<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THREE D DEPARTMENTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
THREE D DEPARTMENTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 16, 1998
To The Stockholders of Three D Departments, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Three D
Departments, Inc., a Delaware corporation (the "Company"), will be held at our
Costa Mesa store, 3900 C South Bristol Street, Costa Mesa, on Friday, January
16, 1998, at 11:00 a.m., Pacific Standard Time, for the following purposes:
1. To elect six directors to serve for a term of one year each and until
their respective successors have been elected and qualified; two of whom shall
be elected by the holders of the Company's Class A Common Stock, voting
separately as a class, and four of whom shall be elected by the holders of the
Company's Class B Common Stock, voting separately as a class.
2. To transact such other business as may properly come before the Meeting
and any adjournments thereof.
The close of business on November 30, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting.
You are cordially invited to attend the Meeting in person. IF YOU DO NOT
EXPECT TO BE PRESENT, PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. It will assist us in controlling expenses
of the Meeting if stockholders who do not expect to attend in person will return
their signed proxies promptly, whether they own a few shares or many shares.
By Order of the Board of Directors,
Bernard Abrams
Chairman of the Board of Directors
Costa Mesa, California
December 15, 1997
<PAGE>
THREE D DEPARTMENTS, INC. PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of
Three D Departments, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on Friday, January 16, 1998, and at any adjournments
thereof. This Proxy Statement and the accompanying proxy are being sent to
stockholders on or about December 19, 1997. Stockholders are requested to
complete, date and sign the proxy and return it promptly to the Company.
Any stockholder executing a proxy has the power to revoke it at any time
before it is voted by filing with the Assistant Secretary of the Company either
a written notice of revocation or a duly executed proxy bearing a later date.
Proxies also may be revoked by any stockholder present at the Meeting who elects
to vote in person. Subject to such revocation, all proxies duly executed and
received by the Company on a timely basis prior to commencement of the Meeting
will be voted in accordance with the directions specified on the proxy.
The Annual Meeting is being called for the purpose of electing six
directors for the 1998 fiscal year. Votes cast by proxy or in person at the
Meeting will be counted by the person(s) appointed by the Company to act as
inspectors of election for the meeting. The inspectors of election will treat
shares represented by proxies that reflect abstentions as shares that are
present and entitled to vote, for purposes of determining the presence of a
quorum and for purposes of determining the outcome of any matter submitted to
the shareholders for a vote. Abstentions, however, do not constitute a vote
"for" or "against" any matter and thus will be disregarded in the calculation of
a plurality or of "votes cast".
The inspectors of election will treat shares referred to as "broker non-
votes" (i.e., shares identified as held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote that the broker or nominee does not have discretionary power to
vote on a particular matter) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. However, for the purposes of
determining the outcome of any matter as to which the broker or nominee has
physically indicated on the proxy that it does not have discretionary authority
to vote, those shares will be treated as not present and not entitled to vote
with respect to that matter (even though those shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other matters).
IF NO SPECIFICATION IS MADE TO THE CONTRARY, PROXIES DULY EXECUTED WITH
RESPECT TO CLASS A COMMON STOCK WILL BE VOTED IN FAVOR OF ALL TWO NOMINEES NAMED
HEREIN FOR ELECTION AS CLASS A DIRECTORS, AND PROXIES DULY EXECUTED WITH RESPECT
TO CLASS B COMMON STOCK WILL BE VOTED IN FAVOR OF ALL FOUR NOMINEES NAMED HEREIN
FOR ELECTION AS CLASS B DIRECTORS.
Copies of the Company's Annual Report to Stockholders for the fiscal year
ended August 2, 1997, are being mailed concurrently with this Proxy Statement to
all stockholders entitled to notice of and to vote at the Meeting. The Annual
Report is not incorporated in the Proxy Statement and is not to be considered
proxy solicitation material.
The Company's principal executive offices are located at 3535 Hyland Ave.,
Costa Mesa, California 92626-1439.
