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: |_| Confidential, for Use of the
|_| Preliminary proxy statement Commission Only (as permitted
|X| Definitive proxy statement by Rule 14a-6(e)(2))
|_| Definitive additional materials
|_| Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
Arctco, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Items 22(a)(2) of Schedule A.
|_| $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 transactions
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:
|X| 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.:
(3) Filing party:
(4) Date filed:
ARCTCO, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 8, 1996
Notice is hereby given that the Annual Meeting of Stockholders of Arctco, Inc.
(the "Company") will be held at the National Guard Armory, at Arnold Avenue
South and Highway 32 South, Thief River Falls, Minnesota 56701, on Thursday,
August 8, 1996 at 4:00 p.m. for the following purposes:
1. To elect three directors to serve three-year terms and one
director to serve a one-year term.
2. To ratify and approve an amendment to the Company's Restated
Articles of Incorporation to change the name of the Company to
"Arctic Cat Inc."
3. 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 June 21, 1996 as
the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors,
/s/ Timothy C. Delmore
Timothy C. Delmore,
Secretary
Thief River Falls, Minnesota
June 28, 1996
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY ON THE ENCLOSED PROXY CARD WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY SO DESIRE.
ARCTCO, INC.
600 BROOKS AVENUE SOUTH
THIEF RIVER FALLS, MN 56701
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 8, 1996
This Proxy Statement is furnished in connection with the solicitation on behalf
of the Board of Directors of Arctco, Inc. (the "Company") of proxies for the
Annual Meeting of Stockholders of the Company to be held at the National Guard
Armory, at Arnold Avenue South and Highway 32 South, Thief River Falls,
Minnesota, 56701 on Thursday, August 8, 1996 at 4:00 p.m. Central Daylight Time,
or any adjournment or adjournments thereof. This Proxy Statement and the
enclosed proxy card are being mailed to stockholders on or about June 28, 1996.
The Company's Annual Report for the fiscal year ended March 31, 1996, including
audited financial statements, is being mailed to stockholders concurrently with
the Proxy Statement.
Proxies may be revoked at any time before they are exercised by the execution
and delivery of a later proxy, and stockholders present at the meeting may
withdraw their proxies and vote in person. Unless revoked, proxies will be voted
and, where a choice is specified with respect to any matter to be voted upon,
the proxies will be voted as specified.
The total number of shares outstanding and entitled to vote at the meeting as of
June 21, 1996 consists of 22,043,528 shares of $.01 par value Common Stock
(excluding 7,560,000 shares of Class B Common Stock which do not vote with the
Common Stock in the general election of directors; see "Election of Directors").
Each share of Common Stock is entitled to one vote and there is no cumulative
voting. Only stockholders of record at the close of business on June 21, 1996
will be entitled to vote at the Annual Meeting. The presence in person or by
proxy of holders of a majority of the shares of stock entitled to vote at the
Annual Meeting of Stockholders constitutes a quorum for the transaction of
business.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the presence of a quorum and in tabulating votes cast on
proposals presented to stockholders, but as unvoted for purposes of determining
the approval of the matter. Consequently, an abstention will have the same
effect as a negative vote. 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 present and entitled to vote with
respect to that matter.
PROPOSAL 1
ELECTION OF DIRECTORS
Four directors will be elected at the Annual Meeting, three for three-year terms
and one for a one-year term. Pursuant to the Company's Restated Articles of
Incorporation, the Board of Directors is divided into three classes of
directors, each director serving a three-year term. Each year only one class of
directors is subject to a stockholder vote, and, generally, one-third of the
directors belong to each class. During the last fiscal year, the Board of
Directors added two new members, Gregg A. Ostrander and Kenneth J. Roering. Each
of the new directors has been assigned to an existing class of the Board. In
addition to the election of the class nominated for a term ending in 1999, the
Board of Directors is seeking shareholder election of one new member appointed
to the class with a term ending in 1998. Accordingly, Messrs. Dondelinger, Hagen
and Roering have been nominated for election to a three-year term at the 1996
Annual Meeting and Mr. Ostrander has been nominated for election to a one-year
term. In accordance with a Stock Purchase Agreement dated July 18, 1988 between
Suzuki Motor Corporation ("Suzuki") and the Company pursuant to which Suzuki
purchased 7,560,000 shares (as adjusted for subsequent stock splits) of the
Company's Class B Common Stock (constituting all outstanding shares of Class B
Common Stock), Suzuki is entitled to elect one member of the Board of Directors.
