12
THERMWOOD CORPORATION
P. O. Box 436
Old Buffaloville Road
Dale, Indiana 47523
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, December 10, 1998 at 9:00 A.M. (Central Daylight
Savings Time)
To the Stockholders:
The Annual Meeting of Stockholders of Thermwood Corporation
will be held at the Corporation's offices on Thursday, December
10, 1998 at 9:00 A.M., Central Daylight Savings Time, for the
following purposes:
1.To elect five (5) directors for the ensuing one-year term;
2.To act upon the ratification of the selection by the Board
of Directors of KPMG Peat Marwick LLP as independent
auditors;
3.To transact any other business which properly may be brought
before the meeting.
All stockholders are cordially invited to attend, although only
stockholders of record at the close of business on November 12,
1998 will be entitled to vote at the meeting.
By order of the Board of Directors,
/s/Linda S. Susnjara
Secretary
Dale, Indiana
November 17, 1998
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return the
accompanying form of proxy, so that if you are unable to attend
the meeting your shares may nevertheless be voted.
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of
Thermwood Corporation (the "Corporation" or "Thermwood") for
use at the Annual Meeting of Stockholders (the "Annual
Meeting") on December 10, 1998.
The Corporation's principal executive office is located at Old
Buffaloville Road, Dale, Indiana 47523. The approximate date
on which this Proxy Statement is first being sent to
stockholders is November 17, 1998.
You may revoke this proxy at any time prior to its use by
delivering a written notice to the Secretary of the
Corporation, by executing a later-dated proxy or by attending
the meeting and voting in person. Proxies in the form
enclosed, unless previously revoked, will be voted at the
meeting in accordance with the specifications made by you
thereon, or, in the absence of such specifications, for the
election of directors nominated herein and to ratify the
selection of KPMG Peat Marwick LLP as independent auditors for
the fiscal year ending July 31, 1999.
Holders of record of Shares of Common Stock, without par value
per share ("Common Stock") of the Corporation at the close of
business on November 12, 1998, will be entitled to vote at the
Annual Meeting. Each share of Common Stock will be entitled to
one vote. The Common Stock will be voted together as one
class. On November 12, 1998, there were 1,444,709 outstanding
shares of Common Stock of the Corporation. There are no other
voting securities outstanding.
ELECTION OF DIRECTORS
At the annual meeting, five directors are to be elected to
serve for a term of one year and until their successors shall
have been elected and qualified. It is intended that proxies
will be voted for the nominees set forth herein. Although it
is expected that all candidates will be able to serve, if one
or more is unable to do so, the proxy holders will vote the
proxies for the remaining nominees and for substitute nominees
chosen by the Board of Directors unless it reduces the number
of directors to be elected.
The table below presents information as of November 6, 1998 on
the nominees for election as directors of the Corporation for a
one-year term expiring in 1999:
<TABLE>
Principal Occupation Director Other
Name Business Experience Age Since Directorships
- --------------- -------------------- ----- --------- -------------
<S> <C> <C> <C> <C>
Kenneth J. President and 51 1969 Automation
Susnjara (1) Chairman of Board Associates, Inc.
since 1971
Linda S. President of 49 1986 Automation
Susnjara(1) Automation Associates, Inc.
Associates, Inc.
since 1985
Peter N. Lalos Engaged in the 64 1989
private practice of
law since 1961 and
senior partner,
Lalos & Keegan
Edgar Mulzer Chairman of the 80 1974 Lincolnland
Board Bank
of Lincolnland Bank
(Retired)
Lee Ray Olinger Chairman of the 71 1989 First Bank of
Board of First Bank Huntingburg
Huntingburg
</TABLE>
(1) Linda S. Susnjara and Kenneth J. Susnjara are husband and
wife.