November 30, 1997, has been fixed by the Board of Directors as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting and any adjournments thereof. As of November 30, 1997, there were
1,171,494 shares of the Company's Class A Common Stock outstanding and 1,264,455
shares of the Company's Class B Common Stock outstanding. Only stockholders of
record at the close of business on November 30, 1997, are entitled to notice of
and to vote at the Meeting.
<PAGE>
VOTES AND VOTING PROCEDURES(1)
At the Annual Meeting the holders of Class A Common Stock, voting
separately as a class, will be entitled to elect directors for two of the six
positions on the Board of Directors, and for this purpose two persons have been
nominated for election to the Board as "Class A Directors." Similarly, the
holders of Class B Common Stock, voting separately as a class, will be entitled
to elect the balance of the directors, being four of the six positions on the
Board, and for this purpose four persons have been nominated for election to the
Board as "Class B Directors."
Directors to represent each class are elected by a plurality of the votes
cast by the shares of that class entitled to vote, at a meeting at which a
majority of the shares of that class entitled to vote are present in person or
by proxy. Signed, unmarked proxy cards are voted in accordance with management's
recommendations.
The Class A shares may be voted with respect to the election of Class A
Directors, but may not be voted with respect to the election of Class B
Directors. Similarly, Class B shares may be voted with respect to the election
of Class B Directors, but may not be voted with respect to the election of Class
A Directors. Separate proxy cards are provided for each class of common stock.
- ---------------------
(1) The Company's Certificate of Incorporation provides that, other than the
differences in voting rights discussed above, Class A and Class B shares differ
in the following respects: Quarterly cash dividends, if declared, must be for a
higher amount on Class A shares than on Class B shares. Extra dividends, special
dividends and dividends payable other than in cash, if any, are payable equally
on all shares of both classes. Class B shares may be converted to Class A
shares, share for share, at the option of the holder. Although stock dividends
of either class may be payable on shares of either or both classes, any such
stock dividends which would result in a change in the ratio of the number of
outstanding shares of the two Classes to each other may be subject to regulatory
consent.
2
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth the beneficial ownership of the Company's
Class A and Class B Common Stock by each person known by the Company to own
beneficially more than five percent of any class at November 30, 1997.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
TITLE OF CLASS OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK OWNERSHIP(1) OF CLASS
<S> <C> <C> <C>
Bernard Abrams(2) Class A 389,084 31.2
3535 Hyland Ave. Suite 200 Class B 509,246 36.4
Costa Mesa, CA 92626-1439
Donald L. Abrams(2) Class A 152,817(3) 12.2
3535 Hyland Ave. Suite 200 Class B 231,016(3) 16.4
Costa Mesa, CA 92626-1439
John B. Abrahms Class A 45,616 3.7
47 Brrokside Blvd. Class B 78,384 5.6
West Hartford, CT 06107
Joel Diamond(2) Class A 121,632 9.7
16954 Canyon Creek Circle Class B
Riverside, CA 92503
Estate of David Kotkin Class A 115,832 9.3
90 State House Square Class B 115,832 8.3
Hartford, CT 06103
</TABLE>
- -------------------------
(1) Sole voting and investment power unless otherwise stated. Includes 76,375
shares of Class A common stock and 134,076 shares of class B common stock
which could be acquired within 60 days of November 30, 1997 upon the
exercise of stock options.
(2) Bernard Abrams is the father of Donald L. Abrams and the uncle of Joel
Diamond.
(3) Includes 6,000 shares of each class held for minor children; and 125,346
shares of Class B common stock which could be acquired within 60 days of
November 30, 1997 upon the exercise of stock options.
3
<PAGE>
SHARE OWNERSHIP OF DIRECTOR NOMINEES
The following table sets forth the beneficial ownership of the Company's
Class A and Class B Common Stock beneficially owned by each of the six nominees
for election as a director, and by all directors and officers of the Company as
a group at November 30, 1997.
