SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934
[ X ] Filed by Registrant
[ ] Filed by Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a- (6)e (2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to rule 14a-11
or Rule 14a-12
DUCKWALL-ALCO STORES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box) :
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(I) (4) and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the
filling fee is calculated and stat how it was
determined):
4) Proposed maximum aggregate value of
transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11 (a) (2) and identify the
filing for which the offset 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>
DUCKWALL-ALCO STORES, INC.
401 Cottage Street
Abilene, Kansas 67410
(785) 263-3350
April 30, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Duckwall-ALCO Stores, Inc., to be held at the principal offices of the
Company, located at 401 Cottage Street, Abilene, Kansas on Thursday,
May 27,1999, commencing at 10:00 a.m., local time. The business to be
conducted at the meeting is described in the attached Notice of Annual Meeting
and Proxy Statement. In addition, there will be an opportunity to meet with
members of senior management and review the business and operations of the
Company.
Your Board of Directors joins with me in urging you to attend the meeting.
Whether or not you plan to attend the meeting, however, please sign, date
and return the enclosed proxy card promptly. A prepaid return envelope is
provided for this purpose. You may revoke your proxy at any time before
it is exercised and it will not be used if you attend the meeting and
prefer to vote in person.
Sincerely yours,
/s/ Glen L. Shank
Glen L. Shank
Chairman of the Board
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders
of Duckwall-ALCO Stores, Inc., a Kansas corporation ("Duckwall" or the
"Company"), will be held at the principal executive offices of Duckwall
located at 401 Cottage Street, Abilene, Kansas, on Thursday, May 27,
1999, commencing at 10:00 a.m., local time, and thereafter as it may
from time to time be adjourned, for the following purposes:
1. To elect six directors to hold office for a one-year term until the
2000 Annual Meeting of the Stockholders of Duckwall and until their
respective successors are duly elected and qualified or until their
respective earlier resignation or removal;
2. To consider and act upon a proposal to amend the Duckwall-ALCO
Stores, Inc. 1993 Stock Option Plan as described in the accompanying
Proxy Statement;
3. To consider and act upon ratification and approval of the selection
of the accounting firm of KPMG LLP as the independent auditors of
Duckwall for the fiscal year ending January 30, 2000;
4. To consider and act upon any other matters which may properly come
before the Annual Meeting of the Stockholders or any adjournment or
adjournments thereof.
In accordance with the provisions of the Bylaws of the Company,
the Board of Directors has fixed the close of business on April 9, 1999
as the record date for determination of the stockholders entitled to
notice of, and to vote at, the Annual Meeting of the Stockholders and
any adjournment or adjournments thereof.
All stockholders are cordially invited to attend the meeting.
Whether or not you intend to be present at the meeting, the Board of
Directors of Duckwall solicits you to sign, date and return the enclosed
proxy card promptly. A prepaid return envelope is provided for this
purpose. You may revoke your proxy at any time before it is exercised
and it will not be used if you attend the meeting and prefer to vote in
person. Your vote is important and all stockholders are urged to be
present in person or by proxy.
By Order of the Board of Directors
/s/ Charles E. Bogan
Charles E. Bogan
Vice President and Secretary
April 30, 1999
Abilene, Kansas
<PAGE>
DUCKWALL-ALCO STORES, INC.
401 Cottage Street
Abilene, Kansas, 67410-2832
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of
Duckwall-ALCO Stores, Inc., a Kansas corporation ("Duckwall" or the
"Company"), in connection with the solicitation of proxies by the
Board of Directors of Duckwall for use at the Annual Meeting of
Stockholders to be held on Thursday, May 27, 1999, and at any
adjournment or adjournments thereof (the "Annual Meeting"). The
Annual Meeting will commence at 10:00 a.m., local time, and will be
held at the principal offices of the Company, located at 401 Cottage
Street, Abilene, Kansas, 67410-2832.
This Proxy Statement and the enclosed form of proxy were first
mailed to the Company's stockholders on or about April 30, 1999.
Proxies
You are requested to complete, date and sign the enclosed form
of proxy and return it promptly in the enclosed postage prepaid
envelope. Shares represented by properly executed proxies will,
unless such proxies previously have been revoked, be voted in
accordance with the stockholders' instructions indicated in the
proxies. If no instructions are indicated, such shares will be
voted in favor of the election of the nominees for director named
in this Proxy Statement, in favor of the proposal to amend the
Duckwall-ALCO Stores, Inc. 1993 Stock Option Plan, in favor of
ratifying the selection of the accounting firm of KPMG LLP as
Duckwall's independent auditors for the current fiscal year, and,
as to any other matter that properly may be brought before the
Annual Meeting, in accordance with the discretion and judgment of
the appointed attorneys-in-fact. A stockholder who has given a
proxy may revoke it at any time before it is exercised at the
Annual Meeting by filing written notice of revocation with the
Secretary of the Company, by executing and delivering to the
Secretary of the Company a proxy bearing a later date, or by
appearing at the Annual Meeting and voting in person.
Voting at the Meeting
For purposes of voting on the proposals described herein, the
presence in person or by proxy of stockholders holding a majority
of the total outstanding shares of the Company's common stock, par
value $0.0001 per share ("Common Stock"), shall constitute a quorum
at the Annual Meeting. Only holders of record of shares of the
Company's Common Stock as of the close of business on April 9, 1999
(the "Record Date"), are entitled to notice of, and to vote at, the
Annual Meeting or any adjournment or adjournments thereof. As of
the Record Date, 5,082,374 shares of the Company's Common Stock were
outstanding and entitled to be voted at the Annual Meeting. Each
share of Common Stock is entitled to one vote on each matter
properly to come before the Annual Meeting.
Directors are elected by a plurality (a number greater than
those cast for any other candidates) of the votes cast by the
stockholders present in person or represented by proxy and entitled
to vote at the Annual Meeting for that
<PAGE>
purpose. The affirmative vote of a majority of the shares of the
Company's Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting, provided a quorum is present,
is required to (i) approve the proposed amendment to the
Duckwall-ALCO Stores, Inc. 1993 Stock Option Plan, (ii) ratify the
selection of KPMG LLP as the Company's independent auditors, and
(iii) approve such other matters as properly may come before the
Annual Meeting or any adjournment thereof.
Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction
of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-
votes are not counted for purposes of determining whether a proposal
has been approved.