Information on the executive officers of the Company is
contained in the following table:
<TABLE>
Name Principal Occupation Executive
Business Experience Age Officer Prior Position (s)
Since
- -------------- ----------------------- --- --------- ---------------
<S> <C> <C> <C> <C>
Michael P. Vice President of 44 1980 Project
Hardesty Engineering since 1988 Engineer,
Project Manager,
Vice President
of Machining
Products since
1975
Rebecca F. Treasurer since 1993 48 1993 Controller;
Fuller Accounting
Manager since
1981
David J. Vice President of 41 1988 Sales Manager;
Hildenbrand Sales since 1988 Technical
Manager since
1977
Donald L. Vice-President of 41 1997 Production
Ubelhor Manufacturing Manager since
1993
Richard Kasten Vice President of 46 1993 Applications
Technical Services Manager since
since 1993 1990
</TABLE>
OPERATION OF BOARD OF DIRECTORS AND COMMITTEES
During 1998 the Board of Directors held 4 meetings and each
incumbent director attended at least 75% of the aggregate of
all Board of Directors' meetings and all meetings of committees
of the Board of Directors that he or she served on.
All directors hold office until the next Annual Meeting of
shareholders of Thermwood or until their successors shall have
been elected and qualified. Directors receive compensation in
the amount of $1,000 plus $100 for each $100,000 in profit for
the previous quarter for attending each directors' meeting, and
are reimbursed for all related expenses.
The Audit Committee, consisting of Lee Ray Olinger, Edgar
Mulzer and Peter N. Lalos, met once during 1998. This
committee's function is to review the scope of the
Corporation's audit and generally to supervise the financial
affairs of Thermwood.
The Nominating Committee, consisting of Mr. Olinger, Mr. Mulzer
and Mr. Lalos, met once in 1998. The Nominating Committee
reviews officer performance and corporate needs and proposes to
the Board of Directors certain directions and changes in
titles, positions and responsibilities. The Nominating
Committee does not formally consider nominations by
shareholders.
The Stock Option Committee, consisting of Mr. Olinger, Mr.
Mulzer and Mr. Lalos, met once in 1998. This committee makes
awards to Thermwood employees of stock options under its
incentive stock option plan and non-qualified stock option
plan.
The Compensation Committee, consisting of Mr. Olinger, Mr.
Mulzer and Mr. Lalos met once during 1998. The Compensation
Committee reviews salaries and other compensation paid to the
Corporation's officers and makes recommendations to the Board
of Directors regarding such items.
It is expected that Mr. Olinger, Mr. Mulzer and Mr. Lalos will
be reappointed to the foregoing committees.
EXECUTIVE COMPENSATION
The following table sets forth the annual remuneration paid
during the fiscal years ended July 31, 1998, 1997 and 1996 to
the Chief Executive Officer and to each of the executive
officers of the Company whose total fiscal 1998 remuneration
exceeded $100,000 and to all officers of the Company as a
group.
<TABLE>
Summary Compensation Table
- ------------------------------------------------------------------------------
Long-term compensation
-----------------------
Annual compensation
Awards Payouts
Other --------------- -------
Name and Year Salary Bonus annual Restr- Options/ LTIP All
principal compen- icted SARs(#) payouts other
position (1) stock com-
awards pensa-
tion
- ---------- ------ -------- -------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth J.
Susnjara, 1998 $108,000 $146,664 $6,400 0 0 0 0
Chairman of
the Board 1997 63,000 83,242 3,700 0 0 0 0
President
and director 1996 63,000 94,739 2,000 0 0 0 0
Michael
Hardesty, 1998 48,000 100,565 0 0 0 0 0
Vice-
president 1997 48,000 102,165 0 0 0 0 0
Engineering 1996 48,000 58,269 0 0 0 0 0
David
Hildenbrand 1998 45,000 122,239 0 0 0 0 0
Vice-
president 1997 45,000 116,779 0 0 0 0 0
Sales 1996 45,000 56,818 0 0 0 0 0
Rebecca
Fuller, 1998 40,000 86,199 0 0 0 0 0
Treasurer 1997 40,000 87,570 0 0 0 0 0
All other
officers as
a group: 1998 80,000 78,893 0 0 4,000 0 0
(2) persons
(1) person 1997 40,000 29,172 0 0 0 0 0
(2) persons 1996 80,000 76,369 0 0 0 0 0
</TABLE>
(1) Other annual compensation represents directors' fees paid
to Mr. Susnjara.
