______________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 8, 1995
______________________________
TO OUR STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of NPC
INTERNATIONAL, INC. (the ``Company``) will be held at the Memorial
Auditorium, 503 North Pine, Pittsburg, Kansas, on Tuesday, August 8, 1995,
at 10:00 a.m., Central Daylight Savings Time, for the following purposes:
1.For the Class A Stockholders to elect two directors to
serve a three-year term and until their successors are
elected and qualified;
2.For the Class A and Class B Stockholders, voting as
separate classes, to approve a stock recapitalization plan
for the Company, including the adoption of an amendment to
the Restated Articles of Incorporation to allow the
payment of a dividend to the holders of the Class A common
stock and to subsequently amend the Restated Articles of
Incorporation to reclassify and convert the outstanding
shares of Class A common stock and Class B common stock
into a single class of new common stock; and
3.For the Class A Stockholders to transact such other
business as may properly come before the meeting or any
adjournment of the meeting.
Stockholders of record at the close of business on June 30, 1995, will
be entitled to vote at the meeting. The Class A Stockholders are entitled
to vote on all matters submitted to a vote at the meeting and the Class B
Stockholders are entitled to vote on Proposal Two as stated above. The
annual report for the year ended March 28, 1995, is enclosed herewith. A
complete list of stockholders entitled to notice of and to vote at the
meeting will be available and open to the examination of any stockholder
for any purpose germane to the meeting during ordinary business hours on
and after July 28, 1995, at the office of the Company, 720 W. 20th Street,
Pittsburg, Kansas 66762.
All stockholders are cordially invited to attend the meeting. For the
convenience of those stockholders who do not expect to attend the meeting
in person and desire to have their stock voted, a form of proxy and an
envelope, for which no postage is required, are enclosed. The white
colored proxy card is for use by Class A Stockholders and the blue colored
proxy card is for use by Class B Stockholders. Any stockholder who later
finds he can be present at the meeting, or for any other reason desires to
do so, may revoke this proxy at any time before it is voted.
Please complete, sign, date and mail promptly the appropriate proxy
card in the return envelope furnished for that purpose, even if you
currently plan to attend the meeting.
By Order of the Board of Directors,
David G. Short
Secretary
Pittsburg, Kansas
July 17, 1995
NPC INTERNATIONAL, INC.
720 W. 20TH STREET
PITTSBURG, KANSAS 66762
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 8, 1995
SOLICITATION AND REVOCATION OF PROXY
This Proxy Statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of NPC International,
Inc. (the ``Company``), to be voted at its Annual Meeting of Stockholders
to be held at the Memorial Auditorium, 503 North Pine, Pittsburg, Kansas at
10:00 a.m. on Tuesday, August 8, 1995. The mailing address of the principal
executive offices of the Company is 720 West 20th Street, Pittsburg, Kansas
66762. The individuals named as proxies are O. Gene Bicknell and James K.
Schwartz. Proxies may be solicited by use of the mails, by personal
interview, or by telephone and may be solicited by officers and directors,
and by other employees of the Company. Brokers, nominees, fiduciaries, and
other custodians will be requested to forward soliciting material to the
beneficial owners of shares and will be reimbursed for their expenses in
forwarding such material. All costs of solicitation of proxies will be
borne by the Company.
Only holders of record of Class A Common Stock, $.01 par value per
share (the ``Class A Stock``), as of the close of business on June 30,
1995, are entitled to vote on all issues presented for a vote at the
meeting or any adjournment or postponement thereof, and holders of record
of Class B Common Stock, $0.01 par value per share (the ``Class B Stock``),
as of the close of business on June 30, 1995 are entitled to vote as a
separate class on Proposal Two with respect to the recapitalization plan.
All shares of common stock represented by proxies received will be voted in
accordance with instructions contained therein. In the absence of voting
instructions, the shares will be voted FOR the proposals listed herein. A
holder of common stock giving a proxy has the power to revoke it any time
before it is voted by notifying the Secretary of the Company in writing, by
submitting a substitute proxy having a later date or by voting in person at
the meeting. This Proxy Statement and forms of proxy are first being mailed
to stockholders on July 21, 1995.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE AND RETURN THE
FORM OF PROXY SENT TO THEM WITH THIS PROXY STATEMENT.
VOTING AT THE MEETING
At the close of business on June 30, 1995, the record date for the
determination of stockholders entitled to vote at the Annual Meeting, there
were 12,356,755 shares of Class A Stock outstanding and 12,150,569 shares
of Class B Stock.
