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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Additional Materials Commission Only (as permitted)
[ ] Soliciting Material Pursuant to by Rule 14a-6(e)(2)
Rule 14a-12
THE PIONEER GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
LENS INVESTMENT MANAGEMENT, LLC
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not applicable
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(2) Aggregate number of securities to which transaction applies: Not
applicable.
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(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): Not
applicable.
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(4) Proposed maximum aggregate value of transaction: Not applicable.
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(5) Total Fee Paid: Not applicable.
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[ ] 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: Not applicable.
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.: Not applicable.
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(3) Filing Party: Not applicable.
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(4) Date Filed: Not applicable.
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NY2:\872927\13\58531.0014
<PAGE>
PRELIMINARY COPY, SUBJECT TO COMPLETION
DATED MARCH 22, 2000
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PROXY STATEMENT OF
LENS INVESTMENT MANAGEMENT, LLC
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IN CONNECTION WITH THE
2000 ANNUAL MEETING OF STOCKHOLDERS
OF THE PIONEER GROUP, INC.
To the Stockholders of The Pioneer Group, Inc.:
This Proxy Statement is being furnished to stockholders of The
Pioneer Group, Inc. (the "Company" or "Pioneer") in connection with a
solicitation by Lens Investment Management, LLC ("Lens") and the other
participants described below under "Certain Information Concerning Lens and the
Other Participants in the Solicitation" (collectively with Lens, the "Lens
Group," "we" or "us"). The Lens Group beneficially owns 1,099,463 shares or 4.1%
of the Company's outstanding common stock, $0.10 par value per share ("Common
Stock"). This Proxy Statement is for use at the 2000 Annual Meeting of
Stockholders of the Company and at any adjournments thereof (the "2000 Annual
Meeting"). The Company has announced that the 2000 Annual Meeting will be held
on Tuesday, May 16, 2000, at 9:30 a.m., local time, at the offices of Hale and
Dorr LLP, located at 60 State Street, Boston, Massachusetts.
This Proxy Statement is first being sent or given to one or more
stockholders on or about March 22, 2000.
The Company's Common Stock closed yesterday at $23.31 per share,
representing a loss to stockholders of 29.6% since its peak of $33.375 on
December 4, 1997. The Company, founded in 1928, is one of the oldest mutual fund
businesses in the country. Yet, today, growth in assets under management is
stagnant, at less than one-half the industry average, and operating income per
employee is one-third of the Company's peer group average (according to the Lens
Group's calculations). We believe that the Company has diluted its human and
financial capital by expanding into operations of unrelated businesses that are
far removed from its core expertise and located on four continents. The
Company's international mistakes have generated a staggering $194 million in net
losses since 1997, and the small average size of the Company's funds creates
significant relative infrastructure costs. We believe that something is broken
at Pioneer that your current management and Board of Directors cannot fix.
Please read the following pages that describe your Company's failure to compete
successfully and our opinions on why and how we think THE SOLUTIONS WE RECOMMEND
COULD BRING TO STOCKHOLDERS MORE THAN $28 PER SHARE.
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We are soliciting proxies in connection with the 2000 Annual Meeting
for the election of Richard A. Bennett, John P.M. Higgins, Robert B. Holmes,
Robert A.G. Monks and George W. Siguler (collectively, the "Lens Group
Nominees") as Directors of the Company. If elected, the Lens Group Nominees
would constitute a majority of the members (five out of eight) of the Company's
Board of Directors (the "Pioneer Board"). The Lens Group Nominees are committed
to promptly seeking a sale of the Company to the highest bidder in an auction.
See "Our Reasons for The Solicitation" for a discussion of why we believe
current strategies have failed and why we believe an auction of the Company
would yield a significant premium to stockholders.
WE RECOMMEND THAT YOU VOTE IN
FAVOR OF THE LENS GROUP NOMINEES.
We are nominating the Lens Group Nominees because we believe that the
Company's current business strategies, plans and policies are not the best
course of action for you -- the owners of the Company. Although we continue to
believe that there is great value in the Company, we have grown extremely
concerned about the apparent inability of its management to have such value
reflected in its stock market price. The Pioneer Board and current management
are not now producing a satisfactory return for the Company's stockholders in
comparison to major market indicators, or even the "peer group" index chosen by
the Company for presentation in its proxy statement. Our disappointment in the
Company's financial results and stock price has led us to seek representation on
the Pioneer Board in order to cause the Company to auction itself to the highest
bidder.
WE BELIEVE THAT A VOTE IN FAVOR OF THE LENS GROUP NOMINEES IS A SIGNIFICANT STEP
TOWARD A SALE OF THE COMPANY THAT WILL ALLOW STOCKHOLDERS TO EARN A PREMIUM ON
THEIR COMMON STOCK.
Based upon a preliminary analysis of Pioneer using only publicly
available information and without having conducted any solicitation of
third-party interest, we believe that the value stockholders could receive in a
sale or merger transaction involving Pioneer is likely to substantially exceed
the current trading range of the Common Stock. The Company's strategy has
required investment of valuable time and resources outside of its core Pioneer
Investment Management business segment. We believe that this lack of focus has
contributed to the dismal performance of the Common Stock. We are advocating the
immediate sale of the Company as we believe an assessment of worth by a
third-party buyer will create greater value for the Company's stockholders than
existing operations.
To avoid further deterioration of stockholder value, we believe that
the Pioneer Board must take immediate steps towards a sale of the Company. The
reasons we believe that the Company must be sold now are as follows:
o we believe that far too much capital (both human and
financial) has been diverted to businesses such as gold mining
and timber
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harvesting which have not produced a return on investment and
are unrelated to, and geographically distant from, the
Company's core Pioneer Investment Management business segment;
o based on Pioneer's small average fund size and low Operating
Income per Employee, we believe that Pioneer's businesses are
undersized and overstaffed, and that it will become
progressively more difficult for the Company to compete on its
own going forward;
o prices that we have observed in recent sales of similar
businesses and trading ranges of peers suggest that the
current climate for sale of financial services businesses, and
the Company in particular, is favorable; and
o current management has shown itself incapable of executing
strategic change even after affirmatively adopting it as a key
objective.
While we were encouraged by the Company's recent announcement that it
has engaged two investment banking firms to assist the Company in evaluating
strategic alternatives, we believe that the Company's history of failing to act
decisively where business dispositions are concerned has eroded the Company's
credibility with analysts and the investment community. In October of 1998, the
Company hired an investment banking firm and announced its intention to sell its
gold mining operations in Ghana. As of March 21, 2000, over 16 months later, no
such disposition has occurred.
Management's lack of credibility with analysts and the investment
community, a critical commodity in the financial services business, is evidenced
by the market's response to the Company's February 11, 2000 announcement of its
intention to hire two investment banking firms. The closing price of the Common
Stock was $16.78 per share on the day before the announcement was made. The
closing price of the Common Stock subsequently increased a mere 2.8% to $17.25
per share by February 23, 2000, the day we filed our preliminary proxy statement
with respect to the Lens Group Nominees. We believe that this minor price
movement evidences doubt on the part of the investment community as to whether
or not the announcement will result in timely action on the part of the
Company's management and the Pioneer Board. We also believe that the increase in
the closing price of the Common Stock following the filing of our preliminary
proxy statement on February 23, to $19.88 per share on February 24, 2000
(representing a 15.2% increase from the prior day's close), and the subsequent
price increases (with the Common Stock closing at $23.31 per share on March 20,
2000) is largely attributable to our proxy filing, i.e., the market's perception
that the nomination and/or election of the Lens Group Nominees increases the
likelihood that the Company will be sold.
As more fully described below, WE HAVE ESTIMATED THAT THE TOTAL VALUE
OF PIONEER'S EQUITY, WHICH IS THE SUM OF OUR ESTIMATES OF THE EQUITY VALUE OF
EACH OF THE COMPANY'S THREE OPERATING SEGMENTS, COULD BE AT LEAST $28.03 PER
SHARE.
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Our estimated value of $28.03 per share represents a premium of 20.2% from the
closing price of $23.31 per share on March 20, 2000. The Pioneer Board has not
taken, and has announced no plans that we believe are likely to result in, the
stockholders receiving comparable value for their Common Stock in the
foreseeable future. Consequently, we are advocating that the Company be sold
immediately to deliver this now-unrealized value to you - its stockholders,
before any further deterioration in the stock price can occur.
WHY SHOULD YOU VOTE FOR THE LENS GROUP NOMINEES?
According to Bloomberg, L.P., over the two years ended December 31,
1999, PIONEER WAS RANKED AS AMERICA'S WORST-PERFORMING MONEY-MANAGEMENT STOCK.
During what is perhaps the greatest bull market in history, over the past five
years, the Common Stock has significantly underperformed both the Russell 3000
Index as well as its peer group index (chosen by the Company, not us) consisting
of 11 investment management companies (which peer group, because it includes the
Company, masks what is actually an even larger shortfall in performance versus
its peers). According to the Company's 1999 proxy statement, $100 investments
made on January 1, 1994 in the Russell 3000 Index and in the investment
management peer group index would have grown to $220 and $248, respectively, by
December 31, 1998. A similar $100 investment in the Company would be worth only
$164.
YOUR VOTE IS IMPORTANT!