Solicitation of Proxies
This solicitation of proxies for the Annual Meeting is being
made by the Company's Board of Directors. The Company will bear
all costs of such solicitation, including the cost of preparing and
mailing this Proxy Statement and the enclosed form of proxy. After
the initial mailing of this Proxy Statement, proxies may be
solicited by mail, telephone, telegram, facsimile transmission or
personally by directors, officers, employees or agents of the
Company. Brokerage houses and other custodians, nominees and
fiduciaries will be requested to forward soliciting materials to
beneficial owners of shares held of record by them, and their
reasonable out-of-pocket expenses, together with those of the
Company's transfer agent, will be paid by the Company.
A list of stockholders entitled to vote at the Annual Meeting
will be available for examination at least ten days prior to the date
of the Annual Meeting during normal business hours at the principal
executive offices of Duckwall located at 401 Cottage Street,
Abilene, Kansas. The list also will be available at the Annual
Meeting.
ITEM 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of six
directors. One of the purposes of this Annual Meeting is to elect
six directors to serve for a one-year term expiring at the Annual
Meeting of Stockholders in 2000 and until their respective
successors are duly elected and qualified or until their respective
earlier resignation or removal. The Board of Directors has
designated Glen L. Shank, Dennis A. Mullin, Robert L. Barcum,
Lolan C. Mackey, Jeffrey Macke, and Robert L. Woodard as the six
nominees proposed for election at the Annual Meeting. Unless
authority to vote for the nominees or a particular nominee is
withheld, it is intended that the shares represented by properly
executed proxies in the form enclosed will be voted for the election
as directors of all nominees. In the event that one or more of the
nominees should become unavailable for election, it is intended that
the shares represented by the proxies will be voted for the election
of such substitute nominee or nominees as may be designated by the
Board of Directors, unless the authority to vote for both nominees
or for the particular nominee who has ceased to be a candidate has
been withheld. Each of the nominees has indicated his willingness
to serve as a director if elected, and the Board of Directors has
no reason to believe that any nominee will be unavailable for
election.
The Board of Directors recommends that you vote for the
election of Glen L. Shank, Dennis A. Mullin, Robert L. Barcum,
Lolan C. Mackey, Jeffrey Macke, and Robert L. Woodard as directors.
<PAGE 2>
Nominees
The following table sets forth certain information with respect
to each person nominated by the Board of Directors for election as
a director at the Annual Meeting.
Present
Position
With Director
Name Age Duckwall Since
_______________________________ ___ ______________________ ________
Glen L. Shank 54 Chairman and President 1988
Dennis A. Mullin (1) 51 Director 1991
Robert L. Barcum (2) 50 Director 1991
Lolan C. Mackey(2)(3) 53 Director 1998
Jeffrey Macke(1)(2)(4) 30 Director 1998
Robert L. Woodard(1)(2)(4) 38 Director 1998
_______________________________ ___ ______________________ ________
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Lolan C. Mackey was appointed to the Board of Directors on
March 19, 1998 and elected to the Board of Directors at the
Annual Meeting of Stockholders on May 21, 1998.
(4) Jeffrey Macke and Robert L. Woodard were appointed to the
Board of Directors on August 27, 1998, replacing William J.
Morgan and Robert C. Amenta, who resigned from the Board of
Directors on August 27, 1998 and August 3, 1998, respectively.
The business experience of each of the directors of the Company
during the last five years is as follows:
Glen L. Shank has served as President of the Company since June
1988 and as Chairman of the Board since May 1991. Between 1982 and
1988, Mr. Shank served as Vice President of Merchandising of the
Company. Prior to 1982, Mr. Shank served as a Buyer and as a
Merchandise Manager for the Company. Mr. Shank has approximately
32 years of experience in the retail industry.
Dennis A. Mullin is the President and Chief Executive Officer
of Steel & Pipe Supply Co., Inc., and has served in various
capacities with that company for more than the last five years.
He also serves as a director of Commerce Bank, Kansas City.
Robert L. Barcum is Chairman of the Board of The viaLink
Company, an internet based technology company. He has also been
president since 1985 of Applied Intelligence Group, a Netplex
Company, that provides consulting and systems integration services
to the retail industry.
Lolan C. Mackey is currently a partner of Diversified Retail
Solutions LLC, a retail senior management advisory firm. For 25
years, Mr. Mackey was employed in various capacities by Wal-Mart
Stores, Inc. From 1990 to 1994, he was Vice President of Store
Planning. From 1994 to 1997, he was Vice President of International
Operations.
Jeffrey Macke has been a partner and lead investor with JKM
Investments, a San Francisco based hedge fund, since 1995. From
1993 to 1995, he was a senior consultant for Senn-Delaney/Arthur
Andersen LLP.
Robert L. Woodard has been the Chief Investment Officer of
the Kansas Public Employees Retirement System since 1996. From
1994 to 1996, he was Vice-President, and General Manager of FB
Capital Management of Kansas, Inc.
<PAGE 3>
Compensation of Directors
Non-employee directors of the Company receive compensation of
$4,000 per year, payable quarterly, plus reimbursement for expenses
incurred in connection with attendance at Board of Directors
meetings. Employee directors of the Company receive no compensation
for serving on the Board or any committee thereof.
On March 18, 1993, the Company entered into an employment
agreement with Glen L. Shank, President of the Company. The
original term of the employment agreement expired on January 31,
1995. The current term of the employment agreement expires on
January 31, 2001, subject to certain termination provisions
provided in the agreement. The employment agreement provides that
Mr. Shank's minimum base salary shall be $144,000, subject to
increase by the Board of Directors. During the 1999 Fiscal Year,
the employment agreement provided for a base salary of $190,000.
In the event of death or disability, Mr. Shank or his representative
shall be entitled to his salary through the end of the month in
which his death occurs or the last day of the sixth consecutive
month of his disability, as the case may be.
Meetings of the Board and Committees
During the fiscal year ended January 31, 1999,(the "1999
Fiscal Year"), the Board of Directors of Duckwall held eight
meetings. All of the directors attended at least 75% of the meetings
of the Board of Directors and the committees of the Board of
Directors on which they served which were held during the 1999 Fiscal
Year.
Pursuant to Duckwall's Bylaws, the Board of Directors has
established Audit and Compensation Committees of the Board of
Directors. There currently is no Nominating Committee or other
committee of the Board of Directors performing similar functions.
