SWISS ARMY BRANDS, INC.
ONE RESEARCH DRIVE
SHELTON, CONNECTICUT 06484
April 19, 2000
Dear Fellow Stockholder:
You are cordially invited to attend your Companys 2000 Annual Meeting of
Stockholders to be held at the Swiss Army Brands, Inc. Distribution Center, 65
Trap Falls Road, Shelton, Connecticut at 10:30 a.m. (local time) on Thursday,
May 18, 2000. We hope you will be able to attend and participate.
The Notice of Annual Meeting and Proxy Statement which follow describe the
formal business to be transacted at the annual meeting, which includes the
election of directors of the Company. Accordingly, we urge you to review the
accompanying materials carefully. Directors and officers of the Company will be
present to host the annual meeting and to respond to any questions from our
stockholders.
Your vote is very important to us and, accordingly, we ask that you sign, date
and return the enclosed proxy as soon as conveniently possible whether or not
you plan to attend. This will ensure that your shares will be represented at the
meeting, and it will not limit your right to revoke your proxy in the manner
described in the accompanying Proxy Statement or to attend the annual meeting
and vote personally should you so choose.
In an effort to reduce the size of our Board of Directors, three of the current
Directors have agreed not to stand for re-election. They are Mr. Thomas Barron,
Mr. Keith Lively, and Mr. Eric Reynolds. All three gentlemen have made
remarkable contributions to our Company and each in his own inimitable fashion
has helped to shape our new strategic direction as well as our profitable
growth. On behalf of the entire Board, I offer my sincere and heartfelt thanks
for their many years of wonderful service.
The directors, officers and employees of Swiss Army Brands, Inc. look forward to
seeing you at the meeting.
Sincerely,
/s/ Peter W. Gilson
Peter W. Gilson
Chairman of the Board
<PAGE>
SWISS ARMY BRANDS, INC.
One Research Drive
Shelton, Connecticut 06484
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 18, 2000
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of Swiss
Army Brands, Inc. (the "Company") will be held on Thursday, May 18, 2000 at
10:30 a.m. (local time) at the Company's Distribution Center, 65 Trap Falls
Road, Shelton, Connecticut 06484 for the following purposes:
(1) To elect eleven members of the Board of Directors to serve until the
next annual meeting of stockholders and until their successors are duly elected
and qualified;
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed April 10, 2000 as the record date for the
determination of the stockholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only stockholders of record at the close
of business on that date are entitled to notice of and to vote at such meeting.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1999 is enclosed herewith.
By Order of the Board of Directors.
/s/ Thomas M. Lupinski
THOMAS M. LUPINSKI
Secretary
Dated: Shelton, Connecticut
April 19, 2000
YOUR VOTE IS IMPORTANT
TO ENSURE A QUORUM, PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU AT THE MEETING UPON
REQUEST TO THE SECRETARY OF THE MEETING.
<PAGE>
S W I S S A R M Y B R A N D S , I N C .
One Research Drive
Shelton, Connecticut 06484
P R O X Y S T A T E M E N T
This Proxy Statement and accompanying form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Directors of Swiss
Army Brands, Inc., a Delaware corporation (the "Company"), for use at the
Company's Annual Meeting of Stockholders to be held on May 18, 2000, at 10:30
a.m. (local time) at the Company's Distribution Center at 65 Trap Falls Road,
Shelton, Connecticut, or any adjournment thereof (the "Meeting"). Copies of this
Proxy Statement, the attached Notice of Annual Meeting of Stockholders, and the
enclosed form of proxy were first mailed to the Company's stockholders on or
about April 20, 2000.
A proxy in the accompanying form, that is properly executed, duly returned
to the Board of Directors and not revoked, will be voted in accordance with the
instructions contained in the proxy. If no instructions are given with respect
to any matter specified in the Notice of Annual Meeting to be acted upon at the
Meeting, the proxy will vote the shares represented thereby FOR the nominees for
Directors set forth below, and in accordance with his best judgment on any other
matters that may properly come before the Meeting. The Board of Directors
currently knows of no other business that will be presented for consideration at
the Meeting. Each stockholder who has executed a proxy and returned it to the
Board of Directors may revoke the proxy by notice in writing to the Secretary of
the Company, or by attending the Meeting in person and requesting the return of
the proxy, in either case at any time prior to the voting of the proxy. Presence
at the Meeting does not itself revoke the proxy. The cost of the solicitation of
proxies will be paid by the Company. In addition to the solicitation of proxies
by the use of the mails, management and regularly engaged employees of the
Company may, without additional compensation therefor, solicit proxies on behalf
of the Company by personal interviews, telephone, telegraph or other means, as
appropriate. The Company may also engage a proxy-soliciting firm to solicit
proxies, although the Company has no current plans to do so. The Company will,
upon request, reimburse brokers and others who are only record holders of the
Company's Common Stock for their reasonable expenses in forwarding proxy
material to, and obtaining voting instructions from, the beneficial owners of
such stock.
The close of business on April 10, 2000 has been fixed as the record date
(the "Record Date") for determining the stockholders entitled to notice of and
to vote at the Meeting. As of the Record Date, there were 7,850,860 shares of
Common Stock issued and outstanding and entitled to vote.
Each share of Common Stock entitles the holder thereof to one vote. A
majority of the shares of Common Stock issued and outstanding constitutes a
quorum. Abstentions and broker non-votes are counted as present in determining
whether the quorum requirement is satisfied. The affirmative votes of holders of
a plurality of the shares of Common Stock present in person or represented by
proxy at the Meeting will be necessary for the election of Directors. Thus,
abstentions and broker non-votes will not be included in the vote total in the
election of Directors and will have no effect on the outcome of the vote. A
broker non-vote occurs when a nominee holding shares for a beneficial owner does
not vote on a proposal because the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership
of the Common Stock on April 10, 2000, by each person or group known by the
Company to own beneficially 5% or more of the outstanding Common Stock. Except
as otherwise noted, each person listed below has sole voting and investment
power with respect to the shares listed next to his or its name.
<TABLE>
<CAPTION>
Number of
Name and Address of Beneficial Owner Shares Percent owned 1
- ------------------------------------ --------- ---------------
<S> <C> <C>
Victorinox A.G.
CH-6438
Ibach-Schwyz
Switzerland 2,964,400 37.8%
Louis Marx, Jr.