Stock options for an additional 4,000 shares were issued to an
officer of the Company under the Qualified Stock Option Plan in
fiscal year 1998. At July 31, 1998 the exercise prices of some
of the unexercised options were less than the market price of
the Company's Common Stock. On September 6, 1994, registration
statements on Form S-8 were filed with the Securities and
Exchange Commission under the Securities Act of 1933 in
connection with the registration of shares of the Company's
Common Stock under the Company's Employee Incentive Stock
Option Plan and Non-Qualified Stock Option Plan.
In 1985 the Board of Directors appointed Mr. Susnjara to the
position of President and Chief Executive Officer. In this
position, he is to receive a bonus based on the pre-tax profits
of the Company as set forth below. See "Profit Sharing Plan"
below.
Certain other officers may be entitled to participate in the
Company's profit sharing plan. See "Profit Sharing Plan"
below.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Options/SAR Values
<TABLE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Shares Value
Acquired Realized Exercisable/ Exercisable/
Name on Exercise ($) Unexercisable Unexercisable
- ------------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Exercisable: Exercisable:
Kenneth J. Susnjara 0 0 160,000 $83,700
Unexercisable: Unexercisable:
0 0
Michael Hardesty 0 0 Exercisable: Exercisable:
8,000 $66,960
Unexercisable: Unexercisable:
0 0
David Hildenbrand 0 0 Exercisable: Exercisable:
8,000 $25,110
Unexercisable: Unexercisable:
0 0
Rebecca Fuller 0 0 Exercisable: Exercisable:
2,000 $16,740
Unexercisable: Unexercisable:
0 0
Donald Ubelhor 0 0 Exercisable: Exercisable:
3,000 $5,022
Unexercisable: Unexercisable:
0 0
</TABLE>
Profit Sharing Plan.
In 1985, the Company instituted a management profit sharing
plan. This plan has been operative since fiscal 1987, and was
continued in an amended form for fiscal year 1998. Covered
under the plan are the Chairman of its Board of Directors, the
President, Vice President of Engineering, Vice President of
Sales, Vice President of Technical Services, the Treasurer and
various departmental managers.
Under the plan, the Chairman is entitled to 5% of corporate
operating income. The Vice President of Sales and Vice
President of Technical Services each are entitled to 5% of the
divisional operating income. The Vice-President of
Manufacturing and the Treasurer are each entitled to receive 2%
and 3%, respectively, of the Corporate operating income. Any
divisional losses are to be subtracted from these amounts so
that the total bonus paid does not exceed 25% of operating
income.
Department managers are entitled to various bonuses based upon
productivity of their departments. Payments due under the plan
accrue for each six-month period and are thereafter paid in six
monthly installments. Vesting of rights under the plan
requires eligible participants to be continually employed
through the payment dates. Divisional losses of the fiscal
year must be recouped in the succeeding year, or years, in
order to be eligible for profit sharing earnings in the
succeeding year(s).
Incentive Stock Option Plan.
Under the Company's Employee Incentive Stock Option Qualified
Plan (the "Qualified Plan"), options to purchase a maximum of
80,000 shares of its Common Stock may be granted to officers
and other key employees of Thermwood. Options granted under
the Qualified Plan are intended to qualify as incentive stock
options as defined in Section 422A of the Internal Revenue Code
of 1954, as amended by the Tax Reform Act of 1986.