AS OF THE ANNUAL MEETING RECORD DATE, MR. O. GENE BICKNELL, CHIEF
EXECUTIVE OFFICER AND THE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE
COMPANY, BENEFICIALLY HELD 7,605,651 SHARES OF CLASS A STOCK, CONSTITUTING
APPROXIMATELY 61.6% OF THE CLASS A STOCK, AND 7,597,478 SHARES OF THE CLASS
B STOCK, CONSTITUTING APPROXIMATELY 62.5% OF THE CLASS B STOCK. MR.
BICKNELL HAS INFORMED THE COMPANY THAT HE INTENDS TO VOTE ALL SUCH SHARES
IN FAVOR OF PROPOSALS ONE AND TWO. IF HE VOTES SUCH SHARES ACCORDINGLY,
THEN SUCH PROPOSALS WILL BE APPROVED REGARDLESS OF HOW ANY OTHER HOLDER OF
SHARES OF CLASS A STOCK OR CLASS B STOCK VOTES WITH RESPECT TO THE
PROPOSALS.
Class A Stock
Each share of Class A Stock is entitled to one vote on all matters
presented for stockholder action at the meeting. All shares of Class A
Stock have cumulative voting rights in the election of directors, and there
are no conditions precedent to the exercise of those rights. Cumulative
voting means a Class A Stockholder is entitled to cast a total number of
votes equal to the number of his shares multiplied by the number of
directors to be elected at the meeting, and can cast them all for one
nominee or can divide them among as many nominees as he or she chooses. A
holder of Class A Stock may divide his cumulative votes among the nominees
by marking the white colored proxy card according to instructions on the
card. If a Class A Stockholder does not allocate his votes, then such
stockholder`s cumulative votes will be allocated equally among the nominees
for whom authority to vote is granted.
Only Class A Stockholders of record at the close of business on June
30, 1995, will be entitled to vote on all matters submitted for a vote at
the meeting. Votes submitted as abstentions on any proposal will be counted
as votes against such proposal. An affirmative vote of the majority of the
outstanding shares of Class A Stock present at the meeting in person or by
proxy is required for approval of all proposals, except Proposal Two. For
Proposal Two to be approved, an affirmative vote of a majority of the total
number of outstanding shares of Class A Stock and a majority of the total
number of outstanding shares of Class B Stock, each voting as a separate
class, is required. Broker non-votes will not count for or against any
proposal, other than Proposal Two, because such shares will not be counted
as shares present at the meeting. Broker non-votes will count against
Proposal Two. A broker ``non-vote`` occurs when a nominee holding shares
for a beneficial holder does not have discretionary voting power and does
not receive voting instructions from the beneficial owner.
Class B Stock
Pursuant to the Restated Articles of Incorporation, Class B Stock has
no voting rights other than those required by law. Under the Kansas
General Corporation Code, holders of Class B Stock will be entitled to vote
on proposals to increase or decrease the number of authorized shares of
Class B Stock, to change the par value of the Class B Stock, or to alter or
change the powers, preferences or special rights of the shares of Class B
Stock so as to affect them adversely. Consequently, the Class B
Stockholders are entitled to vote as a class on the recapitalization plan
as provided in Proposal Two. On the vote for Proposal Two, each share of
Class B Stock is entitled to one vote. Only Class B Stockholders of record
at the close of business on June 30, 1995, will be entitled to vote at the
meeting. For Proposal Two to be approved, an affirmative vote of a
majority of the total number of outstanding shares of Class A Stock and a
majority of the total number of outstanding shares of Class B Stock, each
voting as a separate class, is required. Votes submitted as abstentions
will be deemed to be and counted as votes against such proposal. Broker
non-votes of Class B Stock will count against Proposal Two.
PROPOSAL NUMBER ONE
ELECTION OF TWO DIRECTORS
The Board of Directors of the Company is comprised of six directors
and is divided into three classes. At each annual meeting of stockholders,
members of one of the classes, on a rotating basis, are elected for three
year terms. The two persons designated by the Board of Directors as
nominees for election at this meeting to serve a three year term and until
their successors are elected and qualified are O. Gene Bicknell, who is
currently a director, and Mary M. Polfer, a proposed new member of the
Board. Each of the nominees has indicated a willingness and ability to
serve as a director. If a nominee becomes unable or unwilling to serve, the
accompanying proxy may be voted for the election of such other person as
shall be designated by the Board of Directors. Shares of Class A Stock
represented by all proxies received by the Board of Directors and not
marked to withhold authority to vote for any individual director or for all
directors will be voted (unless one or both nominees are unable or
unwilling to serve) for the election of the nominees named above. Each
director requires an affirmative vote of the majority of the outstanding
shares of the Class A Stock present at the meeting in person or by proxy to
be elected to the Board of Directors. Mr. Bicknell has informed the Company
that he intends to vote his shares of Class A Stock FOR the election of the
nominees named above. If his Class A shares are voted in this manner, the
vote required for election of the nominees listed above will be achieved,
regardless of how other shares of Class A Stock are voted.