The Audit Committee assists the Board of Directors in
fulfilling its responsibilities with respect to Duckwall's
accounting and financial reporting practices and in addressing the
scope and expense of audit and related services provided by
Duckwall's independent auditors. The Audit Committee is responsible
for recommending the appointment of Duckwall's independent auditors
and reviewing the terms of their engagement, reviewing Duckwall's
policies and procedures with respect to internal auditing,
accounting and financial controls and reviewing the scope and
results of audits and any auditor recommendations. The current
members of the Audit Committee are Dennis A. Mullin, Jeffrey Macke,
and Robert L. Woodard. The Audit Committee met twice during the 1999
Fiscal Year.
The Compensation Committee makes recommendations to the Board
of Directors regarding the compensation and benefits of Duckwall's
executive officers. The Compensation Committee also administers
the Company's Incentive Stock Option Plan. The current members of
the Compensation Committee are Robert L. Barcum, Lolan C. Mackey,
Jeffrey Macke, and Robert L. Woodard. The Compensation Committee
met two times during the 1999 Fiscal Year.
<PAGE 4>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth for the fiscal years ending
January 31, 1999, February 1, 1998, and February 2, 1997,
respectively, the compensation of the Company's chief executive
officer and of each of the Company's four other most highly
compensated executive officers whose remuneration for the 1999
Fiscal Year was in excess of $100,000 for services to the Company
in all capacities:
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term
Compensation
Annual Compensation Payouts
_________________________ __________________________
Securities
Under- All
lying Other
Name and Fiscal Options/ Compen-
Principal Position Year Salary Bonus(1) SARs sation (2)
___________________________ ______ ____________ ____________ ____________ ____________
<S> <C> <C> <C> <C> <C>
Glen L. Shank 1999 $190,500 0 4,000 $5,270(3)
Chairman and President 1998 175,474 85,000 7,800 5,736(4)
1997 162,650 75,000 4,000 5,110(5)
James E. Schoenbeck 1999 145,450 36,000 3,500 5,461(3)
Vice President-Operations 1998 140,426 53,500 5,800 5,927(4)
and Advertising 1997 130,100 46,500 3,000 5,301(5)
James R. Fennema 1999 139,675 34,000 3,500 5,304(3)
Vice President- 1998 135,150 51,000 5,800 5,770(4)
Merchandise 1997 124,625 44,000 2,800 5,144(5)
Richard A. Mansfield 1999 133,970 28,000 2,500 5,407(3)
Vice President-Finance 1998 98,459 30,000 9,600 0
and Treasurer (6) 1997 0 0 0 0
Charles E. Bogan 1999 122,775 24,000 0 7,121(3)
Vice President, Secretary 1998 120,275 30,000 3,800 7,519(4)
and General Counsel 1997 117,250 28,000 1,800 6,912(5)
___________________________ ______ ____________ ____________ ____________ ____________
</TABLE>
(1) Reflects bonus earned for the fiscal years ending January 31,
1999, February 1, 1998, and February 2, 1997, respectively.
(2) Excludes perquisites and other benefits, unless the aggregate
amount of such compensation is the lesser of either $50,000 or
10% of the total of annual salary and bonus reported for the
named executive officer.
(3) Includes contributions made by the Company for fiscal 1999 to
the named individual's account in the Duckwall-ALCO Stores, Inc.
Profit Sharing Plan and Trust (the "Profit Sharing Plan")
(together with forfeitures) in the amounts of $4,369 each for
Mr. Shank, Mr. Schoenbeck, Mr. Fennema, and Mr. Mansfield, and
$4,172 for Mr. Bogan. Also includes premiums paid by the Company
with respect to whole life insurance for each of the named
individuals for fiscal 1999 in the amounts of $901 for Mr. Shank,
$1,092 for Mr. Schoenbeck, $935 for Mr. Fennema, $1,038 for
Mr. Mansfield, and $2,949 for Mr. Bogan.
(4) Includes contributions made by the Company for fiscal 1998 to
the named individual's account in the Duckwall-ALCO Stores, Inc.
Profit Sharing Plan and Trust (the "Profit Sharing Plan")
(together with forfeitures) in the amounts of $4,835
<PAGE 5>
each for Mr. Shank, Mr. Schoenbeck, and Mr. Fennema, and $4,570
for Mr. Bogan. Also includes premiums paid by the Company with
respect to whole life insurance for each of the named
individuals for fiscal 1998 in the amounts of $901 for Mr. Shank,
$1,092 for Mr. Schoenbeck, $935 for Mr. Fennema and $2,949 for
Mr. Bogan.
(5) Includes contributions made by the Company for fiscal 1997 to
the named individual's account in the Duckwall-ALCO Stores, Inc.
Profit Sharing Plan and Trust (the "Profit Sharing Plan")
(together with forfeitures) in the amounts of $4,209 each for
Mr. Shank, Mr. Schoenbeck, and Mr. Fennema, and $3,963 for Mr.
Bogan. Also includes premiums paid by the Company with respect
to whole life insurance for each of the named individuals for
fiscal 1997 in the amounts of $901 for Mr. Shank, $1,092 for
Mr. Schoenbeck, $935 for Mr. Fennema and $2,949 for Mr. Bogan.
(6) Mr. Mansfield became Vice President-Finance and Treasurer on
May 29, 1997.
Option Grants, Exercises and Holdings
The following table provides further information concerning
grants of stock options pursuant to the Duckwall-ALCO Stores, Inc.,
Incentive Stock Option Plan during the 1999 Fiscal Year to the named
executive officers who received grants:
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Potential
Realized Value at
% of Assumed Annual
Number of Total Rates of Stock Price
Securities Options/ Appreciation
Underlying Granted to Exercise Individual Grants (1)
Options Employees or Base for Option Term
Granted in Fiscal Price Expiration _______________
Name (#) Year ($/Sh) Date 5%($) 10%($)
______________________ __________ __________ ________ ____________ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Glen L. Shank 4,000 8.84% 18.50 May 20, 2003 20,445 45,178
James E. Schoenbeck 3,500 7.73% 18.50 May 20, 2003 17,889 39,531
James R. Fennema 3,500 7.73% 18.50 May 20, 2003 17,889 39,531
Richard A. Mansfield 2,500 5.52% 18.50 May 20, 2003 12,778 28,236
______________________ __________ __________ ________ ____________ ______ ______
</TABLE>
(1) The options were granted with an exercise price equal to the fair
market value of the Company's Common Stock on May 21, 1998.