<TABLE>
<CAPTION>
TITLE OF CLASS OF AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK BENEFICIAL OWNERSHIP(1) OF CLASS
<S> <C> <C> <C>
Bernard Abrams (2) Class A 389,084 31.2
3535 Hyland Ave. Suite 200 Class B 509,246 36.4
Costa Mesa, CA 92626-1439
Donald L. Abrams (2) Class A 152,817(3) 12.2
3535 Hyland Ave. Suite 200 Class B 231,816(3) 16.5
Costa Mesa, CA 92626-1439
Abe Markowicz Class A 18,810(4) 1.5
63 Bainton Road Class B 13,810(4) 1.0
West Hartford, CT 06117
Steven R. Kerkstra Class A 12,500(5) 1.0
5847 Zapata Place Class B
Alta Loma, Ca. 91737
John B. Dawson Class A 4,875(6) 0.4
23411 Summerfield
Aliso Viejo, CA 92656
Jennie Daniells Class A 4,875(6) 0.4
49 Barton Road Class B
Milford, CT 06460
All Directors and Class A 765,118(7) 61.3
Officers as a Group (11 persons) Class B 970,148(7) 69.4
</TABLE>
(1) Sole voting and investment power unless otherwise stated. Includes 76,375
shares of Class A common stock and 134,096 shares of Class B common stock
which could be acquired within 60 days of November 30, 1997 upon the
exercise of stock options.
(2) Bernard Abrams and Donald L. Abrams are father and son, respectively.
(3) Includes 6,000 shares of each class held by Mr. Abrams for minor children
and 125,346 shares of Class B common stock which could be acquired within
60 days of November 30, 1997 upon the exercise of stock options.
(4) Includes 1,470 shares of each class owned by Mr. Markowicz's wife, as to
which he does not share voting or investment power.
(5) Includes 12,500 shares of Class A common stock which could be acquired
within 60 days of November 30, 1997 upon the exercise of stock options.
(6) Includes 4,875 shares of Class A common stock which could be acquired
within 60 days of November 30, 1997 upon the exercise of stock options.
(7) Includes 1,025 shares of Class A and 10,175 shares of Class B Common Stock
owned by Mr. Bassell's wife, as her sole and separate property and as to
which he does not share voting or investment power.
4
<PAGE>
EXECUTIVE OFFICERS
The following information is provided with respect to each executive officer
of the Company. Bernard Abrams and Donald L. Abrams are currently a director and
a nominee for re-election as a director. Messrs. Kerkstra and Dawson are
nominees for election as Director. The Company's executive officers serve at the
discretion of the Board of Directors and are customarily appointed as an officer
at the annual organizational meeting of the Board held immediately following the
Annual Meeting of Stockholders.
<TABLE>
<CAPTION>
Date Office
Name Age Office Assumed
- ---- --- ------ -------
<S> <C> <C> <C>
Bernard Abrams 77 Chairman of the Board and Chief Executive Officer 1958
Donald L. Abrams 50 President 1983
Steven R. Kerkstra 46 Vice President-Chief Financial Officer and Assistant Secretary 1995
Lawrence Bassell 43 Vice President - West Coast Operations 1995
Robert Stephenson 48 Vice President - East Coast Operations 1992
Ronald Dow 59 Controller 1978
and Treasurer 1989
John B. Dawson 50 Vice President and General Merchandise Manager 1997
</TABLE>
See "Election of Directors" for a summary of the principal occupation and
relevant business experience of each executive officer who is also a nominee for
election as a director. Mr. Ronald Dow has been employed as Controller of the
Company since 1978. Mr. Robert Stephenson, appointed an officer in October
1992, has been employed by the Company in various capacities since 1980. Mr.
Lawrence Bassell has been employed by the Company in various capacities since
1983 and was appointed to his present office in February 1995. Mr. Donald L.