There currently is one vacant seat on the Board of Directors for an
unexpired term to end at the annual meeting to be held in 1996. The Board
is conducting a search to fill this position, but no candidate is being
proposed at this time. The Board has not set a definitive date by which to
fill the vacant directorship.
Nominees for Directors to Serve a Three-Year Term to Expire in 1998:
O. GENE BICKNELL, Age 62, Chairman of the Board of the Company.
Mr. Bicknell has been Chairman of the Board of Directors of the
Company and its predecessors since 1962. Mr. Bicknell re-assumed the
position of Chief Executive Officer, a position he held from 1962 to
1992, on January 31, 1995.
MARY M. POLFER, Age 50, Vice President of Administration, Public
Service Company of Oklahoma.
Ms. Polfer has been with Public Service Company of Oklahoma, a
subsidiary of Central and South West Corporation, since December,
1990, first as Vice President Finance and, since November 1993, as
Vice President of Administration. Prior to that, Ms. Polfer was
Director of Corporate Projects with Farmland Industries, Inc.
Continuing Directors - Not Standing for Election This Year
Director with a Term Expiring in 1996:
JOHN W. CARLIN, Age 54, Archivist of the United States of America
Mr. Carlin was appointed Archivist of the United States of America in
June 1995. Prior to that, he was a partner of Clark Publishing, a
textbook publisher, and president of Midwest Superconductivity, Inc.,
a high technology research company. Mr. Carlin was first elected a
Director in 1987. He was the Visiting Professor of Public
Administration and International Management at Wichita State
University from 1987 to 1988, and Governor of the State of Kansas from
January 1979 to January 1987.
Directors with Terms Expiring in 1997:
FRAN D. JABARA, Age 70, President of Jabara Ventures Group.
Mr. Jabara was elected a director of the Company in May 1984. He is
currently President of Jabara Ventures Group, a venture capital firm.
From September 1949 to August 1989 he was a distinguished professor of
business at Wichita State University, Wichita, Kansas. He is also a
director of Commerce Bank, Wichita, Kansas and Midwest Grain Products,
Inc.
ROBERT E. CRESSLER, Age 56, Partner in FRAC Enterprises.
Mr. Cressler was first elected a director of the Company in April
1985. He has been for more than the past five years a partner in FRAC
Enterprises, which previously operated Pizza Hut restaurants and
continues to operate other businesses, including Nutri/Systems
franchises.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met five times during the fiscal year ended
March 28, 1995. The Company`s standing Compensation and Stock Option
Committee met once and the Company`s standing Audit Committee met twice
during the last fiscal year. The Company does not have a Nominating
Committee. The normal duties of such a committee are carried out by the
entire Board of Directors. During the last fiscal year, none of the
Company`s Directors attended fewer than 75% of the meetings of the Board of
Directors or any committee of which he was a member.
AUDIT COMMITTEE. The Audit Committee is comprised of Messrs. Carlin,
Jabara and Cressler. The Audit Committee recommends to the Board of
Directors the independent auditors that will conduct the annual audit of
the Company, and also reviews the Company`s accounting practices and
control systems and reviews the qualifications and performance of the
proposed independent auditors.
COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation and Stock
Option Committee is comprised of Messrs. Bicknell, Jabara and Cressler. The
Committee reviews and recommends to the Board of Directors the levels,
amounts, and types of compensation to be paid to executive officers and
directors of the Company. The Committee also determines the number of
options to be granted to the Company`s executive management and receives
and reviews executive management`s recommendations regarding options to be
granted to all other Company employees. All recommendations of the
Committee are submitted to the Board of Directors for approval.
