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
THE DIANA CORPORATION
________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________
(Name of Person(s) Filing Proxy Statement
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125.00 per Exchange Act Rules 0-11(c)(ii), 14a-6(i)(1)
or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
________________________________________________
2) Aggregate number of securities to which
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 filing fee
is calculated and state how it was determined):
__________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________
<PAGE>
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 offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and date of its filing.
1) Amount Previously Paid:
__________________________________________________
2) Form, Schedule or Registration No.:
__________________________________________________
3) Filing Party:
__________________________________________________
4) Date Filed:
__________________________________________________
<PAGE>
THE DIANA CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 22, 1996
TO THE SHAREHOLDERS OF THE DIANA CORPORATION:
The Annual Meeting of the Shareholders of THE DIANA CORPORATION (the
"Company") will be held in the Devonshire Room at the Chatsworth Hotel, 9777
Topanga Canyon Blvd., Chatsworth, California 91311, 818/709-7054 on August
22, 1996 at 1:00 p.m., local time, to consider and act upon the following
matters:
1. The election of two directors to serve for a three-year term
and one director to serve for a two-year term.
2. Any other matters that may properly come before the meeting or
any adjournments thereof.
Shareholders of record at the close of business on June 24, 1996, are
entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting. Your vote is important no
matter how large or small your holdings may be. Whether or not you plan to
attend the meeting, please date, sign and return the accompanying proxy at
your earliest convenience so as to assure the largest possible representation
at the meeting. A reply envelope is provided for this purpose which needs no
postage if mailed in the United States. If you attend the meeting and wish
to vote in person, your proxy may be revoked.
By Order of the Board of Directors,
R. Scott Miswald
Secretary
Milwaukee, Wisconsin
July 31, 1996
<PAGE>
PROXY
ANNUAL MEETING OF SHAREHOLDERS OF THE DIANA CORPORATION
RICHARD Y. FISHER and R. SCOTT MISWALD, and each of them, are hereby
appointed proxies, with full power of substitution, to represent and to vote,
as set forth on the reverse side, all shares of stock the undersigned is
entitled to vote at the annual meeting of shareholders of The Diana
Corporation, to be held in the Devonshire Room at the Chatsworth Hotel, 9777
Topanga Canyon Blvd., Chatsworth, California 91311 on August 227, 1996 at
1:00 p.m. local time, and at any adjournments thereof, hereby revoking any
proxy heretofore given.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CHOICE IS INDICATED, WILL BE
VOTED FOR ITEM 1.
1. ELECTION OF DIRECTORS: RICHARD Y. FISHER, JAMES J. FIEDLER
AND BRUCE C. BORCHARDT
FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority
listed (except as AUTHORITY to vote for any individual nominee,
marked to the to vote for write that nominee's name on the
contrary.) all nominees space provided below.)
listed
___________________________________
[ ] [ ]
2. In their discretion on such other matters as may properly come before the
meeting.
Dated:________________________________1996
__________________________________________
__________________________________________
(Please sign exactly as name appears
hereon. If stock is owned by more than
one person, all owners should sign.) If
signing as attorney, administrator,
executor, guardian or trustee, please
indicate such capacity. A proxy given by
a corporation should be signed by an
authorized officer.
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE CORPORATION.
<PAGE>
THE DIANA CORPORATION
8200 West Brown Deer Road
Suite 200
Milwaukee, Wisconsin 53223
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 22, 1996
Solicitation
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Diana Corporation (the "Company")
for the Annual Meeting of Shareholders to be held in the Devonshire Room at
the Chatsworth Hotel, Chatsworth, California 91311, 818/709-7054 on August
22, 1996 at 1:00 p.m., local time, and any adjournments thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. Shares represented by properly executed proxies will be voted
at the meeting in accordance with the directions contained therein, but a
proxy may be revoked at any time prior to its exercise by written notice
filed with the Secretary of the Company or the acting secretary of the
meeting, including by subsequent written proxy, or by oral notice to the
presiding officer during the meeting.
