SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement
[x]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Arnold Industries, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Persons(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ]$500 per each party to the controversy pursuant to exchange
Act Rule 14a-6.
[ ]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 0-11:1
_____________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
1 Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ]Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount previously Paid:
________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________
3) Filing Party:
________________________________________
4) Date Filed:
________________________________________
ARNOLD INDUSTRIES, INC.
AND SUBSIDIARIES
625 SOUTH FIFTH AVENUE
P. O. BOX 630
LEBANON, PENNSYLVANIA 17042-0630
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 3, 1995
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of Arnold Industries,
Inc. (herein called the "Company" or "Arnold Industries") will be
held at the Lebanon Country Club, 3375 West Oak Street, Lebanon,
Pennsylvania, on Wednesday, May 3, 1995, at 4:00 o'clock p.m.,
prevailing time, for the following purposes:
(1) To elect three (3) directors to serve until the Annual
Meeting of Shareholders in 1997; and
(2) To transact such other business as may properly come
before the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on
March 21, 1995, as the record date for determination of share-
holders entitled to notice of and to vote at the Annual Meeting.
Accordingly, only shareholders of record at the close of business
on that date will be entitled to vote at the meeting. Management
of the Company extends a cordial invitation to all shareholders
to attend the meeting.
The Annual Report of the Company for 1994 is enclosed
herewith.
By Order of the Board of Directors,
HEATH L. ALLEN
Secretary
Lebanon, Pennsylvania
March 22, 1995
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE FILL IN,
DATE, SIGN AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE-PAID,
PRE-ADDRESSED ENVELOPE ENCLOSED FOR THAT PURPOSE. IF YOU ATTEND
THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON.
ARNOLD INDUSTRIES, INC.
625 South Fifth Avenue
Lebanon, Pennsylvania 17042-0630
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 1995
GENERAL
This proxy statement is furnished in connection with the
solicitation by the Board of Directors of Registrant, Arnold
Industries, Inc. (herein called the "Company" or "Arnold Indus-
tries") of proxies for use at the Annual Meeting of Shareholders
to be held on Wednesday, May 3, 1995, at 4:00 p.m. prevailing
time, at the Lebanon Country Club, 3375 West Oak Street, Lebanon,
Pennsylvania, and at any adjournment or adjournments thereof.
This proxy statement and the accompanying form of proxy are being
mailed to shareholders on or about March 31, 1995.
A form of proxy is enclosed for use at the Annual Meeting.
When the enclosed form of proxy is signed, dated and returned,
the shares represented thereby will be voted in accordance with
the instructions specified thereon. If no instructions are
given, the shares will be voted for the election of the nominees
for directors named below and, in the discretion of the proxies,
upon such other matters as may properly come before the Annual
Meeting. Any shareholder executing a form of proxy may revoke
that proxy at any time before it is voted at the meeting.
The entire cost of soliciting proxies will be borne by the
Company, including postage, printing and handling.
The Company's Annual Report for 1994, including financial
statements, accompanies this meeting notice, proxy statement and
form of proxy.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed the close of business on
March 21, 1995, as the record date for the determination of the
shareholders entitled to notice of, and to vote at, the Annual
Meeting of Shareholders or any adjournment or adjournments
thereof. Shareholders as of that date will receive the Notice of
Annual Meeting of Shareholders, the Proxy Statement, and the
Annual Report of the Company. As of March 21, 1995, there were
26,630,244 shares of Common Stock issued and outstanding and
entitled to notice of, and to vote at, the Annual Meeting of
Shareholders. There are no other classes of stock outstanding.
Each share of Common Stock is entitled to one vote on each matter
properly submitted to the shareholders for action at the Annual
Meeting. Shareholders have cumulative voting rights with respect
to the election of directors. That is, every shareholder enti-
tled to vote shall have the right to multiply the number of
shares which the shareholder is entitled to vote by the total
number of directors to be elected and to cast the total number of
such votes for one candidate or distribute them among any two or
more candidates.
VOTE REQUIRED
The presence, in person or by properly executed proxy, of
the holders of a majority of the outstanding shares of stock
entitled to vote at the meeting is necessary to constitute a
quorum. The Company will treat shares of voting stock represent-
ed by a properly signed, dated and returned proxy as present at
the meeting for purposes of determining a quorum, without regard
to whether the proxy is marked as casting a vote or abstaining.
