<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Publishers Equipment Corporation
- --------------------------------------------------------------------------------
(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)(1) 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:
-----------------------------------------------------------------------
(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 the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
PUBLISHERS EQUIPMENT CORPORATION
16660 DALLAS PARKWAY, SUITE 1100
DALLAS, TEXAS 75248
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 1998
As a shareholder of Publishers Equipment Corporation (the "Company"), you are
hereby given notice of and invited to attend in person or by proxy the Annual
Meeting of Shareholders of the Company to be held at Publishers Equipment
Corporation, Corporate Headquarters, 16660 Dallas Parkway, Suite 1100, Dallas,
Texas, on Friday, June 19, 1998 at 3:00 p.m. for the following purposes:
1. The election of six directors for a one-year term.
2. To consider and act upon a proposal to amend the Publishers Equipment
Corporation Stock Option Plan to extend the expiration date of the
Plan from April 26, 1999 to April 26, 2004.
3. To transact such other business as may properly come before the
meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on May 4, 1998, as the
record date ("Record Date") for the determination of shareholders entitled to
notice of and to vote at such meeting and any adjournment(s) thereof. Only
shareholders of record at the close of business on the Record Date are entitled
to notice of and to vote at such meeting. The transfer books will not be
closed.
You are cordially invited to attend the meeting. HOWEVER, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING, MANAGEMENT DESIRES TO HAVE THE MAXIMUM
REPRESENTATION AT THE MEETING AND RESPECTFULLY REQUESTS THAT YOU DATE, EXECUTE
AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED STAMPED ENVELOPE FOR WHICH
NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. A proxy may
be revoked by a shareholder by notifying the Secretary of the Company in
writing at any time prior to its use.
By order of the Board of Directors
Evans Kostas
Chairman of the Board,
President and Chief Executive Officer
Dallas, Texas
May 7, 1998
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE ENCLOSED
PROXY CARD IN THE ENVELOPE PROVIDED.
<PAGE> 3
PUBLISHERS EQUIPMENT CORPORATION
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 1998
TO OUR SHAREHOLDERS:
This Proxy Statement is furnished to shareholders of Publishers Equipment
Corporation (the "Company") for use at the Annual Meeting of Shareholders on
June 19, 1998, or at any adjournment or adjournments thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of Shareholders. The
enclosed proxy is solicited on behalf of the Board of Directors of the Company
and is subject to revocation at any time prior to the voting of the proxy (as
provided herein). Unless a contrary choice is indicated, all duly executed
proxies received by the Company will be voted in accordance with the
instructions set forth on the front side of the proxy card. The record of
shareholders entitled to vote at the Annual Meeting was taken at the close of
business on May 4, 1998. The approximate date on which this Proxy Statement
and the enclosed proxy are first being sent to shareholders is May 7, 1998.
The principal executive offices of the Company are located at 16660 Dallas
Parkway, Suite 1100, Dallas, Texas 75248.
PROPOSAL ONE - ELECTION OF DIRECTORS
Six Directors are proposed to be elected at the Annual Meeting. Each Director
will serve until the next Annual Meeting of Shareholders or until a successor
shall be elected and shall qualify. Proxies in the accompanying form will be
voted for the nominees listed in the table that follows, except where authority
is withheld by the shareholder. All nominees are presently members of the
Board of Directors.
If any of the nominees should become unable to accept election, the persons
named in the proxy may vote for such other person or persons as may be
designated by the Board of Directors. Management has no reason to believe that
any of the nominees named below will be unable to serve.
<TABLE>
<CAPTION>
Year First
Became
Age Director
--- --------
<S> <C> <C>
Simon Bonnier (b) 68 1984
James K. Feeney (a,b) 61 1986
Robert S. Hamilton (a,b) 71 1979
Evans Kostas (a) 62 1984
Ole B. Rygh (c) 54 1988
Reinhart Siewert (c) 60 1988
</TABLE>
- ---------------
a - Member of the Executive Committee
b - Member of the Compensation/Option Committee
c - Member of the Audit Committee
1
<PAGE> 4
Mr. Bonnier currently serves as a Director of AB Bonnierforetagen, a Swedish
conglomerate having primary business activities in book/magazine publishing and
film production/distribution. Other business interests include manufacture of
furniture and graphic arts equipment. Mr. Bonnier has served in this capacity
since 1965 and from January 1978 he has also served as International Operations
Officer for AB Bonnierforetagen.