TO VOTE FOR OUR NOMINEES PLEASE NOTE THE FOLLOWING:
No proxy card for use at the 2000 Annual Meeting is included with
this Proxy Statement but we will provide a GOLD PROXY CARD after the Company
notifies stockholders of the matters to be voted upon at the 2000 Annual
Meeting. The GOLD PROXY CARD we distribute will be accompanied or preceded by a
revised Proxy Statement.
ONLY SUBMIT THE GOLD PROXY CARD.
ONLY YOUR LATEST DATED PROXY CARD WILL COUNT AT THE 2000 ANNUAL
MEETING. THEREFORE, PLEASE DO NOT COMPLETE OR RETURN ANY PROXY CARD SENT TO YOU
BY THE COMPANY'S MANAGEMENT OR BOARD OF DIRECTORS.
REVOCATION OF PROXIES
You can revoke your proxy (whether such proxy was solicited by us or
the Company) at any time prior to its use at the 2000 Annual Meeting by
submitting to us or the Company a written revocation or duly executed proxy
bearing a later date. In addition, if you attend the 2000 Annual Meeting in
person, you can vote by ballot, thereby canceling any proxy previously given.
Proxies may be delivered to us, by hand or by mail, at:
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Lens Investment Management, LLC
c/o MacKenzie Partners
156 Fifth Avenue, PH 3
New York, New York 10010
THIS SOLICITATION IS BEING MADE BY THE LENS GROUP IN OPPOSITION TO THE INCUMBENT
PIONEER BOARD AND MANAGEMENT OF THE COMPANY.
The Company reported in its quarterly report on Form 10-Q for the
fiscal quarter ended September 30, 1999, that there were 26,503,913 shares of
Common Stock outstanding as of September 30, 1999. Unless otherwise indicated,
any reference in this Proxy Statement to the percentage of outstanding shares of
Common Stock owned by any person was computed based upon this number of
outstanding shares. Each share of Common Stock is entitled to one vote.
The Company has not formally announced the record date of the 2000
Annual Meeting, but we expect that the Company will provide this information in
due course. Only stockholders of record at the close of business on the record
date for the 2000 Annual Meeting will be entitled to notice of, or to vote at,
the 2000 Annual Meeting.
In accordance with the By-laws and the Delaware General Corporation
Law, the number of directors that constitutes the entire Pioneer Board is to be
fixed by resolution of the Board. The directors are elected to hold office until
the next annual meeting of stockholders and until the election and qualification
of their successors or until their earlier death, resignation or removal. At
each annual meeting of stockholders, all of the directors are elected for
one-year terms. The Pioneer Board currently has nine directors, all of whose
terms will expire at the 2000 Annual Meeting. In addition, one director, Maurice
Engleman, has decided not to stand for reelection to the Pioneer Board at the
2000 Annual Meeting.
At the 2000 Annual Meeting we anticipate nominating five people for
election to the Pioneer Board. We are soliciting proxies pursuant to this Proxy
Statement to elect the Lens Group Nominees to the Pioneer Board to serve until
the next annual meeting of stockholders, replacing John F. Cogan, Jr., presently
the Company's Chief Executive Officer, and directors Jaskaran S. Teja, David D.
Tripple, Alan J. Strassman and John H. Valentine. We do not oppose the
reelection of incumbent directors John D. Curtin, Jr., Alyce J. Lee and W. Reid
Sanders to fill the remaining board seats and to serve alongside the Lens Group
Nominees.
No assurance can be given that the Lens Group Nominees would be able
to successfully implement their plan to sell the Company if elected to the
Pioneer Board. The Lens Group, itself, does not intend to make any offer to
acquire the Company. The Lens Group Nominees could, in the future, based upon
their fiduciary duties and an evaluation of the Company's operations and future
plans, decide to pursue another course of action.
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IF YOU HAVE ANY QUESTIONS ABOUT EXECUTING YOUR PROXY OR
REQUIRE ASSISTANCE, PLEASE CONTACT:
MACKENZIE PARTNERS
156 FIFTH AVENUE, PH 3
NEW YORK, NEW YORK 10010
CALL: (800) 322-2885
OR (212) 929-5500
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IMPORTANT
At the 2000 Annual Meeting, the Lens Group seeks to elect five nominees as
Directors of the Company.
A VOTE FOR OUR NOMINEES WILL PROVIDE YOU -- THE OWNERS OF THE COMPANY -- WITH A
MAJORITY OF THE PIONEER BOARD COMMITTED TO INCREASING STOCKHOLDER VALUE THROUGH
A SALE, MERGER OR OTHER DISPOSITION OF THE COMPANY OR ITS ASSETS TO THE HIGHEST
BIDDER PURSUANT TO AN AUCTION.
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OUR REASONS FOR THE SOLICITATION
We are soliciting your votes for the Lens Group Nominees because we
believe: (i) the economic value of the Company is not reflected in its market
price, (ii) the Company's current strategies are deficient and (iii) the Common
Stock has had a dismal performance in recent years. Our reasons for these
beliefs are set forth below.
THE ECONOMIC VALUE OF PIONEER IS NOT REFLECTED IN ITS MARKET PRICE.
Based upon a preliminary analysis of Pioneer using only publicly
available information and without having conducted any solicitation of
third-party interest, we believe that the value the Company's stockholders could
receive in a sale or merger transaction involving Pioneer is likely to
substantially exceed the current trading range of the Common Stock. The
Company's strategy has required investment of valuable time and resources
outside of its core Pioneer Investment Management business segment. We believe
that this diffusion of Pioneer's focus has contributed to the dismal performance
of the Company's Common Stock. We are advocating that management take immediate
steps to sell the Company, as we believe an assessment of worth by a third-party
buyer will create greater value for the Company's stockholders than existing
operations.
The reasons we believe that the Company must be sold now are as
follows:
o we believe that far too much capital (both human and
financial) has been diverted to businesses such as gold mining
and timber harvesting which have not produced a return on
investment and are unrelated to, and geographically distant
from, the Company's core Pioneer Investment Management
business segment;
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o based on Pioneer's small average fund size and low Operating
Income per Employee, we believe that Pioneer's businesses are
undersized and overstaffed, and that it will become
progressively more difficult for the Company to compete on its
own going forward;
o prices that we have observed in recent sales of similar
businesses and trading ranges of peers suggest that the
current climate for sale of financial services businesses, and
the Company in particular, is favorable; and
o current management has shown itself incapable of executing
strategic change even after affirmatively adopting it as a key
objective.
Our assessment of Pioneer's real, or economic, value is based upon
our analysis of the Company's three business units:
o PIONEER INVESTMENT MANAGEMENT ("PIONEER INVESTMENT"): the
Company's core business - U.S. registered and offshore fund
management, distribution and servicing operation;
o PIONEER INTERNATIONAL FINANCIAL SERVICES ("PIONEER
FINANCIAL"): the Company's international mutual fund
management, distribution and servicing business with
operations in Russia, Poland and the Czech Republic; and
o PIONEER GLOBAL INVESTMENTS ("PIONEER GLOBAL"): the Company's
gold mining, timber harvesting, European venture capital and
real estate management operations.
ACCORDING TO OUR CALCULATIONS, THE TOTAL VALUE OF PIONEER'S EQUITY
COULD EXCEED $28 PER SHARE IN A SALE. We believe that if a buyer simply paid the
theoretical public trading market values of each of the Company's three business
segments, without a premium for change in control or potential revenue and cost
synergies, Pioneer Investment would be worth $24.26 per share, Pioneer Financial
would be worth $3.30 per share and that Pioneer Global would be worth $0.47 per
share. Our estimated value of $28.03 per share (i.e., the "sum of the parts")
represents a premium of 20.2% from the March 20, 2000 closing price of $23.31
per share. The valuation "metrics" we used to calculate these estimated values
are described in Annex A, which is incorporated herein by reference.
WE BELIEVE THAT PROCEEDS TO STOCKHOLDERS IN A PRIVATE SALE OF THE
PIONEER INVESTMENT SEGMENT ALONE COULD BE APPROXIMATELY $38 PER SHARE. In 1999,
there were two private acquisitions of publicly held businesses that we believe
are comparable to the Pioneer Investment segment. The two transactions were the
acquisitions of Pilgrim Capital Corp. ("Pilgrim") by Reliastar Financial Corp.
and of PIMCO Advisors LP ("PIMCO") by Allianze AG. We believe these acquisitions
are comparable because both Pilgrim and PIMCO, like the Pioneer Investment
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segment, manage mutual funds, offer equity-style fund products, utilize "load"
class fund shares and, at the time these transactions were announced, had
publicly traded securities and operations based in the United States. The
acquisitions of Pilgrim and of PIMCO were announced at multiples of 5.03 and
4.99 times trailing twelve month revenues, respectively. If applied to Pioneer
Investment, the sale price multiples generated in these acquisitions would
result in a valuation range of $37.88 to $38.18 per share for this segment of
the Company's business. We cannot guaranty that a transaction involving Pioneer
Investment would yield these same results because, among other things, the use
of a single valuation measurement could reduce the reliability of an estimate of
the potential worth of this segment. We believe, however, that these
transactions create a benchmark for stockholders to consider in evaluating our
belief that significant value exists in the Company that management has been
unable to realize.