Likewise, the Company will treat shares of voting stock repre-
sented by "broker non-votes" (i.e., shares of voting stock held
in record name by brokers or nominees as to which (i) instruc-
tions have not been received from the beneficial owners or
persons entitled to vote, (ii) the broker or nominee does not
have discretionary voting power, and (iii) the recordholder has
indicated on the proxy card or otherwise notified the Company
that it does not have authority to vote such shares on that
matter) as present for purposes of determining a quorum.
The nominees for the Board of Directors receiving a plurali-
ty of the votes cast will be elected as Directors. Abstentions
and broker non-votes do not have the effect of negative votes in
respect to the foregoing matters.
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth certain information as of
February 18, 1995 (unless otherwise noted), with regard to
persons with beneficial ownership of five percent (5%) or more of
Arnold Industries' outstanding stock:
Amount Percent
Name and Address of Beneficially of
Title of Class Beneficial Owner Owned Class
Common Stock Edward H. Arnold
Lebanon, PA..........6,802,496 (1) 25.5%
Common Stock Daniel R. Efroymson
Moriah Fund, Inc.
Real Silk Investments, Inc.
Indianapolis, IN.....1,750,560 (2) 6.6%
Common Stock Firstar Corporation
Firstar Bank Madison, N.A.
Firstar Trust Company
Firstar Investment Research
and Management Company
Madison, WI..........1,336,705 (3) 5.0%
_________________________
(1) The shares shown include 82,500 shares held by Mr. Arnold's
spouse, the beneficial ownership of which is disclaimed by
Mr. Arnold. Mr. Arnold exercises sole dispositive and
voting power over the remainder of the shares shown in the
table above.
(2) Based on information supplied pursuant to Form 13G for the
year ended 12/31/94, management is advised that Moriah Fund,
Inc.; Real Silk Investments and Daniel R. Efroymson exercise
sole dispositive and voting power over 979,400; 600,000 and
36,130 shares, respectively, and that Daniel R. Efroymson
exercises shared voting and dispositive power over 135,030
shares.
(3) Based on information supplied pursuant to Form 13G for the
year ended 12/31/94, management is advised that Firstar
Corporation is a holding company whose listed subsidiaries
(combined) exercise sole dispositive power over 1,303,625
shares; sole voting power over 1,243,125 shares and shared
voting and dispositive power over 33,080 shares.
The following table sets forth certain information as of
February 18, 1995, with respect to the beneficial ownership of
the outstanding common stock of Arnold Industries by the persons
named therein who are board nominees or directors who will
continue in office, named executive officers and all directors
and executive officers as a group as reported by each person:
Amount Percent
Name and Address of Beneficially of
Title of Class Beneficial Owner Owned Class
Common Stock E.H. Arnold............ 6,802,496 (1) 25.5%
Common Stock Kenneth F. Leedy....... 340,415 (2) 1.3%
Common Stock Heath L. Allen......... 270,920 (3) 1.0%
Common Stock Ronald E. Walborn...... 400,940 (4) 1.5%
Common Stock Arthur L. Peterson..... 6,300 *
Common Stock Carlton E. Hughes...... 12,000 (5) *
Common Stock Paul L. Shiffler....... 11,000 (6) *
Common Stock Directors and Officers as
a Group (7 in number)... 7,844,071 (7) 29.1%
* less than 1.0%
_________________________
(1) See Note (1) of the immediately preceding table.
(2) The shares shown include 168,600 shares covered by incentive and non-
qualified stock option(s).
(3) The shares shown include 88,400 shares covered by incentive and non-
qualified stock option(s) and 120,000 shares held jointly by Mr. Allen
and his spouse.
(4) The shares shown include 88,400 shares covered by incentive and non-
qualified stock option(s) and shares held for Mr. Walborn's segregated
accounts by the Walborn Shambach Associates Profit Sharing Trust and
Janney Montgomery Scott, Inc.
(5) The shares shown include 10,000 shares covered by non-qualified stock
option(s).