Mr. Feeney is currently President and Treasurer of Windmoller & Holscher
Corporation, a manufacturer of flexographic printing presses for packaging, a
position he has held since December 1977.
Mr. Hamilton retired from Publishers Equipment Corporation October 31, 1990,
after having served in various executive capacities with the Company during the
twelve years prior to that date.
Mr. Kostas has served as Chairman of the Board, President and Chief Executive
Officer of the Company since February 1985. From September 1984 until February
1985, Mr. Kostas served as Chief Operating Officer of the Company.
Mr. Rygh currently serves as President and Chief Executive Officer of Ryson
International, Inc., a supplier of material handling equipment and systems to
the printing industry, a position he has held since September 1995. From
December 1993 to August 1995, Mr. Rygh served as President and Chief Executive
Officer of IDAB, Incorporated, a supplier of material handling equipment and
systems to the printing industry.
Mr. Siewert currently serves as President of Koenig & Bauer-Albert AG, a German
manufacturer of newspaper and commercial printing presses, a position he has
held since July 1995. For the prior fifteen years Mr. Siewert served as
Executive Vice-President-Finance of Koenig & Bauer-Albert AG.
In connection with the Company's acquisition of King Press Corporation in 1984,
the Company agreed to use its best efforts to cause two seats on its Board of
Directors to be filled by persons designated by AB Bonnierforetagen, as long as
it and its affiliates own at least 15% of the shares of Common Stock of the
Company. Mr. Bonnier and Mr. Rygh currently serve as Directors at the request
of AB Bonnierforetagen.
In connection with the Company's issuance of the Company's Common Stock in a
private placement to Koenig & Bauer-Albert AG in October 1988, the Company
agreed to use its best efforts to cause one seat on its Board of Directors to
be filled by a person designated by Koenig & Bauer-Albert AG as long as it owns
at least 15% of the shares of Common Stock of the Company. Mr. Siewert
currently serves as a Director at the request of Koenig & Bauer-Albert AG.
2
<PAGE> 5
CERTAIN INFORMATION RELATING TO THE BOARD OF DIRECTORS AND COMMITTEES OF THE
BOARD
The Board of Directors of the Company held three formal meetings during 1997.
The Board's Audit Committee and Executive Committee each held one formal
meeting during the year. The Board's Compensation/Option Committee did not
meet during 1997. Each of the Directors who are nominated in this Proxy
Statement and who served during 1997 as a Director or as a member of the
Compensation/Option Committee, the Executive Committee or the Audit Committee
attended at least 75% of the total number of such meetings during 1997 during
the period in which they served as Director.
At the beginning of each fiscal year, each Director who is not an employee of
the Company individually elects his form of compensation for each Meeting of
the Board of Directors attended from three options:
<TABLE>
<S> <C>
Option 1: $500 cash and a stock option for 500 shares of
the Company's Common Stock.
Option 2: $1,000 cash.
Option 3: A stock option for 1,000 shares of the Company's
Common Stock.
</TABLE>
In addition, at the beginning of each fiscal year the Chairman designated for
each Committee who is not an employee of the Company individually elects his
form of compensation for each Meeting of the Committee attended that is not
concurrent with a Meeting of the Board of Directors from two options:
<TABLE>
<S> <C>
Option 1: A stock option for 250 shares of the Company's
Common Stock.
Option 2: $250 cash.
</TABLE>
The exercise price of options granted to Directors is based on the fair market
value of the Company's Common Stock at the time of each Meeting.
For 1998, one of the nominees to the Board of Directors elected Option 1, three
elected Option 2 and one elected Option 3 for compensation to be received for
each Board of Directors meeting attended. For compensation to be received as
Committee Chairman in 1998, one non-employee Chairmen chose Option 1 and one
non-employee Chairman chose Option 2 for each Committee Meeting attended that
is not concurrent with a Board of Directors Meeting. These elections are
irrevocable for 1998.