The Qualified Plan is administered by the Board of Directors
and a Committee currently consisting of three members of the
Board which determines which persons are to receive options,
the number of shares that may be purchased under each option
and the exercise price. In the event an optionee voluntarily
terminates his employment with the Company, he has the right to
exercise his accrued options within 5 days prior to such
termination. However, the Company may redeem any accrued
options held by each optionee by paying him the difference
between the option price and the then fair market value. If an
optionee's employment is involuntarily terminated, other than
because of death, he/she also has the right to exercise his
accrued options within 30 days of termination. Upon death,
his/her estate or heirs have one year to exercise his/her
accrued options. The maximum term of any option is ten years
and the option price per share may not be less than the fair
market value of Thermwood's shares on the date the option is
granted. However, options granted to persons owning more than
10% of the voting shares of the Company may not have a term in
excess of five years and the option price per share may not be
less than 110% of fair market value at the date the option is
granted.
The aggregate fair market value of the shares of Common Stock
(determined at the time the options are granted) with respect
to which incentive stock options are exercisable for the first
time by such optionee during any calendar year (under all such
plans) shall not exceed $100,000. Options must be granted
within ten years from the effective date of this Qualified
Plan.
Options granted under the Qualified Plan are not transferable
other than by will or the laws of descent and distribution.
Options granted under the Qualified Plan are protected by anti-
dilution provisions increasing the number of shares issuable
thereunder and reducing the exercise price of such options,
under certain conditions. The life term of the Qualified Plan
extends to December 3, 2000, or on such earlier date as the
Board of Directors may determine. Any option outstanding at
the termination date will remain outstanding at the termination
date until it expires or is exercised in full, whichever occurs
first.
As of July 31, 1998, options to acquire 50,600 shares of the
Company's common stock for ten years at an average exercisable
price of $8.48 per share had been granted under the Qualified
Plan to 20 employees of the Company. Options for the purchase
of 50,600 shares were exercisable as of July 31, 1998.
Non-qualified Stock Option Plan.
Under Thermwood's Non-qualified Stock Option Plan ("NSO Plan"),
options to purchase a maximum of 70,000 shares of its Common
Stock may be granted to officers, directors, and other key
employees.
The NSO Plan is administered by the Board of Directors and a
committee of three members of the Board which determines which
persons are to receive such options, the number of shares that
may be purchased under the option, the exercise prices, the
time and manner of exercise and other related matters.
In the event an optionee voluntarily terminates his employment
or tenure with the Company's consent or his employment or
tenure is terminated by Thermwood without cause, he generally
has the right to exercise his accrued options within 30 days
after such termination unless the Committee elects other time
periods. In all other cases of termination of the optionee's
employment or tenure other than death, said options shall cease
immediately. Upon death, his estate or heirs have one year to
exercise his accrued options.
The Committee may grant an optionee the right to surrender all
or a portion of his accrued options to the Company and receive
from it the difference between the option price and the then
fair market value. Options become exercisable in 25%
installments each year beginning in the second year through the
fifth year. Options are generally not transferable and are
conditioned upon the optionee remaining in the Company's employ
for at least one year from the date of its grant. Under the
NSO Plan, no option may be granted after January 1, 2005 and
the exercise price of such options may not be less than the
then fair market value. It is within the Committee's
discretion to grant anti-dilution provisions to each optionee.
Under present federal income tax law, an employee, officer or
director who is granted an option will not have any income upon
the grant of an option and the Company will not be entitled to
any deduction at that time. When an optionee exercises his
option, ordinary income will be realized by him, measured by
the excess of the fair market value of the shares over the
price paid for the shares. The Company will be entitled to a
deduction equal to the amount of income realized by the holder
of the option. If the optionee surrenders all or part of his
option for a cash or common stock payment, he will realize
ordinary income in the amount of cash or fair market value of
stock received. The Company will be entitled to a deduction
equal to the amount of income realized by the optionee.
