which Messrs. Smith, Jr. and
Steele are the majority shareholders. The loan to the Company by this
corporation (i) bore interest at the lesser of 25 percent per annum or the
highest rate permitted by law, (ii) was due in October 1993, and (iii) was
secured by an assignment of the aforementioned mortgage and the indebtedness
secured by such mortgage. If the Company did not repay this note at maturity,
then the shareholders of the corporation making the loan to the Company could
elect to redeem their shares in that corporation for a note from the Company
bearing interest at 10 percent per annum from April 1993 and due the later of
April 1995 or six months after the making of such election. The Company's note
to such corporation would have been reduced by the corresponding principal
amount. No shares were redeemed and the mortgage became the subject of a
foreclosure action. On May 23, 1994, the Company obtained a judgment of $2.6
million. The judgment began accruing interest on that date. On July 8, 1994, the
customer filed a petition under Chapter 11 of the United States Bankruptcy Code.
This property was sold on October 13, 1994 pursuant to a court order. In
connection with the sale, the Company received payment of its judgment, accrued
interest and certain attorneys' fees, and has repaid the corporation that made
the loan to the Company.
The Company believes that, to the extent applicable, the foregoing
transactions were on terms no less favorable to the Company than those that
could have been obtained from independent third parties.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of
the Company's Common Stock, to file with the
11
<PAGE>
Securities and Exchange Commission (the 'SEC') initial reports of ownership and
reports of changes in ownership of Common Stock. Officers, directors and greater
than 10 percent shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended December 31, 1994 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except for the late filing by each
of Robert A. Steele, Robert L. Kester and Alec P. Courtelis of a Form 5 relating
to the grant of options to purchase 1,000 shares each in June 1994 under the
Directors' Stock Option Plan. Mr. Steele's Form 5 also related to his gift of
stock to a charitable organization in December 1994. The Company has been
advised that in 1994, Donald L. Smith, III amended his 16(a) filings to correct
the failure to report the ownership of shares of the Company by his wife in his
initial filing in 1989 and the subsequent transfer of such shares and certain of
his shares into joint ownership in 1992.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Alec P. Courtelis, Robert L. Kester
and Robert A. Steele.
Robert A. Steele (a director and shareholder of the Company) has a 2%
interest in an oceangoing bulk cement ship in which the Company has a 98%
interest.
A subsidiary of the Company pays approximately $12,800 per year in rent to
The Courtelis Company, a company of which Mr. Courtelis is a principal.
In April 1993, an unaffiliated customer of the Company had not made certain
payments to the Company on one of its construction contracts because the
customer had not obtained financing necessary to make the payments. The Company
then committed to loan the customer $2.3 million, of which $2.1 million was
advanced, and secured the loan with first and second mortgages on various
parcels of land located in Collier County, Florida. A majority of the proceeds
of the loan were used to repay the Company and its subcontractors on the
project. The interest rate on the loan was the lesser of 25 percent per annum or
the highest rate permitted by law. The loan was due in August 1993 but the
customer did not obtain the financing necessary to repay the Company. Most of
the proceeds for the Company's loan to the customer were obtained through a loan
in the amount of $1,775,000 from a corporation in which Messrs. Smith, Jr. and
Steele are the majority shareholders. The loan to the Company by this
corporation (i) bore interest at the lesser of 25 percent per annum or the
highest rate permitted by law, (ii) was due in October 1993, and (iii) was
secured by an assignment of the aforementioned mortgage and the indebtedness
secured by such mortgage. If the Company did not repay this note at maturity,
then the shareholders of the corporation making the loan to the Company could
elect to redeem their shares in that corporation for a note from the Company
bearing interest at 10 percent per annum from April 1993 and due the later of
April 1995 or six months after the making of such election. The Company's note
to such corporation would have been reduced by the corresponding principal
amount. No shares were redeemed and the mortgage became the subject of a
foreclosure action. On May 23, 1994, the Company obtained a judgment of $2.6
million. The judgment began accruing interest on that date. On July 8, 1994, the
customer filed a petition under
12
<PAGE>
Chapter 11 of the United States Bankruptcy Code. This property was sold on
October 13, 1994 pursuant to a court order. In connection with the sale, the
Company received payment of its judgment, accrued interest and certain
attorneys' fees, and has repaid the corporation that made the loan to the
Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is primarily responsible for determining the
compensation of the Company's executive officers, although the Company's Chief
Executive Officer and President makes recommendations to the Compensation
Committee as to the compensation of the Company's executive officers.