The Compensation/Option Committee recommends compensation/option arrangements
for the Company's officers. The Executive Committee serves primarily as an
advisor to management. The Audit Committee provides supervision of the
auditing process. See the table on page 1 for information as to the members of
such committees. The Company
3
<PAGE> 6
does not have a nominating committee of the Board of Directors, or any other
committee that performs similar functions.
For information on the security ownership of management and executive
compensation, see pages 8 to 9 of this Proxy Statement.
PROPOSAL TWO - PROPOSAL TO AMEND STOCK OPTION PLAN
The Company's success is largely dependent upon the efforts of its key
employees. In order to continue to attract, motivate and retain outstanding
individuals as key employees, the Board of Directors believes that it is
essential to provide compensation incentives that are competitive with those
provided by other companies. In addition, the Board of Directors believes that
it is important to further the identity of interests between key employees of
the Company and its shareholders by encouraging employee ownership of the
Company's Common Stock. Accordingly, in 1981, 1984, 1989 and again in 1994,
the Board of Directors and the Shareholders of the Company adopted and approved
the Publishers Equipment Corporation Stock Option Plan (the "Plan").
The Plan currently provides for the reservation of 500,000 shares of Common
Stock to be available for issuance under the Plan for options granted until the
termination of the Plan. As of May 7, 1998, 45,025 shares have been issued
pursuant to the exercise of options granted under the Plan and options to
purchase an additional 333,492 shares had been granted and have not expired,
leaving 121,483 shares available for future options. If approved, the
amendment will permit the Company to continue to grant options under the Plan,
which the Board of Directors believes is necessary in order to continue to
attract, motivate and retain outstanding key employees. The amendment will
result in no other change to the Plan nor will it result in any change,
alteration or extension of any options presently outstanding under the Plan.
On April 27, 1998, the closing sales price for the Common Stock was $0.398 per
share.
The following is a summary of certain provisions of the Plan as proposed to be
amended.
GENERAL. Under the Plan, stock options ("Options") will be granted to key
employees covering shares of Common Stock. The Options may be either Qualified
Stock Options (as defined in Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code") or nonqualified stock options. The specific type of
option granted and its treatment under the Code, depends on the terms of the
agreement pursuant to which such option is granted. The Plan, as proposed to
be amended, will terminate in 2004, unless sooner terminated by the Board of
Directors. Options granted may not be sold, transferred or disposed of in any
manner other than by will or under the applicable laws of descent and
distribution. A maximum of 500,000 shares (subject to antidilution provisions)
of Common Stock is available for issuance under the Plan. The shares of Common
Stock subject to any outstanding Option that expires or is terminated without
having been exercised in full, or the portion of such shares allocable to the
4
<PAGE> 7
unexercised portion, may again be subject to an Option granted under the Plan.
ADMINISTRATION. The Plan is administered by the Board of Directors. The
Compensation/Option Committee (the "Committee") has been appointed by the Board
to administer the Plan on its behalf. The Committee currently consists of
Simon Bonnier, James K. Feeney and Robert S. Hamilton. The Committee has full
and final authority to select the employees who will participate, grant
Options, set the exercise price or prices and the exercise period of each
Option and, in general, interpret and administer the Plan and make all other
determinations necessary or advisable for its administration.
The members of the Committee are not eligible to receive Options granted by the
Committee; however, the members of the Committee may receive Options granted by
the Board of Directors. In addition, the Plan provides that no Director may
vote on the granting of Options to himself or herself, but such Director may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors in which such a vote is taken.