DIRECTOR COMPENSATION
Non-employee Directors are paid a fee of $750 for each Board meeting
attended and $750 per month as additional Director`s compensation.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee is currently comprised of
Mr. O. Gene Bicknell, the Chairman of the Board of Directors and the Chief
Executive Officer, and two non-employee Directors, Messrs. Jabara and
Cressler. Mr. Bicknell chairs the Committee. Messrs. Jabara and Cressler
have never been employed by the Company. The Board of Directors, on January
24, 1995, authorized the purchase of a restaurant facility owned by an
affiliate of Mr. Bicknell. The Company engaged a MAI-certified appraisal
company to perform an appraisal of the property. The Board of Directors
upon review of the proposal and the appraisal, and with Mr. Bicknell
abstaining from any participation in the vote, approved the purchase of
this site for the appraised value of $750,000, plus $50,000 for excess
equipment remaining in the facility. The Company currently leases two
properties from Mr. Bicknell and one restaurant from Mr. Gordon W. Elliott,
a former officer and current Director of the Company. See the section
titled ``Transactions with Management`` for additional information on the
leases. Management believes these leases are at least as favorable as
could be obtained from unrelated parties.
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDER
AND OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of June 30, 1995, certain
information as to the number of shares of common stock beneficially owned
by each person who is known by the Company to own beneficially more than 5%
of its outstanding shares of Class A or Class B Stock, by all directors and
nominees, by the Named Executive Officers (as defined below) and by the
directors and executive officers as a group.
Amount and Nature of
Name, Title and Address Beneficial Ownership (1) Percent of Class
Of Beneficial Owner Class A Class B Class A Class B
O. Gene Bicknell (2)
Chairman, Chief
Executive Officer
and Director 8,073,151 7,858,728 63.4% 62.8%
100 N. Pine
Pittsburg, KS 66762
J. Mitchell Boyd
Former Chief
Executive Officer ---- 1,000 ---- *
James K. Schwartz
President and
Chief Operating
Officer ---- 65,000 ---- *
Marty D. Couk
Senior Vice
President-
Pizza Hut
Operations 3,750 8,306 * *
Robert B. Page
President,
Romacorp, Inc. 11,250 20,000 * *
David G. Short
Vice President
Legal and
General Counsel ---- 1,250 ---- *
R. Frank Brown
Former President,
Skipper`s Inc. ---- ---- ---- ----
Gordon W. Elliott,
Vice Chairman
and Director 275,958 427,258 2.2% 3.4%
John W. Carlin,
Director ---- ---- ---- ----
Robert E. Cressler,
Director ---- ---- ---- ----
Fran D. Jabara,
Director 1,999 1,999 * *
All executive
officers and
directors
as a group 8,366,108 8,382,541 65.7% 67.0%
(1) Includes options for 382,500 shares of Class A Stock and 355,000
shares of Class B Stock which could be exercised within 60 days. Does
not include options held which are not exercisable within 60 days.
(2) Includes 22,500 shares each of Class A Stock and Class B Stock owned
by Pitt Plastics, Inc., a corporation controlled by Mr. Bicknell, and
1,100 shares of Class A Stock and 7,100 shares of Class B Stock owned
by Mr. Bicknell`s spouse.
* Less than 1% ownership.
EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years
ended March 28, 1995, March 29, 1994, and March 30, 1993, the compensation
awarded to, earned by, or paid to (i) the Chief Executive Officer (the
``CEO``) of the Company as of March 28, 1995, and (ii) each of the four
most highly compensated executive officers (other than the CEO) who served
as executive officers of the Company or its subsidiaries as of March 28,
1995, whose annual compensation exceeded $100,000 for the fiscal year ended
March 28, 1995, and (iii) up to two additional individuals for whom
disclosure would have been provided but for the fact that the individual
was not serving as an executive officer at the end of the fiscal year,
((i), (ii) and (iii) collectively, the ``Named Executive Officers``). The
Company does not currently award stock appreciation rights, restricted
stock and other long term incentives (other than stock options) under its
executive compensation program.