As of July 31, 1998 options to acquire 40,000 shares of the
Company's common stock at an average exercisable price of $8.91
per share have been granted under the NSO Plan to four
directors and officers of Thermwood, all of which are presently
exercisable.
Other options.
Other options to purchase 140,000 shares have been granted by
the Board of Directors, 124,000 of which were outstanding and
exercisable as of July 31, 1998. An option to purchase 120,000
of these shares was granted to the President of the Company.
The option extends through October 18, 1998 and permits the
purchase of 60,000 shares at $15.00 per share and 60,000 at
$30.00 per share. A 6,000 share option was granted to an
employee at $5.00 per share and was exercised in October, 1997.
An additional 4,000 shares at $8.44 per share were granted
during fiscal year ended July 31, 1996 to a principal in a
former public relations firm for the Company. At July 31, 1998
the options were exercisable; however, in August 1998, the
Company and the option holder agreed to terminate the option
agreement in exchange for a cash payment to the option holder
of $10,250. During fiscal year 1997 options for 10,000 shares
were granted to another public relations firm. These options
expired in March, 1998 upon the termination of the service
agreement between the Company and the firm.
Section 401(k) Plan
The Company adopted a tax-qualified cash savings plan (the
"401(k) Plan") which became effective in October 1989. This
Plan covers all employees who have completed 12 months of
continuous service prior to a plan entry date. Pursuant to the
401(k) Plan, eligible employees may make salary deferral
(before tax) contributions of up to 15% of their total
compensation per plan year up to a specified maximum
contribution as determined by the Internal Revenue Service. The
Company also makes a matching contribution of 25% of employees'
contributions up to 5% of their annual salaries and an
additional match of 10% of their contributions between 6% and
8% of employees' salaries.
The 401(k) Plan also includes provisions, which authorize the
Company to make discretionary contributions. Such
contributions, if made, are allocated among all eligible
employees as determined under the 401(k) Plan. The trustee
under the 401(k) Plan is Merrill Lynch Trust Company of
Evansville, Indiana. The trustee invests the assets of each
participant's account in funds at the direction of such
participant.
OWNERSHIP OF EQUITY SECURITIES OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial Ownership
The following table sets forth certain information regarding
the Company's Common Stock, including shares underlying the
convertible debentures and exercisable Common Stock options
owned as of July 31, 1998 by (i) each person known by the
Company to own beneficially more than 5% of its outstanding
Common Stock, (ii) each director, and (iii) all officers and
directors as a group:
<TABLE>
Shares
Owned
Including
Percentage Those Percentage of
Names and Addresses Shares of Total Underlying Total
of Beneficial Owned at Outstanding Exercisable Outstanding
Owners (1) July 31, Shares Options and Shares Owned
1998 Owned Convertible
(2) Securities
- ------------------- --------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Kenneth J. Susnjara 251,400 17.57 411,400(5) 24.79(5)
(3,4) and Linda
Susnjara
Edgar Mulzer
401 10th Street
Tell City, Indiana 208,052 14.54 218,052(6) 13.14(6)
47586
Peter N. Lalos
14312 Darnstown
Road 8,000 0.6 22,000(7) 1.3(7)
Gaithersburg,
Maryland 20878
Lee Ray Olinger
c/o First Bank of
Huntingburg
4th and Main Street 400 0 400 0
Huntingburg, IN
47542
All Officers and
Directors as a 471,402 32.94 686,402 41.36
Group (9 persons) (5,6,7,8) (5,6,7,8)
</TABLE>
(1) Except as indicated in (4), all shares are beneficially
owned and the sole voting and investment power is held by the
person indicated.