ELIGIBILITY. Any person, including officers and directors, employed by the
Company or any parent or subsidiary of the Company which now exists or
hereafter is organized or acquired by or acquires the Company is eligible to
participate in the Plan. Because of the discretion possessed by the Committee,
it is not possible to indicate the number of persons who may be selected to
participate in the Plan, the number of Options which may be granted to them or
the number of shares of Common Stock subject to each option. However, in no
event may the aggregate fair market value (determined at the time the Options
are granted) of the Common Stock with respect to which Qualified Stock Options
are exercised for the first time by an individual in any calendar year (under
all plans of the individual's employer corporation and its parent and
subsidiary corporations, if applicable) exceed $100,000.
At May 7, 1998, a total of approximately 111 employees were eligible to
participate in the Plan and approximately 41 of those employees had received
Options under the Plan.
TERMS OF OPTIONS, LIMITATION ON RIGHT TO EXERCISE AND RESTRICTION ON TRANSFER.
Unless otherwise provided in the terms of an option, the term of each Option
granted under the Plan shall not exceed five years from the date of the grant
thereof. The Plan also provides that the term of a Qualified Stock Option
shall not exceed ten years from the date of its grant, and the term of a
Qualified Stock Option granted to an employee owning, directly or indirectly,
at the time of the grant 10% or more of the total combined voting power of the
stock of the Company (a "10% Shareholder") shall not exceed five years from the
date of its grant. Except in the event of death or disability as set forth
below, or as otherwise provided in the terms of an Option, options may only be
exercised if the holder is employed by the Company or any parent or subsidiary
of the Company. Common Stock received upon the exercise of an Option may be
subject to restrictions determined by the Committee prohibiting its transfer to
anyone other than the Holder's employer or the Company during a
5
<PAGE> 8
specific period not exceeding ten years from the date of the grant of such
Option and requiring the resale of such stock to the holder's employer or the
Company for the exercise price of the Option in the event the holder does not
complete a required period of employment.
EXERCISE PRICE. The Committee will determine the exercise price or prices for
each Option at the time such Option is granted; provided, however, that such
exercise price will not be less than the greater of $0.25 or the fair market
value of the Common Stock at the time of the granting of the Option, as
determined by the Committee. With respect to an Option granted to any 10%
Shareholder, the exercise price shall not be less than 110% of the fair market
value of the Common Stock at the time of the granting of the Option. A holder
of Options may pay the exercise price upon the exercise of any Option in cash
or in shares of Common Stock based upon fair market value of the Common Stock
on the date of exercise or in combination of cash and shares of Common Stock.
DEATH OR DISABILITY. In the event of the death or disability of a holder of
Options while in the employ of the Company, its parent or subsidiaries, such
Options will be exercisable in full within the year next succeeding such death
or disability, but not later than the expiration date of such Options.
DILUTION OR OTHER ADJUSTMENTS. Under certain circumstances, such as stock
dividends, stock splits and mergers, appropriate adjustments will be made with
respect to outstanding Options and the provisions of the Plan.
AMENDMENT AND TERMINATION. The Board of Directors may amend or terminate the
Plan; however, any amendment which would (a) increase the number of shares of
Common Stock for which Options may be issued under the Plan or (b) modify the
eligibility standards under the Plan shall not be effective until approved by
the shareholders of the Company.
FEDERAL INCOME TAX CONSEQUENCES. The Plan provides that Options may be granted
as nonqualified or incentive stock options. The specific type of Option
granted and the tax treatment thereof will depend on the terms of the agreement
pursuant to which Option is granted. Generally, any employee receiving
incentive stock options will not realize any taxable income at the time the
Option is granted or at the time an incentive option is exercised, provided,
however, that in connection with the computation of the alternative minimum
tax, the amount by which fair market value of the Common Stock at the time of
the exercise exceed the exercise price generally will constitute a preference
item. In addition, the Company is not entitled to any deduction at the time
the Option is granted or at the time the Option is exercised. Upon the sale of
the Common Stock acquired by exercise of an Option, the employee generally will
realize a capital gain or capital loss, and the Company will receive no
deduction, so long as such sale does not occur within two years of the date of
the grant of the Option or within one year after the exercise of the Option.
If a sale does occur within two years of the date of grant or one year of the
date of exercise, part or all of the income recognized by the employee may be
treated as ordinary income. Under such
6
<PAGE> 9
circumstances, the Company could be entitled to a deduction equal to the
ordinary income recognized by the employee.