Abrams has been President and Chief Operating Officer since 1983. In June 1996,
the duties of the Chief Operating Officer were assigned to Mr. Bernard Abrams,
Mr. Steven R. Kerkstra and other Company personnel. The role of the President
was redefined to support the overall strategic goals of the Company regarding
new business development, store development and other corporate issues.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
The Company's directors and executive officers and any holders of 10% or
more of either class of the Company's stock are required to report ownership and
any changes in that ownership to the SEC. Based solely upon representations of
its officers and directors, and its review of the copies of those reports filed
with it by its officers and directors, the Company believes that during the
fiscal year ended August 2, 1997 all filing requirements by such officers and
directors were timely met.
5
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors consist of an Audit
Committee, an Executive Committee and a Compensation and Stock Option Committee.
The Board of Directors does not have a Nominating Committee.
The Audit Committee reviews the engagement of the independent accountants,
reviews and approves the scope of the annual audit undertaken by the independent
accountants and reviews the independence of the accounting firm. The Audit
Committee also reviews the adequacy of the Company's internal control
procedures. During the 1997 fiscal year, the Audit Committee held one meeting.
The members of the Audit Committee are Gerson K. Bernstein and Henry W. Nozko,
Jr.
The Executive Committee exercises all of the powers and authority of the
Board of Directors in the management and affairs of the Company between meetings
of the Board of Directors to the extent permitted by law. The members of the
Executive Committee are Bernard Abrams, Donald L. Abrams and John B. Abrams. The
Executive Committee conducted one formal meeting during the fiscal year and
several telephonic conferences.
The Compensation and Stock Option Committee determines the compensation of
corporate officers and determines the award of stock options. This Committee
was reconstituted in April 1993 so as to be composed of non-management
directors. The members of the Committee are Messrs. Gerson K. Bernstein and
Henry W. Nozko, Jr. The Compensation and Stock Option Committee conducted one
formal meeting during the fiscal year and several telephonic conferences.
During the 1997 fiscal year, there were four meetings of the Board of
Directors. In addition, the Board and/or its Committees are authorized to adopt
resolutions by the unanimous written consent of the members, acting without a
meeting. All directors attended at least 75% of the Board meetings and all
committee meetings that they were scheduled to attend during the year.
ELECTION OF DIRECTORS
At the Annual Meeting, a total of six directors will be elected to hold
office for a term of one year, and until their respective successors have been
duly elected and qualified. The persons named as proxies in the accompanying
proxy card, or their substitutes, intend to vote the shares represented by each
proxy card in favor of the election of the nominees (for the respective classes
of stock) set forth below, unless a contrary direction is specified on the proxy
card. Each nominee has indicated his intention to serve, if elected. In case
any such nominee shall become unavailable for election to the Board of
Directors, an event which is not anticipated, the persons named as proxies, or
their substitutes, will have full discretion and authority, as and if provided
in the proxy card, to vote or refrain from voting for any other nominee in
accordance with their judgement.
The Company's Bylaws authorize a minimum of six and a maximum of fifteen
directors, the exact number of which is established from time to time by action
of the Board. The Company's Bylaws state that no less than 25% of the members
of the Board of Directors shall represent Class A shareholders. Two nominees
will stand for election as Class A Directors and four nominees will stand for
election as Class B Directors. Class A shares may only be voted with respect to
the election of the Class A Directors, and Class B shares may only be voted with
respect to the election of Class B Directors.
6
<PAGE>
NOMINEES FOR ELECTION
Three of the nominees set forth below is currently a director of the
Company and each was elected to the Board of Directors at the last Annual
Meeting of Stockholders. Messrs. John B. Abrahms, Gerson K. Bernstein and Henry
W. Nozko, Jr., are currently Directors of the Company and have indicated their
desire to retire from their role of Director and do not stand for re-election.
Mr. David Kotkin, was a Director and Secretary of the Company when he passed
away in 1997.