In addition to use of the mails, proxies may be solicited in person or by
telephone or facsimile by directors, officers and regular employees of the
Company, and no additional compensation will be paid to these persons for
their efforts. All expenses of soliciting proxies will be paid by the
Company. Upon request, the Company will reimburse brokers, dealers, banks
and voting trustees, or their nominees, for reasonable expenses incurred in
forwarding copies of the proxy material and Form 10-K for the fiscal year
ended March 30, 1996 ("Form 10-K") to the beneficial owners of shares which
such persons hold of record. The Company may also request other holders of
record to forward copies to the beneficial owners, and reimburse them for
reasonable forwarding expenses. This proxy statement, the accompanying proxy
and the 1996 Form 10-K are being mailed to shareholders commencing on or
about July 31, 1996.
Voting Securities
Holders of record of the Company's Common Stock at the close of business on
June 24, 1996, the record date fixed by the Board of Directors, are entitled
to notice of and to vote at the meeting. On June 24, 1996, 5,028,590 shares
of Common Stock were outstanding. Each holder is entitled to one vote in
person or by proxy for each such share of stock registered in his name on the
above date. A majority of the shares entitled to vote, represented in person
or by proxy, constitutes a quorum. If a quorum is present, the nominees for
directors of the Company who receive the greatest number of votes will be
elected. Abstentions are considered as shares present and entitled to vote
but are not counted as votes cast in the affirmative on a given matter. If
a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as shares present and entitled to vote.
1
<PAGE>
Principal Shareholders
The following sets forth as of July 12, 1996, information concerning (i)
beneficial ownership of the Company's Common Stock by the only persons who
are known by the Company to own beneficially more than 5% of the Common Stock
(including options exercisable within 60 days of July 12, 1996) and (ii)
beneficial ownership of the Common Stock (including options exercisable
within 60 days of July 12, 1996) by each director, nominee, and named
executive officer and by all directors, nominees and executive officers of
the Company as a group. Except as otherwise noted, the persons named below
have sole voting and investment power with respect to shares shown as
beneficially owned:
<TABLE>
<CAPTION>
Number of
Beneficial Owner Shares (1) Percent
<S> <C> <C>
Richard Y. Fisher................................... 845,230 (2) 16.0%
8200 West Brown Deer Road, Suite 200
Milwaukee, WI 53223
Donald E. Runge..................................... 707,838 13.4%
8200 West Brown Deer Road, Suite 200
Milwaukee, WI 53223
Putnam Investments, Inc............................. 534,200 (3) 10.6%
One Post Office Square
Boston, MA 02109
Sattel Technologies, Inc............................ 300,000 6.0%
9145 Deering Avenue
Chatsworth, CA 91311
Dimensional Fund Advisors, Inc...................... 293,173 (4) 5.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
WisdomTree Capital Management, Inc.................. 254,950 (5) 5.1%
1633 Broadway, 38th Floor
New York, NY 10019
Sydney B. Lilly..................................... 138,154 (2) 2.7%
Jay M. Lieberman.................................... 26,084 *
Jack E. Donnelly.................................... 19,271 *
R. Scott Miswald.................................... 8,103 (2) *
James J. Fiedler.................................... --- *
Bruce C. Borchardt.................................. --- *
All directors and executive officers as a group (7
persons)..........................................1,744,680 (2) 30.7%
</TABLE>
*Less than 1 percent.
[FN]
(1) Includes options exercisable within 60 days of July 12, 1996 to purchase
262,264 shares for Messrs. Fisher and Runge, 119,266 shares for Mr.
Lilly, 11,576 shares for Mr. Donnelly, 5,788 shares for Mr. Miswald and
661,158 shares for all directors and officers as a group.
(2) Mr. Fisher owns 20,000 shares (less than 1%) of common stock of Entree
Corporation ("Entree"), an 81.25%-owned subsidiary of the Company. Mr.
Lilly owns 30,000 shares (less than 1%) of Entree common stock. Mr.
Miswald owns 10,000 shares (less than 1%) of Entree common stock. All
directors and officers as a group beneficially own 60,000 shares (less
than 1%) of Entree common stock. Mr. Lilly also has a 1% profits
interest in Sattel Communications LLC, a subsidiary of the Company.
(3) Based on its Schedule 13G filed July 10, 1996, Putnam Investments, Inc.
has shared voting power with respect to 43,100 shares and shared
dispositive power with respect to 534,200 shares.