The Board of Directors has nominated for election the persons named below. It is
intended that proxies will be voted for such nominees. The Company believes that
each nominee named below will be able to serve; but should any such nominee be
unable to serve as a director, the persons named in the proxies have advised
that they will vote for the election of such substitute nominee as the Board may
propose.
The names and ages of the nominees and their principal occupations are set forth
below, based upon information furnished to the Company by the nominees. Unless
otherwise indicated, each of the directors has held their respective identified
positions for more than the past five years.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION SINCE
<S> <C> <C>
NOMINATED FOR A TERM ENDING IN 1997:
Gregg A. Ostrander (43) President and Chief Executive Officer of Michael Foods, 1995
Inc. (a food processing manufacturer) since 1993; President
of Swift-Eckrich Prepared Foods Co. (a food manufacturer)
from 1985 to 1993. Director of Michael Foods, Inc.
NOMINATED FOR A TERM ENDING IN 1999:
Robert J. Dondelinger (60) President and Chief Executive
Officer of Northern Motors (a 1983 General Motors
dealership), Thief River Falls, MN.
William I. Hagen (58) Co-owner and Vice President of North Star Transport, Inc. 1983
(a nationwide trucking company), Eagan, MN; owner and
operator of a farm in northern Minnesota.
Kenneth J. Roering (54) Professor, School of Management, University of Minnesota 1996
since 1981. Director of Sheldahl, Inc., TSI, Inc.,
Transport Corporation of America, Inc. and Mountain Parks
Financial Group, Inc.
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING AND
WHOSE TERMS EXPIRE IN 1997:
William G. Ness (58) Chairman of the Board of Directors of the Company; 1983
Co-owner and Vice President of Northern Woodwork
(specialty furniture manufacturing), Thief River Falls, MN.
Director of Northern State Bank, Thief River Falls, MN.
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING AND
WHOSE TERMS EXPIRE IN 1998:
Lowell T. Swenson (74) Retired since 1980; previously employed in snowmobile 1983
industry for 14 years.
Christopher A. Twomey (48) President and Chief Executive Officer of the Company since 1987
January 1986; executive officer of the Company in various
capacities since 1983. Director of Lund International
Holdings, Inc. and Community Board Member, Norwest
Bank Minnesota West, N.A.
DIRECTOR ELECTED ANNUALLY BY CLASS B COMMON STOCK:
Takeshi Natori (57) Senior General Manager of Industrial & Power Products 1992
Division, Suzuki Motor Corporation (vehicle and
related manufacturing operations); Hamamatsu,
Japan; prior to June 1991, President of Suzuki
France S.A.
</TABLE>
MEETINGS. During fiscal 1996, the Board of Directors met six times. Each
director attended more than 75% of the meetings of the Board of Directors and
any committee on which he served.
BOARD COMMITTEES. The Board has appointed a Compensation Committee and an Audit
Committee. The Compensation Committee, which consists of Messrs. Dondelinger,
Hagen and Swenson, met once during the last fiscal year. The Compensation
Committee assists management in making recommendations to the Board with respect
to officers' and key employees' salaries, bonuses and stock option grants. The
Audit Committee, which consists of Messrs. Dondelinger, Hagen and Swenson, met
once during the last fiscal year. The Audit Committee meets with the Company's
independent public accountants and representatives of management to review the
internal and external financial reporting of the Company, reviews the scope of
the independent auditors' examination, considers comments by the auditors
regarding internal controls and accounting procedures and management's response
to those comments and approves any material non-audit services to be provided by
the Company's independent public accountants. The Company does not have a
nominating committee. However, the Company's Bylaws provide that any stockholder
entitled to vote generally in the election of directors may nominate one or more
persons for election as directors provided that such stockholder has provided
written notice of such intention to the Secretary of the Company. Such notice
must be given not less than 60 days nor more than 90 days prior to the meeting
date corresponding to the previous year's Annual Meeting. Stockholders desiring
to nominate a director should contact the Company's Secretary for a copy of the
relevant procedure.