The Company has nominated three individuals, two of whom are officers of
the Company, and all of whom have significant industry experience to stand for
election as a Director. The following information furnished with respect to each
nominee was obtained from the records of the Company or from information
furnished directly by the nominee.
NOMINEES FOR ELECTION AS CLASS A DIRECTORS
<TABLE>
<CAPTION>
Director
Name of Nominee Age Since Principal Occupation
- --------------- --- ----- --------------------
<S> <C> <C> <C>
Abe Markowicz 70 1973 Retired; until April 1992 Vice President-Merchandising; employed by the
Company in various capacities since 1954. A Director of the Company.
John B. Dawson 50 - Mr. Dawson is currently Vice-President and General Merchandising Manager
of the Company. Mr. Dawson was a founding member of Linens Plus, which was
acquired by the Company in 1963. For the last eight years, Mr. Dawson managed
the Linens Plus division, which has been the most profitable dicision of the Company.
</TABLE>
NOMINEES FOR ELECTION AS CLASS B DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Bernard Abrams 77 1958 Chairman of the Board and Chief Executive Officer of the Company.
Donald L. Abrams 50 1980 President since 1983; an Executive Officer and a Director of the Company since
1980.
Steven R. Kerkstra 46 - Chief Financial Officer and Assistant Secretary of the Company since 1995. Mr. Kerkstra
is a CPA and was Vice-President, Finanance for Strouds, Inc., a NASDAQ traded company.
Mr. Kerkstra has alos served in various positions with the May Department Stores and
Arthur Young & Company.
Jennie Daniells 40 - Supervisor of Connecticut stores since 1988 and employee of the Company since 1981. Ms.
Daniells also served in various positions with Caldor, Inc., and Macy's.
</TABLE>
7
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Stock Option Committee are Messrs. Gerson
K. Bernstein and Henry W. Nozko, Jr. , all members are non-employee directors
and none has any other direct or indirect material interest in or relationship
with the Company outside of his position as director. To the Company's
knowledge there were no other interrelationships involving current members of
the Committee or other directors of the Company requiring disclosures in this
Proxy Statement.
DIRECTORS FEES
Each member of the Board of Directors who is not otherwise compensated as an
officer or employee of the Company receives a director's fee at the current rate
of $3,000 per year for attending meetings of the Board and committees thereof,
plus payment of travel expenses related to such attendance. Each such director
who also serves as a member of the Audit Committee receives an additional fee at
the current rate of $1,000 per year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
OTHER RESTRICTED
NAME AND FISCAL ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY BONUS COMP. AWARDS SARS(2) PAYOUTS COMPENSATION
- ------------------------ ------ --------- ------ ----- ---------- ---------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard Abrams 1997 $280,241 - - - - - -
Chairman of the 1996 275,000 -
Board and Chief 1995 272,700 - - - - - -
Executive Officer
Donald L. Abrams 1997 $217,614 - - - - - -
President 1996 215,753 - - - - - -
1995 212,600 -- - - 80,000 -
Steven R. Kerkstra 1997 $125,008 - - - - - -
Chief Financial 1996 63,465 - - - 25,000 - -
Officer and
Assistant Secretary
</TABLE>
- ---------------------
(1) Includes the Chief Executive Officer and all other executive officers
earning over $100,000 salary plus bonus.
(2) Mr. Donald Abrams holds incentive stock options granted at various dates to
purchase 158,769 Class B shares at prices in excess of current market. Mr.
Kerkstra holds incentive stock options to purchase 25,000 Class A shares,
at prices in excess of current market.