An employee receiving nonqualified stock options ("NQSOs") under the Plan will
not realize any taxable income and the Company will not be entitled to any
deduction at the time the NQSOs are granted. At the time the NQSOs are
exercised, however, the employee generally will realize ordinary income equal
to the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price paid, and the Company generally will be
entitled to a deduction equal to the ordinary income recognized by the
employee, provided certain conditions are met. Upon the sale of the Common
Stock acquired pursuant to NQSOs, the employee generally will recognize capital
gain or loss based on the fair market value of the Common Stock on the date
acquired.
THIS SUMMARY OF THE EFFECTS OF FEDERAL INCOME TAX LAWS UPON THE COMPANY AND THE
PARTICIPANTS IN THE PLAN DOES NOT PURPORT TO BE COMPLETE. IN ADDITION, THE TAX
TREATMENT UNDER STATE OR LOCAL LAWS IS NOT COVERED IN THIS SUMMARY AND WILL
VARY FROM STATE TO STATE.
OPTION AWARDS AND VESTED BENEFITS: The following table sets forth certain
information relating to options previously granted under the Plan for the
period beginning on the date of the adoption of the Plan to May 7, 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Number of Average
Name of Options Per Share Net Value
Individual Granted (1) Exercise Price Realized (2)
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Roger R. Baier 38,000 $ 0.55 $ --
Simon Bonnier 4,500 0.85 --
James K. Feeney 3,000 1.00 --
Robert S. Hamilton 2,500 1.00 --
Evans Kostas 162,242 0.39 --
Ole B. Rygh 3,500 1.00 --
Reinhart Siewert 3,750 0.91 --
All Executive Officers
As A Group (2 Persons) 200,242 0.42 --
All Directors Who Are
Not Also Executive
Officers As A Group
(5 Persons) 17,250 $ 0.94 $ --
- ---------------------------------------------------------------------
</TABLE>
(1) Excluding all options granted that have expired or been canceled
without being exercised.
(2) There has been no exercise of options by Executive Offices or
Directors.
7
<PAGE> 10
The affirmative vote of the holders of a majority of the shares of Common Stock
entitled to vote and present or represented at the Annual Meeting is required
to approve the proposed amendments to the Plan. The Board of Directors
believes that the proposed amendments are in the best interest of the Company
and its shareholders and are important in order it help assure the ability of
the Company to continue to attract, motivate and retain highly qualified
individuals as employees and directors of the Company.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
PROPOSAL TWO.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The executive officers and directors of the Company are eligible to participate
in the Plan. Therefore, if the Plan is amended as described in Proposal Two,
the executive officers and directors may personally benefit from the extension
of the termination of the Plan to April 26, 2004.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The total outstanding capital stock of the Company as of May 7, 1998, consisted
of 5,220,253 shares of Common Stock, no par value (the "Common Stock"). All
outstanding shares of Common Stock are entitled to one vote per share. Under
the terms of the Articles of Incorporation of the Company, cumulative voting is
not permitted.
As of May 7, 1998, the Company's officers and nominees to the Board of
Directors, as a group (7 persons), owned beneficially 2,034,463 shares or 36.6%
of the issued and outstanding shares of Common Stock (including 217,492 shares
subject to options), as set forth in the following table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Name Of Class Amount and Nature
Beneficial Of of Beneficial Percent
Owner Stock Ownership(1) of Class
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Simon Bonnier Common Stock 1,715,363 (2) 32.8%
James K. Feeney Common Stock 3,750 (3) *
Robert S. Hamilton Common Stock 11,497 (4) *
Evans Kostas Common Stock 257,202 (5) 3.6%
Ole B. Rygh Common Stock 3,500 (6) *
Reinhart Siewert Common Stock 3,750 (7) *
Directors and
Executive Officers
As A Group
(7 Persons) Common Stock 2,034,463 36.6%
- ---------------------------------------------------------------------
</TABLE>
(*) Less than 1%.
8
<PAGE> 11
(1) Sole voting and investment power.