(4) Based on its Schedule 13G filed February 7, 1996, Dimensional Fund
Advisors Inc. ("Dimensional"), a registered investment adviser, is
deemed to have beneficial ownership of 293,173 shares of Common Stock,
all of which shares are held in portfolios of DFA Investment Dimensions
Group, Inc., a registered open-end investment company, or the DFA Group
Trust, an investment vehicle for qualified employee benefit plans, for
both of which Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(5) Based on its Schedule 13D amendment dated April 22, 1996, WisdomTree
Capital Management, Inc. ("WisdomTree") has shared voting and
dispositive power over the shares, which are held by two partnerships
for which WisdomTree acts as general partner. Mr. Jonathan L. Steinberg
is Chairman and Chief Executive Officer of WisdomTree and Mr. Russell
Anmuth is a Vice President. Mr. Anmuth has sole voting and dispositive
power with respect to an additional 18,550 shares for a total beneficial
ownership of 273,500 shares or 5.4% of the Company's outstanding shares.
2
<PAGE>
Election of Directors
The six member Board of Directors in office following the Annual Meeting will
be divided into three classes of two members each. The election of directors
is staggered so that the term of only one class of directors expires each
year. The term of each class is three years and the term of office for
Messrs. Fisher and Fiedler will expire in 1999. Mr. Borchardt is filling a
vacancy in the class with a term of office expiring in 1998. Mr. Runge has
announced his intention to retire as President of the Company and his
position on the Board of Directors is being filled by Mr. Fiedler.
The Board of Directors believes that all nominees will stand for election,
but if any person nominated fails to stand for election, the persons named in
the accompanying form of proxy or their substitutes will vote for a
substitute nominee selected by the Board of Directors, unless the Board
reduces the number of directors to be elected. The Board of Directors
believes that each nominee named herein will serve if elected to the Board of
Directors.
The Board of Directors recommends that shareholders vote FOR all nominees to
be elected as Directors.
The following table sets forth certain information regarding the nominees and
other directors.
Director Principal Occupation for the
Name and Age Since Past Five Years; Directorships
Nominees For Terms Expiring in 1999
Richard Y. Fisher 1978 Chairman of the Board since 1984. Mr. Fisher
Age 63 has held various executive positions with the
Company and its subsidiaries since 1984. Mr.
Fisher is a director of Entree.
James J. Fiedler --- Chairman and Chief Executive Officer, Sattel
Age 49 Communications LLC ("Sattel"), since September
1995. From September 1994 to September 1995,
Mr. Fiedler was a principal in the consulting
firm of Johnson & Fiedler. From July 1993 to
September 1994, Mr. Fiedler was president and a
director of Summa Four Corp. From March 1985 to
July 1993, Mr. Fiedler served in various
executive positions with Unisys Corp., including
Executive Vice President and Chief Operating
Officer at its Timeplex subsidiary. Prior to
March 1985, Mr. Fiedler held executive positions
with Sperry Corporation (subsequently acquired
by Unisys Corp.) and General Instruments
Corporation.
Nominee For Term Expiring in 1998
Bruce C. Borchardt 1996 President of General Industries Investment
Age 55 Corporation, a private investment and holding
company, since 1989.
Director With Term Expiring in 1998
Sydney B. Lilly 1988 Executive Vice President of the Company since
Age 67 April 1995. Legal and business consultant
from 1984 to 1995; Director of Entree.
Directors With Terms Expiring in 1997
Jack E. Donnelly 1991 Principal of Bailey & Donnelly Associates,
Inc., an investment company, since 1986.
Jay M. Lieberman 1989 Private law practice since 1987.
Age 63
3
<PAGE>
The Board of Directors, its Committees, and Director Compensation
The Board of Directors held a total of 6 meetings during the fiscal year
ended March 30, 1996. Each director attended at least 75% of the aggregate
total number of meetings of the Board of Directors held during the last
fiscal year and the total number of meetings held by all committees of the
Board of Directors on which he served during the year.
The Board of Directors has one standing committee: an Audit Committee. The
Audit Committee recommends to the Board of Directors the independent
certified public accountants to perform audit and non-audit services, reviews
the scope and results of such services, reviews with management and the
independent certified public accountants the systems of internal control,
assures adherence in accounting and financial reporting to generally accepted
accounting principles and performs such other duties deemed appropriate by
the Board of Directors. Currently, Mr. Lieberman is the only member of the
Audit Committee. The Committee met once during the fiscal year ended March
30, 1996.