(6) The shares shown are comprised of 11,000 shares covered by incentive
stock options(s).
(7) The totals include the named individuals who exercise sole voting and
dispositive power over the shares shown unless otherwise indicated. See
also Notes (1) through (6) above.
DIRECTORS
The Board of Directors is the ultimate governing body of the Company.
As such, it has the responsibility for establishing broad corporate policies
and objectives and for the overall performance of the Company. Management is
accountable to the Board of Directors for the satisfactory conduct of the
Company's day-to-day business. Members of the Board are kept informed of the
Company's principal activities and plans by various reports and documents sent
to them each month, as well as by operating and financial reports and analy-
ses.
The Bylaws of the Company provide that the Board of Directors shall
consist of not less than three (3) nor more than seven (7) members, and that
the directors shall be divided into two classes as nearly equal in number as
possible. The term of office of each class of directors is two years, and the
term of office of the two classes overlap. Pursuant to the Company's Bylaws,
the Board of Directors has fixed its size at six (6). At the Annual Meeting,
three (3) directors are to be elected to hold office until the 1997 Annual
Meeting of Shareholders. After the election of three (3) directors at the
meeting, the Company will have six (6) directors, including three (3) direc-
tors whose present terms extend until the 1996 Annual Meeting of Shareholders.
In the absence of instructions to the contrary, proxies received
pursuant to this solicitation will be voted for the election of Kenneth F.
Leedy, Heath L. Allen and Carlton E. Hughes as directors to hold office until
the 1997 Annual Meeting of Shareholders and until their successors are duly
elected and qualified. Each nominee is presently a director and was elected
to his present term of office by the stockholders. There are no arrangements
or understandings between any director and any other person pursuant to which
he was selected as a director.
If any other than the nominees named below should be nominated for
election as a director, the proxies may be voted cumulatively in accordance
with the judgment of the persons named therein, so as to elect as directors as
many of the nominees listed below as possible. In the event that any nominee
declines or is unable to serve as a director (which is not anticipated), the
persons named in the accompanying form of proxy shall have full discretion and
authority to vote or refrain from voting for such substitute nominee, if any,
as may be designated by the Board of Directors.
Set forth below is information regarding the nominees and the directors
who will continue in office on the Company's Board. Such information includes
their names and ages, the principal occupation or employment of each such
person during the past five years, including all positions and offices with
the Company, and directorships held by such persons in other public companies,
if any. Also shown is the year during which each incumbent began continuous
service as a director of Arnold Industries, Inc. and/or its predecessor, New
Penn Motor Express, Inc. (herein called "New Penn"). On April 1, 1982, each
person who was then a director of New Penn also became a director of the
Company as a result of the plan of reorganization and merger approved by New
Penn's shareholders on March 24, 1982, pursuant to which New Penn became a
wholly-owned subsidiary of the Company.
The Board of Directors of the Company meets on a regularly scheduled
basis and, during 1994, met on four separate occasions.
To be Elected for a Two-Year Term
HEATH L. ALLEN: 67, Director since 1972
Partner of Keefer, Wood, Allen & Rahal (Attorneys); Secretary (1982 to
present) of Arnold Industries; Secretary (1972 to present) of New Penn.
Mr. Allen is also a director of Nuclear Support Services, Inc.
KENNETH F. LEEDY: 53, Director since 1980
Executive Vice President (1986 to present) and Vice President-Operations
(1982 to 1986) of Arnold Industries; Executive Vice President (1983 to
present) and Vice President-Operations (1975 to 1983) of New Penn.
CARLTON E. HUGHES: 63, Director since 1988
Chairman of Stewart-Amos Steel, Inc. Mr. Hughes is also a director of
CoreStates Financial Corp. and IREX Corp.
To Continue in Office
EDWARD H. ARNOLD: 55, Director since 1969
President and Chairman of the Board (1982 to present) of Arnold Indus-
tries; President (1974 to present) and Treasurer (1974 to 1982) of New
Penn. Mr. Arnold is also a director of Hamburger Hamlet Restaurants,
Inc.
RONALD E. WALBORN: 58, Director since 1972
President and Treasurer of Walborn Shambach Associates (Accountants);
Treasurer (1982 to present) of Arnold Industries; Treasurer (1982 to
present) and Assistant Treasurer (1980 to 1982) of New Penn.