REMUNERATION OF DIRECTORS. All non-employee directors other than the
representative of Class B Common Stock receive $2,250 per quarter, $1,000 per
meeting attended in person, $500 per meeting attended telephonically and $500
per committee meeting attended on a date when no regular Board meeting is held,
in addition to out-of-pocket expenses incurred on behalf of the Company. In
addition, pursuant to the Company's 1995 Stock Plan, each non-employee director
automatically receives on the date of election or re-election as a director, or
appointment as a director by action of the Board during the period between
stockholder meetings, and on the date of each subsequent annual or special
stockholder meeting at which action is taken to elect any director if the
non-employee director's term is not up for election that year and the
non-employee director is serving an unexpired term (provided that the
non-employee director has served for at least six months), an option to purchase
6,000 shares of the Company's Common Stock at an option price equal to the fair
market value of the Company's Common Stock on the date the option is granted.
These options have terms equal to the later to occur of five years from the date
of grant or the 66th birthday of the non-employee director, which term in any
event expires 30 days after termination of service as a director, and is
exercisable at any time from the date of grant. The director elected by the
holder of Class B Common Stock is reimbursed for out-of-pocket expenses incurred
on behalf of the Company, does not receive the fee described above and has
declined to receive the stock options described above.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table shows, for fiscal years 1996, 1995 and 1994, the cash
compensation paid by the Company, as well as certain other compensation paid or
accrued for those years, to Christopher A. Twomey, the Company's Chief Executive
Officer, and to each of the four other most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS (#) COMPENSATION(1)
<S> <C> <C> <C> <C> <C>
Christopher A. Twomey 1996 $165,000 $112,500 60,000 $4,500
President and Chief 1995 165,000 225,000 45,000 4,500
Executive Officer 1994 165,000 225,000 45,000 5,682
Mark E. Blackwell 1996 106,000 65,000 30,000 4,500
Vice President -- 1995 103,000 100,000 22,500 4,500
Marketing 1994 103,000 85,000 42,750 2,321
Timothy C. Delmore 1996 106,000 65,000 30,000 4,500
Chief Financial Officer 1995 103,000 102,000 22,500 4,500
and Secretary 1994 103,000 90,000 22,500 3,338
Ronald G. Ray 1996 106,000 62,000 30,000 4,500
Vice President -- 1995 103,000 97,000 22,500 4,500
Manufacturing 1994 103,000 85,000 22,500 2,384
Roger H. Skime 1996 106,000 62,000 30,000 4,500
Vice President -- 1995 103,000 97,000 22,500 4,500
Engineering 1994 103,000 85,000 22,500 3,417
</TABLE>
(1) Represents amount contributed by the Company to the individual's 401(k)
retirement plan account.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of its executive
officers which provide, among other things, for a lump-sum cash severance
payment to each such executive equal to approximately three times the
executive's average annual compensation over the preceding five years plus
certain fringe benefits under certain circumstances following a "change in
control" of the Company. In general, a "change in control" would occur when
there has been any change in the controlling persons reported in the Company's
proxy statement, when 20% or more of the Company's outstanding voting stock is
acquired by any person, when current members of the Board of Directors or their
successors elected or nominated by such members cease to constitute at least 75%
of the Board of Directors, when the Company merges or consolidates with or sells
substantially all its assets to any person or entity, or when the Company's
stockholders approve a plan of liquidation or dissolution of the Company. The
employment agreements also prohibit disclosure of confidential information
concerning the Company and require disclosure and assignment of inventions,
discoveries and other works relating to the executive's employment. If a "change
in control" had occurred at the end of fiscal 1996 and the executive's
employment was terminated, the following executive officers would have received
the amounts indicated, which includes deemed compensation during the preceding
five years from the exercise of stock options: Mr. Twomey, $1,877,129; Mr.