The Company has no standing nominating or compensation committee of the Board
of Directors, or committees performing similar functions, because decisions
regarding nomination of directors and executive compensation are made by the
full Board of Directors.
In fiscal 1996, directors who were not executive officers or employees of the
Company or a subsidiary of the Company ("Outside Directors") each received a
grant of 1,818 shares of the Company's common stock. The number of shares of
common stock granted to each director was determined by dividing $15,000 by
the closing price of the Company's common stock on the New York Stock
Exchange at the close of trading on the date of the 1995 Annual Meeting of
Shareholders. The stock granted to the directors cannot be sold as long as
the director is a member of the Board of Directors. The compensation for
Outside Directors for fiscal 1997 has not been determined by the Company.
Directors are also reimbursed for travel expenses. Members of the Audit
Committee receive an additional fee of $1,250 per Audit Committee meeting.
In fiscal 1996, certain Board members were also compensated for performing
certain other services for the Company. See "Compensation Committee
Interlocks and Insider Participation."
EXECUTIVE COMPENSATION
The following table sets forth the total annual compensation paid or accrued
by the Company for the account of the executive officers of the Company
serving as such at the end of fiscal 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Name & Principal Fiscal Annual Compensation Compensation Awards (1)
Position Year Salary Bonus Stock Options (#)
<S> <C> <C> <C> <C>
Richard Y. Fisher 1996 $210,000 $64,550 0
Chairman 1995 444,538 0 0
1994 394,538 0 100,000 (2)
Donald E. Runge 1996 210,000 64,550 0
President
Sydney B. Lilly 1996 210,000 64,550 78,750
Senior Vice President
R. Scott Miswald 1996 110,000 11,614 10,000
Vice President, 1995 110,000 0 0
Treasurer and 1994 95,000 0 50,000 (2)
Controller
</TABLE>
[FN]
(1) None of the named executive officers held restricted stock at March 30,
1996.
(2) Represented options to purchase Entree common stock.
4
<PAGE>
The table below provides information regarding stock options granted during
fiscal 1996 to the persons named in the Summary Compensation Table:
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Number of % of Total Value at Assumed Annual
Shares Options Rate of Stock Price
Underlying Granted to Appreciation for
Options Employee in Exercise Expiration Option Term
Granted (1) Fiscal Year Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Richard Y. Fisher 0 --- $ --- --- $ --- $ ---
Donald E. Runge 0 --- --- --- --- ---
Sydney B. Lilly 78,750 (2) 20.3% 6.19 04/02/00 134,676 297,601
R. Scott Miswald 10,000 (3) 2.6% 20.00 03/07/00 43,101 92,820
</TABLE>
[FN]
(1) All stock options were awarded with an exercise price equal to the
fair market value of the common stock on the date of grant.
(2) Option is immediately exercisable.
(3) Option is exercisable in full on March 8, 1998.
The table below provides information regarding the value of in-the-money
stock options held by named executive officers at March 30, 1996. Named
executive officers did not exercise any stock options during the fiscal year.
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised Options In-the-Money Options
at Fiscal Year End at Fiscal Year End
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Richard Y. Fisher 262,264 0 $6,054,594 $ 0
Donald E. Runge 262,265 0 6,054,594 0
Sydney B. Lilly 119,266 0 2,748,898 0
R. Scott Miswald 5,788 10,000 138,280 87,500
</TABLE>
Employment Agreements
The Company has entered into employment agreements (the "Agreements"),
effective as of April 2, 1995, with Mr. Richard Fisher, Mr. Donald Runge and
Mr. Sydney Lilly (the "Officers"). Mr. Fisher is serving as the Chairman of
the Company, Mr. Runge is serving as President and Mr. Lilly is serving as
Senior Vice President.
Each Agreement is for a term expiring March 31, 1997, subject to extension
from year to year thereafter unless either the Company or the Officer
provides 90 days prior notice that the term should be not so extended. Each
Agreement provides for a minimum annual salary of $210,000, lifetime medical
expense reimbursement for the Officer and his spouse (medical expense
reimbursement is for the term of the Agreement for Mr. Lilly and to April 2,
2000 for his spouse), a bonus (described below) and nondiscrimination with
respect to certain other benefits provided to the Company's officers. In
addition, Mr. Lilly received a 5 year option to purchase 78,750 shares of
common stock at $6.19 per share. Mr. Fisher's Agreement also provides for
the payment through fiscal 2000 of deferred compensation previously earned by
him.