Except in the event of death, if an optionee ceases to be
employed by the Company, his or her option shall terminate on
the earlier of (i) the expiration of the option, or (ii) the
thirtieth day following such termination of employment. In the
event of the death of an optionee, the option may be exercised
by his or her legal representatives on the earlier of (i) the
expiration of the option, or (ii) within twelve months of the
date of death. Upon a merger, consolidation, reorganization or
liquidation of the Company, the option may, in the discretion of
the Compensation Committee, become immediately exercisable until
the day immediately prior to the date the contemplated
transaction is consummated. The options granted were granted
on May 21, 1998 and expire on May 20, 2003. The options become
exercisable in equal amounts over a four year period beginning
one year subsequent to their grant date.
<PAGE 6>
Options exercised by the named executive officers during the 1999
Fiscal Year were as follows: Mr. Shank, 5,750 shares, Mr. Schoenbeck, 4,375
shares, Mr. Fennema, 7,500 shares, and Mr. Bogan, 3,500 shares. The following
table provides information with respect to the named executive officers
concerning unexercised options held as of the end of the 1999 Fiscal Year.
<TABLE>
Last Fiscal Year End Option Values
<CAPTION>
_________________________________________________________________
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at FY-End (#) FY-End ($) (1)
_________________________ ___________ _____________ ___________ _____________
Name Exercisable Unexercisable Exercisable Unexercisable
_________________________ ___________ _____________ ___________ _____________
<S> <C> <C> <C> <C>
Glen L. Shank 17,263 13,037 48,893 5,901
James E. Schoenbeck 12,425 10,175 34,278 4,284
James R. Fennema 5,100 10,000 5,469 4,106
Richard A. Mansfield 2,400 9,700 1,200 3,600
Charles E. Bogan 8,825 4,325 25,309 2,841
_________________________ ___________ _____________ ___________ _____________
</TABLE>
(1) The value of unexercised in-the-money options equals the
difference between the option exercise price and the closing
price of Duckwall-ALCO Stores, Inc. stock at fiscal year end,
multiplied by the number of shares underlying the options.
The closing price of Duckwall-ALCO stock on January 31, 1999 was
$13.25.
Employee Stock Option Plan
In May 1993, the Company adopted the Duckwall-ALCO Stores, Inc. Incentive
Stock Option Plan (the "Plan") to encourage key employees of the Company to
participate in the ownership of the Company and promote the success of the
business of the Company. Presently, 450,000 shares of Common Stock are
authorized for issuance upon exercise of options under the Plan. Included
in this meeting is a resolution to amend the Plan to increase the number of
shares authorized for issuance to 650,000. The number of shares and option
price covered by outstanding options may be adjusted in the event of any
stock dividend, stock split, reorganization, merger, consolidation,
liquidation or any combination or exchange of shares of Common Stock. The
Plan is administered by the Compensation Committee consisting of not less
than two nor more than five members of the Board of Directors who are
appointed by the Board. The price of each option shall be its fair market
value as determined by the Compensation Committee if the Common Stock is not
traded on a public market. Employees of the Company eligible to receive
options are those selected by the Compensation Committee in its sole
discretion on the basis that such employees have made material contributions
to the successful performance of the Company in the past, or are expected to
make material contributions in the future.
Of the 450,000 shares of Common Stock available under the Plan, an
aggregate of 235,562 shares were subject to options as of April 2, 1999.
<PAGE 7>
Compensation Committee Report
This report has been prepared by the Compensation Committee of the Board
of Directors, which consists of Robert L. Barcum, Lolan C. Mackey, Jeffrey
Macke, and Robert L. Woodard. The Committee has general responsibility for
the establishment, direction and administration of all aspects of the
compensation policies and programs for the Company's executive officers.
During Fiscal 1999, the Compensation Committee was composed of three
independent outside directors, none of whom is an officer or employee of
the Company. The Chief Executive Officer of the Company, and certain other
executive officers of the Company, may attend meetings of the Compensation
Committee, but are not present during discussions or deliberations regarding
their own compensation. The Compensation Committee meets at least annually
or more frequently as the Company's Board of Directors may request.
Compensation Policy. The Company's executive compensation policy is
premised upon three basic goals: (1) to attract and retain qualified
individuals who provide the skills and leadership necessary to enable the
Company to achieve both its short and long-term earnings growth and return
on investment objectives; (2) to create incentives to achieve Company and
individual performance objectives through the use of performance-based
compensation programs; and (3) to link executive pay to corporate performance,
including share price, recognizing that there is not always a direct and
short-term correlation between executive performance and share price.
In determining the structure and levels of each of the components of
executive compensation needed to achieve these goals, the Compensation
Committee considers all elements of the compensation package in total, as
well as the individual components thereof. As more fully described below, the
determination of such levels of executive compensation is a subjective
process in which the Compensation Committee considers many factors including
the Company's performance (as measured by earnings growth and return on
investment, among other factors) and the individual executive's specific
responsibilities, historical and anticipated personal contribution to the
Company's business, and length of service with the Company. In addition,
the Compensation Committee considers publicly available executive compensation
data for comparable positions in companies believed to be most comparable for
purposes of executive compensation. The levels of compensation paid by the
Company to its executive officers were matched to comparable positions of
executives at comparable companies and a competitive level for the total
compensation package and relevant individual components was determined.
Compensation Components. The Company's compensation program is reviewed
annually to ensure that compensation levels and incentive opportunities are
competitive and reflect the performance of the Company and the individual
executive officer. The principal components of the compensation program for
executive officers are base salary, annual incentive bonuses, and employee
stock options. Management has been granted options in the past to provide
linkage between executive pay and corporate performance and to provide
incentive to continue employment with the Company. The Compensation
Committee believes that the total compensation package awarded to top
management is fair based upon the total compensation packages awarded to
top management at comparable companies.