THE COMPANY'S CURRENT STRATEGIES ARE DEFICIENT AND ARE DEPRESSING THE PRICE OF
THE COMMON STOCK.
We have invested our clients' money in, and caused certain affiliated
limited partnerships to invest in, the Common Stock because we believe that the
Company has superior product recognition, portfolio management capacity and
distribution capability. However, management and the Pioneer Board have
repeatedly failed to recognize and adequately address fundamental business
problems.
Management and the Pioneer Board have failed to act decisively in shedding
value-destroying operations.
We believe that the Company has been misallocating its capital and
human resources to ill-conceived foreign ventures where it has neither the
historical presence, the critical mass, nor the managerial expertise to succeed.
In addition, we believe that the Company has been extremely slow in both
recognizing the failure of these operations and in undertaking remedial action
by shedding value-destroying operations. For example:
o Since 1986, the Company has invested approximately $243
million in developing a gold mining venture in Ghana. The
result has been a near total loss.
o Since 1993, the Company has expended approximately $51 million
to acquire timber equipment and facilities in eastern Russia.
Again, the result is a near total loss.
o Since 1995, the Company has lost an aggregate of $15.4 million
(amounting to $0.59 per share) in Poland and an aggregate of
$5.3 million (amounting to $0.21 per share) since 1996 in the
Czech Republic in trying to establish mutual fund operations
in those countries. The Company has lost an additional $5.8
million (amounting to $0.23 per share) in its eastern European
venture capital operations.
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o The Company has also invested in real estate advisory and
management services businesses in Moscow and Poland, all of
which have produced losses.
Overall losses from these international ventures have taken a serious
toll on the Company's reported earnings. Since 1997, these losses amount to $194
million (or $7.45 per share), as compared with net income of $103 million (or
$4.02 per share) generated by the Company's profitable core Pioneer Investment
business. With the impairment to stockholders' equity, debt/total capital has
risen from 39% to 43% during 1999. The Company has announced on a number of
occasions its intent to sell, close down, or otherwise mitigate the negative
effects of these operations on its reported earnings. Despite these promises, we
believe that little by way of results has been forthcoming.
Management and the Pioneer Board have failed to focus on streamlining and
building the core Pioneer Investment business.
We believe that the Company has a valuable franchise in its core
Pioneer Investment business. The Pioneer Investment division has a history of
continuous cash generation and increasing profitability, and currently manages
and services some $24 billion in assets. We believe that growth in assets under
management, however, has suffered with the diversion of capital resources and
managerial talent to its foreign exploits. Amid one of the greatest bull markets
in U.S. history, and despite the Company's strong brand recognition, according
to Lens Group calculations derived from publications of the Investment Company
Institute, over the past decade the Company has grown at less than one-half the
industry average. We believe that focus has been lost and opportunities to
develop an institutional business, a stronger distribution network and more
highly-rated funds have been missed. We also believe that the Company is
managing its fund structure poorly. There are currently no fewer than 36
investment portfolios that have to be operated and serviced, or significantly
less than $1 billion per fund, with larger proportionate service costs. As a
consequence, Pioneer Investment's operating income of $63,000 per employee is
nearly one-third of the peer average of $170,000 per employee (according to the
Lens Group's calculations). Assets under management per employee are $28.3
million, which is 63% below the peer average.
Management and the Pioneer Board have failed to implement a management
succession plan.
The current President, Chief Executive Officer and Chairman of the
Board - one individual - has held these positions since 1962. He is 73 years of
age. There is no apparent successor to replace him. We believe that management
depth is dangerously thin.
DISMAL STOCK PRICE.
We believe that the Company's stock price has spiraled downward for
far too long. BASED ON THE COMPANY'S OWN CALCULATION OF CUMULATIVE TOTAL
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STOCKHOLDER RETURN PRESENTED IN THE COMPANY'S 1999 PROXY STATEMENT, $100
HYPOTHETICAL INVESTMENTS MADE ON JANUARY 1, 1994 IN THE RUSSELL 3000 INDEX AND
IN A PEER GROUP INDEX CONSISTING OF 11 INVESTMENT MANAGEMENT COMPANIES
(INCLUDING THE COMPANY) WOULD HAVE GROWN TO $220.00 AND $248.26, RESPECTIVELY,
BY DECEMBER 31, 1998. IN CONTRAST, A $100 INVESTMENT IN THE COMPANY MADE ON
JANUARY 1, 1994, WOULD BE WORTH ONLY $164.24 BY DECEMBER 31, 1998. In addition,
the Company's stock price has fallen from its peak of $33.375 on December 4,
1997, to a current level of $23.31 as of March 20, 2000. This reflects a
cumulative loss to stockholders of 29.6%. Perhaps most disturbing is that this
performance occurred during a period when the values represented by the S&P 500
INDEX, DOW JONES INDUSTRIAL AVERAGE AND NASDAQ COMPOSITE INDEX ALL ROSE TO
54.5%, 37.8% AND 188.0% of their respective levels since December 4, 1997.
YOU HAVE A VOTE IN THE FUTURE OF YOUR INVESTMENT.
VOTE FOR THE LENS GROUP NOMINEES.
By running our own slate of nominees, we believe we are giving you,
the Company's stockholders, a choice. If you are satisfied with the performance
of your Company and its stock price, no doubt you will reelect the Board's
nominees. But, if you - like us - are not satisfied and believe that the
Company's stockholders would benefit from diligent efforts to sell the Company
at a premium to its current market value through an auction process, we urge you
to support our nominees. By electing the Lens Group Nominees, you would be
assured that a majority of the Pioneer Board would be committed to securing such
a sale, subject to its fiduciary duty.
INFORMATION REGARDING THE PROPOSAL
ELECTION OF DIRECTORS
We are soliciting your proxy for the election of the Lens Group
Nominees as Directors of the Company after we nominate them at the 2000 Annual
Meeting to serve until their successors are duly elected and qualified.
On February 15, 2000, the Lens Group provided written notice to the
Company of its intent to nominate four persons for election to the Pioneer
Board. On March 17, 2000, the Lens Group provided written notice to the Company
of its intent to add an additional nominee so that, if elected, the Lens Group
Nominees will represent a majority of the Pioneer Board. Such notices were
provided pursuant to the Company's By-laws.
In accordance with the Company's Restated Certificate of
Incorporation and By-laws and the Delaware General Corporation Law, the size of
the Pioneer Board shall be fixed by a resolution of the Board of Directors.
Pioneer currently has nine Directors, all of whose terms will expire at the 2000
Annual Meeting. One director, Maurice Engleman, has decided not to stand for
reelection to the Pioneer Board at the 2000 Annual Meeting. Consequently, we
believe that eight directors are to be elected at the 2000 Annual Meeting. The
Lens Group Nominees, Richard A. Bennett, John P.M. Higgins, Robert B. Holmes,
Robert A.G. Monks and George W. Siguler, if elected, would each serve terms
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expiring at the Company's next annual meeting of stockholders and until his
successor is elected and qualified or until his earlier death, resignation or
removal. We reserve the right to nominate additional candidates for any or all
available seats on the Pioneer Board at the 2000 Annual Meeting of Stockholders.
In addition, if any additional Directorships are to be voted upon at the 2000
Annual Meeting, we reserve the right to nominate additional persons to fill such
positions. We do not expect that any of our nominees will be unable to stand for
election but, in the event that any of them are unable to do so, shares
represented by GOLD PROXY CARDS will be voted for the remaining Lens Group
Nominees. Furthermore, we reserve the right to nominate substitute or additional
persons if the Company makes or announces any changes to the By-laws or takes or
announces any other action that has, or if consummated would have, the effect of
disqualifying any of our nominees.
If the Lens Group Nominees are elected and take office as Directors,
they intend to discharge their duties in compliance with all applicable legal
requirements, including the general fiduciary obligations imposed upon corporate
directors.
LENS GROUP NOMINEES
Each of the Lens Group Nominees has consented to serve as a Director
if elected. There are no arrangements or understandings between any such nominee
and any other person pursuant to which he was selected as a Lens Group Nominee.
The information below concerning age, principal occupation, directorships and
beneficial ownership of Common Stock has been furnished by the respective Lens
Group Nominees.
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<TABLE>
<CAPTION>
NUMBER OF SHARES
PRESENT PRINCIPAL OCCUPATION AND PRINCIPAL OF COMMON PERCENT OF
NAME, BUSINESS OCCUPATIONS DURING LAST FIVE (5) YEARS; STOCK COMMON
ADDRESS AND AGE DIRECTORSHIPS OWNED STOCK
- --------------- ------------- ----- -----
<S> <C> <C> <C>
John P.M. Higgins Principal in and President and Chief Investment Officer of Lens 1,097,063(1) 4.1%
c/o Lens Investment (engaged primarily in the investment management and investment
Management, LLC advisory businesses) since 1992; Director and President of Ram
45 Exchange Street (engaged primarily in the investment management and investment
Portland, ME 04101 advisory businesses) since 1991; Alternate Director of Hermes
Age 51. Lens Asset Management Ltd. (an investment management and
investment advisory business) since 1998;
Director and Chairman of the Executive Committee
of Atlantic Bank, N.A. (a national bank) from
1994 to 1997; Vice President of and responsible
for cross border mergers and acquisitions for
Banque de Gestion Privee (a French merchant
bank) from 1987 to 1990; Vice President in
charge of investments for Lambert Brussels
Capital Corp. (a financial services company)
from 1985 to 1987.