5
<PAGE>
Each Agreement provides for an annual bonus equal to the greater of (a) 1/2
of 1% of the purchase price or sales price relating to any business purchased
or sold by the Company or its affiliates, or (b) an amount equal to (ROI less
Base Rate) x Investment x 10%, where ROI equals the Company's earnings before
interest and taxes divided by Investment, Investment equals shareholders
equity (at the beginning of the year) plus average amount of debt (during the
prior year) and Base Rate is 150% of the yield on 30 year treasury bonds at
the beginning of the fiscal year.
In the event of termination of employment due to disability or death, the
Officer is entitled to receive three-quarters of his salary and bonus for the
year of termination. In the event an Officer terminates his employment
following a change in his position, a failure to re-elect him as a director
or a change-in-control of the Company, the Company must pay in a lump sum an
amount equal to 100% of the salary for the rest of the year in which the
employment terminated. The Officer would also be entitled to the entire
bonus for the year of termination.
Mr. Runge has announced his intention to retire as President of the Company.
As a result, his Agreement will not be renewed when it expires. It is
anticipated that Mr. Runge will serve the remainder of the term of his
Agreement. Mr. Runge has been President of the Company since 1990. He has
held various executive positions with the Company and its subsidiaries since
1984. In addition, Mr. Runge has been President of General Growth, Inc., a
private investment company, since 1990.
Compensation Committee Interlocks and Insider Participation
As noted above, the Board of Directors does not have a compensation
committee, because executive compensation decisions are made by the full
Board. All directors participate in the deliberations.
Mr. Fisher is the Company's Chairman. His employment agreement and his
fiscal 1996 compensation are described above.
Mr. Runge is President of the Company. His employment agreement and his
fiscal 1996 compensation are described above.
Mr. Lilly is Senior Vice President of the Company. His employment agreement
and his fiscal 1996 compensation are described above.
Mr. Donnelly has entered into a consulting agreement with the Company to
serve as chairman and consultant to C&L Communications, Inc. ("C&L"), one of
the Company's subsidiaries. Upon expiration or termination of the agreement,
the Company will pay Mr. Donnelly 10% of the "increase in value" of C&L. The
increase in value is defined generally as the previous fiscal year's net pre-
tax earnings of C&L, multiplied by four, minus $9 million. During fiscal
1995 Mr. Donnelly's consulting agreement was amended to provide for an
extension of the term of the agreement from December 23, 1996 to March 31,
1997, and Mr. Donnelly was provided an option to extend the term one
additional year. Also, Mr. Donnelly has the ability to obtain a loan from
the Company at the prime rate, not to exceed 25% of the amount accrued by the
Company for the estimated payment due at the termination of the agreement.
No amounts have been loaned to Mr. Donnelly pursuant to this provision. In
addition Mr. Donnelly is paid $50,000 per year in accordance with the
agreement. Mr. Donnelly also performed other consulting services for the
Company for which he was paid $4,375.
Mr. Lieberman is in private law practice. During fiscal 1996, Mr. Lieberman
performed tax consulting services for the Company for which he was paid
$4,850.
Messrs. Barr and Bailey, who were former directors of the Company, were paid
an aggregate of $15,750 during fiscal 1996 for various consulting services.
6
<PAGE>
Board of Directors Report on Executive Compensation
This report documents the Board's compensation policies and the Board's basis
for the Chairman's compensation in fiscal 1996.
In fiscal 1996, Messrs. Fisher, Runge and Lilly were compensated under the
Agreements which were entered into during the year (see "Employment
Agreements"). The terms of the Agreements were established by the Board
based upon discussion among Board members and their belief as to what
reasonable compensation should be. Mr. Lilly also received a grant of 78,750
stock options in connection with his Employment Agreement. Mr. Lilly
received these stock options as an incentive to become an employee of the
Company and upon the condition that Mr. Lilly purchase additional shares of
common stock of the Company in the open market. Mr. Lilly purchased 20,895
shares of stock between March and June 1995.
During fiscal 1996, Messrs. Fisher Runge and Lilly each received the minimum
salary under the Agreements. In addition, in accordance with the terms of
the Agreements, Messrs. Fisher, Runge and Lilly received bonuses in
connection with the Company's acquisition of Valley Communications, Inc. and
the Company's acquisition of an additional 30% interest in Sattel.