Summary Compensation Table
Long Term
Name and Fiscal Annual Compensation Compensation All Other
Principal Year Option Award Compensation
Position (1) Salary Bonus (#) (2)
O. Gene Bicknell
Chairman of the 1995 $300,000 $75,000 ---- $11,975
Board and Chief 1994 300,000 60,000 ---- 15,517
Executive 1993 300,000 100,000 235,000 17,039
Officer (3)
J. Mitchell Boyd 1995 152,269 45,000 ---- 5,235
Former Chief 1994 152,000 60,000 5,000 197
Executive 1993 116,846 30,000 65,000 197
Officer (4)
James K. Schwartz 1995 130,750 18,250 100,000 4,049
President and 1994 80,000 10,000 ---- 2,456
Chief Operating 1993 63,286 5,000 15,000 197
Officer (5)
Marty D. Couk 1995 103,000 33,049 50,000 5,105
Senior Vice 1994 89,231 39,432 ---- 3,681
President - 1993 69,039 8,297 7,500 2,719
Pizza Hut Operations
Robert B. Page 1995 115,384 16,500 50,000 3,680
President, 1994 99,231 39,946 ---- 4,794
Romacorp, Inc. 1993 89,904 15,000 10,000 4,214
David G. Short
Vice President 1995 115,177 5,000 5,000 3,917
Legal and 1994 81,577 ---- 5,000 148
General Counsel (6)
R. Frank Brown
Former
President, 1995 110,539 ---- ---- 164
Skipper`s Inc. (7) 1994 57,693 ---- 20,000 197
(1) For the fiscal year ended on the last Tuesday in March for the year
noted.
(2) Fiscal 1995 figures consist of the Company`s calendar 1994 profit
sharing plan contributions, the cost of group term life insurance and
accidental death benefits and, in the case of Mr. Bicknell, the
economic benefit derived from split-dollar life insurance policies
paid for by Company (see footnote 3), in the following amounts: Mr.
Bicknell, $5,071 profit sharing, $197 group insurance, $6,707 split-
dollar insurance; Mr. Boyd, profit plan $5,071, group insurance $164;
Mr. Schwartz, $3,852 profit sharing, $197 group insurance; Mr. Couk,
$4,908 profit sharing, $197 group insurance; Mr. Page, $3,483 profit
plan, $197 group insurance; Mr. Short, $3,720 profit plan, $197 group
insurance; Mr. Brown, $164 group insurance.
(3) The Company pays 100% of the premiums on split-dollar policies
insuring the life of Mr. Bicknell. The policies state the Company is
entitled to be reimbursed all premiums it paid, without interest, from
the proceeds with the residual to be paid to a named beneficiary. The
Company receives a statement from the insurance company specifying the
economic benefit derived by Mr. Bicknell under this arrangement, based
upon the Company`s rights under the policy. The benefit derived for
each year is as follows: fiscal 1995, $6,707; fiscal 1994, $10,625;
and fiscal 1993, $7,409.
(4) Mr. Boyd joined the Company on June 1, 1992 and resigned on January
30, 1995. In addition to the above compensation, at the time of his
resignation Mr. Boyd received $505,000 in settlement of the terms
associated with his employment.
(5) Mr. Schwartz has a five year employment contract with the Company
dated January 27, 1995. If Mr. Schwartz is terminated by the Company
for any reason (other than for cause) the Company is required to pay
Mr. Schwartz any accrued bonus and an amount equal to his then current
base salary for one year and continuation for six months of any
benefit plan available to him immediately prior to the termination of
the contract. His current base salary is $185,000. If there is a
change in control in the Company and his employment with the Company
is terminated, Mr. Schwartz will continue to receive from the Company
or a successor entity, as the case may be, his base salary as of the
date of the contract for a period of one year.
(6) Mr. Short joined the Company on June 8, 1993 and became an executive
officer on July 23, 1993.
(7) Mr. Brown joined the Company on September 27, 1993 and terminated on
January 31, 1995.
STOCK OPTIONS
The following two tables set forth information for the last completed
fiscal year relating to (i) grants to and exercises by the Named Executive
Officers of stock options pursuant to the Company`s 1994 Non-Qualified
Stock Option Plan (the ``1994 Plan``) and the Amended and Restated 1984 Non-
Qualified Stock Option Plan (the ``1984 Plan`` or collectively the
Company`s ``Stock Option Plans``), and (ii) holdings at March 28, 1995, by
the Named Executive Officers of unexercised options granted pursuant to the
Stock Option Plans. The Company currently does not award stock appreciation
rights under its executive compensation program.
Option Grants in the Fiscal Year Ended March 28, 1995
Potential Realizable
Value at Assumed
% of Total Annual Rates
Options of Stock Price
Granted to Exercise Appreciation
Options Common Employees or Base Expi- for Option
Granted Stock in Fiscal Price ration Term (2)
Name (1) Class Year ($/Sh) Date 5% 10%
O. Gene
Bicknell ---- ---- ---- ---- ---- ---- ----
J. Mitchell
Boyd ---- ---- ---- ---- ---- ---- ----
James K.