(2) Includes 1,710,863 shares owned by AB Bonnierforetagen and 4,500
shares subject to Options. Mr. Bonnier is a Director of AB
Bonnierforetagen and a member of the family which controls AB
Bonnierforetagen.
(3) Includes 3,000 shares subject to Options.
(4) Includes 2,500 shares subject to Options.
(5) Includes 162,242 shares subject to Options.
(6) Consists of 3,500 shares subject to Options.
(7) Consists of 3,750 shares subject to Options.
The following table sets forth as of May 7, 1998, each stockholder known to
management of the Company to own beneficially more than 5 percent of the
Company's outstanding shares of Common Stock.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Name and Address Class Of Amount and Nature of Percent
of Beneficial Owner Stock Beneficial Ownership(1) of Class
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
AB Bonnierforetagen Common Stock 1,710,863 (2) 32.8%
Torsgatan 21
S-105 44 Stockholm
Sweden
Koenig & Bauer AG Common Stock 1,079,500 20.7%
Postfach 6060
Friedrich-Koenig-
Str. 4
97080 Wurzburg 1
Germany
- ---------------------------------------------------------------------
</TABLE>
(1) Sole voting and investment power.
(2) Mr. Simon Bonnier, a Director of the Company, is a Director of AB
Bonnierforetagen and a member of the family which controls AB
Bonnierforetagen. As a result, Mr. Bonnier may be deemed to be the
beneficial owner of the shares owned by AB Bonnierforetagen.
On April 6, 1990, the Company issued 145,349 shares of its non-voting Series A
Convertible Preferred Stock, no par value (the "Preferred Stock"), to AB
Bonnierforetagen in connection with the Company's purchase of the shares of
Solna Gruppen AB. On each January 1, 1991, 1992, 1993, 1994, 1995, 1996, 1997
and 1998, 14,534 shares of the Preferred Stock converted to Common Stock. As a
result of the foregoing and the repurchase of 9 shares of Preferred Stock for
cash, there are currently 29,068 shares of Preferred Stock outstanding. No
other shares of the Preferred Stock of the Company are issued or outstanding.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten
9
<PAGE> 12
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers. Officers,
directors and greater than ten percent Shareholders are required by Securities
and Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during the fiscal year
ending December 31, 1997, its officers, directors and greater than ten percent
Shareholders have complied with all applicable Section 16(a) filing
requirements with respect to the Company's equity securities.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of
Executive Officers of the Company whose total annual salary and bonus for the
fiscal year ended December 31, 1997, exceeded $100,000.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------
Long Term
Compensation
Annual Compensation Awards
---------------------------------------
(a) (b) (c) (d) (g)
Name and Options/
Principal Position Year Salary ($) Bonus ($) SARs (#)
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
CEO, Evans Kostas 1997 165,000 49,500 132,242
1996 165,000 29,184 --
1995 165,560 -- 30,000
1994 194,560 -- 30,000
- ---------------------------------------------------------------------
</TABLE>
The remuneration described in the above table does not include the cost to the
Company of benefits furnished to the named executive officer, including
premiums for health insurance, personal use of Company automobile and other
personal benefits provided to such individual that are extended in connection
with the conduct of the Company's business. The value of such benefits cannot
be precisely determined, but the executive officer named above did not receive
other compensation in excess of the lesser of $25,000 or 10% of such officer's
cash compensation in any of the last three years.
10
<PAGE> 13
The following table sets forth information concerning the grant of stock
options to the named Executive Officer during the fiscal year ended December
31, 1997:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ---------------------------------------------------------------------
(a) (b) (c) (d) (e)
% of Total
Options/SARs
Granted to Exercise or
Employees in Base Price Expiration
Name Option/SARs Fiscal Year ($/Sh) Date
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
CEO,
Evans Kostas 132,242 65.4% $0.25 07/01/02
- ---------------------------------------------------------------------
</TABLE>
The following table sets forth information concerning the number of unexercised
options held by the named Executive Officer at the end of the fiscal year ended
December 31, 1997:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
- ---------------------------------------------------------------------
(a) (d)
Number of
Unexercised
Options/SARs
At FY-End (#)
- ---------------------------------------------------------------------
Exercisable/
Name Unexercisable
- ---------------------------------------------------------------------
<S> <C>
CEO, Evans Kostas 96,121/
66,121
- ---------------------------------------------------------------------
</TABLE>
EMPLOYMENT AGREEMENTS: The Company has an employment agreement with Mr.