Base Salary. The Compensation Committee reviews each executive officer's
base salary from the previous year and, in determining whether to adjust base
salary levels, takes into account the Chief Executive Officer's
recommendations and assessments of each executive's growth and effectiveness
in the performance of his or her duties and the Company's performance. For
Fiscal 1999, base salary levels for the executive officers were increased by
approximately two to nine percent from Fiscal 1998 levels. These salaries
were based upon the Compensation Committee's analysis of the Company's
performance, including a review of the Company's revenues, earnings, return
on investment and new store openings for the prior year. An analysis of the
role played by each individual executive in generating the Company's
performance included a consideration of the executive's specific
responsibilities, contributions to the Company's business, and length of
service. The Compensation Committee also considered publicly available
executive compensation data for comparable positions in comparable companies.
Base pay levels for the executive officers are competitive within a range
that is considered in the Compensation Committee's judgment, to be reasonable
and necessary.
<PAGE 8>
Annual Incentive Bonus. The Company's executive officers and
certain other employees of the Company who, in the discretion of the Chief
Executive Officer, are considered to be in a position to significantly
influence the Company's results or operations and level of profits are
eligible to receive annual incentive bonus awards under the Company's
incentive bonus program. Annual bonus opportunities allow the Company to
communicate specific goals that are of primary importance during the coming
year and motivate executives to achieve these goals. The selection of the
persons eligible to participate in the incentive bonus program is necessarily
subjective in nature and is made after taking into account management's
assessment of each person's level of responsibility. The incentive program
establishes a bonus pool at the beginning of each year which is included in
the Company's operating budget for that year. Each of the participants in
the incentive program is evaluated based upon a number of criteria related
to management skills and personal characteristics. In addition, each
participant is evaluated based upon his or her accomplishments for the year
compared to the goals that were established at the end of the previous year.
The size of the bonus pools, the persons who are eligible to receive bonuses,
the targets established for bonus participants and the amount of bonus
payments can vary from year to year and are subject to the discretion of the
Compensation Committee and management.
Stock Options. Since the Company's policy is to retain qualified
individuals to enable the Company to achieve both short- and long-term
earnings growth, it is important that there be a long-term component of
the compensation policy. The Company's Incentive Stock Option Plan which
was approved by the Stockholders in 1993, amended in 1997, and proposed to
be amended in 1999, provides the vehicle for addressing long-term rewards.
The Compensation Committee administrates the Stock Option Plan. The Chief
Executive Officer provides recommendations to the Compensation Committee who
may grant the options at any time. The options permit the holder to purchase
shares of the Company's stock at a price equal to the fair market value of
the Stock at the time of the grant. Thus, the options gain value only to the
extent the stock price exceeds the option price. To date, all of the options
that have been granted become exercisable in equal amounts over a four-year
period beginning one year subsequent to the grant date.
Compensation Committee Interlocks
Robert L. Barcum, Lolan C. Mackey, Jeffrey Macke, and Robert L. Woodard
each served on the Compensation Committee of the Board of Directors during
the 1999 Fiscal Year.
Jeffrey Macke, Director of the Company, beneficially owned 446,300 shares
of Common Stock as of March 19, 1999.
Insider Participation
Dennis A. Mullin is President and Chief Executive Officer of Steel & Pipe
Supply Co., Inc. Mr. Mullin is also a partner in or stockholder or officer
of five partnerships or corporations which own stores leased to the Company.
During the 1999 Fiscal Year, the Company paid fixed rentals aggregating
approximately $585,066 and percentage rentals aggregating approximately $635
to these entities. The Company also pays the taxes, insurance and maintenance
on the stores leased from these entities. Each of the store leases has a
remaining term of more than four years. Robert L. Barcum is Chairman of the
Board of The viaLink Company, the successor company of Applied Intelligence
Group, Inc. ("AIG"), a computer consulting firm. During the 1999 Fiscal Year,
the Company paid AIG $260,299 for the purchase of software, services and
expenses related to upgrading the Company's point-of-sale systems. The
Company has used AIG as a source for point-of sale software and related
services since 1987.
Glen L. Shank, James E. Schoenbeck, Richard A. Mansfield, and Charles E.
Bogan were four of the five members of the administrative committee of the
Duckwall-ALCO Stores, Inc. Profit Sharing Plan and Trust (the "Profit Sharing
Plan"). On March 19, 1999, the plan owned 79,053 shares of Common Stock.
See "Ownership of Duckwall Common Stock."
<PAGE 9>
Company Performance
The following graph compares the cumulative total return of the Company,
the Nasdaq Stock Market Index, and the Nasdaq Retail Trade Stocks Index
(dividends reinvested). The graph assumes $100 was invested on October 27, 1994
in Duckwall-ALCO Stores, Inc. Common Stock, the Nasdaq Stock Market Index,
and the Nasdaq Retail Trade Stocks Index (the "Peer Group").
<TABLE>
Comparative Total Stock Returns
<CAPTION>
10/24/94 01/29/95 01/28/96 02/02/97 02/01/98 01/31/99
<S> <C> <C> <C> <C> <C> <C>
Duckwall-Alco Stores, Inc. 100 102.778 108.333 145.833 161.111 147.222
Nasdaq Composite Index 100 97.497 137.789 180.642 213.475 333.135
Nasdaq Retail Stock Index 100 90.123 101.859 125.271 146.473 178.529
</TABLE>
Based upon the data reflected in the table, a $100 investment in the
Company's stock would have a total return value of $147.22 at fiscal year-end,
as compared to $333.14 for the Composite Nasdaq Index and $178.53 for the
Nasdaq Retail Stock Index.
There can be no assurances that the Company's stock performance will
continue into the future with the same or similar trends depicted in the
graph above. The Company does not make or endorse any predictions as to the
future stock performance.