667 Madison Avenue
New York, NY 10021 2,441,922 2 29.2%
Brae Group, Inc.
15710 John F. Kennedy Blvd.
Houston, TX 77032 2,417,900 3 29.0%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
Santa Monica, CA 90401 521,124 4 6.6%
David L. Babson & Co., Inc.
One Memorial Drive
Cambridge, MA 02142 396,850 5 5.1%
</TABLE>
1 Based on 7,850,860 shares of Common Stock outstanding; (excluding
1,014,108 shares held as treasury stock). Shares of common subject to options,
warrants or rights that are currently exercisable within 60 days are deemed
outstanding for computing the ownership percentage of the person holding these
options, warrants or rights, but are not deemed outstanding for computing the
owership percentage of any other person.
2 Consists of 19,730 shares held directly by Mr. Marx, 4,292 shares held by
a trust for the benefit of Mr. Marx, 1,917,900 shares held by Brae Group, Inc.,
which corporation Mr. Marx may be deemed to control, and 500,000 shares issuable
upon the exercise of a stock option held by Brae Group, Inc.
3 Includes 500,000 shares issuable upon the exercise of a stock option held
by Brae Group, Inc.
4 According to a Schedule 13G dated February 4, 2000, consists of shares as
to which Dimensional Fund Advisors, Inc. shares power of disposition by virtue
of serving as investment advisor to its clients.
5 According to a Schedule 13G/A dated February 7, 2000, consists of shares
that David L. Babson & Co., Inc. beneficially owns by virtue of serving as
investment advisor.
<PAGE>
The following table sets forth certain information concerning the beneficial
ownership of Common Stock on April 10, 2000, by each Director, each officer
named in the Summary Compensation Table herein and by all Directors and officers
of the Company as a group.
<TABLE>
<CAPTION>
Number of
Name Shares Percent of Class 1
<S> <C> <C>
J. Merrick Taggart 195,250 2 2.4%
Peter W. Gilson 195,000 3 2.4%
Harry R. Thompson 50,000 4 *
Michael J. Belleveau 46,350 5 *
Jerald J. Rinder 32,500 6 *
A. Clinton Allen 51,000 7 *
Clarke H. Bailey 43,000 8 *
Vincent D. Farrell, Jr. 55,000 9 *
Herbert M. Friedman 15,868 10 *
Louis Marx, Jr. 2,441,922 11 29.4%
Robert S. Prather 55,823 12 *
Stanley R. Rawn, Jr. 136,711 13 1.8%
John Spencer 11,000 14 *
John V. Tunney 11,000 15 *
All officers and directors
as a group (19 persons) 3,449,793 16 37.4%
*Less than 1% of the Class.
</TABLE>
1 Based on 7,850,860 shares of Common Stock outstanding; (excluding
1,014,108 shares held as treasury stock). Shares of common stock subject to
options, warrants or rights that are currently exercisable within 60 days are
deemed outstanding for computing the ownership percentage of the person holding
these options, warrants or rights, but are not deemed outstanding for computing
the ownership percentage of any other person.
2 Includes 97,000 shares of Common Stock issuable upon exercise of warrants
held by Mr. Taggart and 93,750 shares of Common Stock issuable upon exercise of
options held by Mr. Taggart.
3 Includes 194,000 shares of Common Stock issuable upon exercise of options
held by Mr. Gilson.
4 Consists of 50,000 shares of Common Stock issuable upon exercise of
options held by Mr. Thompson.
5 Includes 45,000 shares of Common Stock issuable upon exercise of options
held by Mr. Belleveau.
6 Includes 31,250 shares of Common Stock issuable upon exercise of options
held by Mr. Rinder.
7 Includes 50,000 shares of Common Stock issuable upon exercise of options
held by Mr. Allen.
8 Includes 40,000 shares of Common Stock issuable upon exercise of options
held by Mr. Bailey.
9 Includes 50,000 shares of Common Stock issuable upon exercise of options
held by Mr. Farrell. Excludes shares beneficially owned by Spears, Benzak,
Salomon & Farrell, Inc. a general partnership in which Mr. Farrell has a 22%
interest.
10 Includes 12,500 shares of Common Stock issuable upon exercise of options
held by Mr. Friedman.
11 Consists of 19,730 shares of Common Stock held directly by Mr. Marx,
4,292 shares held by a trust for the benefit of Mr. Marx, 1,917,900 shares held
by Brae Group, Inc., which corporation Mr. Marx may be deemed to control, and
500,000 shares issuable upon exercise of options held by Brae Group, Inc.
<PAGE>
12 Includes 10,000 shares of Common Stock issuable upon exercise of options
held by Mr. Prather.
13 Includes 100,000 shares of Common Stock issuable upon exercise of
options held by Mr. Rawn.
14 Includes 10,000 shares of Common Stock issuable upon exercise of options
held by Dr. Spencer.
15 Includes 10,000 shares of Common Stock issuable upon exercise of options
held by Mr. Tunney.
16 Includes 1,282,750 shares of Common Stock issuable to directors and
officers upon exercise of options and 97,000 shares of Common Stock issuable
upon exercise of warrants.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the meeting, eleven Directors of the Company are to be elected by the
stockholders, to hold office until the next Annual Meeting of Stockholders of
the Company to be held in 2001, and until their successors shall have been duly
elected and qualified.
The nominees of the Board of Directors for election as Directors are Mr. A.
Clinton Allen, Mr. Clarke H. Bailey, Mr. Vincent D. Farrell, Jr., Herbert M.
Friedman, Esq., Mr. Peter W. Gilson, Mr. Louis Marx, Jr., Mr. Robert S. Prather,
Jr., Mr. Stanley R. Rawn, Jr., Dr. John Spencer, Mr. J. Merrick Taggart and Mr.
John V. Tunney. All of the nominees are Directors elected at the 1999 Annual
Meeting of Stockholders. If, for any reason not presently known, any of the
nominees is not available for election, it is intended that the Proxies will be
voted for such substitute nominees as the Board of Directors may designate
unless the Board of Directors reduces the number of directors. The Directors
shall be elected by a vote of the holders of a plurality of the shares of Common
Stock entitled to vote and present in person or represented by proxy at the
meeting.
<PAGE>
The following table sets forth the names and ages of each Director, and
executive officer of the Company, the period during which each person has served
as a Director or officer of the Company, and the positions and offices with the
Company held by each such person.