Hamilton that provides a retirement benefit of $30,000 per year for a period of
15 years following his October 31, 1990 retirement. The retirement benefit is
reduced in the event of Mr. Hamilton's death before the expiration of the 15
year period, and ceases in the event that Mr. Hamilton is not survived by his
spouse.
401(K) PLAN: On October 1, 1984, the Company established a 401(K) Plan. The
401(K) Plan provides for voluntary contributions from participating employees.
A participant may elect to make contributions up to the maximum permissible
amount (the lesser of $30,000 or 25% of the participant's annual compensation)
on a before tax basis. The 401(K) Plan was amended on December 28, 1987, to
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allow the Company to make voluntary contributions to eligible employees'
accounts at the discretion of the Company. There were no Company contributions
to the 401(K) Plan during the fiscal year ended December 31, 1997.
INCENTIVE COMPENSATION PLAN: The Company has implemented an Incentive
Compensation Plan for certain officers of the Company and King Press
Corporation, a wholly-owned subsidiary of the Company. Under the Incentive
Compensation Plan, an incentive bonus based upon a percentage of the
participant's base compensation will be paid to a participant if the Company or
King Press Corporation achieves certain levels of targeted after-tax profits.
The Incentive Compensation Plan is administered by the Compensation/Option
Committee. During the fiscal year ended December 31, 1997, the incentive bonus
paid to the individual listed in the preceding Summary Compensation Table and
to the Executive Officers as a group was as follows: Mr. Kostas - $49,500; and
all Executive Officers as a group (2 persons) - $60,473.
STOCK OPTION PLAN: In June 1981, the Board of Directors adopted and the
shareholders of the Company approved the Publishers Equipment Corporation Stock
Option Plan ("Plan"). The Plan is currently administered by the
Compensation/Option Committee of the Board. The Plan was amended in April 1989
to increase the number of shares authorized for grant under the Plan and extend
the expiration date of the Plan. The Plan as amended provides for the grant of
stock options to key employees covering a maximum of 500,000 shares of Common
Stock, subject to certain adjustments upon the subdivision or consolidation of
shares. Under the Plan, the exercise price per share of a stock option cannot
be less than the greater of $0.25 per share or the fair market value per share
on the date the option is granted, provided that an employee owning directly or
indirectly more than 10% of the total combined voting power of all classes of
stock of the Company may not be issued a stock option unless the exercise price
per share is at least 110% of the fair market value per share on the date the
option is granted. The Plan further provides that the exercise period cannot
exceed ten years (or five years if the optionee owns, directly or indirectly,
more than 10% of the total combined voting power of all classes of stock of the
Company).
The Plan permits the grant in any calendar year of incentive options greater
than $100,000 aggregate market value provided that no more than $100,000
aggregate market value are exercisable for the first time in any single
calendar year. As proposed, the Plan will expire April 26, 2004.
Options for 155,242 shares of Common Stock were granted to Executive Officers
during the year ended December 31, 1997. No Options were exercised during
1997.
CERTAIN TRANSACTIONS
During 1997, the Company paid interest to Windmoller & Holscher totalling
$49,311 under a $1,000,000 Convertible Subordinated Note due December 1999 with
a floating interest rate based on the publicly quoted German prime rate. Mr.
Feeney, a Director of the Company, is the President and Treasurer of
Windmoller & Holscher Corporation, a
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Delaware Corporation and wholly-owned subsidiary of Windmoller & Holscher of
Germany.
AUDITORS
Arthur Andersen LLP, independent certified public accountants, were the
independent auditors for the fiscal year ended December 31, 1997.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. The cost of soliciting proxies in the accompanying form will be borne
by the Company. In addition to the use of mail, officers of the Company may
solicit proxies by telephone or telegraph. Upon request, the Company will
reimburse brokers, dealers, banks and trustees or their nominees, for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of shares of stock.