8
<PAGE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTIONS/SAR EXERCISES IN FISCAL YEAR ENDED AUGUST 2, 1997
AND FISCAL YEAR END AUGUST 2, 1997 OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
Name Number of Securities
Underlying Unexercised Value of Unexercised
Shares Value Options/SARs at August 2, In-the-Money
Acquired on Realized (A) 1997 Options/SARs at
Exercise ($) # August 2, 1997 (A)
# Exercisable/Unexercisable ($)
<S> <C> <C> <C> <C>
Bernard Abrams - - - -
Donald L. Abrams - - 125,346/33,423 -
Steven R. Kerkstra - - 12,500/12,500 -
- --------------------------
</TABLE>
(A) No options were in-the-money at the end of the fiscal year and no options
were exercised during the fiscal year ended August 2, 1997.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH
THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIALS OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee reviewed the Compensation of its Chief Executive Officer and all
others expected to earn, during fiscal 1997, in excess of $100,000. In
reviewing the Compensation policies and business performance of the Company, the
Committee determined the Company will not pay bonuses to its executives for the
fiscal year. In addition, the Committee determined to defer making any
compensation changes until February 1998, at which time it will assess its first
and second quarter's business and determine whether compensation changes are in
order. The fiscal 1997 salary levels do not reflect any specific qualitative or
quantitative measures of the Company's performance.
In fiscal 1997, there were no options granted to either the President, Chief
Executive Officer or Chief Financial Officer. The Chief Executive Officer holds
no stock options nor SARs nor other long-term incentives. He is the beneficiary
of a Deferred Compensation Plan which will provide him with $20,000 annually for
10 years upon his retirement; or in the event of his death prior to expiration
of such 10 years, the then unpaid portion is payable to his estate in two equal
annual installments. No options were repriced during the fiscal year.
The Compensation Committee has considered the anticipated tax treatment to the
Company regarding the compensation and benefits paid to the executive officers
of the Company in light of the enactment of Section 162(m) of the Internal
Revenue Code of 1986, as amended. The basic philosophy of the Compensation
Committee is to strive to provide the executive officers of the Company with a
compensation package which will preserve the deductibility of such payments for
the Company. However, certain types of compensation payments and their
deductibility (e.g. the spread on exercise of non-qualified options) depend upon
the timing of an executive officer's vesting or exercise of previously granted
rights. Moreover, interpretations of and changes in the tax laws and other
factors beyond the Compensation Committee's control may affect the deductibility
of certain compensation payments. The Compensation Committee will consider
various alternatives to preserving the deductibility of compensation payments
and benefits to the extent reasonably practicable and to the extent consistent
with its other compensation objectives.
Gerson K. Bernstein
Henry W. Nozko, Jr.
Members of the Compensation Committee
9
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Company's Class A and Class B common
stock against the cumulative return on the AMEX Market Index as well as a Peer
Group Index for the five year period from July 30, 1992 through August 2, 1997.
The graph assumes that $100 was invested on July 30,1992 in Class A or Class B
common stock and in the other indices, and that all dividends were reinvested.
The Peer Group is Media General Industry Group 529-"Other Importers,
Wholesalers, and Retailers".
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THREE D DEPT CLASS A, AMEX MARKET INDEX,
PEER GROUP INDEX AND THREE D DEPT CLASS B
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period THREE D DEPT THREE D DEPT INDUSTRY BROAD
(Fiscal Year Covered) INC CL A INC CL B INDEX MARKET
- ------------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Measurement Pt-1992 $100 $100 $100 $100
FYE 1993 $ 76.71 $ 82.25 $110.67 $109.20
FYE 1994 $ 72.60 $ 77.29 $123.16 $111.91
FYE 1995 $167.71 $170.71 $151.38 $135.72
FYE 1996 $ 63.08 $ 59.89 $171.94 $138.92
FYE 1997 $ 51.43 $ 13.30 $192.55 $165.10
</TABLE>
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company owns and operates a Bed and Bath store, in leased premises
consisting of 12,000 square feet of a 280,000 square foot shopping center in
Saybrook, Connecticut. The spouses and/or other family members of Messrs. John
Abrahms, Bernard Abrams, and David Kotkin, officers and directors, own an
aggregate 41% interest in such shopping center. Management believes that the
terms of the Company's lease, including rental, are competitive with those
available for similar properties.