The Compensation Committee's general philosophy with respect to the
compensation of the Company's executive officers is to offer competitive
compensation programs designed to attract and retain qualified executives, to
motivate performance to achieve specific goals and to align the interests of
senior management with the long-term interests of the Company's shareholders.
In determining compensation, job level, individual performance and Company
performance are considered. More specifically, factors considered include the
Chief Executive Officer and President's recommendations, specific
accomplishments of the executive officers, the Company's historical and
projected performance, sales, earnings, financial condition and return on equity
and economic conditions. These factors and the ultimate determination of
compensation are subjective. The Company attempts to provide incentives to
retain qualified executive officers, but also believes that the compensation
paid to its executives is well within the range of compensation paid to
similarly situated executives at other companies in similar industries or at
companies having a similar market capitalization. Given the level of the
Company's executive officer compensation, the Committee does not believe that it
is necessary to incur the expense of formal studies or market analyses.
Of all the components of compensation, salary is most closely related to
individual performance. Strong emphasis is given to the Chief Executive
Officer's recommendations, given his experience with the Company since its
origin and his day-to-day contact with the other executive officers.
Consideration is also given to the amount deemed necessary to retain an
executive officer's services. These considerations are subjective and not
subject to specific criteria. Company performance is also a factor and, given
the Company's losses in 1991-1993 and the fact that the Company did not meet the
economic goals set forth in its proposed budget, salaries for executive officers
increased only slightly or not at all in 1994. Based on its experience with
companies generally and in the Company's industry, and without utilizing any
formal market studies, the Committee believes that the salaries paid by the
Company to its executive officers are moderate by comparison to external
standards. For this reason and because individual performances did not merit a
decrease in the view of the Committee, salaries did not decrease. The Committee
took special notice of several factors, including the additional time and effort
expended by management, difficult economic conditions and difficulties and costs
encountered in servicing the workforce and reducing Florida operations. Where
increases did occur, they were based on specific efforts in cost control or
revenue generation and the need to retain the officer. This analysis was also
subjective and not subject to specific criteria.
13
<PAGE>
While bonuses are also related to individual performance, Company
performance is emphasized more in determining bonus payments than in determining
salary. This is particularly true at the highest level of management. In
considering performance, generally earnings are most emphasized, although
revenues and financial condition are also considered. The amount of any bonus is
not tied to specific performance criteria, but is also subjectively determined
based upon an analysis of the aforementioned factors. An executive officer could
receive a bonus in a year where the Company is not profitable, based upon his
individual performance or areas of responsibility. Given the Company's return to
profitability in 1994, several executive officers received modest bonuses in
1994. The Committee determined not to grant more significant bonuses until a
trend in profitability developed.
The Company also attempts to provide incentives to its executive officers
to remain with the Company and to improve performance through the grant of stock
options. Options allow executive officers to share, to some extent, in
shareholders' return on equity. Typically, Company options vest in staggered
amounts over a long-term, such as a given percentage every three years. The
determination of how many options to grant to an executive officer depends, to
varying degrees, on the number of outstanding options held by the executive
officer, his job level and performance and Company performance. Given the
foregoing factors, primarily Company performance in prior years and outstanding
options, no executive officers received options in 1994. The Committee will,
however, review the grant of further options in 1995.
As a result of the foregoing factors, primarily the Company's performance
in 1993, the President and Chief Executive Officer's salary was not increased in
1994. In addition, he received no bonus or new grants of options. In determining
to maintain the President's compensation at its existing level the Committee
took into consideration, in addition to the other factors mentioned above, the
time and effort being expended by the President, with respect to bonus, the
Company's profitability in 1994, with respect to salary, the Company's results
in 1993 and difficulties encountered in reducing the workforce and Florida
operations, economic conditions, the President's experience and expertise in
handling the issues facing the Company and the perceived progress towards
enabling the Company to meet future goals. The Committee, with the concurrence
of the President and Chief Executive Officer, decided not to increase his
compensation until a trend in profitability developed. The final determination,
after reviewing these factors, was subjective.
The Company had various obligations under its 401(k) plan and with respect
to split dollar insurance premiums, all of which were met.
In December 1993, the Internal Revenue Service issued proposed regulations
concerning compliance with Section 162(m) of the Internal Revenue Code of 1986,
as amended (the 'Code'). Section 162(m) generally disallows a public company's
deduction for compensation to any one of certain employees (primarily executive
officers) in excess of $1.0 million per year unless the compensation is pursuant
to a plan or performance goals approved by the public company's shareholders.