Mr. Miswald's bonus and salary are established by Mr. Fisher at levels that
he considers to be appropriate and reasonable. In fiscal 1996, Mr. Miswald
also received a discretionary stock option.
Respectfully submitted by:
Richard Y. Fisher Jay M. Lieberman
Donald E. Runge Jack E. Donnelly
Sydney B. Lilly
7
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock over the last five fiscal years with the
cumulative total return of companies on the Standard & Poor's 500 Stock Index
and with an index compiled by the Company of issuers with similar market
capitalizations. The Company elected to compare shareholder returns to an
index of similarly capitalized issuers because it was unable to identify a
published industry or line-of-business index which closely resembled its mix
of businesses. This index was developed in June 1993 based upon companies
with similar capitalizations. The issuers included in the index are; Cimco,
Inc., Cobra Electronics Corporation, Courier Corporation, Davis Water & Waste
Industries, Inc., Frequency Electronics, Inc., Greenman Bros. Inc., Jay
Jacobs, Inc., Lindberg Corporation, Mickelberry Corporation and Sharper Image
Corporation. The graph assumes $100 was invested on April 1, 1991 in the
Company's Common Stock and the Standard & Poor's 500 Stock Index and assumes
the reinvestment of dividends. The index of similarly capitalized issuers
(Peer Group) was calculated based on an initial $100 investment weighted
annually according to the beginning of the period market capitalization of
the companies and assumes the reinvestment of dividends.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN*
From April 1, 1991 to March 30, 1996
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Diana Corporation $100 $ 64 $189 $308 $154 $951
- --------------------------------------------------------------------------
S&P 500 100 111 128 130 150 198
- --------------------------------------------------------------------------
Peer Group 100 98 86 95 99 134
</TABLE>
__________
*Assumes $100 invested on April 1, 1991.
8
<PAGE>
Certain Transactions
The Company's directors have certain business relationships with the Company.
See "Compensation Committee Interlocks and Insider Participation."
On January 16, 1996, the Company acquired an additional 30% ownership
interest in Sattel from Sattel Technologies, Inc. ("STI"). The Company
issued 350,000 shares of common stock to STI in connection with this
transaction. On May 3, 1996, the Company and STI entered into a Supplemental
Agreement to amend the Exchange Agreement entered into on January 16, 1996.
STI agreed to convey to the Company an additional 15% of Sattel and 50,000
shares of common stock of the Company in exchange for being released from the
obligation to pay for certain product development and STI's proportionate
share of a $10 million capital contribution to Sattel. STI's effective
ownership of Sattel was reduced to approximately 4% as a result of all of
these transactions. In addition, Sattel outsources manufacturing,
procurement of raw materials and final assembly and test of finished systems
to STI. In fiscal 1996, Sattel paid $1,295,000 to STI for these services.
Compliance with Section 16(a) of the Exchange Act
Based on information available to it, the Company is not aware that any
director, officer or beneficial owner of 10% of the Common Stock failed to
file on a timely basis reports required by Section 16(a) of the Securities
Exchange Act of 1934 during the last fiscal year, except Mr. Lieberman, a
director of the Company, who filed one late Form 4 with respect to one
transaction and Mr. Miswald, an officer of the Company, who filed one late
Form 4 with respect to one transaction.
Auditors
Price Waterhouse LLP is the Company's independent public accountant. A
representative of Price Waterhouse LLP is not expected to be present at the
meeting.
Shareholder Proposals for the Next Annual Meeting
Any proposal of a shareholder intended to be presented at the Company's next
annual meeting of shareholders must be received by the Company for
consideration for inclusion in the proxy statement and form of proxy for that
meeting no later than April 2, 1997.
Other Matters
Management is not aware of any other matters which may be brought before the
meeting. If other matters not now known come before the meeting, or any
adjournments thereof, the persons named in the accompanying form of proxy or
their substitutes will vote such proxy in accordance with their best
judgment.
/s/ R. Scott Miswald
Secretary
Milwaukee, Wisconsin
July 31, 1996
YOUR COOPERATION IN SIGNING AND RETURNING
YOUR PROXY WILL BE GREATLY APPRECIATED.