Blackwell, $706,892; Mr. Delmore, $746,826; Mr. Ray, $860,750; and Mr. Skime,
$936,404.
The Company has also entered into employment agreements with each of its
executive officers pursuant to which they will receive upon termination of
employment, other than by the Company for "cause," for a twelve-month period,
(i) with respect to Mr. Twomey, an amount equal to his average annual cash
compensation over the five-year period immediately preceding the date of
termination plus $35,000, and, with respect to the other executive officers, an
amount equal to their average annual salary over the three-year period
immediately preceding the date of termination, and (ii) the employee benefits
received prior to termination. The employment agreements also restrict each
executive officer from certain competitive employment following termination and
prohibit disclosure of confidential information concerning the Company. If the
named executive officers had been terminated at the end of the last fiscal year
for a reason other than cause, they would have received the following amounts
pursuant to the employment agreements: Mr. Twomey, $366,500; Mr. Blackwell,
$104,000; Mr. Delmore; $104,000; Mr. Ray, $104,000; and Mr. Skime, $104,000.
STOCK OPTIONS
The following table contains information concerning individual grants of stock
options under the Company's Stock Option Plans to each of the named individuals
during the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
PERCENT OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS GRANTED ASSUMED ANNUAL RATES OFSTOCK
NUMBER OF TO PRICE APPRECIATION FOR OPTION
SECURITIES UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION TERM(2)
NAME OPTIONS GRANTED (#) (1) FISCAL YEAR PRICE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
All Non-Affiliate Stockholders N/A N/A N/A N/A $87,326,837 $192,969,472
Christopher A. Twomey 60,000 26.0% $11.25 8/03/2000 186,490 412,094
Mark E. Blackwell 30,000 13.0% 11.25 8/03/2000 93,245 206,047
Timothy C. Delmore 30,000 13.0% 11.25 8/03/2000 93,245 206,047
Ronald G. Ray 30,000 13.0% 11.25 8/03/2000 93,245 206,047
Roger H. Skime 30,000 13.0% 11.25 8/03/2000 93,245 206,047
</TABLE>
(1) Exercises of one-third of the shares are permitted on each of the first
through third anniversary dates of the grant; potential realizable value based
on five-year term of option.
(2) Indicates amount of potential aggregate non-affiliate stockholder equity
appreciation over five-year period at the assumed appreciation rates based on
$11.25 purchase price.
None of the named individuals exercised stock options during the last fiscal
year. The following table contains information concerning the value of options
previously granted under the Company's Stock Option Plans which were held by the
named individuals at the end of the last fiscal year.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END(#) OPTIONS AT FY-END
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Christopher A. Twomey 45,000 240,000 $174,375 $348,750
Mark E. Blackwell 40,132 81,743 143,464 0
Timothy C. Delmore 45,000 75,000 174,375 0
Ronald G. Ray 27,000 75,000 138,375 0
Roger H. Skime 22,500 75,000 87,188 0
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives are generally made by the
three-member Compensation Committee of the Board consisting of Messrs.
Dondelinger, Hagen and Swenson. All decisions by the Compensation Committee
relating to the compensation of the Company's executive officers were during
fiscal 1996 and will in fiscal 1997 be reviewed by the full Board. Pursuant to
SEC rules designed to enhance disclosure of companies' policies with regard to
executive compensation, set forth below is a report submitted by the
Compensation Committee addressing the Company's compensation policies for fiscal
1996 as they affected Mr. Twomey and Messrs. Blackwell, Delmore, Ray and Skime,
the four executive officers other than Mr. Twomey who, for fiscal 1996, were the
Company's most highly paid executive officers whose compensation exceeded
$100,000 (collectively with Mr. Twomey, the "Named Executives"). The following
report shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 (the "1933 Act") or the Securities Exchange Act of 1934
(the "1934 Act"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the 1933 Act or the 1934 Act.