ARTHUR L. PETERSON: 68, Director since 1988
Executive Director of the Florida Association of Colleges and Univer-
sities; Director of the Academy of Senior Professionals, Eckerd College,
St. Petersburg, Florida (1987 to 1994); President of Lebanon Valley
College, Annville, Pennsylvania (1983 to 1987).
The Board of Directors has established an Audit Committee. The func-
tions of the Audit Committee are to recommend the engagement of the Company's
independent auditors and to review with them the plan and scope of their audit
for each year, the status of their audit during the year, the results of such
audit when completed, and their fees for services performed. The Committee
will also review with the Company's accountants the plan, scope and results of
their operations and discuss with each group independently of the other any
recommendations or matters which either considers to be of significance. The
present members of the Audit Committee are Carlton E. Hughes (who is Chair-
man), Arthur L. Peterson and Heath L. Allen. The Audit Committee met once in
1994.
The Board has established a Compensation Committee. The primary
function of the Compensation Committee is to review and to make recommenda-
tions on executive officer compensation. The present members of the
Compensation Committee are Carlton E. Hughes and Arthur L. Peterson. The
Compensation Committee met one time in 1994. The Board does not have a
standing Nominating Committee.
Heath L. Allen who serves as Secretary and Director, and Ronald E.
Walborn who serves as Treasurer and Director for the Company each received a
flat fee of $10,000 for their services in 1994. Directors who are not also
officers of the Company are paid $5,000 per year and a fee of $500 for each
meeting of the Board of Directors attended, together with the expenses of
attendance.
EXECUTIVE OFFICERS
Executive officers are appointed annually by the Board of Directors
following the annual meeting of shareholders and serve at the pleasure of the
Board. There are no arrangements or understandings between any executive
officer and any other person pursuant to which the executive officers are
selected. Set forth below is information on the executive officers of the
Company, including age and principal occupation or employment during the past
five years, including all positions with the Company.
EDWARD H. ARNOLD: 55,
President and Chairman of the Board (1982 to present) of Arnold Indus-
tries; President (1974 to present) and Treasurer (1974 to 1982) of New
Penn.
KENNETH F. LEEDY: 53,
Executive Vice President (1986 to present) and Vice President-Operations
(1982 to 1986) of Arnold Industries; Executive Vice President (1983 to
present) and Vice President-Operations (1975 to 1983) of New Penn.
PAUL L. SHIFFLER: 41,
Chief Financial Officer (May 1992 to present) of Arnold Industries,
Inc.; Chief Financial Officer of Jones Truck Lines, Inc. (May 1988 to
October 1991).
HEATH L. ALLEN: 67,
Partner of Keefer, Wood, Allen & Rahal (Attorneys); Secretary (1982 to
present) of Arnold Industries; Secretary (1972 to present) of New Penn.
RONALD E. WALBORN: 58,
President and Treasurer of Walborn Shambach Associates (Accountants);
Treasurer (1982 to present) of Arnold Industries; Treasurer (1982 to
present) and Assistant Treasurer (1980 to 1982) of New Penn.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
The following table sets forth information concerning compensation paid
or accrued by the Company and its subsidiaries during the fiscal year ended
December 31, 1994, to or for the chief executive officer and each of the
executive officers of the Company whose cash compensation exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Other Awards All other
Name and principal position Year Salary ($) Bonus ($) annual compensa-
compensa- Restricted Options/ tion <F2>
tion(s) stock SARs(#)
awards ($) <F1>
<S> <C> <C> <C> <C> <C> <C> <C>
EDWARD H. ARNOLD 1994 166,653 633,000 0 0 0 14,970
President and Chairman 1993 147,628 733,000 0 0 0 25,421
of the Board 1992 150,689 661,000 0 0 0 24,688
KENNETH F. LEEDY 1994 146,204 353,000 0 0 0 14,970
Executive Vice President 1993 127,504 453,000 0 0 36,400 25,421
1992 130,152 380,000 0 0 80,000 24,688
PAUL L. SHIFFLER 1994 88,400 44,426 0 0 2,000 3,849
Chief Financial Officer <F3> 1993 76,956 22,500 0 0 5,000 3,317
1992 44,414 8,652 0 0 4,000 0
<FN>
<FN1>
(1) Adjusted for 11/22/93 two-for-one stock split.
