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
|X| Preliminary proxy statement Commission Only (as permitted
|_| 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):
|X| $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:
|_| 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,
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
corporate headquarters 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 [24], 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 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, three directors (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
NOMINATED FOR A TERM ENDING IN 1997.
<S> <C> <C>
Gregg A. Ostrander (43) President and Chief Executive Officer 1995
of Michael Foods, 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 1983
of Northern Motors (a General Motors
dealership), Thief River Falls, MN.
William I. Hagen (58) Co-owner and Vice President of North 1983
Star Transport, Inc. (a nationwide
trucking company), Eagan, MN; owner
and operator of a farm in northern Minnesota.
Kenneth J. Roering (54) Professor, School of Management, University 1996
of Minnesota since 1981. Director of
Sheldahl, Inc. (producer of flexible
laminates and circuitry), TSI, Inc. (manu-
facturer of technical instruments),
Transport Corporation of America, Inc.
(transportation) and Mountain Parks
Financial Group, Inc. (financial services).
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 1983
the Company; 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 1983
in snowmobile industry for 14 years.
Christopher A. Twomey (48) President and Chief Executive Officer 1987
of the Company since 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 & 1992
Power Products 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 will 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
shall in any event expire 30 days after termination of service as a directors,
and will be 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>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION --------------------
--------------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS 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 - Marketing 1995 103,000 100,000 22,500 4,500
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
-------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME 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 affect 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, Mr. Hagen, a director and member of the
Compensation Committee of the Board, has 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 snowmobiles from Suzuki pursuant to a contract
which is renewed annually and which stipulates price and general terms of
delivery of engines. Orders are placed annually and Suzuki is restricted from
supplying engines to any other snowmobile manufacturer for use in snowmobiles
sold in North America. During the last fiscal year, the Company paid Suzuki
approximately $95,619,000 for engines. Terms of the agreement 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 April 1, 1991, and
assumes reinvestment of all dividends and has been adjusted to reflect stock
splits.
[LINE GRAPH]
MARCH 31,
1991 1992 1993 1994 1995 1996
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
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) 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 shares; Mr. Roering, 6,000
shares; 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.
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
built a tremendous amount of customer loyalty and satisfaction. The Board
believes associating this long respected name across all product lines will
enhance the Company's marketing efforts. The Board is also 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 to be greatly
enhanced and simplified using this already recognized name.
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, independent public accountants, were the auditors for
the Company for fiscal 1996. A representative of Grant Thornton 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 mails, 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,
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 [24], 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 |_| WITHHOLD AUTHORITY
(except as marked to the to vote for both
contrary below) 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 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)
2. 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 PROPOSAL (1) IN
ACCORDANCE WITH THE SPECIFICATION MADE AND "FOR" SUCH PROPOSAL 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.