COMPENSATION PHILOSOPHY. The Compensation Committee's executive compensation
policies are designed to reflect three basic objectives: payment for
performance; attraction and retention of executives who contribute to the
long-term success of the Company; and alignment of the interests of management
with those of stockholders.
BASE PAY. The Compensation Committee annually reviews each officer's salary,
including those of the Named Executives. In determining appropriate base salary
levels, the Compensation Committee considers levels of responsibility,
experience, internal equity, and external pay practices. With respect to
external pay practices, the Compensation Committee compares the base salary paid
by the Company to a survey of national manufacturing companies, which includes a
strong representative sample of midwestern companies, and to compensation paid
by companies manufacturing similar products in the same geographic location. The
Company attempts to maintain base salary levels at approximately the 50th
percentile according to the national survey, a level which it believes
emphasizes corporate and individual performance which it recognizes through
annual incentive awards and still allows it to attract and retain strong
executive talent. Base salaries for the Named Executives except Mr. Twomey were
increased 3% for fiscal 1996.
ANNUAL INCENTIVE AWARDS. Each executive is eligible to receive annual cash
incentive awards based on corporate and individual performance. It is the
Compensation Committee's belief that placing a potentially large portion of an
executive's total compensation at risk, based on corporate and individual
performance, is the best way to focus attention on the short and long-term goals
of the Company and encourage high levels of performance from each executive. By
focusing on both corporate and individual goals, team work is encouraged.
Individual incentive awards for all executives are based on the Compensation
Committee's assessment of overall Company performance and each individual's
contribution. Compensation comparisons are made with peer-company executives
through a national survey and individual incentive awards are made such that
when added to base salary, total cash compensation reflects corporate and
individual performance and is within the range of total cash compensation
according to the national survey. Incentive payments for fiscal 1996 were
significantly below such payments the prior year as a reflection of the
Company's policy on incentive compensation and the Company's relatively poor
financial performance in fiscal 1996.
LONG-TERM INCENTIVES. Aligning the interest of management with those of
stockholders is accomplished through longer term incentives directly related to
the improvement in long-term stockholder value. The Compensation Committee
believes this is accomplished with the award of stock options to the Named
Executives and other key personnel. Stock options are awarded periodically
consistent with the Company's objective to include in total compensation a
long-term equity interest for executive officers, with greater opportunity for
reward if long-term performance is sustained. Stock options have value for the
executive officers only if the price of the Company's stock appreciates in value
from the date of grant. Stockholders also benefit from such stock price
appreciation. The Compensation Committee believes that stock options encourage
and reward effective management which, in turn, results in the long-term
corporate financial success as measured by stock price appreciation. To
encourage a longer term perspective, in recent years stock options have vested
near the end of a multi-year period. However, in light of the Company's
relatively poor financial performance in fiscal 1996, options were granted to
the Named Executives with vesting on a short-term schedule to reward the Named
Executives for shorter-term improvements in the Company's financial performance.
OTHER COMPENSATION PROGRAMS. The Company maintains certain broad based employee
benefit plans in which its executive officers, including the Named Executives,
have been permitted to participate, including retirement, life, and health
insurance plans. The Company's retirement plan is a 401(k) plan which allows all
eligible employees to make pre-tax contributions and in which the Company
matches employee contributions in an amount equal to the employee's contribution
up to 3% of the employee's base salary.
MR. TWOMEY'S FISCAL 1996. Mr. Twomey's base pay for fiscal 1996 was $165,000
which is at the low end of the target range for base pay set by the
Compensation Committee and is the same base pay as Mr. Twomey received in
fiscal 1995. In evaluating the Company's overall performance in order to
determine Mr. Twomey's annual incentive award, the Compensation Committee
considered the Company's financial performance for fiscal 1996 and Mr.