<PAGE 10>
OWNERSHIP OF DUCKWALL COMMON STOCK
The following table sets forth certain information as of March 19, 1999
(as of December 31, 1998 for Goldman, Sachs and Company, Heartland Advisors,
Inc., Dimensional Fund Advisors, Inc., Wellington Management Company LLP,
Franklin Resources, Inc. and Putnam Investments, Inc.) regarding the
beneficial ownership of Duckwall Common Stock by each person known to the
Board of Directors to own beneficially 5% or more of the Company's Common
Stock, by each director of the Company, by each executive officer named in
the Summary Compensation Table under "Executive Compensation and Other
Information--Executive Compensation" and by all directors and officers of
the Company as a group. All information with respect to beneficial ownership
has been furnished by the respective directors, officers or 5% or more
stockholders, as the case may be, or by documents filed with the Securities
and Exchange Commission.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Name Beneficial Ownership Shares Outstanding
___________________________________ ____________________ ___________________
<S> <C> <C>
Glen L. Shank (1)(2)(3) 24,413 *
James E. Schoenbeck (1)(2)(4) 16,800 *
James R. Fennema (1)(5) 9,400 *
Richard A. Mansfield (1)(2)(6) 2,400 *
Charles E. Bogan (1)(2)(7) 11,825 *
Robert L. Barcum (8) 0 *
Lolan C. Mackey (9) 0 *
Jeffrey Macke (10) 446,300 8.76
Dennis A. Mullin (11) 118,498 2.33
Robert L. Woodard (12) 0 *
KDF, a Kansas Nominee (12) 672,000 13.20
INTRUST Bank N.A., as Trustee
for Duckwall-ALCO Profit
Sharing Plan & Trust (2) 79,053 1.55
Goldman, Sachs and Company(13) 514,700 10.11
Heartland Advisors, Inc.(14) 435,000 8.54
Dimensional Fund
Advisors, Inc.(15) 353,600 6.94
Wellington Management
Company LLP (16) 329,600 6.47
Franklin Resources, Inc.(17) 284,900 5.59
Putnam Investments, Inc.(18) 265,000 5.20
All directors and officers as
a group (10 in group) 629,636 3.50
</TABLE>
___________________________________
* Less than one percent.
(1) The address for this person is 401 Cottage Street, Abilene, Kansas
67410-2832.
(2) Glen L. Shank, Chairman of the Board and President of the Company,
James E. Schoenbeck, a Vice President of the Company, Richard A.
Mansfield, a Vice President of the Company, and Charles E. Bogan,
a Vice President of the Company were four of the five members of
the administrative committee of the Duckwall-ALCO Stores, Inc.
Profit Sharing Plan and Trust (the "Profit Sharing Plan"),
however each has disclaimed beneficial ownership of any shares
of Common Stock owned by the Profit Sharing Plan. The address of
the Profit Sharing Plan is INTRUST Bank N.A., 4000 Sommerset
Drive, P.O. Box 8338, Prairie Village, KS 66208-0338.
(3) Mr. Shank owns options to purchase 26,300 shares of Common Stock.
Of those options, 17,263 are currently exercisable.
<PAGE 11>
(4) Mr. Schoenbeck owns options to purchase 19,100 shares of Common
Stock. Of those options, 12,425 are currently exercisable.
(5) Mr. Fennema owns options to purchase 11,600 shares of Common
Stock. Of those options, 5,100 are currently exercisable.
(6) Mr. Mansfield owns options to purchase 9,600 shares of Common
Stock. Of those options, 2,400 are currently exercisable.
(7) Mr. Bogan owns options to purchase 13,150 shares of Common
Stock. Of those options, 8,825 are currently exercisable.
(8) The address for Mr. Barcum is The viaLink Company, 13800
Benson Road, Edmond, Oklahoma 73013.
(9) The address for Mr. Mackey is Diversified Retail Solutions LLP,
1913 N. Walton Blvd., Bentonville, AR 72712.
(10) Jeffrey Macke owns 20,000 shares of Common Stock and is a
partner in JKM Investments, LLC, which owns 62,200 shares of
Common Stock. Mr. Macke beneficially owns the following shares:
Macke Limited Partnership, 3,500 shares of Common Stock; Kenneth
A. Macke and Kathy Macke, 356,100 shares of Common Stock; Kenneth
A. Macke Trust, 1,000 shares of Common Stock; Melissa Macke, 2,500
shares of Common Stock; and Michael Macke, 1,000 shares of Common
Stock. The address for Mr. Macke is JKM Investments, LLC, 2401
Vallejo St., San Francisco, CA 94123.
(11) Dennis A. Mullin owns 6,000 shares of Common Stock and is the
President and Chief Executive Officer of Steel & Pipe Supply Co.,
Inc., which owns 105,818 shares of Common Stock. The address of
Steel & Pipe Supply Co., Inc., is 555 Poyntz, Manhattan, Kansas
66502. Mr. Mullin is also an executive officer of Business
Buildings, Inc. which own 840 shares of Common Stock and of MBI,
Inc., which owns 5,840 shares of Common Stock. The address for
Mr. Mullin is 555 Poyntz, Manhattan, Kansas 66502.
(12) KDF is the nominee holder of shares of Common Stock on behalf of
the Kansas Public Employees Retirement System ("KPERS"). KPERS
has investment and voting power with regard to these shares.
Robert L. Woodard is the Chief Investment Officer of KPERS.
Mr. Woodard has disclaimed beneficial ownership of all shares
of Common Stock beneficially owned by KDF and KPERS. The
address of KPERS is 611 S. Kansas Avenue, Suite 200, Topeka KS
66603.
(13) The address of Goldman, Sachs and Company is 85 Broad Street,
New York, New York 10004.
(14) The address of Heartland Advisors, Inc. is 790 North Milwaukee
Street, Milwaukee, Wisconsin 53202.
(15) The address of Dimensional Fund Advisors, Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401.
(16) The address of Wellington Management Company LLP is 75 State
Street, Boston, Massachusetts 02109.
(17) The address of Franklin Resources, Inc. is 777 Mariners Island
Blvd., San Mateo, CA 94403.
(18) The address of Putnam Investments, Inc. is One Post Office
Square, Boston, Massachusetts 02109.
<PAGE 12>
ITEM 2
PROPOSED AMENDMENT TO THE DUCKWALL-ALCO STORES, INC. 1993 STOCK OPTION PLAN
During the 1994 fiscal year, the Board of Directors of the Company adopted
and the stockholders approved, the Duckwall-ALCO Stores, Inc. 1993 Stock
Option Plan ("Plan"). In 1997, the Board of Directors of the Company adopted,
and the stockholders approved, an amendment to the plan that increased the
number of shares available in the plan to 450,000. In the opinion of the
Board of Directors, the availability of a stock option plan will encourage
key employees of the Company to participate in the ownership of the Company
and provide additional incentive for such employees to promote the success
of the business of the Company through sharing in the future growth of such
business. The Board of Directors of the Company has adopted a proposed
amendment to the Plan whereby a maximum of 650,000 shares of Common Stock,
rather than 450,000 shares, may be issued upon exercise of options under the
Plan.