John B. Abrahms, a stockholder, officer and director of the Company is the
principal stockholder of an insurance agency used by the Company. During fiscal
1997, 1996 and 1995, the Company paid insurance premiums on insurance policies
issued through this agency of $93,163, $383,874, and $451,000, respectively.
Management believes that such premiums are competitive with those charged by
unrelated insurance brokers.
In May 1992, Donald Abrams entered into a note agreement with the Company to
borrow $37,107. The agreement provides for interest to accrue at 8.5% annually
for four years with principal and interest due in May 1995. In May 1995, the
Company agreed to extend the note maturity until December 1997. In May 1995, the
Company also increased the interest on the note to 10.75% per annum. The
outstanding balance at August 2, 1997 is $60,525 and is included in receivables.
In December 1994, the Company entered into a note agreement to borrow
$500,000 from Bernard Abrams. The agreement provides for interest payable
monthly at 10% for the first eighteen months and interest and principal
thereafter with the final payment due in July, 1999. The outstanding balance at
August 2, 1997 is $210,530 and is included in long-term debt.
In October, 1996 the Company sold a residence it owned in West Hartford,
Connecticut to Bernard Abrams, in exchange for a reduction of $180,000 in the
note payable the Company owes to the him. The Company obtained an independent
appraisal of the property prior to the transaction, reviewed the appraisal with
the Company's executive committee and believes the price is competitive with
those of similar properties. The Company recorded a gain of $78,833 in
connection with this transaction.
INDEPENDENT ACCOUNTANTS
Price Waterhouse, LLP has audited the financial statements of the Company for
the past 29 fiscal years. A representative of Price Waterhouse is expected to
be available at the Annual Meeting in person or by telephone and will have an
opportunity to make a statement if he desires and will be available to respond
to appropriate questions from stockholders.
The Board of Directors has not selected or approved an auditing firm for fiscal
1998 and is currently reviewing proposals for such work.
STOCKHOLDER PROPOSALS
In order to be considered by the Company for inclusion in its proxy material
for the next Annual Meeting, stockholder proposals must be received by the
Company no later than September 6, 1998, and should be submitted to the
Assistant Secretary, Three D Departments, Inc., P.O. Box 19773, Irvine, CA
92713-9773.
11
<PAGE>
OTHER MATTERS
GENERAL
Pursuant to the Securities Exchange Act of 1934, the Company is required to
file an Annual Report with the Securities and Exchange Commission ("SEC") on
Form 10-K containing certain prescribed information, including financial
statements and financial statement schedules. The Company has filed this report
with the SEC for the fiscal year ended August 2, 1997. THE COMPANY WILL FURNISH
COPIES OF THE REPORT TO STOCKHOLDERS INCLUDING BENEFICIAL OWNERS OF SHARES,
WITHOUT CHARGE, UPON WRITTEN REQUEST SUBMITTED TO STEVEN R. KERKSTRA, CFO, THREE
D DEPARTMENTS, INC., P.O. BOX 19773, IRVINE, CA 92713-9773.
The cost of preparing this Proxy Statement and of soliciting proxies will be
borne by the Company. Proxies may be solicited by mail, personal interview,
telephone and telegraph. Directors, officers and regular employees of the
Company may solicit proxies by such methods without additional remuneration.
Banks, brokerage houses and other institution nominees and fiduciaries will be
requested to forward the soliciting material to their principals and to obtain
authorizations for the execution of proxy cards, and will, upon request, be
reimbursed for reasonable expenses incurred.
As of the date of this Proxy Statement, the Company does not intend to
present, and has not been informed that any other person intends to present, any
business not specified in this Proxy Statement for action at the Meeting. If
any other business is properly presented for consideration at the Meeting,
proxies will be voted on such matters in accordance with the judgement of the
person or persons to the extent authorized to vote the proxies.