Twomey's individual contribution. The Compensation Committee paid Mr. Twomey
$112,500 as an incentive award, which is 50% of the amount paid Mr. Twomey
the prior year, as a reflection of these factors.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
Robert J. Dondelinger William I. Hagen Lowell T. Swenson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described below, Messrs. Dondelinger and Hagen, directors and members of
the Compensation Committee of the Board, have important relationships with
entities which engage in certain transactions with the Company which require
disclosure. See "Certain Transactions."
CERTAIN TRANSACTIONS
Since the Company first began production in August 1983, it has purchased all
engines for its products from Suzuki pursuant to contracts which are renewed
annually and which stipulate price and general terms of delivery of engines.
During the last fiscal year, the Company paid Suzuki approximately $95,619,000
for engines. Terms of the agreements were, and renewal rates are, the subject of
arms-length negotiation on terms no less favorable to the Company than the
Company could otherwise obtain.
During the last fiscal year, the Company has engaged North Star Transport, Inc.,
a corporation for which Mr. Hagen, a director of the Company, is a director,
executive officer and principal shareholder, for freight hauling services for
which it paid North Star Transport, Inc. approximately $4,310,000. The rates
charged were, and will continue to be, the subject of arms-length negotiation on
terms no less favorable to the Company than the Company could otherwise obtain.
During the last fiscal year, the Company purchased wiring harnesses from Itasca
Bemidji, Inc. ("IBI"), a company in which Mr. Ness, a director of the Company,
owns approximately 15% of the outstanding stock. During the last fiscal year,
the Company paid IBI approximately $1,701,000 for harnesses. The prices paid by
the Company were, and will continue to be, the subject of arms-length
negotiation on terms no less favorable to the Company than the Company could
otherwise obtain.
During the last fiscal year, the Company purchased certain vehicles from
Northern Motors, a General Motors dealership which Mr. Dondelinger, a director
of the Company, is President and Chief Executive Officer. During the last fiscal
year, the Company paid Northern Motors approximately $244,000 for vehicles. The
prices paid by the Company were, and will continue to be, the subject of
arms-length negotiations on terms no less favorable to the Company than the
Company could otherwise obtain.
PERFORMANCE GRAPH
In accordance with the rules of the Securities and Exchange Commission, the
following performance graph compares performance of the Company's Common Stock
on the Nasdaq National Market to the S&P 500 Index and to the Recreational and
Luxury Product Index (indicated below as the "Peer Group Index") prepared by
Media General Financial Services. The graph compares on an annual basis the
cumulative total stockholder return on $100 invested on March 31, 1991, and
assumes reinvestment of all dividends and has been adjusted to reflect stock
splits.
<TABLE>
<CAPTION>
MARCH 31,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Arctco, Inc. $100.00 $171.08 $315.72 $478.58 $439.80 $295.24
Peer Group Index 100.00 135.35 152.87 176.15 181.54 212.86
S&P 500 Index 100.00 111.06 128.00 129.89 150.11 198.30
</TABLE>
The performance graph above shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the 1933 Act or the 1934 Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the 1933 Act or the 1934 Act.
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table presents information provided to the Company as to the
beneficial ownership of the Company's capital stock as of June 21, 1996 by (i)
the only stockholders known to the Company to hold 5% or more of such stock,
(ii) each of the directors and Named Executives of the Company and (iii) all
directors and officers as a group. Unless otherwise indicated, all shares
represent sole voting and investment power.
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
CAPITAL STOCK OUTSTANDING SHARES OUTSTANDING SHARES
BENEFICIAL OWNERS BENEFICIALLY OWNED(1) OF COMMON STOCK OF CAPITAL STOCK
<S> <C> <C> <C>
Suzuki Motor Corporation 7,560,000 0% 25.54%
Hamamatsu-Nishi
P.O. Box 1, 432-91
Hamamatsu, Japan
State of Wisconsin Investment Board 2,580,000(2) 11.70 8.72
P.O. Box 7842
Madison, WI 53707
Harris Associates LP 2,071,765(3) 9.40 7.00
Two North Lasalle St.