<TABLE>
<CAPTION>
Director
and/or
Name Age Position(s) Officer Since
---- --- ----------- -------------
<S> <C> <C> <C>
J. Merrick Taggart 49 President, Chief Executive
Officer and Director 1 1995
Peter W. Gilson 60 Chairman of the Board,
Chairman of the Executive
Committee and Director 2 1994
Louis Marx, Jr. 68 Chairman of the Management
Committee and Director 3 1990
Stanley R. Rawn, Jr. 72 Senior Managing Director
and Director 4 1990
Herbert M. Friedman 68 Vice President and General
Counsel and Director 5 1981
Harry R. Thompson 70 Managing Director 1994
Thomas M. Lupinski 47 Senior Vice President, Chief
Financial Officer, Secretary
and Treasurer 1986
A. Jeffrey Turner 42 Senior Vice President -
Marketing and Product
Development 1998
James R. Cary 50 Senior Vice President -
Operations 1998
Marc A. Gold 34 Vice President and Controller 1998
Jerald J. Rinder 53 Vice President and
General Manager - Retail
Division 1996
Robert L. Topazio 51 Vice President and General
Manager - R.H. Forschner
Division 1996
A. Clinton Allen 56 Director 6 1993
Clarke H. Bailey 45 Director 7 1997
Vincent D. Farrell, Jr. 53 Director 8 1992
Robert S. Prather, Jr. 55 Director 1998
John Spencer 70 Director 9 1990
John V. Tunney 65 Director 10 1992
</TABLE>
1. Mr. Taggart is a member of the Executive Committee, Management Committee
and Foreign Exchange Committee.
2. Mr. Gilson is Chairman of the Board, Chairman of the Executive Committee
and a member of the Nominating Committee.
3. Mr. Marx is Chairman of the Management Committee and Nominating
Committee and a member of the Executive Committee and Foreign Exchange
Committee.
4. Mr. Rawn is a member of the Executive Committee, Management Committee
and Nominating Committee.
5. Mr. Friedman is a member of the Executive Committee, Audit Committee and
Nominating Committee.
6. Mr. Allen is Chairman of the Stock Option and Compensation Committee and
a member of the Executive Committee.
7. Mr. Bailey is a member of the Executive Committee.
8. Mr. Farrell is Chairman of the Audit Committee and a member of the
Executive Committee and Foreign Exchange Committee.
9. Mr. Spencer is a member of the Audit Committee and Stock Option and
Compensation Committee.
10. Mr. Tunney is a member of the Stock Option and Compensation Committee.
<PAGE>
Biographical Information
------------------------
J. Merrick Taggart, President, Chief Executive Officer and Director of the
Company, was elected Chief Executive Officer on February 18, 1999 and President
on December 13, 1995. From 1993 to November 1995 Mr. Taggart was President of
Duofold, Inc, a sports apparel company, and Pringle of Scotland U.S.A., an
apparel company. From 1990 to November 1992 Mr. Taggart was President of O'Brien
International, a manufacturer and marketer of water sports equipment. Prior to
that Mr. Taggart was Senior Vice President of Product Development for the
Timberland Company, a footwear and apparel company. Mr. Taggart is also a
director of SWWT, Inc. ("SWWT"), a holding company formerly in the business of
manufacturing and marketing portable water filtration systems.
Peter W. Gilson, Chairman of the Board and Chairman of the Executive
Committee and a Director of the Company, also served as President and Chief
Executive Officer of Physician Support Systems, Inc., a company specializing in
the management of physicians' health care practices, from 1991 through January
1998. From 1989 to the present, Mr. Gilson has also served as President and
Chief Executive Officer of the Warrington Group, Inc., a manufacturer of safety
products that was previously a division of The Timberland Company. From 1987 to
1988, Mr. Gilson served as Chief Operating Officer of The Timberland Company, a
manufacturer of footwear and outdoor clothing. From 1978 to 1986, he served as
President of the Goretex Fabrics Division of W.L. Gore Associates. Mr. Gilson is
also Chairman of the Board and a director of SWWT and a director of Glenayre
Technologies, Inc. ("Glenayre Technologies"), a paging and messaging
infrastructure technology firm.
Louis Marx, Jr., Chairman of the Management Committee and a Director of the
Company, has been associated with the Company for over 20 years and has played
the key role in helping to guide its affairs during that entire period. Through
discussions with the Chief Executive Officer of Victorinox Cutlery Company
("Victorinox"), the Company's principal supplier, he and Mr. Rawn were
responsible for the Company obtaining exclusive U.S. distribution rights for
Victorinox products and later, together with Mr. Rawn, he negotiated the
expansion of the Company's distribution rights to include Canada, Bermuda and
the Caribbean and also obtained for the Company exclusive distribution rights to
the Victorinox Watch. In a prior year he and Mr. Rawn played an important part
in negotiating, on behalf of the Company, the settlement of potentially
expensive litigation, and more recently, Mr. Marx has played an active role in
the Company's investment policy and, together with the Company's advisors, has
successfully managed the Company's currency hedging program. Mr. Marx has been a
venture capital investor for more than thirty years. Mr. Marx, together with his
close business associates, have been founders or substantial investors in such
companies as Pan Ocean Oil Corporation, Donaldson, Lufkin & Jenrette, Bridger
Petroleum Corporation Ltd., Questor Corporation, Environmental Testing and
Certification Corporation, Garnet Resources Corporation, The Prospect Group,
Inc. and Noel Group, Inc. ("Noel"), a publicly held company which prior to its
adoption in 1996 of a Plan of Complete Liquidation and Dissolution, conducted
its principal operations through small and medium sized operating companies in
which it held controlling interests. Mr. Marx served as a director of The
Prospect Group, Inc., a company that, prior to its adoption in 1990 of a Plan of
Complete Liquidation and Dissolution, conducted its major operations through
subsidiaries acquired in leveraged buyout transactions ("Prospect"), from
February 1986, and as Chairman of Prospect's Asset Committee from October 1988,
until January 1990. Mr. Marx serves as a trustee of the Mount Sinai New York
University Medical Center and Health Systems, The New York University School of
Medicine Foundation Board and Middlebury College. Mr. Marx is also Co-Chairman
and a director of Hudson River Capital LLC, a private equity firm specializing
in middle market acquisitions, recapitalizations and expansion capital
investments ("Hudson River"), a Co- Chairman, director and consultant of Victory
Ventures LLC, a private equity firm specializing in small market venture capital
investments ("Victory Ventures"), and the Chairman, President and controlling
stockholder of Brae Capital Corporation, a venture capital firm. He is President
and a director of Victorinox-Swiss Army Knife Foundation, a non-profit
corporation formed by the Company for charitable purposes including the
improvement of the welfare of underprivileged children.