Robert B. Holmes Principal in and Investment Committee Member for Lens since 1992; 1,097,063(1) 4.1%
c/o Lens Investment Director of Dayton Superior Corp. (a manufacturer of accessories
Management, LLC used in concrete construction and paving) since 1996; Advisory
45 Exchange Street Director of Ripplewood Holdings, L.L.C. (a manager of private
Portland, ME 04101 equity funds and other private investments) since 1995; advisor
Age 68. to Nihon Nosan Koygo K.K. (a grain and food products company)
since 1998; Director of Mitsubishi International Corp. (a
worldwide trading company) since 1990 and consultant since 1994;
Director and Chairman of the Audit Committee of Atlantic Bank,
N.A. from 1994-1997; private investor.
Robert A.G. Monks Principal in and participant in the management of Lens since 1,097,063(1) 4.1%
c/o Lens Investment 1990; Director of Ram since 1989; Director of Hermes Lens Asset
Management, LLC Management Ltd. since 1998; Chairman of the Board of the Boston
45 Exchange Street Company (a bank holding company), and its wholly-owned subsidiary
Portland, ME 04101 Boston Safe Deposit and Trust Co. from 1979 to 1981 and a member
Age 66 of the Board of Directors thereof from 1975 to 1979; Principal in
Gardner Associates (a money manger) from 1965 to
1967; Director of Tyco International Ltd. (a
diversified manufacturing and service company)
from 1985 to 1994; private investor.
Richard A. Bennett Director of Governance for Lens since 1997; Maine State Senator 1,097,063(1) 4.1%
c/o Lens Investment since 1996; proprietor of the Bennett Development Company (a
Management, LLC research and public affairs consulting business) since 1992;
45 Exchange Street sales manager of Burlington Homes of Maine, Inc. (a manufactured
Portland, ME 04101 housing business) from 1995 to 1996.
Age 36
12
<PAGE>
George W. Siguler Managing Director of Siguler Guff & Company (a private equity 2,400(2) *
c/o Siguler Guff & Company management firm) since 1995; director of NovaCare, Inc. (a
630 Fifth Avenue healthcare services company); director and officer of Venture
New York, NY 10111 Lending & Leasing, Inc. (a private investment fund); director of
Age 51 Business Mortgage Investors, Inc. (a private real estate
investment trust); managing director of Mitchell
Hutchins Institutional Investors, Inc. (an
investment company) and head of its private
equity group since 1991; President of Associated
Capital Investors from 1985 to 1991; Executive
Vice President of Monarch Capital Corporation
from 1985 to 1991.
</TABLE>
- -------------
* Denotes ownership of less than 1% of the outstanding shares of Common
Stock.
(1) Mr. Higgins is a client of Lens and Ram. Shares of Common Stock
beneficially owned by Lens and Ram Trust Services, Inc. ("Ram") include
27,560 shares purchased with investment funds of Mr. Higgins and his
spouse and are held in a Lens Group-managed account. Mr. Monks is a client
of Lens and Ram. Shares of Common Stock beneficially owned by Lens and Ram
include 72,400 shares purchased with investment funds of Mr. Monks and his
spouse and are held in a Lens Group-managed account. Mr. Bennett is a
client of Lens and Ram. Shares of Common Stock beneficially owned by Lens
and Ram include 1,662 shares purchased with investment funds of Mr.
Bennett and his spouse and are held in a Lens Group-managed account. Mr.
Holmes used his personal funds to purchase 4,000 shares of Common Stock,
which he owns as of the date hereof, which shares of Common Stock were not
purchased at the direction of Lens or Ram. John B. Goodrich used his
personal funds to purchase 2,150 shares of Common Stock, which he owns as
of the date hereof, which shares of Common Stock were not purchased at the
direction of Lens or Ram. Barbara A. Sleasman used her personal funds to
purchase 1,000 shares of Common Stock, which she owns as of the date
hereof, which shares were not purchased at the direction of Lens or Ram.
William Schaffner used his personal funds to purchase 500 shares of Common
Stock, which he owns as of the date hereof, which shares were not
purchased at the direction of Lens or Ram. Lens is the direct beneficial
owner of 776,673 shares of Common Stock (including 1,000 shares held of
record by Lens II, L.P.). Ram is the direct beneficial owner of 312,740
shares of Common Stock. The Lens Group may be deemed to be the beneficial
owner of 1,097,063 shares of Common Stock in the aggregate, representing
approximately 4.1% of the outstanding shares of Common Stock (does not
include shares beneficially owned by Mr. Siguler - see footnote 2). Other
than with respect to purchases using personal funds, as set forth above,
Mr. Higgins, Mr. Holmes, Mr. Monks and Mr. Bennett each disclaim
beneficial ownership of all shares of Common Stock held by the Lens Group.
Nothing herein shall be deemed to be an admission that any member of the
Lens Group or the beneficial owners of any of the shares of Common Stock
held of record by any participants in any proxy solicitation by the Lens
Group pursuant to Regulation 14A under the Exchange Act, constitute a
"group" within the meaning of Section 13(d) of the Securities Exchange Act
of 1934, as amended, or the rules and regulations thereunder or of any
provision of the Delaware General Corporation Law.
(2) Includes shares held by the following trusts of which Mr. Siguler is the
trustee: (a) the George W. Siguler Jr. Minority Trust, (b) the Charles A.
Siguler Minority Trust and (c) the Emily A. Siguler Minority Trust.
Because Mr. Siguler is a participant in a proxy solicitation with the
members of the Lens Group set forth in footnote 1 above, he may be deemed
to be acting in concert with them with respect to the Common Stock.
Therefore, Mr. Siguler may be deemed to beneficially own the shares of
Common Stock beneficially owned by them, and they may be deemed to
beneficially own the shares of Common Stock beneficially owned by Mr.
Siguler. Mr. Siguler and the other members of the Lens Group disclaim such
beneficial ownership.
All transactions in securities of the Company engaged in by any
member of the Lens Group during the past two years are summarized in Annex B,
which is incorporated herein by reference.
13
<PAGE>
VOTE REQUIRED
The proposed election of Directors requires the affirmative vote of a
plurality of the shares of Common Stock of the Company having voting power
present in person or represented by proxy and entitled to vote thereon at the
2000 Annual Meeting. The affirmative vote of the holders of a majority of the
votes cast at the meeting will be required to approve each other proposal.
Our Proxy Statement and a form of proxy will be delivered to holders
of at least the percentage of the Company's Common Stock required under
applicable law to carry the proposal.
METHOD OF COUNTING VOTES AND PROXY PROCEDURES
Votes will be counted and certified by independent inspectors of
election. Under the rules of the Securities and Exchange Commission, boxes and a
designated blank space are provided on the proxy card for you to mark if you
wish to vote "for" or "against" or "abstain" from voting on one or more of the
proposals, or to withhold authority to vote for one or more of the nominees for
Director. Delaware law and the Company's By-laws require the presence of a
quorum, in person or by proxy, consisting of at least a majority of the
outstanding shares of Common Stock at the 2000 Annual Meeting. Abstentions and
broker non-votes will be included in the number of shares of Common Stock
present or represented at the 2000 Annual Meeting for purposes of determining
whether a quorum exists. Votes withheld in connection with the election of one
or more of the nominees for director will not be counted as votes cast for those
individuals and will not affect the outcome of the election. However,
abstentions with respect to any proposal brought to a vote at the 2000 Annual
Meeting will have the same effect as a vote against such proposal. Broker
non-votes, which occur when brokers do not receive voting instructions from
their customers on non-routine matters, and consequently have no discretion to
vote on those matters, are treated as shares not present for the purpose of the
vote with respect to a specific proposal and therefore will have no effect on
the outcome of the vote on any such proposal.
If no directions are given and the signed GOLD PROXY CARD is
returned, the attorneys-in-fact appointed in the proxy will vote the shares of
Common Stock represented by any such GOLD PROXY CARD FOR the election of the
Lens Group Nominees and FOR the selection of [__________] as the Company's
auditors. Lens knows of no other business to be presented at the 2000 Annual
Meeting, but if other matters do properly come before the 2000 Annual Meeting,
the attorneys-in-fact appointed in the proxy will use their discretion to vote
the shares of Common Stock represented by GOLD PROXY CARDS in accordance with
their best judgment on such matters.
14
<PAGE>
CERTAIN INFORMATION CONCERNING LENS AND THE OTHER
PARTICIPANTS IN THE SOLICITATION
Information is being given herein for (i) Lens, (ii) Ram Trust
Services, Inc. ("Ram"), (iii) Richard A. Bennett, a natural person and nominee
for the Board of Directors of the Company ("Bennett"), (iv) John P.M. Higgins, a
natural person and nominee for the Board of Directors of the Company
("Higgins"), (v) Robert B. Holmes, a natural person and nominee for the Board of
Directors of the Company ("Holmes"), (vi) John B. Goodrich, a natural person and
employee of Ram ("Goodrich"), (vii) Robert A.G. Monks, a natural person and
nominee for the Board of Directors of the Company ("Monks"), (viii) Barbara A
Sleasman, a natural person and member of Lens ("Sleasman"), (ix) William S.