(2) Excludes (i) an aggregate of 181,000 shares of Common Stock
reserved for issuance upon conversion of debentures; (ii)
80,000 shares reserved for issuance under the Company's
Qualified Stock Option Plan of which options to purchase 50,600
shares have been granted and are currently exercisable; (iii)
70,000 shares reserved for issuance under the Company's Non-
Qualified Stock Option Plan of which options to purchase 40,000
shares have been granted and are currently exercisable; (iv)
120,000 shares reserved for issuance upon exercise of options
granted to Mr. Susnjara, all of which are currently
exercisable; and (v) 4,000 shares reserved for issuance of
options granted to R. Jerry Falkner, all of which were
exercisable as of July 31, 1998. In August 1998, the Company
and the option holder agreed to terminate the option agreement
in exchange for a cash payment to the option holder of $10,250.
See Item 11. "Executive Compensation" and Item 13."Certain
Relationships and Related Transactions."
(3) The address of this person is c/o the Company.
(4) Mr. and Mrs. Susnjara may each be deemed to be a
beneficial owner of the Company's securities owned by the other
because of their marital relationship.
(5) Includes (i) an aggregate of 10,000 shares issuable upon
conversion of debentures owned by Mr. Susnjara; (ii) 10,000
shares issuable upon the exercise of options granted to Mr.
Susnjara under the Company's Non-Qualified Stock Option Plan;
and (iii) 120,000 shares issuable upon the exercise of other
options granted to him and includes 10,000 shares issuable upon
the exercise of options granted to Mrs. Susnjara under the
Company's Non-Qualified Stock Option Plan.
(6) Includes 10,000 shares issuable upon the exercise of
options granted to Mr. Mulzer under the Company's Non-Qualified
Stock Option Plan.
(7) Includes (i) an aggregate of 4,000 shares issuable upon
conversion of debentures owned by Mr. Lalos; and (ii) 10,000
shares issuable upon the exercise of options granted to Mr.
Lalos under the Company's Non-Qualified Stock Option Plan.
Certain Relationships and Related Transactions:
In February 1987 the Company purchased its premises from an
independent third party for $1,000,636 and simultaneously
resold it to Mr. Mulzer for $1,800,000. At the same time the
Company leased the premises back from Mr. Mulzer for a 20-year
period at a monthly rental of $19,353 or approximately $232,000
on an annual basis.
The lease agreement, which was treated as a capitalized lease
for financial reporting purposes, also obligated the Company to
pay all maintenance, taxes, assessments, insurance premiums and
utilities incurred in connection with the operation of the
premises. Pursuant to a related agreement, the Company had an
option to repurchase the premises from Mr. Mulzer, exercisable
through 2006, at prices descending on an annual basis from
$1,786,781 in 1987 to $240,000 in the last year.
On November 18, 1993, this lease payment obligation in the
amount of $1,608,629, together with accrued interest in the
amount of $122,491 was converted to Preferred Stock. Upon the
issuance of the Preferred Stock, the Company no longer had any
lease payments. The liability for all accrued and future lease
payments was converted to Preferred Stock.
On October 7, 1997, the Company entered into an agreement for a
$3.5 million line of credit with a bank, proceeds of which were
used to repurchase the Preferred Stock.
Conversion by Affiliated Party of Debt to Preferred Stock:
As previously noted, an aggregate of $3,437,120 owed to Mr.
Mulzer was converted to an aggregate of 1,000,000 shares of
Preferred Stock on November 18, 1993. The holder of the
Preferred Stock was entitled to receive cumulative cash
dividends out of the net profits of the Company at the rate of
thirty-four cents ($0.34) per share per annum, payable monthly
in equal installments within the first fifteen days of each
month for the preceding month as directed by the Board of
Directors of the Company. The Company had the right in its
sole discretion to redeem the stock at any time at $3.40 per
share. The Company redeemed 738,000 and 162,000 shares of the
preferred stock for a total of $2,546,320 and $550,800 during
fiscal years 1998 and 1997, respectively. Dividends were paid
in the amount of $43,255 and $285,204 for the fiscal years 1998
and 1997, respectively. The balance of the shares had been
previously repurchased. The Preferred Stock is fully redeemed
and no further dividends will be paid as of July 31, 1998.