Suite 500
Chicago, IL 60602-3790
William G. Ness 184,727(4) * *
Christopher A. Twomey 252,569(4) 1.14 *
Robert J. Dondelinger 215,343(4) * *
William I. Hagen 313,818(4) 1.42 1.06
Takeshi Natori 0(5) 0 0
Lowell T. Swenson 427,261(4) 1.94 1.44
Gregg A. Ostrander 6,000(4) * *
Kenneth J. Roering 6,000(4) * *
Mark E. Blackwell 69,375(4) * *
Timothy C. Delmore 118,910(4) * *
Ronald G. Ray 57,450(4) * *
Roger H. Skime 150,792(4) * *
All Directors and Officers
as a Group (14 persons) 2,076,957(4)(5) 9.18 6.88
</TABLE>
* Less that 1%.
(1) All outstanding shares of capital stock are Common Stock except shares
held by Suzuki which are all Class B Common Stock. See "Election of
Directors."
(2) Based in part on information included in a Schedule 13G filed with the
Securities and Exchange Commission.
(3) Based in part on information included in a Schedule 13G filed with the
Securities and Exchange Commission. Consists of 2,071,765 shares over which the
owner exercise shared voting power and 918,000 shares and 1,153,765 shares over
which the owner exercises sole and shared dispositive power, respectively.
(4) Includes the following number of shares purchasable by the indicated
individuals and group within 60 days from the date hereof pursuant to the
exercise of outstanding stock options: Mr. Ness, 45,000; Mr. Twomey, 90,000;
Mr. Dondelinger, 29,628; Mr. Hagen, 29,628; Mr. Swenson, 23,721; Mr.
Ostrander, 6,000; Mr. Roering, 6,000; Mr. Blackwell, 69,375; Mr. Delmore,
67,500; Mr. Ray, 49,500; Mr. Skime, 45,000; and all directors and officers as
a group, 569,352.
(5) Excludes shares held by Suzuki Motor Corporation.
Based upon its review of Forms 3, 4 and 5 and any amendments thereto furnished
to the Company pursuant to Section 16 of the 1934 Act, the Company believes all
of such forms were filed on a timely basis by reporting persons.
PROPOSAL 2
AMENDMENT TO THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION
The Board of Directors has approved and recommends that stockholders vote in
favor of an amendment to the Company's Restated Articles of Incorporation to
change the name of the Company to "Arctic Cat Inc." "Arctic Cat" is the
Company's registered trademark and has always been used in connection with its
snowmobile products.
The Board of Directors believes that over the last thirty years the name "Arctic
Cat" has become synonymous with exciting, innovative and high quality
snowmobiles and related products. As a result, the name "Arctic Cat" has been
associated with customer loyalty and satisfaction with the Company and its
products. The Board believes associating this long respected name across all
product lines will enhance the Company's marketing efforts and is recommending
this change as a result of numerous requests from the Company's customers and
dealers. In addition, the Board expects communication to the Company's
stockholders, the financial market, and the investing public will become greatly
enhanced and simplified using this already recognized name. If the proposed
amendment is approved, the cost to the Company to effect the corporate name
change will not be significant.
THE BOARD UNANIMOUSLY RECOMMENDS ADOPTION BY THE STOCKHOLDERS OF THE
FOLLOWING RESOLUTION:
RESOLVED, that Article I of the Corporation's Restated Articles of
Incorporation be, and the same hereby is, amended in its entirety to
read as follows:
"The name of the Corporation shall be Arctic Cat Inc."
Approval of the proposed amended Article I requires the affirmative vote of a
majority of all shares of Common Stock entitled to vote at the Annual
Meeting. The Board of Directors recommends that stockholders vote FOR
Proposal No. 2.
AUDITORS
Grant Thornton LLP, independent public accountants, were the auditors for the
Company for fiscal 1996. A representative of Grant Thornton LLP is expected to
be present at the Annual Meeting of Stockholders and will be available to
respond to appropriate questions. As of the date hereof, no auditing firm has
been formally selected for fiscal 1997 since the Board of Directors has
historically made such formal selection in conjunction with the Annual Meeting
of Stockholders.
STOCKHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission permit stockholders,
after timely notice to a company, to present proposals for stockholder action in
a company's proxy statement where such proposals are consistent with applicable
law, pertain to matters appropriate for stockholder action and are not properly
omitted by corporate action in accordance with the proxy rules. The Company's
Annual Meeting of Stockholders for the fiscal year ended March 31, 1997 is
expected to be held on or about August 7, 1997 and proxy materials in connection
with that meeting are expected to be mailed on or about June 27, 1997.
Stockholder proposals prepared in accordance with the proxy rules must be
received by the Company on or before February 29, 1997.
METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the Notice of
Annual Meeting of Stockholders, this Proxy Statement, the proxy itself, and the
cost of soliciting proxies relating to the meeting will be borne by the Company.
In addition to use of the mail, proxies may be solicited by officers, directors,
and other regular employees of the Company by telephone, telegraph, or personal
solicitation, and no additional compensation will be paid to such individuals.
The Company will, if requested, reimburse banks, brokerage houses, and other
custodians, nominees and certain fiduciaries for their reasonable expenses
incurred in mailing proxy material to their principals.
OTHER MATERIALS
The Company's Bylaws provide that certain requirements be met in order that
business may properly come before the stockholders at the Annual Meeting. Among
other things, stockholders intending to bring business before the Annual Meeting
must provide written notice of such intent to the Secretary of the Company. Such
notice must be given not less than 60 days nor more than 90 days prior to the
meeting date corresponding with the previously year's Annual Meeting.
Stockholders desiring to bring matters for action at an Annual Meeting should
contact the Company's Secretary for a copy of the relevant procedure. Since no
such notice was received with respect to this year's Annual Meeting, no
stockholders may bring additional business before the meeting for action.
The Board of Directors knows of no business other than that described herein
that will be presented for consideration at the Annual Meeting. If, however,
other business shall properly come before the meeting, the persons in the
enclosed form of proxy intend to vote the shares represented by said proxies on
such matters in accordance with their judgment in the best interest of the
Company.
By Order of the Board of Directors,
/s/ Timothy C. Delmore
Timothy C. Delmore,
Secretary
- --------------------------------------------------------------------------------
ARCTCO, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 8, 1996
The undersigned hereby appoints William G. Ness and Christopher A. Twomey, or
either of them, as proxies with full power of substitution to vote all shares of
stock of Arctco, Inc. of record in the name of the undersigned at the close of
business on June 21, 1996 at the Annual Meeting of Stockholders to be held in
Thief River Falls, Minnesota on August 8, 1996, or any adjournment or
adjournments, hereby revoking all former proxies.
1. ELECTION OF DIRECTORS:
|_| FOR all nominees listed below
(except as marked to the contrary below)
|_| WITHHOLD AUTHORITY
to vote for all nominees listed below
ROBERT J. DONDELINGER WILLIAM I. HAGEN KENNETH J. ROERING
GREGG A.OSTRANDER
(INSTRUCTION: To withhold authority to vote for any individual nominee,
mark the FOR box and write that nominee's name for which you are withholding
authority on the space provided below)
2. AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE
COMPANY TO "ARCTIC CAT INC."
|_| FOR |_| AGAINST |_| ABSTAIN
(continued on other side)
(continued from other side)
3. In their discretion, the proxies are authorized to vote upon any other
matters coming before the meeting.
THE SHARE(S) REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1) AND (2)
IN ACCORDANCE WITH THE SPECIFICATION MADE AND "FOR" SUCH PROPOSALS IF THERE IS
NO SPECIFICATION.
Dated: _________________________, 1996
______________________________________
Signature
______________________________________
Signature if held jointly
Please sign exactly as name(s) are
shown at left. When signing as
executor, administrator, trustee, or
guardian, give full title as such;
when shares have been issued in names
of two or more persons, all should
sign.