Schaffner, a natural person and employee of Ram ("Schaffner") and (x) George W.
Siguler a natural person and nominee for the Board of Directors of the Company
("Siguler"), who are each a "participant in a solicitation" (collectively, the
"Participants") as defined under the proxy rules promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended.
Lens is a Maine limited liability company. Ram is a Maine
corporation. Lens and Ram are engaged primarily in the investment management and
investment advisory businesses and are owned and controlled by their common
management (as identified below). The principal place of business and principal
offices of both Lens and Ram are located at 45 Exchange Street, Suite 400,
Portland, Maine 04101. Lens also conducts business at 1200 G Street, N.W., Suite
800, Washington, D.C. 20005.
Each of Lens and Ram manages investment accounts for clients, which
include members of the management of Lens and Ram and affiliated and associated
persons as well as unaffiliated individual and institutional clients.
Additionally, Lens manages investment accounts for certain affiliated limited
partnerships. Each of Lens and Ram has caused investment accounts of certain of
its clients and limited partnerships (collectively, "Clients"), over which it
has discretion, to acquire Common Stock. The Lens Group has voting and
dispositive power over the Common Stock held in these accounts and by these
limited partnerships and, accordingly, may be deemed the beneficial owner for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of such Common Stock. Except for such deemed beneficial
ownership and except as described herein, neither Lens nor Ram, nor any of their
members or associates or such members' associates, own any Common Stock or other
securities of the Company.
Goodrich is employed as a Research Director by Ram, which position
constitutes his principal occupation. Goodrich's business address is c/o Ram
Trust Services, Inc., 45 Exchange Street, Portland, Maine 04101.
Sleasman is a member of and participates in the management of Lens.
Sleasman's business address is c/o Lens Investment Management, LLC, 45 Exchange
Street, Portland, Maine 04101.
15
<PAGE>
Schaffner is a director of Ram, as well as its Treasurer and
Secretary. Schaffner's business address is c/o Ram Trust Services, Inc., 45
Exchange Street, Portland, Maine 04101.
The name, business address, position and principal occupation of each
of the Members of Lens is as follows:
Name and Business Address Position and Principal Occupation
- ------------------------- ---------------------------------
John P.M. Higgins Member/Management Participant
45 Exchange Street
Portland, ME 04101
Robert A.G. Monks Member/Management Participant
45 Exchange Street
Portland, ME 04101
Nell Minow Member/Management Participant
1200 G Street, NW
Suite 800
Washington, DC 20005
Robert B. Holmes Member/Management Participant
45 Exchange Street
Portland, ME 04101
Barbara A. Sleasman Member
1200 G Street, NW
Suite 800
Washington, DC 20005
The principal occupation of each of the individuals listed above is
participation in the management of Lens and Ram.
The name, business address, position and principal occupation of each
of the Members of Ram is as follows:
Name and Business Address Position and Principal Occupation
- ------------------------- ---------------------------------
John P.M. Higgins President, Chief Executive Officer,
45 Exchange Street Director and Controlling Stockholder
Portland, ME 04101
16
<PAGE>
Robert A.G. Monks Director
45 Exchange Street
Portland, ME 04101
William F.K. Monks Director
45 Exchange Street
Portland, ME 04101
William S. Schaffner Secretary, Treasurer and Director
45 Exchange Street
Portland, ME 04101
The principal occupation of each of the individuals listed above is
participation in the management of Ram and/or Lens.
As of the date hereof, Lens and Ram, collectively, have caused their
Clients to expend $17,830,056 of the Clients' investment funds to purchase a
total of 1,089,413 shares of Common Stock.
Holmes is a Client of the Lens Group, and the shares of Common Stock
beneficially owned by Lens and Ram as identified herein include shares purchased
with investment funds of Holmes and his wife held in a Lens Group-managed
account. Holmes has separately used his personal funds to purchase the 4,000
additional shares of Common Stock owned by him as of the date hereof, which
additional shares of Common Stock are not held in a Lens Group-managed account
and were not purchased at the direction of the Lens Group. Because of Holmes'
relationship with Lens and Ram, he may be deemed to be acting in concert with
respect to the Common Stock with them and may be deemed to beneficially own, for
purposes of Section 13(d) of the Exchange Act, the shares of Common Stock
beneficially owned by them, and vice versa. Holmes, Lens and Ram disclaim such
beneficial ownership.
Goodrich is a Client of the Lens Group and the shares of Common Stock
beneficially owned by Lens and Ram as identified herein include shares purchased
with investment funds of Goodrich held in a Lens Group-managed account. Goodrich
used his personal funds to purchase 2,150 shares of Common Stock which he owns
as of the date hereof, which shares of Common Stock were not purchased at the
direction of the Lens Group. Because of Goodrich's relationship with Lens and
Ram, he may be deemed to be acting in concert with respect to the Common Stock
with them and may be deemed to beneficially own for purposes of Section 13(d) of
the Exchange Act the shares of Common Stock beneficially owned by them, and vice
versa. Goodrich, Lens and Ram disclaim such beneficial ownership.
Higgins is a Client of the Lens Group, and the shares of Common Stock
beneficially owned by Lens and Ram as identified herein include shares purchased
with investment funds of Higgins and his spouse held in a Lens Group-managed
account. Because of Higgins' relationship with Lens and Ram, he may be deemed to
be acting in concert with respect to the Common Stock with them and may be
deemed to beneficially own for purposes of Section 13(d) of the Exchange Act the
17
<PAGE>
shares of Common Stock beneficially owned by them. Higgins, Lens and Ram
disclaim such beneficial ownership.
Monks is a Client of the Lens Group, and the shares of Common Stock
beneficially owned by Lens and Ram as identified herein include shares purchased
with investment funds of Monks and his spouse held in a Lens Group-managed
account. Because of Monks' relationship with Lens and Ram, he may be deemed to
be acting in concert with respect to the Common Stock with them and may be
deemed to beneficially own for purposes of Section 13(d) of the Exchange Act the
shares of Common Stock beneficially owned by them. Monks, Lens and Ram disclaim
such beneficial ownership.
Bennett is a Client of the Lens Group, and the shares of Common Stock
beneficially owned by Lens and Ram as identified herein include shares purchased
with investment funds of Bennett and his spouse held in a Lens Group-managed
account. Because of Bennett's relationship with Lens and Ram, he may be deemed
to be acting in concert with respect to the Common Stock with them and may be
deemed to beneficially own for purposes of Section 13(d) of the Exchange Act the
shares of Common Stock beneficially owned by them. Bennett, Lens and Ram
disclaim such beneficial ownership.
Sleasman is a Client of the Lens Group, and the shares of Common
Stock beneficially owned by Lens and Ram as identified herein include shares
purchased with investment funds of Sleasman and her spouse held in a Lens
Group-managed account. Sleasman used her personal funds to purchase 1,000 shares
of Common Stock which she owns as of the date hereof, which shares of Common
Stock were not purchased at the direction of the Lens Group. Because of
Sleasman's relationship with Lens and Ram, she may be deemed to be acting in
concert with respect to the Common Stock with them and may be deemed to
beneficially own for purposes of Section 13(d) of the Exchange Act the shares of
Common Stock beneficially owned by them. Sleasman, Lens and Ram disclaim such
beneficial ownership.
Schaffner is a Client of the Lens Group, and the shares of Common
Stock beneficially owned by Lens and Ram as identified herein include shares
purchased with investment funds of Schaffner and his spouse held in a Lens
Group-managed account. Schaffner used his personal funds to purchase 500 shares
of Common Stock which he owns as of the date hereof, which shares of Common
Stock were not purchased at the direction of the Lens Group. Because of
Schaffner's relationship with Lens and Ram, he may be deemed to be acting in
concert with respect to the Common Stock with them and may be deemed to
beneficially own for purposes of Section 13(d) of the Exchange Act the shares of
Common Stock beneficially owned by them. Schaffner, Lens and Ram disclaim such
beneficial ownership.
No Participant or any of their respective associates owns any
securities of the Company of record but not beneficially.
Mr. Monks is the uncle of Mr. Higgins.
18
<PAGE>
None of the Participants or any of their respective associates has
any arrangement or understanding with any person with respect to (i) any future
employment with the Company or its affiliates or (ii) any future transactions to
which the Company or any of its affiliates will or may be a party.
CERTAIN INTERESTS IN THE PROPOSAL AND WITH RESPECT
TO SECURITIES OF THE ISSUER
To the knowledge of the Lens Group, no member of the Lens Group nor
any of such members' associates, or controlling persons thereof, has any direct
or indirect economic or other interests in the proposal which differ in any way
from the other stockholders of the Company.