REVOCABILITY OF PROXY
Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, in
accordance with the Board of Directors' recommendations. Any shareholder of
the Company has the unconditional right to revoke a proxy at any time prior to
the voting thereof by written notice thereof addressed to Roger R. Baier,
Secretary, Publishers Equipment Corporation, 16660 Dallas Parkway, Suite 1100,
Dallas, Texas 75248; however, no such revocation shall be effective unless and
until such notice of revocation has been received by the Company at or prior to
the Annual Meeting.
PROPOSALS OF SHAREHOLDERS
A proper proposal submitted by a shareholder in accordance with applicable
rules and regulations for presentation at the Company's Annual Meeting of
Shareholders in 1999, and received at the Company's executive offices no later
than January 8, 1999 will be included in the Company's Proxy Statement and form
of proxy relating to such Annual Meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for action at
the meeting other than the matters set forth herein. Should any other matter
requiring a vote of shareholders arise, the proxies in the enclosed form confer
upon the person or persons
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entitled to vote the shares represented by such proxies discretionary authority
to vote the same in accordance with their best judgment in the interest of the
Company.
A copy of the Company's 1997 Annual Report, containing audited financial
statements, accompanies this Proxy Statement. The annual report does not
constitute a part of the proxy solicitation material.
By order of the Board of Directors
Evans Kostas
Chairman of the Board,
President and Chief Executive Officer
May 7, 1998
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PUBLISHERS EQUIPMENT CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. Election of Directors FOR
FOR WITHHOLD all except
NOMINEES: SIMON BONNIER, JAMES K. FEENEY, [ ] [ ] [ ]
ROBERT S. HAMILTON, EVANS KOSTAS, OLE B. RYGH,
REINHART SIEWERT
FOR AGAINST ABSTAIN
2. Proposal to amend the Publishers Equipment
Corporation Stock Option Plan to extend the [ ] [ ] [ ]
expiration date of the Plan from April 26,
1999 to April 26, 2004.
3. Or any other business which may properly come before the meeting;
hereby revoking any proxy or proxies heretofore give by the undersigned.
-----------------------------------------------
Nominee Exceptions
(INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
that nominee's name on the space provided above.)
Receipt herewith of the Company's 1997 Annual Report and Notice of Meeting and
Proxy Statement is hereby acknowledged.
BE SURE TO ENTER DATE
Dated: , 1998
-------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature of Shareholder(s))
Joint owners must each sign. Please sign your name EXACTLY as your name(s)
appear(s) on this card. When signing as attorney, trustee, executor,
administrator, guardian or corporate officer, please give your FULL title.
(PLEASE SIGN, DATE, AND MAIL TODAY)
<PAGE> 18
PUBLISHERS EQUIPMENT CORPORATION
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS AT
3:00 P.M., FRIDAY, JUNE 19, 1998
PUBLISHERS EQUIPMENT CORPORATION - CORPORATE HEADQUARTERS
16660 DALLAS PARKWAY, SUITE 1100
DALLAS, TEXAS 75248
The undersigned shareholder of Publishers Equipment Corporation (the "Company")
hereby appoints Evans Kostas and Roger R. Baier, or either of them, as proxies,
each with full powers of substitution, to vote the shares of the undersigned at
the above-stated annual meeting and at any adjournment(s) thereof:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE OTHER SIDE. IF A CHOICE IS
NOT INDICATED WITH RESPECT TO ITEMS 1 AND 2, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF ALL NOMINEES FOR DIRECTORS LISTED ON THE OTHER SIDE AND FOR THE
APPROVAL OF THE PROPOSED AMENDMENT TO THE STOCK OPTION PLAN. THE PROXIES WILL
USE THEIR DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM 3.
THIS PROXY IS REVOCABLE ANY TIME BEFORE IT IS EXERCISED.
(PLEASE SIGN ON THE OTHER SIDE)