<FN2>
(2) Represents amounts credited to the accounts of the named individuals
pursuant to the New Penn Motor Express, Inc. Profit Sharing Plan.
The amounts accrued under this profit-sharing plan are based on fair
market value of the assets of the trust as determined by the Trustee
on December 31 of the respective years for which the information is
supplied.
<FN3>
(3) Mr. Shiffler commenced employment with the Company in May 1992.
</FN>
</TABLE>
Stock Options. At the 1987 Annual Meeting, the shareholders
approved the Arnold Industries, Inc. 1987 Stock Option Plan (the
"1987 Plan"), which is designed to promote continuity of manage-
ment and to increase incentive for those primarily responsible
for the Company's long-range financial success.
The 1987 Plan is administered by the Board of Directors,
which may extend rights to selected employees or consultants to
purchase shares of common stock in the Company at stated option
prices. The aggregate number of shares for which options may be
granted under the 1987 Plan is presently 1,625,000. As of Decem-
ber 31, 1994, options for 1,104,110 shares were outstanding to
approximately 130 employees and/or consultants. The 1987 Plan
will terminate on March 31, 1997, although outstanding options at
that time will not be canceled by such termination.
The options may be incentive stock options, which qualify
for certain tax benefits (relating primarily to the deferral of
gain recognition until the underlying stock is sold and the
treatment of same as a capital gain as opposed to ordinary
income), or nonqualified options, which do not qualify as incen-
tive stock options. Incentive stock options must be granted at
not less than the fair market value of the stock on the date
granted, and nonqualified stock options must be granted at not
less than one-half of the fair market value of the stock on the
date granted. The Company may take a deduction for gain realized
by its employee upon the exercise of a nonqualified option.
Generally this is not so in the case of an incentive stock
option. Options generally are non-transferable, conditioned upon
continued employment with the Company and expire within 10 years
of grant or upon stated occurrences. Other option terms may vary
depending upon provisions of the specific option agreement. On
June 28, 1991, the Company filed an S-8 Registration Statement
for Company stock subject to the 1987 Plan. The closing market
price of Company common stock as of March 21, 1995 was 19 1/4.
The tables below show information regarding stock options
granted to and exercised or held by the Company's executive
officers.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants Potential realizable value at
assumed annual rates of stock
Percent of price appreciation for option
Total Exercise Market Expira- term
Options/ Options/ or base price on tion
SARs SARs price date of date
granted (#) granted to ($/Sh) grant
Name employees ($/Sh) 0% ($) 5% ($) 10% ($)
in fiscal
year
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PAUL L. SHIFFLER 2,000 (1) 1.5% $18.50 $18.50 7/25/04 0 10,220 58,940
<FN>
<F1>
(1) Incentive stock option first exercisable five years from date of
grant as to all or part.
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
unexercised unexercised
Options/SARs in-the-money
Shares Value realized at FY-End (#) Options/SARs
Name acquired on ($) exercisable/ at FY-End ($)
exercise (#) unexercisable exercisable/
<FN1> unexercisable
<S> <C> <C> <C> <C>
EDWARD H. ARNOLD 0 0 0 0
KENNETH F. LEEDY 0 0 79,564/89,036 1,650,953/1,847,497
PAUL L. SHIFFLER 0 0 0/11,000 0/228,250
HEATH L. ALLEN 0 0 86,424/1,976 1,793,298/41,002
RONALD E. WALBORN 0 0 86,424/1,976 1,793,298/41,002
<FN>
<FN1>
(1) Adjusted for stock splits.
</FN>
</TABLE>
Supplemental Retirement Plan. In 1980, in order to recog-
nize past effort and to encourage future effort, New Penn imple-
mented a supplemental retirement plan. This plan provides to 59
individuals certain retirement, disability and death benefits,
which are available only if the individual is working for Arnold
Industries or one of its subsidiaries at retirement, disability
or death. Retirement benefits would commence five years after
retirement, but not before age 65, and are conditioned on an
absence of competitive employment for two years after retirement.