As part of their client relationships, Lens and Ram have the power to
direct the voting and the disposition of shares of Common Stock owned by their
respective clients in the accounts they manage or held by affiliated limited
partnership pursuant to written investment management agreements with such
clients and limited partnerships. Under such agreements, Lens' compensation for
its services thereunder may include a share in the appreciation earned by such
investments and, accordingly, Lens' compensation for its services thereunder may
vary with the value of the assets (including any Common Stock) under its
management. None of such agreements, however, requires that such accounts be
invested in securities of the Company or include in their provisions any terms
specifically relating to or varying with the investment of the accounts in
securities of the Company. Mr. Holmes has entered into an investment management
agreement with Ram in his capacity as a client of Ram, has an ownership interest
in Lens and participates in its management. Mr. Goodrich has entered into an
investment management agreement with Ram in his capacity as a client of Ram and
is an employee of Ram. Mr. Monks has entered into an investment management
agreement with Ram, has an ownership interest in Lens and participates in the
management of each of Lens and Ram. Mr. Higgins has entered into an investment
management agreement with Ram, has an ownership interest in Lens and Ram and
participates in the management of each of Lens and Ram. Ms. Sleasman has entered
into an investment management agreement with Ram, has an ownership interest in
Lens and participates in the management of Lens. Mr. Bennett has entered into an
investment management agreement with Ram and participates in the management of
Lens. Mr. Schaffner has entered into an investment management agreement with Ram
and participates in the management of Lens.
To the knowledge of the Lens Group, except as set forth herein,
within the past year, there have been no contracts, arrangements or
understandings between or among any of the members of the Lens Group or their
respective associates or controlling persons or between any members of the Lens
Group and any other person with respect to any securities of the Company,
including but not limited to, joint ventures, loan or option agreements, puts or
calls, guarantees against loss, or guarantees of profit, division of losses or
profits, or the giving or withholding of proxies.
19
<PAGE>
Lens, the other Participants, and each of their affiliates and
associates, intend to vote any shares of Common Stock that they beneficially own
in accordance with the recommendations of the Lens Group set forth herein.
PRINCIPAL OWNERS OF COMMON STOCK
The following table sets forth, as of March 24, 1999, based solely,
except as otherwise indicated herein, on the information contained in the
Company's definitive Proxy Statement for the 1999 Annual Meeting of
Stockholders, the number of outstanding shares of Common Stock beneficially
owned by each person known to the Lens Group as of such date to be the
beneficial owner of more than five percent (5%) of the outstanding shares of
Common Stock, each Director, each of the executive officers named in the
executive compensation table of such definitive Proxy Statement and all
executive officers and directors as a group. For purposes of the following
table, John F. Cogan, Jr., David D. Tripple, Stephen G. Kasnet, William H.
Smith, Jr., Alicja K. Malecka, Robert L. Butler and William H. Keough are
referred to as the "named executive officers."
Except as otherwise noted in a footnote below, each Director, nominee
and executive officer has sole voting and investment power with respect to the
number of shares of Common Stock set forth opposite his or her name in the
table.
<TABLE>
<CAPTION>
PERCENT OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER, COMMON STOCK
EXECUTIVE OFFICER OR DIRECTOR NUMBER OF SHARES (1) NATURE OF OWNERSHIP (1) OUTSTANDING (2)
----------------------------- -------------------- ----------------------- ---------------
<S> <C> <C> <C> <C>
John F. Cogan, Jr.
60 State Street 2,352,094 (3) Direct 8.8%
Boston, MA 02109 1,255,950 (4) Indirect 4.8%
Southeastern Asset
Management, Inc.
6410 Poplar Avenue
Suite 900
Memphis, TN 38119 4,932,100 (5) Indirect 18.7%
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580 2,350,105 (6) Indirect 8.9%
Robert L. Butler 393,708 (3)(7) Direct 1.5%
David D. Tripple 316,101 (3) Direct 1.2%
Maurice Engleman 4,000 Direct *
Alan J. Strassman __ ___ ___
Jaskaran S. Teja 18,980(3) Direct *
John H. Valentine 4,000 Direct *
Stephen G. Kasnet 27,297(3) Direct *
20
<PAGE>
Alicja K. Malecka 98,407(3) Direct *
William H. Smith, Jr. 287,926 (3) Direct 1.1%
William H. Keough 149,432 (3) Direct *
All directors and executive officers as a 3,749,493 (3)(7) Direct 13.7%
group (15 persons) 1,255,950 (4) Indirect 4.8%
</TABLE>
- -----------------------
* Denotes ownership of less than 1% of outstanding shares of Common Stock.
(1) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares. Unless otherwise indicated, each stockholder referred to above has
sole voting and investment power with respect to the shares listed.
(2) For purposes of this table, the number of outstanding shares of Common
Stock of the Company is adjusted for each director and executive officer
to include the number of shares of Common Stock into which any options
held by such director or executive officer are exercisable on or before
May 23, 1999.
(3) Includes shares of Common Stock that the listed person has the right to
acquire under outstanding options that are exercisable on or before May
23, 1999, including 303,000 shares for Mr. Cogan; 14,500 shares for Mr.
Kasnet; 75,000 shares for Ms. Malecka; 120,000 shares for Mr. Smith;
163,000 shares for Mr. Tripple; 163,000 shares for Mr. Butler; 115,500
shares for Mr. Keough; 15,400 shares for Dr. Teja; and 1,039,400 shares
for all directors and executive officers as a group.
(4) Includes an aggregate of 378,754 shares of Common Stock held in trusts
with respect to which Mr. Cogan may be deemed to be a beneficial owner by
reason of his position as a trustee and/or his interests as a beneficiary,
over which shares Mr. Cogan exercises shared voting and investment power.
Also includes an aggregate of 877,196 shares of Common Stock held by
voting trusts of which Mr. Cogan is the sole trustee.
(5) Consists of shares of Common Stock held by a variety of investment
advisory clients, over which shares Southeastern Asset Management, Inc.
exercises sole, shared or no voting authority and exercises sole or shared
investment power. The foregoing is based solely on information provided by
the stockholder in Amendment No. 12 to Schedule 13G dated February 10,
1999 with respect to shares held on December 31, 1998.
(6) Consists of shares of Common Stock held by a variety of investment
advisory and investment company clients, over which shares Gabelli Funds,
Inc., Gabelli Asset Management, Inc. or one of their affiliates exercises
sole voting authority and sole investment power. The foregoing is based
solely on information provided by the stockholder in Amendment No. 4 to
Schedule 13D dated March 17, 1999 with respect to shares held on March 12,
1999.
(7) Includes 84,300 shares that Mr. Butler owns jointly with his wife.
PROXY SOLICITATION; EXPENSES
Proxies may be solicited by members of the Lens Group and partners
and employees of members of the Lens Group by mail, telephone, telecopier, the
Internet and personal solicitation. Regular employees and members of the Lens
Group and their affiliates may be used to solicit proxies and, if used, will not
receive additional compensation for such efforts. Banks, brokerage houses and
21
<PAGE>
other custodians, nominees and fiduciaries will be requested to forward the
solicitation material of the Lens Group to their customers for whom they hold
shares of Common Stock, and the Lens Group will reimburse them for their
reasonable out-of-pocket expenses. In addition, the Lens Group has retained
MacKenzie Partners ("MacKenzie") to assist in the solicitation of proxies for a
fee of $_________ plus out-of-pocket expenses. MacKenzie will employ
approximately [ ] people to solicit the Company's stockholders. In addition to
the solicitation of proxies from, and delivery of information to, Pioneer
stockholders, it is contemplated that MacKenzie will, provide advisory services
as requested pertaining to the solicitation of proxies. The Lens Group also
contemplates indemnifying MacKenzie against certain liabilities and expenses
relating to the proxy solicitation.
The entire expense of preparing, assembling, printing and mailing
this Proxy Statement and related materials, and the cost of soliciting proxies
for the proposals endorsed by the Lens Group will be borne by the Lens Group. We
estimate such expenses to be $[______] (including professional fees and
expenses, but excluding any costs represented by salaries and wages of regular
employees of the Lens Group and its affiliates). The total expenditures incurred
to date have been approximately $[______], to be paid by us. We do not intend to
seek reimbursement from the Company for our expenses.
ADDITIONAL INFORMATION
The principal executive offices of Pioneer are located at 60 State
Street, Boston, Massachusetts, 02109. Except as otherwise noted herein, the
information concerning Pioneer has been taken from or is based upon documents
and records on file with the Securities and Exchange Commission and other
publicly available information. Although we do not have any knowledge that would
indicate that any statement contained herein based upon such documents and
records is untrue, we do not take any responsibility for the accuracy or
completeness of the information contained in such documents and records, or for
any failure by Pioneer to disclose events that may affect the significance or
accuracy of such information.
STOCKHOLDERS' PROPOSALS IN COMPANY'S PROXY STATEMENT
The Company's By-laws require that notice of nominations to the Board
of Directors proposed by stockholders be received by the Secretary of the
Company, along with certain other specified material, not less than 60 nor more
22
<PAGE>
than 90 days prior to the annual meeting of stockholders; provided, however,
that if less than 70 days' notice or prior public disclosure of the date of the
meeting is provided to stockholders, such notification must be provided to the
Secretary not later than the close of business on the 10th day following the day
on which the notice of meeting was mailed or public disclosure thereof was
provided, whichever occurs first.
Pursuant to Rule 14a-8(e)(2) under the Exchange Act, any proposal by
a stockholder at the 2001 Annual Meeting, to be included in the Company's proxy
statement for the 2001 annual meeting of stockholders must be received in
writing at the Company's principal executive offices not less than 120 calendar
days in advance of the date that the Company's proxy statement was released to
security holders in connection with its 2000 Annual Meeting of Stockholders.
However, if the date of the meeting is changed by more than 30 days from the
date of the previous year's meeting, then the deadline is a reasonable time
before the Company begins to print and mail its proxy materials.