<PAGE>
Stanley R. Rawn, Jr., Senior Managing Director and a Director of the
Company, actively participates with Messrs. Marx and Taggart in furthering the
relationship between the Company and Victorinox as well as in coordinating
management strategies. He has also played an important part in obtaining and
expanding the Company's exclusive distribution rights covering Victorinox
products. Mr. Rawn was Chairman and Chief Executive Officer and a director of
Adobe Resources Corporation, an oil and gas exploration and production company
from November, 1985 until the merger of that company in May, 1992, and was Chief
Executive Officer of Noel Group, Inc. from March 1995 through August 1999. Mr.
Rawn is also a director of Hudson River, Victory Ventures, First International
Oil Corporation, and Victorinox - Swiss Army Knife Foundation; and a Trustee of
the California Institute of Technology.
Herbert M. Friedman, is Vice President and General Counsel of the Company
since May 1998 and is also a Director of the Company. Mr. Friedman was partner
in the law firm of Zimet, Haines, Friedman & Kaplan until April 1998, where he
had been a member since 1967. Mr. Friedman is also a director of Noel, Hudson
River, Victory Ventures, Connectivity Technologies, Victorinox - Swiss Army
Knife Foundation and Carlyle Industries, Inc.
Harry R. Thompson, was appointed Managing Director of the Company in
January 1995. From 1987 to 1994, Mr. Thompson was president of The Strategy
Group, a business and marketing consulting firm. Mr. Thompson had previously
served as a director of the Company from June 1987 to June 1991, and as Chairman
of the Company's Board of Directors from January 1990 to October 1990 and served
in senior executive capacities with the Interpublic Group of Companies, Inc., a
worldwide leader in the marketing and communications industry. Mr. Thompson
currently serves as a director of Schwin/GT Corp., a designer, marketer and
manufacturer of bicycle equipment, and Brite-Smile Corp., a marketer of new
teeth-whitening technology.
Thomas M. Lupinski, Senior Vice President, Chief Financial Officer,
Secretary and Treasurer of the Company, has been a Senior Vice President of the
Company for more than five years. Prior to joining the Company, Mr. Lupinski was
Finance Manager for the Revlon Health Care Group from 1982 to 1986 and was with
Arthur Andersen & Co. from 1976 through 1982.
A. Jeffrey Turner, was elected to the office of Senior Vice President -
Marketing and Product Development in November 1998. Mr. Turner was Vice
President of Marketing of the Company from March 1997. From 1995 through 1997,
Mr. Turner was Executive Vice President of Silhouette Optical Limited and from
1991 through 1995 he was General Manager/Eyewear Division of Nikon, Inc.
James R. Cary, Senior Vice President - Operations, was elected to the
office of Vice President of Operations in November 1998 and was promoted to
Senior Vice President in February 2000. Mr. Cary was Director of Sales
Administration for the Company from May 1996 through November 1998. From 1994
through 1996, Mr. Cary served as Vice President of Sales Administration for
Duofold, Inc. From May 1994 through September 1994, Mr. Cary was an independent
consultant and from 1991 through 1994 he was a General Manager with Johnson
Camping.
Marc A. Gold, was elected to the office of Vice President and Controller in
November 1998. Mr. Gold has served the Company as Controller from February 1997.
Prior to that Mr. Gold was with Arthur Andersen LLP from 1987 to January 1997
and served as an Audit Manager.
Jerald J. Rinder, Vice President and General Manager - Retail Division, was
elected to the office of Vice President in February 1996. From 1994 through 1995
Mr. Rinder was Executive Vice President of Pringle of Scotland USA, an apparel
company. From 1993 to 1994 Mr. Rinder was Vice President - Sales/Marketing of
Walkover Shoe Co. and from 1991 through 1993 was Vice President - Sales of
Stride Rite Corp.
Robert L. Topazio, Vice President and General Manager - R.H. Forschner
Division, was elected to the office of Vice President in February 1996. Mr.
Topazio has served the Company in various positions since September 1992. From
1991 to 1992 Mr. Topazio was Vice President of Cuisine de France, Ltd., a
marketer of consumer cutlery that was purchased by the Company in 1992. Prior to
that, Mr. Topazio was National Sales Manager for J.A. Henckels.
<PAGE>
A. Clinton Allen, a Director of the Company, is Chairman of A. C. Allen &
Co., a Massachusetts based consulting firm. Mr. Allen also serves as Vice
Chairman and a Director of Psychemedics Corporation, a company that provides
testing services for the detection of abused substances through an analysis of
hair samples, DeWolfe Companies, Inc., a real estate company, Response U.S.A., a
company in the home alarm business, DCRI, a temporary staffing company, The
Legal Club of America, a company which provides legal services, and Steinway
Musical Instrument Company, a manufacturer of pianos and musical instruments.
Clarke H. Bailey, a Director of the Company, is Chairman and Chief
Excecutive Officer of Glenayre Technologies since February 1995 and Mr. Bailey
has served as Co-Chairman of the Board and a director of Hudson River. He is
also currently Chairman, Chief Executive Officer and Director of National
Fulfillment, Inc., a provider of integrated marketing services, Chairman of the
Executive Committee and a director of Connectivity Technologies, Inc., an
acquisition company with interests in the wire and cable industry, a director of
Iron Mountain Incorporated, and a director of SWWT. He served as Chairman, Chief
Executive Officer and a director of Arcus Group Inc., the leading national
provider of secure off-site computer data storage and related disaster recovery
services as well as information technology staffing solutions, from February
1995 to January 1998.
Vincent D. Farrell, Jr., a Director of the Company, has been a Managing
Director of the investment management firm of Spears, Benzak, Salomon & Farrell,
Inc. since 1982. Mr. Farrell is also a director of HealthPlan Services
Corporation, a provider of marketing and administrative services for health and
benefit programs.