Retirement benefits are payable monthly for ten years. Monthly
disability and pre-retirement death benefits are one-half of
retirement benefits, but are payable for twenty years. The
Company is responsible for the full cost of the plan, with no
contributions from the participants. The net pension cost for
this plan was $141,676 for 1994.
The monthly retirement benefits involve six different
categories: (1) $1,666.67, (2) $1,250.00, (3) $1,041.67,
(4) $833.33, (5) $625.00 and (6) $416.67. Category (1) covers
Messrs. Arnold and Leedy and 3 non-directors; category (2)
includes Messrs. Allen and Walborn and 9 non-directors; catego-
ry (3) covers 3 other individuals; and categories (4) through (6)
cover 40 individuals. The Board of Directors may from time to
time add additional individuals to the plan, and may change the
categories of participants to increase benefits.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in
the Company's cumulative total shareholder return on its common
stock with: (i) the cumulative total return of a broad market
index (i.e. NASDAQ MARKET INDEX) and (ii) the cumulative total
return of a published industry or line-of-business index weighted
for market capitalization (i.e., the SIC CODE 4213 INDUSTRY GROUP
- - TRUCKING, EXCEPT LOCAL). This group is composed of the follow-
ing entities: Aasche Transport Service; Allied Holdings, Inc.;
American Freightways Corporation; Anuhco, Inc.; Arkansas Best
Corporation; Arnold Industries, Inc.; Arrow Transportation
Company; Boyd Bros. Transport, Inc.; Builders Transport, Inc.;
Cannon Express CL B; Cannon Express, Inc. CL A; Carolina Freight
Corporation; Celadon Group, Inc.; Consolidated Freightways;
Country Wide Transport; Covenant Transport CL A; Freymiller
Trucking, Inc.; Frozen Food Express Industries; FRP Properties,
Inc.; Heartland Express, Inc.; J.B. Hunt Transportation Services,
Inc.; Intrenet, Inc.; Kenan Transport Company; KLLM Transport
Services, Inc.; Landstar Systems, Inc.; Lynch Corporation; M.S.
Carriers, Inc.; Marten Transport, Ltd.; Matlack Systems, Inc.;
Mayflower Group, Inc.; Morgan Group, Inc. CL A; MTL, Inc.; Old
Dominion Freight Line; Oliver Transportation; OTR Express, Inc.;
PAM Transportation Services; Roadway Services, Inc.; Swift
Transportation Co.; TNT Freightways Corporation; Transport
Corporation of America; U.S. 1 Industries, Inc.; U.S. Xpress
Enterprises CL A; USA Truck, Inc.; Werner Enterprises, Inc.; and
Yellow Corporation. Cumulative returns for the Company and both
indices were calculated assuming dividend reinvestment.
<TABLE>
<CAPTION>
GRAPH AND POINT DATA
5-YEAR CUMULATIVE TOTAL RETURN AMONG ARNOLD INDUSTRIES, INC.
NASDAQ MARKET INDEX AND SIC CODE INDEX
----------------------FISCAL YEAR ENDING--------------------
COMPANY 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
ARNOLD IND INC 100 113.48 187.89 223.48 285.85 288.14
INDUSTRY INDEX 100 83.14 125.04 152.91 173.20 166.52
BROAD MARKET 100 81.12 104.14 105.16 126.14 132.44
ASSUMES $100 INVESTED ON JAN. 1, 1990
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1994
</TABLE>
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's primary function is to review
and to make recommendations to the Board on executive officer
compensation. The present members of the Compensation Committee
are Carlton E. Hughes and Arthur L. Peterson, both of whom are
non-employee "independent" directors of the Company. The Compen-
sation Committee has reviewed the Company's policies on executive
officer compensation and the compensation paid to the Company's
executive officers for fiscal year 1994 and reports as set forth
below.
The Company's executive compensation policy is to provide
competitive levels of total compensation in order to attract,
motivate and retain skilled executive personnel, to recognize and
reward individual initiative and achievements and to promote
above average corporate performance. The Company also endorses
the proposition that stock ownership in the Company by its
employees and executive personnel and stock-based compensation
arrangements are extremely beneficial in aligning the interests
of its employees and management with its shareholders in maximiz-
ing Company value.