Proposals should be addressed to the Secretary, 60 State Street,
Boston, Massachusetts 02109.
Dated: March 21, 2000
Sincerely,
Your Fellow Stockholder,
Lens Investment Management, LLC
23
<PAGE>
ANNEX A
Our estimated value of the Pioneer Investment operating segment
represents a simple average, applying the median peer multiple, using seven
valuation metrics. We have assumed that Pioneer's "peer" group for its Pioneer
Investment operating segment consists of the following companies: Eaton Vance
Corp ("Eaton"), Franklin Resources, Inc. ("Franklin"), Gabelli Asset Management
Inc. ("Gabelli"), SEI Corp ("SEIC"), T. Rowe Price Associates Inc. ("TROW"),
United Asset Management Corp. ("UAM") and Waddell & Reed Financial Inc. ("WDR").
We believe that averaging the seven valuation methods, as opposed to utilizing
one over the others, provides a more accurate range of implied values.
The valuation "metrics" we used to calculate the average estimated
value of the Pioneer Investment operating segment consisted of the following:
o PRICE/TRAILING TWELVE MONTH ("TTM") SALES. This multiple is
equal to the market price per share as of February 11, 2000
divided by the trailing twelve month sales per share through
the quarter ending September 30, 1999, except for Eaton, which
is through the quarter ending October 31, 1999. For Pioneer's
peers, the Price/TTM Sales multiples were: Eaton - 4.03x;
Franklin - 3.66x; Gabelli - 2.92x; SEIC - 3.74x; TROW - 4.26x;
UAM - 0.92x; WDR - 5.59x. The TTM sales per share for Pioneer
Investment, through September 30, 1999, was $7.59 (net
revenues and sales for this segment divided by 26,503,913
actual shares outstanding). The median peer multiple is 3.74x.
Thus, the Lens estimated value of "Pioneer Investment" using
Price/TTM Sales is $28.39 per share (i.e., $7.59 multiplied by
3.74).
o PRICE/TTM NET INCOME. This multiple is equal to the market
price per share as of February 11, 2000 divided by the
trailing twelve month's net income per share through the
quarter ending September 30, 1999, except for Eaton, which is
through the quarter ending October 31, 1999. For Pioneer's
peers, the Price/TTM Net Income multiples were: Eaton - 28.3x;
Franklin - 17.7x; Gabelli - 11.8x; SEIC - 27.9x; TROW - 21.3x;
UAM - 14.1x; WDR - 23.1x. The TTM net income per share for
Pioneer Investment, through the quarter ending September 30,
1999, was $1.25 per share (net income before change in
accounting principle divided by actual shares outstanding).
The median peer multiple is 21.3x. Thus, the Lens estimated
value of "Pioneer Investment" using Price/TTM Net Income per
share is $26.63 per share (i.e., $1.25 multiplied by 21.3).
o PRICE/ESTIMATED CALENDAR YEAR ("CY99") NET INCOME. This
multiple is equal to the market price per share as of February
11, 2000 divided by the estimated calendar year 1999 earnings
per share. Lens estimated the calendar year 1999 earnings per
share for the aforementioned "peer" group using the FirstCall
consensus earnings estimates as of February 11, 2000. For
Pioneer's peers, the P/CY99 Net Income multiples were as
follows: Eaton - 16.8x; Franklin - 16.5x; Gabelli - 10.6x;
SEIC - 26.3x; TROW - 19.0x; UAM - 14.0x; WDR - 20.3x. The CY99
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net income per share for Pioneer Investment, as estimated by
Lens, is $1.35 per share (estimated net income before change
in accounting principle divided by actual shares outstanding).
The median peer multiple is 16.8x. Thus, the Lens estimated
value of "Pioneer Investment" using P/CY99 Net Income per
share is $22.75 per share (i.e., $1.35 multiplied times 16.8).
o PRICE/ESTIMATED CY00 NET INCOME. This multiple is equal to the
market price per share as of February 11, 2000 divided by the
estimated calendar year 2000 earnings per share. Lens
estimated the calendar year 2000 earnings per share for the
aforementioned "peer" group using the FirstCall consensus
earnings estimates as of February 11, 2000. For Pioneer's
peers, the P/CY00 Net Income multiples were as follows: Eaton
- 13.4x; Franklin - 14.3x; Gabelli - 9.5x; SEIC - 20.6x; TROW
- 16.6x; UAM - 12.4x; WDR - 15.2x. The CY00 net income per
share for Pioneer Investment, as estimated by Lens, is $1.43
per share (estimated net income divided by actual shares
outstanding). The median peer multiple is 14.3x. Thus, the
Lens estimated value of "Pioneer Investment" using P/CY00 Net
Income per share is $20.42 per share (i.e., $1.43 multiplied
times 14.3).
o EV/TTM IBIT. This multiple is equal to the "Enterprise Value"
(market value of common stock as of February 11, 2000 plus
minority interest capital plus total debt less cash and cash
equivalents) divided by the trailing twelve month's IBIT
(income from continuing operations before taxes and interest
expense) through the quarter ending September 30, 1999, except
for Eaton, which is through the quarter ending October 31,
1999. For Pioneer's peers, the Price/TTM IBIT multiples were
as follows: Eaton - 15.3x; Franklin - 11.5x; Gabelli - 5.8x;
SEIC - 15.4x; TROW - 10.4x; UAM - 8.9x; WDR - 12.4x. The TTM
IBIT for Pioneer Investment, through September 30, 1999, was
$51.1 million. The median peer multiple is 11.52x. Thus, the
Lens estimated value of "Pioneer Investment" using Price/TTM
IBIT is $22.22 per share (i.e., $51.1 million multiplied times
11.52 less $0 debt and minority interest capital plus $0 cash
divided by actual shares outstanding).
o EV/TTM IBITDA. This multiple is equal to the Enterprise Value
(market value of common stock as of February 11, 2000 plus
minority interest capital plus total debt less cash and cash
equivalents) divided by the trailing twelve month's IBITDA
(income from continuing operations before taxes, interest
expense and depreciation and amortization expense) through the
quarter ending September 30, 1999, except for Eaton, which is
through the quarter ending October 31, 1999. For Pioneer's
peers, the Price/TTM IBITDA multiples were as follows: Eaton -
15.0x; Franklin - 10.9x; Gabelli - 5.8x; SEIC - 13.4x; TROW -
9.6x; UAM - 5.1x; WDR - 11.5x. The TTM IBITDA for Pioneer
Investment, through September 30, 1999, was $63.8 million. The
median peer multiple is 10.9x. Thus, the Lens estimated value
of "Pioneer Investment" using Price/TTM IBITDA is $26.28 per
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share (i.e., $63.8 million multiplied times 10.9 less $0 debt
and minority interest capital plus $0 cash divided by actual
shares outstanding).
o PRICE/ASSETS UNDER MANAGEMENT ("AUM"). This multiple is equal
to the market price per share divided by the amount of assets
the company manages on behalf of its clients, as of the latest
available date, on a per share basis. This ratio is expressed
as a percent. For Pioneer's peers, the Price/AUM percentages
were as follows: Eaton - 3.4%; Franklin - 3.5%; Gabelli -
2.2%; SEIC - 2.6%; TROW - 2.3%; UAM - 0.4%; WDR - 5.0%. The
latest available assets under management attributed to
Pioneer's Pioneer Investment segment were $905.5 per share.
The median peer percentage is 2.6%. Thus, the Lens estimated
value of "Pioneer Investment" using Price/AUM is $23.24 per
share (i.e., $905.5 per share multiplied times 2.6%).
We believe the comparable trading and sale metrics we assigned to the
Company's Pioneer Investment segment are appropriate for the following reasons:
o Pioneer Investment was one of the first U.S. mutual fund
families;
o its use of broad distribution channels;
o the laudable performance of Pioneer's mutual funds,
particularly its growth and value-style equity and high-yield
fixed income; and
o its substantial assets under management suggests significant
ability to generate operating cash flow.
The valuation "metrics" we used to calculate the estimated value of
the Pioneer Financial operating segment
consisted of the following:
o RUSSIAN FINANCIAL SERVICES ("RFS") - $1.15 PER SHARE. Calculated by
applying Pioneer Financial's 51% ownership to RFS assets believed to
be valued at $60 million, then dividing this total by actual shares
outstanding.
o POLISH PENSION FUND OPERATION -- $1.76 PER SHARE. Calculated by
dividing the price Nationwide Financial Services Inc. ("Nationwide")
paid to acquire an ownership stake of Pioneer's Polish Pension Fund
Operation, by the ownership percentage Nationwide received,
subtracting the amount that Nationwide paid. Thus, the Lens
estimated value of Pioneer's stake in its Polish Pension fund
operation is the $20 million Nationwide paid divided by the 30%
ownership Nationwide received, less the $20 million Nationwide owns,
divided by actual shares outstanding.
o POLISH MUTUAL FUND OPERATION -- $0.23 PER SHARE. This assumes that
the segment is worth 2% of the estimated assets under management per
share. ($11.31 per share, which equals $300 million in assets under
management divided by actual shares outstanding, then multiplied by
2%, resulting in $0.23 per share).