Robert S. Prather, Jr., a Director of the Company, has served as President
and Chief Executive Officer of Bull Run Corporation since 1992. Mr. Prather also
serves as a director of Gray Communications, Inc., a company in the television
broadcasting business, Rawlings Sporting Goods Company, Inc., a supplier of team
sports equipment, Morgan Group, Inc., a transportation company, and Victory
Ventures.
John Spencer, a Director of the Company, held the African Studies
Professorship at Middlebury College where he was a member of the faculty from
1974 to 1998. He also served as Dean of Middlebury College and Chairman of its
History Department. Dr. Spencer is Co-Vice-Chairman of the Africa American
Institute, and a Trustee of the Cape of Good Hope Foundation, the Institute of
Current World Affairs, the University of Cape Town Fund, Inc., and Middlebury
College and a director of Victorinox - Swiss Army Knife Foundation.
John V. Tunney, a Director of the Company, is currently the President of
JVT Consultants, Inc. and Chairman of the Board of Cloverleaf Group, Inc. From
1971 to 1977 Mr. Tunney served as a United States Senator from the state of
California and as a Member of the United States House of Representatives from
1965 to 1971. Mr. Tunney is also a director of Foamex International, Inc., a
foam manufacturer, Chairman of the Board of Foamex Asia, Inc., a joint venture
foam fabrication business in Asia, and a director of Victory Ventures.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
- --------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten 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. Officers,
directors and greater than ten percent stockholders are required by regulation
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 5 were
required for those persons, the Company believes that, all filing requirements
applicable to the Company's officers, directors, and greater than ten percent
beneficial owners were complied with during the year ending December 31, 1999.
During the fiscal year ended December 31, 1999, the Board of Directors held
three meetings. All of the directors attended at least 75% of the total of the
meetings of the Board of Directors and the committees of which they were
members.
<PAGE>
Committees of the Board of Directors
- ------------------------------------
The Board of Directors has created the Audit Committee, Nominating
Committee and Stock Option and Compensation Committee, each of which is
described below.
Audit Committee. The Audit Committee, consisting of Messrs. Vincent D.
Farrell, Jr. (Chairman), Herbert M. Friedman and John Spencer, is charged with
the duties of recommending to the Board of Directors the appointment of
independent public accountants, reviewing the scope of the audit and auditing
fees, meeting periodically with the independent public accountants and certain
officers of the Company to insure the adequacy of internal controls and
reporting, reviewing consolidated financial statements, examining audit reports
and performing any other duties or functions deemed appropriate by the Board.
The Audit Committee held one meeting during the fiscal year ended December 31,
1999.
Nominating Committee. The Nominating Committee, consisting of Messrs. Louis
Marx, Jr. (Chairman), Herbert M. Friedman, Peter W. Gilson, and Stanley R. Rawn,
Jr., has all of the power of the Board of Directors in respect of the nomination
of directors for submission to a vote of the stockholders and in respect of the
fixing of the time, place and record date of the Annual Meeting of Stockholders,
as well as all other matters relating to the Annual Meeting of Stockholders. The
Nominating Committee did not meet during the fiscal year ended December 31,
1999. While the Nominating Committee has no stated procedures for the submission
of nominees by the Company's stockholders, the committee will consider such
recommendations on an informal basis.
Stock Option and Compensation Committee. The Stock Option and Compensation
Committee, consisting of Messrs. A. Clinton Allen (Chairman), John Spencer and
John V. Tunney, has all the power of the Board of Directors to grant options and
to exercise all other powers under and pursuant to the Company's Stock Option
Plans and to take all action in respect of the approval of the compensation and
bonuses paid by the Company. The Stock Option and Compensation Committee held
one meeting during the fiscal year ended December 31, 1999.
<PAGE>
MANAGEMENT COMPENSATION
Summary Compensation Table
The Summary Compensation Table below sets forth individual compensation
information of the President and the four other most highly paid executive
officers of the Company for services rendered in all capacities during the
fiscal years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Other
Annual Restricted All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonus sation Award SARS Payouts sation
- ------------------ ---- ------ ----- ------ ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Merrick Taggart 1999 $350,000 $50,000 - - - - $3,200 2
President and Chief 1998 $300,000 $30,000 - $26,250 1 70,000 - $3,200 2
Executive Officer 1997 $300,000 - - - - - $3,200 2
Peter W. Gilson 1999 $250,000 $40,000 - - - - -
Chairman of the Board 1998 $210,000 - - - 25,000 - -
1997 $210,000 - - - - - -
Harry R. Thompson 1999 $210,000 $10,000 - - - - $3,200 3
Managing Director 1998 $210,000 $ 8,000 - - - - $3,200 3
1997 $210,000 - - - - - $2,410 3
Michael J. Belleveau 1999 $210,000 $12,126 - - - - $3,200 6
Senior Vice President 1998 $176,667 $12,000 - $21,875 5 30,000 - $3,200 6
and Group Division Head4 1997 $160,000 - - - - - $3,145 6
Jerald J. Rinder 1999 $205,000 $16,933 - - - - $3,200 9
Vice President - Retail 1998 $170,000 $27,000 - $21,875 8 30,000 - $3,200 9
Division 1997 $170,000 $15,000 $103,737 7 - - - $2,779 9
</TABLE>
1 Consists of the dollar value of a restricted stock grant of 3,000 shares
to Mr. Taggart. The dollar value of the award was calculated based upon the
value of the stock on the grant date (September 16, 1998). The restricted stock
vests in four equal installments over three years starting with the grant date.
2 Consists of amounts contributed by the Company to Mr. Taggart's account
under the Company's 401K savings plan.
3 Consists of amounts contributed by the Company to Mr. Thompsons account
under the Companys 401K savings plan.
4 Mr. Belleveau resigned from the Company on January 17, 2000.
5 Consists of the dollar value of a restricted stock grant of 2,500 shares
to Mr. Belleveau. The dollar value of the award was calculated based upon the
value of the stock on the grant date (September 16, 1998). The restricted stock
vests in four equal installments over three years starting with the grant date.
6 Consists of amounts contributed by the Company to Mr. Belleveaus account
under the Company's 401K savings plan.
<PAGE>
7 Includes relocation benefits of $102,297.
8 Consists of the dollar value of a restricted stock grant of 2,500 shares
to Mr. Rinder. The dollar value of the award was calculated based upon the value
of the stock on the grant date (September 16, 1998). The restricted stock vests
in four equal installments over three years starting with the grant date.