The basic methods by which the Company compensated its
executive officers and implemented the aforementioned policy in
1994 were those of annual salary, annual bonus and, to a lesser
extent, stock option grants made pursuant to the Company's 1987
Stock Option Plan. The Company also maintained a supplemental
retirement plan for some 59 key employees (including its execu-
tive officers) to augment its profit-sharing/retirement plan,
generally available to all eligible employees. Information on
both the Company's stock option plan and options awarded execu-
tive officers in 1994 can be found on pages 5 to 6 of the proxy
statement. Further information on the supplemental retirement
plan and its benefits to the existing officers is found on page 6
of the statement. The Company has not yet adopted a policy with
respect to the $1,000,000 limitation on deductibility of execu-
tive compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended.
The Committee believes that the base salaries of the
Company's principal executive officers are in the median range
for the trucking industry. The Company utilizes cash bonus and
stock option elements to reward superior performance. The
Company considers the desires of the executive and the needs of
the Company in determining the overall compensation package and
the executive's stock and option holdings in adjusting the
mixture between the cash bonus and stock option elements on a
yearly basis.
The Company looks to both quantitative and qualitative
factors in determining the job performance of all of its employ-
ees, including executive officers. The primary quantitative
criteria applied to its executive officers are Company return on
shareholder investment, net earnings, revenue and cost trends.
Internal quantitative criteria such as adherence to, or improve-
ment on, operating budgets or Company specific goals, including
revenue and earnings targets and cost or claims reduction pro-
jects are also considered, when applicable. Qualitative factors
such as the ability to motivate others, to adapt and accomplish
new tasks and to assist in both short and long range strategic
planning for the Company, as well as the officer's internal per-
formance history, are also considered in arriving at appropriate
overall compensation levels. The Company has not established a
specific mathematic weighting or formula for application of these
principles. These criteria are applied on a subjective basis
from year to year and were given roughly equal weight in 1994's
determinations.
Application of the foregoing criteria to Edward H. Arnold,
the Company's chief executive officer, supports placing
Mr. Arnold's total compensation package for 1994 at the high end
of his counterparts in the trucking industry. In terms of
qualitative factors, Mr. Arnold continues his leadership role in
strategic planning and remains an exceptional motivating force
among the Company's executive officers and personnel, emphasizing
a commitment to continuous improvement in customer service and
cost efficiency.
In quantitative terms, the Company again achieved new highs
in annual revenues and earnings in 1994 and remained a stand-out
performer among the broad market and among its trucking counter-
parts in return on shareholder investment. However, due in part
to the Teamsters strike in the Spring of 1994, the Company fell
somewhat short of its own internal revenue and earnings targets
this year. Accordingly, Mr. Arnold's total compensation package,
while reflecting the Company's above average performance in 1994,
was nonetheless reduced from 1992 and 1993 levels. Insofar as
Mr. Arnold has foregone participation in the Company's stock
option program due to his already substantial holdings of Company
stock, his 1994 compensation package utilizes only salary and
cash bonus components.
The Compensation Committee
Carlton E. Hughes
Arthur L. Peterson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Hughes and Mr. Peterson are independent directors of the
Company. They are not, and have not been, officers or employees
of the Company or any of its subsidiaries.
CERTAIN TRANSACTIONS
The firm of Keefer, Wood, Allen & Rahal, of which Heath L.
Allen, a director of the Company, is a partner, received legal
fees of approximately $392,000 for services performed in 1994 for
the Company and its subsidiaries. It is anticipated that the
Company and its subsidiaries will make payments to Keefer, Wood,
Allen & Rahal through 1995 for legal services to be performed.
The firm of Walborn Shambach Associates, of which Ronald E.
Walborn, a director of the Company, is President and Treasurer,
received fees for management and other accounting services of
approximately $380,000 for services performed in 1994 for the
Company and its subsidiaries. It is anticipated that the Company
and its subsidiaries will make payments to Walborn Shambach
Associates through 1995 for management and accounting services to
be performed.
INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand served as independent certi-
fied public accountants to audit the books, records and accounts
of the Company and its subsidiaries for the 1992 through 1994
calendar years, which are the Company's last three fiscal years.