Description of the Plan
Shares Subject to Options. Currently, a maximum of 450,000 shares of
Common Stock may be issued upon exercise of options under the Plan, and
options covering 299,376 shares have been granted or exercised. The number
of shares and option price covered by outstanding options may be adjusted
in the event of any stock dividend, stock split, reorganization, merger,
consolidation, liquidation or any combination or exchange of shares of
Common Stock. In the event the Company shall not be the surviving corporation
in any merger, consolidation or reorganization, or in the event of
acquisition by another corporation of all or substantially all of the assets
of the Company, every option outstanding hereunder may be assumed (with
appropriate changes) by the surviving, continuing, successor or purchasing
corporation, as the case may be, subject to any applicable provisions of
the Internal Revenue Code of 1986, as amended, and the treasury regulations
promulgated thereunder (the "Code") or replaced with new options of comparable
value in accordance with the applicable provisions of the Code.
Administration. The Plan is to be administered by the Compensation
Committee ("the Committee") consisting of not less than two nor more than
five members of the Board of Directors who are appointed by the Board. The
Committee will be composed solely of members of the Board of Directors who
are not employees of the Company and therefore are not eligible to receive
options under the Plan. Subject to the provisions of the Plan, the Committee
has sole authority to determine which employees will be granted options,
when the options will be granted, the time or times when options will be
exercisable, the duration of the options and the form of the option agreement.
Option Price. The option price of each option is determined by the
Committee, but in no event shall the price be less than the greater of (a)
the par value of the Common Stock or (b) 100% of the fair market value of
the Common Stock on the day the option is granted. If such shares are then
listed on any national securities exchange, the fair market value shall be
the mean between the high and low sales prices, if any, on the largest such
exchange on the date of the grant of the option or, if none, shall be
determined by taking a weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the date
of grant in accordance with Treasury Regulations Section 25.2512-2. If the
shares are not then listed on any such exchange, the fair market value of
such shares shall be the mean between the closing "Bid" and the closing
"Ask" prices, if any, as reported in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") for the date of the grant of
the option, or, if none, shall be determined by taking a weighted average of
the means between the highest and lowest sales on the nearest date before
and the nearest date after the date of grant in accordance with Treasury
Regulations Section 25.2512-2. If the shares are not then either listed on
any such exchange or quoted in NASDAQ, the fair market value shall be the
mean between he average of the "Bid" and the average of the "Ask" prices,
if any, as reported in the National Daily Quotation Service for the date of
the grant of the average of the means between the highest and lowest
<PAGE 13>
sales on the nearest date before and the nearest date after the date of grant
in accordance with Treasury Regulations Section 25.2512-2. If the fair market
value cannot be determined under the preceding three sentences, it shall
be determined in good faith by the Compensation Committee.
Eligible Employees. Key employees of the Company, as selected by the
Compensation Committee in its sole discretion on the basis that such
employees have made material contributions within the past, or who are
expected to make material contributions in the future, to the successful
performance of the Company, are eligible to participate in the Plan. The
total number of employees of the Company as of April 29, 1999 was
approximately 5,150.
Maximum Option Term. No option to be granted under the Plan may be
exercised after the expiration of five years from the date of grant.
Nontransferability. No option is transferable by the optionee except
by will or by the laws of descent or distribution.
Exercise of Options. Options under the Plan are exercisable at the
times and on the terms and conditions set forth in the option agreement.
Under certain circumstances involving the merger, consolidation or
reorganization of the Company, or its liquidation or sale of substantially
all of its assets, the Plan provides that the Committee may provide that
each optionee shall, within a 30-day period, exercise all or any part of
the options granted. In addition, if a single stockholder or group of
stockholders deemed to constitute a "person" under the securities laws
acquires more than 33% of the shares of Common Stock, or less than a
majority of the directors are persons who were either nominated or selected
by the Board of Directors, then the Committee may accelerate the time during
which any option outstanding under the Plan will be exercisable in full.
The Plan provides that each option is exercisable only by the optionee
during his lifetime. In the event of the optionee's death while he is an
employee of the Company (or within thirty days after the date of which such
optionee ceases to be so employed), unless otherwise provided by the Committee
in the option grant, the option, to the extent still in effect and
unexercised, may be exercised in whole or in part by the person to whom the
optionee's rights in the option pass by will or by the laws of descent and
distribution within twelve months following the death of the optionee, but
in no event later than the expiration date specified in the respective stock
option agreement.
Ownership Limitations. Any person who owns 10% or more of the voting power
of the Common Stock may not receive any option unless the exercise price of
such option is at least 110% of the fair market value of the Common Stock on
the date of grant and unless such option cannot be exercised more than 5 years
from the date of grant.
Options are subject to the limitation that the aggregate fair market
value of the Common Stock with respect to which stock options may first
become exercisable in any year may not exceed $100,000 as to any individual
holder.
Termination of Options. Options will terminate within thirty days of the
date of termination of employment for any reason other than death, but in
no event later than the expiration date specified in the respective stock
option agreement.
Amendments. The Board of Directors may amend, modify or terminate the
Plan without the approval of stockholders, except that stockholder approval
will be required for any amendment which would (i) increase the maximum number
of shares of Common Stock subject to the Plan, except adjustments made by
reason of stock splits, stock dividends or made upon changes in
capitalization, (ii) alter the eligibility requirements for the optionees
under the Plan, (iii) extend the duration of the Plan or (iv) change the
provisions of the Plan with respect to the determination of the option price.
In addition, no amendment, modification or termination of the Plan may be made
which would adversely affect the rights of any optionee under any then
outstanding options granted under the Plan without the consent of such
optionee.
<PAGE 14>
Duration. No option may be granted under the Plan after May 18, 2003.
Federal Income Tax Consequences. In general, the grant of an option
under the Plan does not result in any Federal income tax consequences to the
Company or to the optionee. In addition, the exercise by an optionee of an
option under the Plan does not generally result in any Federal income tax
consequences to the optionee except that, for purposes of determining the
alternative minimum taxable income of the optionee, if the stock received
on the exercise of an option granted under the Plan by an optionee is
substantially vested within the meaning of the Code, then the excess, if any,
of the fair market value of the Common Stock received upon the exercise of
the option at the time of exercise over the amount paid for such Common Stock
is included in the determination of the optionee's alternative minimum taxable
income for the year in which the option is exercised. If the stock received
upon exercise of an option granted under the Plan is not substantially vested
within the meaning of the Code, then the alternative minimum tax consequences
associated with exercise of the option generally are taken into account in
the year the Common Stock becomes substantially vested.