9 Consists of amounts contributed by the Company to Mr. Rinders account
under the Company's 401K savings plan.
Option Grants in Last Fiscal Year
There was no options granted to any of the executive officers named in the
Summary Compensation Table within the last fiscal year.
Option Exercises and Year-End Value Table
The following table sets forth option exercise activity in the last fiscal
year and fiscal year-end option values with respect to each of the executive
officers named in the summary Compensation Table.
Aggregated Options Exercises in Last Fiscal year, and FY End Option/SAR Value
<TABLE>
<CAPTION>
Value of
Number of Unexercised Unexercised
Options/SARs In-the-Money
at FY-End # Options/SARs at
FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- ---------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
J. Merrick Taggart - - 172,000/35,000 -/-
Peter W. Gilson - - 181,500/12,500 -/-
Harry R. Thompson - - 50,000/- -/-
Michael J. Belleveau - - 45,000/15,000 -/-
Jerald J. Rinder - - 25,000/15,000 -/-
</TABLE>
Compensation of Directors
The Company compensates those of its directors who are not employees of the
Company in the amount of $10,000 annually plus $1,000 for attendance at each
meeting of the Board of Directors. The Chairmen of the Audit Committee and the
Stock Option and Compensation Committee of the Board of Directors are each paid
an additional annual fee of $10,000 in recognition of the additional
responsibilities and time commitments associated with such positions.
In addition, the Company has purchased split dollar life insurance policies
in respect of each of Messrs. Louis Marx, Jr. and Stanley R. Rawn, Jr. See
Certain Transactions.
<PAGE>
Pension Plan
Each employee of the Company at least twenty years of age becomes eligible
to participate in the Company's Pension Trust (the "Pension Trust") after
completing two Years of Credited Service (as defined in the Pension Trust).
Monthly benefits at Normal Retirement Age, age sixty-five, are computed as
follows: Average Monthly Compensation (as defined below) multiplied by 0.65%
plus Average Monthly Compensation in excess of Social Security Covered
Compensation (as defined below) multiplied by 0.65%, such sum multiplied by
Years of Credited Service, not to exceed 35 years. Accrued benefits under the
prior formula used by the Company's Pension Trust are grand-fathered as of
December 31, 1993 for Non-Highly Compensated Employees and as of December 31,
1988 for Highly Compensated Employees.
"Average Monthly Compensation" is defined as one-twelfth of the highest
five consecutive years of total compensation. Social Security Covered
Compensation is defined as the average of the Taxable Wage Base over the 35-year
period ending with the year of the Social Security Normal Retirement (ages 65 -
67, depending on year of birth).
Participants will receive reduced benefits on a life annuity basis with
continuation of benefits to their spouses after death unless an optional form of
benefit is selected. Pre-retirement death benefit coverage is also provided. A
participant is 100% vested in his accrued benefits, as defined in the Pension
Trust, upon such accrual. The Years of Credited Service as of December 31, 1999
of each of the individuals named in the Summary Compensation Table are as
follows:
<TABLE>
<S> <C>
J. Merrick Taggart 4 years
Peter W. Gilson 3 years
Harry R. Thompson 5 years
Michael J. Belleveau 8 years
Jerald J. Rinder 3 years
</TABLE>
The following table shows annual pension benefits under the Pension Trust
assuming retirement at age sixty-five in 1999, payable as a life annuity, in
various remuneration and years of employment classifications. Note that the
maximum allowable compensation for the year beginning 1999 is $170,000, so
remuneration in excess of that amount is not shown. Some grandfathering of
benefits earned at higher compensation levels is provided.
Pension Benefits for 1999 Retirees at Age 65
<TABLE>
<CAPTION>
Years of Service
----------------
Remuneration 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 6,327 $ 8,436 $10,545 $12,654 $14,763
75,000 11,202 14,936 18,670 22,404 26,138
100,000 16,077 21,436 26,795 32,154 37,513
125,000 20,952 27,936 34,920 41,904 48,888
150,000 25,827 34,436 43,045 51,654 60,263
170,000 29,727 39,636 49,545 59,454 69,363
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions regarding compensation of the Company's executives are generally
made by the Stock Option and Compensation Committee (the "Compensation
Committee") of the Company's Board of Directors. The Compensation Committee is
comprised of Messrs. A. Clinton Allen, John V. Tunney and John Spencer. Each
member of the Compensation Committee is a non-employee director.
Pursuant to rules adopted by the Securities and Exchange Commission ("SEC")
designed to enhance disclosure of companies' policies regarding executive
compensation, set forth below is a report submitted by the members of the
Compensation Committee addressing the Company's compensation policies for 1999
as they affected the Company's executive officers generally and, in particular,
as they affected J. Merrick Taggart, President and Chief Executive Officer of
the Company.
Compensation Policies Regarding Executive Officers
- --------------------------------------------------
The Compensation Committee's executive compensation policies are intended
to provide competitive levels of compensation in order to attract and retain
qualified executives, to recognize individual contributions to the successful
achievement of the Company's business objectives, and to align managements' and
stockholders' interests in the enhancement of stockholder value over the long
term. Compensation paid to the Company's executive officers for 1999 consisted
of base annual salary, bonus and the granting of stock options, which occurred
in January 2000. The Compensation Committee has available to it the Company's
1993 Stock Option Plan (the "1993 Stock Option Plan") and the Company's 1994
Stock Option Plan (the "1994 Stock Option Plan"), and the Company's 1996 Stock
Option Plan (the "1996 Stock Option Plan," and together with the 1993 Stock
Option Plan and the 1994 Stock Option Plan, the "Option Plans") to provide
long-term incentives to executive officers by enabling them to share in the
future growth of the Company's business. The Company has also established a 401K
Plan and a Pension Plan to assist it in retaining qualified executives.
The Compensation Committee believes that the Company's executive officers
should be compensated comparably with executive officers of other publicly held
companies engaged in the business of importing, distributing, developing,
selling and marketing consumer and professional products. The Compensation
Committee also believes that the Company competes with such organizations for
qualified executives and is therefore required to adopt competitive salary
structures. In setting compensation, the Committee considers on an informal
basis compensation paid by other corporations in businesses similar to the
Company, as well as the individual contributions to the Company that each of the
executives has made and can be expected to make in the future and such other
factors as the Compensation Committee may deem relevant at the time of making
such determinations.