A representative of Coopers & Lybrand will be present at the
Annual Meeting, will be afforded an opportunity to make a state-
ment if he or she desires to do so and will be available to
respond to appropriate questions.
The Company presently intends to utilize Coopers & Lybrand
to serve as independent auditor for its 1995 fiscal year but has
opted not to submit ratification of same to a vote of sharehold-
ers so as to maintain Board discretion in this matter.
COMPLIANCE WITH SECTION 16
Paul L. Shiffler and Arthur L. Peterson each failed to
timely file one Form 4 for 1994. In each case, the late reports
reflected a single transaction. These inadvertent omissions were
isolated and have been corrected.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
The 1996 Annual Meeting of Shareholders will be held on or
about May 1, 1996. Proposals of shareholders intended to be
presented for action at that meeting must be submitted in writing
and received by the Company at its corporate headquarters,
625 South Fifth Avenue, P. O. Box 630, Lebanon, PA, 17042-0630,
Attn: Corporate Secretary, not later than December 22, 1995, in
order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to that meeting, in accor-
dance with regulations governing the solicitation of proxies. It
is suggested that a shareholder making a proposal submit the
proposal by Certified Mail - Return Receipt Requested.
The Bylaws provide that nominations of candidates for
election to the Board at an annual meeting, other than those made
by or on behalf of existing management, must be made in writing
and delivered or mailed to the Corporate Secretary not less than
fifteen (15) nor more than fifty (50) days prior to that annual
meeting.
OTHER MATTERS
The Board of Directors does not intend to bring any matters
before the Annual Meeting other than those specifically set forth
in the notice of the Annual Meeting and knows of no matters to be
brought before the meeting by others. If any other matters
properly come before the meeting, it is the intention of the
persons named in the enclosed proxy, or their substitutes, to
vote said proxy in accordance with their best judgment on such
matters.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE AVAILABLE AT
THE ANNUAL MEETING. ANY SHAREHOLDER, UPON WRITTEN REQUEST TO THE
CORPORATE SECRETARY, MAY OBTAIN A COPY OF THE COMPANY'S 10-K
WITHOUT CHARGE.
By Order of the Board of Directors,
HEATH L. ALLEN
Secretary
Lebanon, Pennsylvania
March 22, 1995
APPENDIX
REVOCABLE PROXY
ARNOLD INDUSTRIES, INC.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 1995
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders of Arnold Industries, Inc., to be
held on Wednesday, May 3, 1995, at 4:00 p.m., at the Lebanon
Country Club, 3375 West Oak Street, Lebanon, Pennsylvania, and
the proxy statement for said meeting attached thereto, and hereby
appoints Edward H. Arnold or Ronald E. Walborn, or either of
them, proxies to vote and act at the 1995 Annual Meeting of
Shareholders or at any adjournment or adjournments thereof, on
any business that may properly come before such meeting, includ-
ing:
With- For All
1. Election of Directors For hold Except
of the Company: _____ _____ _____
Kenneth F. Leedy, Heath L. Allen and Carlton E. Hughes
INSTRUCTION: To withhold authority to vote for any nominee, mark
"For All Except" and write that nominee's name in the space
provided below.
________________________________________________________________
2. With respect to the use For Against Abstain
of their discretion in _____ _____ _____
such other business as
may come before the
meeting or any adjourn-
ments thereof.
The stock covered by this proxy will be voted in accordance with
specifications made. IF NO SPECIFICATION IS MADE, THE PROXIES
ARE APPOINTED WITH AUTHORITY TO VOTE FOR THE ELECTION OF DIREC-
TORS AND IN FAVOR OF PROPOSAL 2.
Please sign your proxy exactly as your name appears on the
certificate. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such. If owner is a cor-
poration, sign full corporate name by a duly authorized officer.
If two or more persons are named as owners, both or all should
sign.
Please be sure to sign and date Date
this Proxy in the box below. ____________
THIS PROXY IS SOLICITED ON BEHALF
OF THE REGISTRANT'S BOARD OF DIRECTORS.
_____________________________________________________
Shareholder sign above Co-holder (if any) sign above