None of the Named Executive Officers presently receives, and the Compensation
Committee does not anticipate that such persons will receive, annual cash
compensation in excess of the $1.0 million cap provided in Section 162(m). The
Compensation Committee presently intends to take any necessary steps to ensure
compliance with Section 162(m) of the Code.
Alec P. Courtelis; Robert L. Kester; Robert A. Steele.
14
<PAGE>
PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on the
Company's Common Stock over the last five fiscal years as compared to the total
returns of the NASDAQ Stock Market Index and a group of peer companies (the
'Peer Group'). Returns are based on the change in year-end to year-end price and
assume reinvested dividends. The graph assumes $100 was invested on December 31,
1989 in the Company's Common Stock, the NASDAQ Stock Market Index and the Peer
Group.
The Peer Group includes the Company; Florida Rock Industries; Granite
Construction, Inc.; Holnam, Inc.; Kasler Corp.; Lafarge Corp.; and Medusa Corp.
The Peer Group consists of companies that are engaged in the concrete and
related products business and/or the land development contracting business.
Companies included in the Peer Group were weighted by market capitalization from
the beginning of each period for which a return is indicated.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ AND SELECTED PEERS
<TABLE>
<CAPTION>
Base 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
---- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Devcon 100 82 58 42 25 36
NASDAQ 100 82 129 149 171 165
Peer Group 100 47 55 53 85 74
</TABLE>
15
<PAGE>
RATIFICATION OF THE REAPPOINTMENT OF THE COMPANY'S AUDITOR
The firm of KPMG Peat Marwick, independent certified public accountants,
has been the Company's auditor since 1980 and has advised the Company that the
firm does not have any direct financial interest or indirect financial interest
in the Company or any of its subsidiaries, nor has such firm had any such
interest in connection with the Company or its subsidiaries during the past 4
years, other than in its capacity as the Company's independent certified public
accountant. The Board of Directors, on the recommendation of the Company's Audit
Committee, has selected KPMG Peat Marwick as the Company's auditor for the year
ended December 31, 1995. Although the Board is not required to do so, it is
submitting its selection of the Company's auditors for ratification at the
Annual Meeting, in order to ascertain the views of its shareholders. The Board
will not be bound by the vote of the shareholders, however, if the selection is
not ratified, the Board would reconsider its selection. One or more
representatives of KPMG Peat Marwick are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions from
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR
RATIFICATION OF THE REAPPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S
PRINCIPAL INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote proxies as
in their discretion they may deem appropriate, unless they are directed by a
proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal for action at the 1996
Annual Meeting of Shareholders must deliver a proposal in writing to the
Company's principal executive offices on or before January 9, 1996.
By Order of the Board of Directors,
/s/ DONALD L. SMITH, JR.
Donald L. Smith, Jr., President
Deerfield Beach, Florida
May 9, 1995
16
<PAGE>
DEVCON INTERNATIONAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
COMMON STOCK
The undersigned, a holder of Common Stock of Devcon International Corp., a
Florida corporation (the 'Company'), hereby appoints Donald L. Smith, Jr. and
Richard L. Hornsby, and each of them, as proxies for the undersigned, each with
full power of substitution, for and in the name of the undersigned to act for
the undersigned and to vote, as designated below, all of the shares of stock of
the Company that the undersigned is entitled to vote at the 1995 Annual Meeting
of Shareholders of the Company, to be held on Friday, June 9, 1995, at 3:00
p.m., local time, at the Boca Raton Marriott, Boca Center, 5150 Town Center
Circle, Boca Raton, Florida, and at any adjournments or postponements thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND THE
OTHER PROPOSALS SET FORTH.
(1) ELECTION OF DONALD L. SMITH, JR., RICHARD L. HORNSBY, ALEC P. COURTELIS,
ROBERT L. KESTER AND ROBERT A. STEELE as directors.
[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominees (if any):
____________________________________________________________________
[ ] VOTE WITHHELD from all nominees listed above.
[ ] ABSTAIN
(2) PROPOSAL to ratify the reappointment of KPMG Peat Marwick, independent
certified public accountants, as the Company's auditor for 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Upon such other matters as may properly come before the Annual Meeting and
any adjournments thereof. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Annual
Meeting, and any adjournments or postponements thereof.
(see reverse side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED 'FOR' ALL OF THE PROPOSALS.
Dated _________________________ , 1995
______________________________________
(Signature)
______________________________________
(Signature if held jointly)
IMPORTANT: Please sign exactly as your
name appears and mail it promptly even
though you now plan to attend the
meeting. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