Base salaries for the Company's executive officers are determined by the
Compensation Committee on an annual basis. In setting such base salaries, the
Compensation Committee considered the factors set forth in the preceding
paragraph. In the case of certain executives, the Committee considered and
approved the purchase of split dollar life insurance as compensation to such
executives in lieu of the cash compensation the Committee might otherwise have
awarded to such executives.
The Compensation Committee believes that stock-based performance
compensation arrangements are beneficial in aligning managements' and
stockholders' interests in the enhancement of stockholder value over the
long-term. Thus, the Committee has utilized the Company's Stock Option Plans as
an element in the Company's compensation packages for its executive officers.
Options granted to executive officers pursuant to the Stock Option Plans have
had exercise prices equal to the market price of the Company's Common Stock on
the date the options were granted, typically vest over a three-year period, and,
with limited exceptions, are exercisable only during an executive officer's
tenure with the Company and for a specified period thereafter. Thus, amounts
that may be realized by an executive officer upon exercise of options result
directly from appreciation in the Company's stock price during the particular
executive officer's tenure with the Company.
<PAGE>
The Company's 401K Plan is a broad-based employee benefit plan in which the
executive officers are permitted to participate on the same terms as
non-executive employees who meet applicable eligibility criteria, subject to any
legal limitations on the amounts that may be contributed or the benefits that
may be payable under the plan. The Company matches the contributions of
participating employees, including executive officers, up to a certain level
determined by the Board of Directors. Benefits under the 401K Plan are not tied
to Company performance.
1999 Compensation of Chief Executive Officer
- --------------------------------------------
The SEC regulations require the Compensation Committee to disclose the
Committee's bases for compensation reported for Mr. Taggart in 1999 and to
discuss the relationship between such compensation and the Company's performance
during the last fiscal year.
The Compensation Committee's decisions with respect to 1999 compensation
paid to Mr. Taggart were based on the factors discussed above applicable to all
of the Company's executive officers. The subjective factors considered in
determining 1999 annual compensation for Mr. Taggart included his overall
leadership of the Company, his continued role in reorganizing the structure of
the Company, and the improved operating results in the fiscal year ending
December 31, 1999.
SUBMITTED BY THE STOCK OPTION AND COMPENSATION COMMITTEE OF THE COMPANY'S BOARD
OF DIRECTORS:
A. Clinton Allen John Spencer John V. Tunney
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
In 1999, the Compensation Committee was comprised of A. Clinton Allen, John
Spencer and John V. Tunney. None of these individuals is an officer or employee
of the Company or any of its subsidiaries.
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return over a
five-year period of the Companys Common Stock to that of the Russell 2000, a
broad market index, and a peer group consisting of : A.T. Cross Company, Ellett
Brothers, Inc., Fossil, Inc., Johnson Outdoors, Inc., Jostens, Inc., K2, Inc.,
Movado Group, Inc., Oakley, Inc., Rawlings Sporting Goods, Swank, Inc., Tag
Heuer International, The Timberland Company and Variflex, Inc., which the
Company believes constitute a reasonable peer group by virtue of the fact that
the primary business of each is the marketing and distributing of consumer
products.
Comparison of Five-Year Cumulative Total Return*
Performance Results Through 12/31/99
Assumes $100 invested at the close of trading December 31, 1999 in Swiss Army
Brands, Inc., Russell 2000 Index and the Peer Group
<TABLE>
<CAPTION>
PERFORMANCE GRAPH
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Swiss Army Brands, Inc. 100.00 99.00 106.00 81.00 77.00 57.00
Russel 2000 Index 100.00 109.21 100.22 100.12 99.39 111.50
Peer Group 100.00 128.44 149.55 182.75 177.76 209.46
</TABLE>
*Cumulative total return assumes reinvestment of dividends.
CERTAIN TRANSACTIONS
Messrs. Louis Marx, Jr., Chairman of the Company's Management Committee and
a Director of the Company, and Stanley R. Rawn Jr., Senior Managing Director and
a Director of the Company, devoted considerable time and attention to the
affairs of the Company during 1999. During 1999 Messrs. Marx and Rawn were
principally compensated through split dollar insurance on their lives, a method
that allows the Company to recover, without interest, all premiums paid on the
death of the insured and that has substantially lower earnings impact over the
years than would similar amounts paid as cash compensation. Specifically, the
Company has purchased split dollar life insurance payable on the death of Mr.
Marx, some of which is payable on the later to die of Mr. Marx and his wife, and
split dollar life insurance payable on the death of Mr. Rawn. Under these
arrangements the Company will pay approximately $2,500,000 over the course of
the next 14 years as premiums under the policies for Mr. Marx and approximately
$2,100,000 over the course of the next 10 years as premiums under the policy for
Mr. Rawn (in each case including any amounts paid in 2000), and will be
reimbursed, without interest, for all of the premiums that it has paid upon the
death of the respective insured.
<PAGE>
The actual premiums to be paid may be higher than estimated depending upon
the performance of the insurance company's investments and other factors.
Pursuant to the terms of life insurance agreements entered into with each of
Messrs. Marx and Rawn, the Company will continue to be obligated to pay these
premiums during the insured's employment with the Company and in the event of
the termination of such employment for any reason, unless the insured willfully
and materially breaches the terms of a consulting agreement between him and the
Company and such breach continues for 30 days after written notice. Under the
terms of such consulting agreements, each of Messrs. Marx and Rawn is to be
engaged as a consultant immediately following the termination of his employment
with the Company and, in such event, shall receive such compensation as shall be
fair under the circumstances. Mr. Marx has been so engaged as a consultant to
the Company since February 15, 1995, the date on which he ceased to serve as
Chairman of the Company's Executive Committee. The consulting agreements may be
terminated by the Company upon thirty days notice. In 1999, the Company paid an
aggregate of $597,738 in premiums on the policies pertaining to Mr. Marx and
$315,150 in premiums on the policy pertaining to Mr. Rawn. There will be an
insignificant earnings impact in 2000 of the policies on Messrs. Marx's and
Rawn's lives, and an increasingly positive impact on earnings in the later
years.