Your cooperation in giving this matter your immediate attention and returning
your proxies will be appreciated.
By Order of the Board of Directors
BERNARD ABRAMS
December 15, 1997 Chairman of the Board of Directors
12
<PAGE>
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PROXY
CLASS A
Common Stock
THREE D DEPARTMENTS, INC.
3535 HYLAND AVE. SUITE 200
COSTA MESA, CA. 92626-1439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - JANUARY 16, 1998
The undersigned hereby appoints Bernard Abrams, Donald L. Abrams and any of
them, as attorneys and proxies ("Proxies") of the undersigned, with full powers
of substitution, and hereby authorizes them to represent and to vote all shares
which the undersigned would be entitled to vote if personally present of the
Class A Common Stock of Three D Departments, Inc., at the Annual Meeting of
Stockholders to be held on January 16, 1998, and any adjournments thereof. Said
Proxies are authorized to vote upon the following proposals, as designated on
the reverse hereof, and upon all other matters as may properly come before the
Meeting, in their discretion.
(Please sign and date on the reverse side)
- --------------------------------------------------------------------------------
/ / Please mark
/ X / your votes
/ / as this
ELECTION OF DIRECTORS: FOR WITHHELD
Abe Markowicz; John B. Dawson FOR ALL
/ / / /
/ / / /
/ / / /
INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE
LINE BELOW.
___________________________
If you intend to attend the Annual / /
Meeting of Stockholders in person, / /
please indicate here. / /
DISCRETIONARY AUTHORITY IS HEREBY
CONFERRED AS TO ALL OTHERS MATTERS
WHICH MAY COME BEFORE THE MEETING
AND ANY ADJOURNMENTS THEREOF.
This proxy when properly executed
will be voted by the Proxies in
the manner directed by the
undersigned stockholder. If no
direction is given, this Proxy
will be voted FOR ALL NOMINEES
LISTED.
Signature(s)___________________________________________Date___________________
NOTE: Please sign as name appears hereon, joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such
- --------------------------------------------------------------------------------
<PAGE>
PROXY
CLASS B
Common Stock
THREE D DEPARTMENTS, INC.
3535 HYLAND AVE. SUITE 200
COSTA MESA, CA. 92626-1439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - JANUARY 16, 1998
The undersigned hereby appoints Bernard Abrams, Donald L. Abrams and any of
them, as attorneys and proxies ("Proxies") of the undersigned, with full powers
of substitution, and hereby authorizes them to represent and to vote all shares
which the undersigned would be entitled to vote if personally present of the
Class B Common Stock of Three D Departments, Inc., at the Annual Meeting of
Stockholders to be held on January 16, 1998, and any adjournments thereof. Said
Proxies are authorized to vote upon the following proposals, as designated on
the reverse hereof, and upon all other matters as may properly come before the
Meeting, in their discretion.
(Please sign and date on the reverse side)
- ------------------------------------------------------------------------------
/ / Please mark
/ X / your votes
/ / as this
ELECTION OF DIRECTORS: FOR WITHHELD
Bernard Abrams; Donald L. Abrams; FOR ALL
Steven R. Kerkstra; Jennie Daniells. / / / /
/ / / /
/ / / /
INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE
LINE BELOW.
___________________________
If you intend to attend the Annual
Meeting of Stockholders in person, / /
please indicate here. / /
/ /
DISCRETIONARY AUTHORITY IS HEREBY
CONFERRED AS TO ALL OTHERS
MATTERS WHICH MAY COME BEFORE THE
MEETING AND ANY ADJOURNMENTS
THEREOF.
This proxy when properly
executed will be voted by the
Proxies in the manner directed
by the undersigned stockholder.
If no direction is given, this
Proxy will be voted FOR ALL
NOMINEES LISTED.
Signature(s)____________________________________________Date___________________
NOTE: Please sign as name appears hereon, joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such
- --------------------------------------------------------------------------------