Product Sales Through and Lease Agreement With Affiliated
Dealer:
Mr. and Mrs. Susnjara are the owners of Automation Associates
Incorporated ("AAI"), a dealer of the Company's industrial
products. The agreement between the Company and AAI contains
the same terms and conditions as do the Company's agreements
with its other dealers. The Company sold no products to AAI
during fiscal year 1998, but paid AAI $627,816 in commissions
during the year for assisting in effecting sales of
approximately $3,800,000. This amount represents approximately
21% of the Company's gross sales for fiscal year 1998. AAI
also leases space from the Company at what management believes
is a fair market rate. Rental payments were $2,400 during the
1998 fiscal year.
Payment of Legal Fees to Affiliated Party:
Lalos & Keegan, a law firm in which Mr. Lalos is the senior
partner, accrued fees of $95,000, $77,000, $103,000, for the
fiscal years 1998, 1997, and 1996, respectively. During fiscal
year 1998 the Company paid this firm an aggregate of $77,901.
Accordingly, as of July 31, 1998 the Company carried a balance
of $31,515 payable to Lalos & Keegan. This firm performs
patent, trademark, general corporate and litigation services
for the Company. As of October 27, 1998 all of the balance has
been paid.
Fairness of Transactions with Affiliated Parties:
Management believes that the terms of the transactions between
the Company and its affiliated parties as described in this
section are as fair as those, which the Company would have
obtained, if these transactions had been effected with
independent third parties. Each transaction was approved by a
majority of the disinterested directors. In the future, all
such transactions will continue to be approved by a majority of
the disinterested directors.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Based upon the recommendation of its Audit Committee, the Board
of Directors has selected the firm of KPMG Peat Marwick LLP as
the independent auditors of the Corporation for the fiscal year
ending July 31, 1999. KPMG Peat Marwick LLP has acted for the
Corporation in such capacity since August 1993. The Board
proposes that the stockholders ratify such selection at the
Annual Meeting.
If the stockholders do not ratify the selection of KPMG Peat
Marwick LLP by the affirmative vote of a majority of the votes
cast at the Annual Meeting on this proposal, the selection of
independent auditors will be reconsidered by the Board of
Directors.
Representatives of KPMG Peat Marwick LLP are expected to be
present at the Annual Meeting and will be afforded the
opportunity to make a statement if they so desire and to
respond to appropriate questions.
Compliance with Section 16 (a) of the Securities Exchange Act
of 1934
To the Company's knowledge, based solely on a review of such
materials as are required by the Securities and Exchange
Commission, no officer, director or beneficial holder of more
than ten percent of the Company's issued and outstanding shares
of Common Stock failed to timely file with the Securities and
Exchange Commission any form or report required to be so filed
pursuant to Section 16 (a) of the Securities Exchange Act of
1934 during the fiscal year ended July 31, 1998.
OTHER MATTERS
The Board of Directors knows of no other matters to come before
the meeting. Should any unanticipated business properly come
before the meeting, the persons named in the enclosed form of
proxy will vote in accordance with their best judgment.
The cost of preparing and mailing this Proxy Statement and the
accompanying proxy and the cost of solicitation of proxies on
behalf of the Board of Directors will be borne by the
Corporation. Solicitation will be made by mail. Such costs are
estimated to be less than $10,000. Some personal solicitation
may be made by directors, officers and employees without
special compensation, other than reimbursement for expenses.
Proposals which stockholders wish to include in the
Corporation's proxy materials relating to the 1999 Annual
Meeting of Stockholders must be received by the Corporation no
later than September 15, 1999.
It is important that proxies be returned promptly.
Stockholders are urged to sign and date the enclosed proxy and
return it promptly in the accompanying envelope.
By order of the Board of Directors,
Linda S. Susnjara
Secretary
Dale, Indiana
November 17, 1998