In July 1994, the Company entered into a Services Agreement with Brae
Group, Inc. ("Brae"), which beneficially owns 29.0% of the outstanding Common
Stock and in which Louis Marx, Jr., has a controlling interest, and in which
Victorinox Cutlery Company ("Victorinox"), a key supplier and beneficial owner
of approximately 37.8% of the outstanding Common Stock, has a non-controlling
stock interest. Under the Services Agreement, Brae provided various services to
the Company for a period of four years relating to maintaining, enhancing and
expanding the Company's relationship with Victorinox. In exchange for these
services, Brae received an option to purchase 500,000 shares of the Company's
Common Stock at the then current market price of $10.75 per share. The option is
fully vested and can be exercised for ten years from the date of the Services
Agreement.
On May 1, 1998, the Company entered into an agreement with Brae Capital
Corporation ("Brae Capital"), an affiliate of Brae, whereby Brae Capital would
supply the Company with legal services. The fees for these services are expected
to be approximately $12,500 per month. The fees incurred for 1999 were
approximately $160,000. This agreement can be terminated by either party upon
thirty days written notice.
Victorinox owns approximately 37.8% of the outstanding Common Stock and is
the supplier to the Company of Swiss Army Knives, SwissCards, SwissTools, the
majority of its professional cutlery products and certain Victorinox watches.
During the year ended December 31, 1999, the Company purchased Victorinox
products in an aggregate amount of approximately $33,500,000.
Swiss Army Brands, Inc. Charitable Insurance Program
The Company recognizes its responsibility to the communities in which its
products are sold and the importance of charitable organizations to the country
at large. The Company is also aware of the benefits to commercial good will
resulting from the proper discharge of its responsibilities. In order to further
these objectives, the Company instituted its Charitable Insurance Program (the
Program). This program allows the Company to provide the maximum assistance to
numerous charities by utilizing tax provisions intended to encourage such
activities, and to eventually recover, without interest, all amounts expended.
Under the Program, adopted by the Company's Board of Directors in 1993, the
Company will utilize insurance on the lives of each of its directors and other
designated persons (the "Insured Directors") to fulfill charitable pledges to
the Victorinox-Swiss Army Knife Foundation (the "Foundation") and to charities
recommended by the Insured Directors. The Company previously purchased life
insurance on one of the Company's then Co-Chairmen and designated the Foundation
as a beneficiary of a portion of the proceeds, subject to the Company's right to
revoke such designation.
<PAGE>
The Program enables the Company to make a meaningful commitment to the
Foundation, as well as a broad range of charities benefiting our communities.
The Company anticipates that it will be able to make substantial contributions
in the future to these charities at a minimal cost to the Company.
The Foundation is a tax-exempt private foundation, funded primarily by
contributions from the Company and Victorinox. It was organized in December 1992
for general charitable purposes, including the improvement of the welfare of
underprivileged children (and others) through the encouragement of organized
athletic activities, including those sports in which an underprivileged child
would not ordinarily participate. Louis Marx, Jr., is President and a director
of the Foundation. Stanley R. Rawn, Jr., Senior Managing Director and a director
of the Company, and Herbert M. Friedman and John Spencer, directors of the
Company, are directors of the Foundation.
The Company is the owner and beneficiary of the policies, with the right to
borrow against them, and will receive the proceeds upon the death of each
Insured. The proceeds will not be legally segregated from the Company's general
funds and will remain subject to claims of the Company's creditors. Upon the
death of an Insured Director, the Company will retain a share of the insurance
proceeds equal to the cumulative premiums paid by the Company for the policy on
that Insured Director's life. One half of the remaining amount will be used to
fulfill a pledge to the Foundation and the other half will be used to fulfill
pledges to tax-exempt charities recommended by Insured Directors and approved by
the Board.
Generally, the Company will be bound to continue to pay all premiums on the
policy for the life of the Insured or, in the case of Mr. Marx, as long as he is
an officer or Board member or agrees to serve as a consultant to the Company.
Generally, there will be an insignificant impact on earnings in 2000, and
an insignificant positive impact on earnings after 2000 as the cash surrender
value of the insurance increases. If an Insured Director were to leave the
Company prior to the time when the cash surrender value of the policy exceeds
the aggregate premiums, and the Company received no further substantial benefit
from his or her services, the obligation to pay future premiums would result in
a charge to earnings at the time he or she left.
The Company is not be entitled to a tax deduction nor does the Company
realize income for regular income tax purposes at the time a policy is obtained
or as premiums are paid. Upon the death of an Insured Director (when the policy
matures and the insurance proceeds are paid), the Company would not realize
income for "regular" income tax purposes, but the Company might be subject to
alternative minimum tax ("AMT") on a portion of the receipts from the policy.
Upon the making of the cash contribution following the death of the Insured
Director, the Company would be entitled to a deduction. Since the Company is
entitled to claim as charitable deductions only 10% of its taxable income in any
year, the extent of the utilization of this deduction would depend upon income.
These deductions may be carried forward for a period of five years.
AUDITORS
The Board of Directors has selected Arthur Andersen LLP as independent
public accountants to audit the books and records of the Company for the fiscal
year ending December 31, 2000. A representative of Arthur Andersen LLP is
expected to be present at the Annual Meeting, and will have an opportunity to
make a statement if he or she desires to do so, and to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next Annual Meeting
of Stockholders, to be held in 2000, must be received by the Company at One
Research Drive, Shelton, Connecticut 06484 by December 16, 2000 to be included
in the proxy statement and form of proxy relating to that meeting.
<PAGE>
OTHER INFORMATION
The solicitation of Proxies in the accompanying form will be made at the
Company's expense, primarily by mail and through brokerage and banking firms
holding shares in their own names for customers.
A COPY OF THE COMPANYSFORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31,
1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED
WITHOUT CHARGE BY ANY STOCKHOLDER OF THE COMPANY ON WRITTEN REQUEST TO THE
OFFICE OF THE SECRETARY, SWISS ARMY BRANDS, INC., P.O. BOX 874, SHELTON,
CONNECTICUT 06484-0874.
The Board of Directors is aware of no other matters that are to be
presented to stockholders for formal action at the meeting. If, however, any
other matters properly come before the meeting or any adjournment thereof, it is
the intention of the persons named in the enclosed form of proxy to vote such
proxies in accordance with their judgment on such matters.
By Order of the Board of Directors.
/s/ Thomas M. Lupinski
THOMAS M. LUPINSKI
Secretary
Dated: Shelton, Connecticut
April 19, 2000