Upon the sale of the Common Stock received pursuant to the exercise of
an option granted under the Plan ("option stock"), an optionee will generally
recognize either a taxable gain equal to the excess of the amount realized
from the sale over the optionee's basis in the shares of option stock, or a
taxable loss equal to the excess of the optionee's basis in the shares of
option stock over the amount realized from the sale. Such gain or loss from
the sale of option stock will generally be considered gain or loss from the
sale of a capital asset, provided that such sale does not occur within two
years from the date the option is granted or within one year from the date
the option is exercised, and that the option stock is held for investment
purposes.
However, if an optionee sells shares of option stock prior to the
expiration of two years from the date the option is granted or prior to the
expiration of one year from the date the option is exercised, then the
optionee generally will recognize ordinary income in the year the option
stock is sold in an amount equal to the difference between the lesser of (1)
the fair market value of the shares of option stock on the date of exercise,
and (2) the amount realized on the sale of the option stock, and the exercise
price. The excess, if any, of the amount realized on the sale of the option
stock over the fair market value of the option stock on the date of exercise
will generally be considered gain from the sale of a capital asset if the
shares are held for investment purposes.
For purposes of computing an optionee's alternative minimum taxable
income in the year the option stock is sold, the optionee's basis in the
option stock is increased by the amount included in the determination of
alternative minimum taxable income as a result of the receipt of such
option stock.
The Company does not generally realize any income tax consequences on
the issuance or exercise of options under the Plan; however, if an optionee
sells option stock prior to the expiration of two years from the date the
option is granted or prior to the expiration of one year from the date of
exercise, the Company may deduct an amount equal to the amount included in
the optionee's ordinary income, provided the Company satisfies applicable
information reporting and income and payroll tax withholding requirements.
The federal income tax consequences described above are for general
information only. No information is provided as to state, local, or foreign
tax consequences of the acquisition or exercise of stock options granted
under the plan or the sale of shares of common stock acquired upon such
exercise. Each optionee should consult his or her own tax advisor as to
the specific federal income tax consequences and as to the specific
consequences under state, local and foreign tax laws.
Miscellaneous Information. To the extent that any option remains
unexercised upon its termination or expiration, the shares subject to such
option will again be available for the granting of other options under the
Plan.
The Plan does not contain any provisions requiring an optionee to hold
the optioned stock for any period after exercise of the option. However,
such a provision may be included in any option agreement relating to an
option granted by the Committee.
<PAGE 15>
Plan Benefits
Directors who are not executive officers or employees of the Company
are not eligible to receive options under the Plan. The dollar value and
number of options which will be received by the five individuals named in
the Summary Compensation Table are not currently determinable due to the
discretionary nature of the Plan. The Plan provides that all employees of
the Company are eligible to receive Plan benefits and that the Committee
has sole authority to determine which employees will be granted options
under the Plan. As of the date hereof, the Committee has not decided which
employees, if any, will be granted such options.
The Board of Directors recommends that you vote for approval of the
amendment to the Duckwall-ALCO Stores, Inc. 1993 Stock Option Plan.
ITEM 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Board's Audit
Committee, has selected the independent certified public accounting firm of
KPMG LLP as Duckwall's independent auditors to audit the consolidated
financial statements of the Company for the year ending January 30, 2000.
Stockholders will have an opportunity to vote at the Annual Meeting on
whether to ratify the Board's decision in this regard.
KPMG LLP has served as the Company's independent auditors since 1969.
A representative of KPMG LLP is expected to be present at the Annual Meeting.
Such representative will have an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
Submission of the selection of the independent auditors to the
stockholders for ratification will not limit the authority of the Board of
Directors to appoint another independent certified public accounting firm to
serve as independent auditors if the present auditors resign or their
engagement otherwise is terminated.
The Board of Directors recommends that you vote for approval of the
selection of KPMG LLP.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires Duckwall's directors and executive officers, and persons who own
more than 10% of the Company's outstanding Common Stock, to file with the
Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership in Duckwall Common Stock and other equity securities.
Securities and Exchange Commission regulations require directors, executive
officers, and greater than 10% stockholders to furnish Duckwall with copies
of all Section 16(a) reports they file.
To Duckwall's knowledge, based solely upon review of the copies of such
reports furnished to Duckwall and written representations that no other
reports were required, during the 1999 Fiscal Year all Section 16(a) filing
requirements applicable to its directors, executive officers, and greater
than 10% stockholders were complied with.
<PAGE 16>
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of, and does not intend to present,
any matter for action at the Annual Meeting other than those referred to in
this Proxy Statement. If, however, any other matter properly comes before
the Annual Meeting or any adjournment, it is intended that the holders of
the proxies solicited by the Board of Directors will vote on such matters in
their discretion in accordance with their best judgment.
ANNUAL REPORT
Duckwall's Annual Report to Stockholders, containing financial statements
for the year ended January 31, 1999, is being mailed with this Proxy Statement
to all stockholders entitled to vote at the Annual Meeting. Such Annual
Report is not to be regarded as proxy solicitation material.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
It is presently anticipated that the 2000 Annual Meeting of Stockholders
will be held on May 26, 2000. Stockholder proposals intended for inclusion
in the proxy statement for the 2000 Annual Meeting of Stockholders must be
received at the Company's offices, located at 401 Cottage Street, Abilene,
Kansas, 67410-2832, within a reasonable time before the solicitation with
respect to the meeting is made, but in no event later than December 31, 1999.
Proxies solicited in connection with the 2000 Annual Meeting of Stockholders
shall confer discretionary voting authority on the appointed proxyholders to
vote on certain stockholder proposals that are not presented for inclusion
in the proxy materials unless the proposing stockholder notifies the Company
by March 16, 2000 that such proposal will be made at the meeting. Such
proposals must also comply with the other requirements of the proxy
solicitation rules of the Securities and Exchange Commission. Stockholder
proposals should be addressed to the attention of the Secretary of Duckwall.
By Order of the Board of Directors
/s/ Charles E. Bogan
Charles E. Bogan
Secretary
April 30, 1999
Abilene, Kansas
<PAGE 17>