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o CZECH REPUBLIC MUTUAL FUND OPERATION -- $0.06 PER SHARE. This
assumes that the segment is worth 2% of the estimated assets under
management per share ($3.21 per share, which equals $85 million in
assets under management divided by actual shares outstanding, then
multiplied by 2%, resulting in $0.06 per share).
o ASIAN MUTUAL FUND JOINT VENTURE -- $0.09 PER SHARE. This assumes
that the entire operation is valued at 2% of estimated assets under
management, or $5 million (assuming $250 million under management,
Pioneer's 48% interest would be worth $2.4 million, or $0.09 per
share ($2.4 million divided by actual shares outstanding)).
The valuation "metrics" we used to calculate the estimated value of
the Pioneer Global operating segment consisted of the following:
o GOLD MINING OPERATION. Lens estimates the annual operating earnings
(net income plus depreciation and amortization expense) of Pioneer's
gold mining operation at $2.3 million (equal to operating earnings
for the twelve months ended March 31, 1999). According to company
reports, they are currently in negotiations to sell this operation.
We estimate that the company could receive 4.4x our estimated
operating earnings. This would equal $10.3 million ($2.3 million
multiplied times 4.4), or $0.35 per share after giving consideration
to holdings of a minority investor ($10.3 million multiplied by 90%,
which is equal to $9.3 million, then divided by actual shares
outstanding).
o TIMBER OPERATION. According to company reports, they are currently
in negotiations to sell this operation. Lens believes that because
Pioneer has incurred operating losses (net loss plus depreciation
and amortization expense) each fiscal year the company has operated
this segment, no such sale will be consummated. We note that this
operation has $5.6 million of bank debt ($0.21 per actual share
outstanding) for which it is liable. Thus, we have subtracted $0.21
per share from our overall Pioneer Global value of $0.47 per share.
o VENTURE CAPITAL OPERATION. According to company reports, this
segment has $49.9 million in assets. Of this $49.9 million, $22.5
million is reported to be "cash equivalent" assets and the remaining
$27.4 million is invested securities with a market value believed by
Pioneer to be $27.4 million. Through a wholly owned subsidiary,
Pioneer owns 16% of this operation, or $49.9 million. Lens has
valued these assets at 100% of their stated value and assumes
Pioneer's 16% share is worth $7.98 million, or $0.30 per share.
o REAL ESTATE SERVICES OPERATION. Lens estimates the value of this
segment of the Company's operations using a Price/TTM Sales multiple
we believe is appropriate. Price/TTM Sales is defined as market
price per share divided by the trailing twelve month sales per share
of this segment, through the quarter ending September 30, 1999. The
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trailing twelve month sales per share through September 30, 1999 was
$0.05 per share ($1.5 million divided by actual shares outstanding).
We believe that if Pioneer were to sell this operation, they could
possibly receive 0.50x the sales per share of the operation. Thus,
we believe the operation has a value of $0.03 per share to Pioneer.
In conducting our analysis, we reviewed publicly available
information, including relevant industry market research studies and company
research reports, as well as key economic and market indicators, including
interest rates and general stock market performance. While our business as
investment managers involves assessing the estimated worth of publicly traded
companies on a daily basis, we do not regularly engage in the valuation of
companies involved in some of the industries that Pioneer is in, such as U.S.
and European asset management, gold mining, timber harvesting, commercial real
estate services and venture capital.
The foregoing notes do not purport to be a complete description of
the analyses performed by us. Estimating the value of a company is a complex
process. We believe that our analysis must be considered as a whole, and that
selecting portions of such analysis without considering all factors would create
an incomplete view of the processes underlying our opinion. We did not attempt
to assign specific weights to particular measurement metrics. In addition, our
analyses were based solely on publicly available information and we have not
conducted any solicitation of third-party interest in Pioneer or its three
business segments. However, there were no specific factors reviewed by us that
did not support our opinion that the current management team of the Company has
not unlocked the potential stockholder value of the Company. Any estimates
contained in our analyses are not necessarily indicative of actual values, which
may be significantly more or less favorable than as set forth therein.
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ANNEX B
The following is a summary of all transactions in Company securities
by the Participants over the last two years.
DATE OF TRANSACTION NATURE OF TRANSACTION NUMBER OF SHARES
- ------------------- --------------------- ----------------
5/12/99 Purchase by Ram 50
6/21/99 Purchase by Ram 20
6/22/99 Purchase by Ram 2,244
6/25/99 Purchase by Ram 290
6/28/99 Purchase by Ram 7,323
6/29/99 Purchase by Ram 7,071
7/1/99 Purchase by Ram 4,300
7/2/99 Purchase by Ram 5,900
7/7/99 Purchase by Ram 10,011
7/12/99 Purchase by Ram 550
7/13/99 Purchase by Ram 4,005
7/14/99 Purchase by Ram 10,000
7/15/99 Purchase by Ram 21,962
7/16/99 Purchase by Ram 14,865
7/20/99 Purchase by Ram 20,000
7/22/99 Purchase by Ram 62,441
7/23/99 Purchase by Ram 800
7/26/99 Purchase by Ram 465
7/27/99 Purchase by Ram 630
8/5/99 Purchase by Ram 20,000
8/13/99 Purchase by Ram 5,000
8/17/99 Purchase by Ram 2,010
8/18/99 Purchase by Ram 965
8/20/99 Purchase by Ram 11
8/25/99 Purchase by Ram 10
9/23/99 Purchase by Ram 885
10/18/99 Sale by Ram (20)
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<PAGE>
DATE OF TRANSACTION NATURE OF TRANSACTION NUMBER OF SHARES
- ------------------- --------------------- ----------------
10/27/99 Purchase by Ram 1,460
10/28/99 Purchase by Ram 1,155
10/29/99 Purchase by Ram 500
11/2/99 Purchase by Ram 200
11/3/99 Purchase by Ram 30
11/10/99 Sale by Ram (175)
11/15/99 Purchase by Ram 70
11/16/99 Purchase by Ram 32
11/29/99 Purchase by Ram 1,875
11/30/99 Purchase by Ram 25
12/8/99 Purchase by Ram 500
12/21/99 Purchase by Ram 200
12/21/99 Sale by Ram (600)
12/29/99 Purchase by Ram 350
12/30/99 Purchase by Ram 300
1/26/00 Purchase by Ram 100
2/7/00 Purchase by Ram 600
2/8/00 Purchase by Ram 66,800
2/9/00 Purchase by Ram 34,200
3/1/00 Purchase by Ram 3,330
6/17/99 Purchase by Lens 16,500
6/18/99 Purchase by Lens 10,000
6/22/99 Purchase by Lens 47,756
6/25/99 Purchase by Lens 15,410
6/28/99 Purchase by Lens 5,377
6/29/99 Purchase by Lens 12,029
6/30/99 Purchase by Lens 9,700
7/1/99 Purchase by Lens 4,300
7/2/99 Purchase by Lens 5,800
7/7/99 Purchase by Lens 10,389
7/8/99 Purchase by Lens 2,300
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<PAGE>
DATE OF TRANSACTION NATURE OF TRANSACTION NUMBER OF SHARES
- ------------------- --------------------- ----------------
7/12/99 Purchase by Lens 3,250
7/13/99 Purchase by Lens 2,595
7/14/99 Purchase by Lens 10,000
7/15/99 Purchase by Lens 18,038
7/16/99 Purchase by Lens 85,135
7/20/99 Purchase by Lens 30,000
7/22/99 Purchase by Lens 171,559
7/26/99 Purchase by Lens 24,535
8/17/99 Purchase by Lens 6,990
8/18/99 Purchase by Lens 2,735
8/20/99 Purchase by Lens 4,675
10/27/99 Purchase by Lens 38,540
10/28/99 Purchase by Lens 28,545
11/1/99 Purchase by Lens 25,000
11/8/99 Purchase by Lens 20,000
11/15/99 Sale by Lens (12,885)
11/29/99 Purchase by Lens 9,425
11/30/99 Purchase by Lens 14,575
12/1/99 Purchase by Lens 5,000
12/2/99 Purchase by Lens 28,300
12/3/99 Purchase by Lens 12,500
12/30/99 Purchase by Lens 12,700
12/31/99 Purchase by Lens 22,500
1/4/00 Purchase by Lens 10,000
1/5/00 Purchase by Lens 13,400
1/26/00 Purchase by Lens 10,000
2/3/00 Purchase by Lens 20,000
2/4/00 Purchase by Lens 20,000
6/18/99 Purchase by John Goodrich 250
9/7/99 Purchase by John Goodrich 300
9/16/99 Purchase by John Goodrich 300
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<PAGE>
DATE OF TRANSACTION NATURE OF TRANSACTION NUMBER OF SHARES
- ------------------- --------------------- ----------------
10/14/99 Purchase by John Goodrich 400
10/20/99 Purchase by John Goodrich 400
2/4/00 Purchase by John Goodrich 500
1/21/00 Purchase by Robert Holmes 1,000
1/24/00 Purchase by Robert Holmes 1,700
1/31/00 Purchase by Robert Holmes 300
2/4/00 Purchase by Robert Holmes 1,000
6/25/99 Purchase by Barbara Sleasman 1,300
6/29/99 Purchase by Barbara Sleasman 700
1/12/00 Sale by Barbara Sleasman (1,000)
3/1/00 Purchase by William Schaffner 500
B-4