Schwartz (3) 100,000 B 27.4% $5.00 1/27/05 $314,448 $796,872
Marty D.
Couk 50,000 B 13.7 5.50 2/17/05 172,946 438,279
Robert B.
Page 50,000 B 13.7 5.50 2/17/05 172,946 438,279
David G.
Short 5,000 B 1.4 5.50 2/17/05 17,295 43,828
R. Frank
Brown ---- ---- ---- ---- ---- ---- ----
(1) Options are generally exercisable starting 12 months after the grant
date, with 25% of the shares covered thereby becoming exercisable at
that time and with an additional 25% of the option shares becoming
exercisable on each successive anniversary date, with full vesting
occurring on the fourth anniversary date. All options were granted at
the market price or higher on the date of grant and expire ten years
from such date, subject to earlier termination in certain events
related to termination of employment. The exercise price and tax
withholding obligations related to exercise may be paid by delivery of
already owned shares or by offset of the underlying shares, subject to
certain conditions. Upon consummation of the Recapitalization Plan,
each outstanding option to purchase either one share of Class A Stock
or one share of Class B Stock will be deemed to be an option to
purchase one share of New Common Stock.
(2) The values presented in these two columns are based on assumed stock
price appreciation rates. The potential realizable dollar value of a
grant is the product of (a) the difference between: (i) the product of
the per share market price at the time of the grant and the sum of 1
plus the adjusted stock price appreciation rate (the assumed rate of
appreciation compounded annually over the term of the option); and
(ii) the per share exercise price of the option; and (b) the number of
securities underlying the grant at the fiscal year end. THESE ASSUMED
APPRECIATION RATES ARE NOT DERIVED FROM THE HISTORIC OR PROJECTED
PRICES OF THE COMPANY`S STOCK OR RESULTS OF OPERATIONS OR FINANCIAL
CONDITION AND THEY SHOULD NOT BE VIEWED AS A PREDICTION OF POSSIBLE
PRICES FOR THE COMPANY`S STOCK IN THE FUTURE.
(3) Mr. Schwartz received options for 50,000 shares of Class B Stock on
January 27, 1995, which became immediately exercisable at $5.00 per
share, the closing market price on the date of grant. The remaining
option for 50,000 shares is subject to the four-year vesting schedule
as described in footnote (1).
Aggregated Option Exercises in Fiscal 1995
and Option Value at March 28, 1995
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Common March 28, 1995 March 28, 1995
on Value Stock Exercisable/ Exercisable/
Name Exercise Realized Class Unexercisable Unexercisable
O. Gene
Bicknell -0- -0- A 317,500 / 117,500 $0 / $0
B 211,250 / 3,750 0 / 0
J. Mitchell
Boyd -0- -0- B 0 / 0 0 / 0
James K.
Schwartz -0- -0- B 65,000 / 60,000 0 / 0
Marty D. -0- -0- A 3,750 / 0 0 / 0
Couk B 7,500 / 53,750 0 / 0
Robert B. -0- -0- A 11,250 / 0 0 / 0
Page B 20,000 / 56,250 0 / 0
David G.
Short -0- -0- B 1,250 / 8,750 0 / 0
R. Frank
Brown -0- -0- B 0 / 0 0 / 0
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation for the Company`s Chief Executive Officer and its
other executives is administered by the Compensation and Stock Option
Committee. Following review and approval by the Compensation and Stock
Option Committee, all issues pertaining to executive compensation are
submitted to the full Board of Directors for approval and ratification. In
fiscal 1995, the Board of Directors, with Mr. Bicknell abstaining with
respect to his own compensation, approved all recommendations of the
Compensation and Stock Option Committee.
Executive compensation is comprised of three primary components: a
base salary, a non-guaranteed performance bonus and stock option grants.
The first two are based generally upon short-term performance, with the
latter offered as a long-term incentive to the executive. The Company does
not offer any deferred compensation plan to its employees.
In fiscal 1995, the Committee reviewed surveys published by the
National Restaurant Association to obtain competitive compensation levels
for companies similar in size and nature (i.e., those with multiple
restaurants ``concepts,`` of which the Company has three in Pizza Hut,
Skipper`s and Tony Roma`s restaurants). The Committee seeks to establish
base rates believed to be competitive so that the Company is able to
attract and retain qualified and experienced executives. Base salaries are
reviewed annually taking into account competitive salaries in the industry
and the relative performance of the individual and Company during the
previous fiscal year. Compensation surveys reviewed by the Committee
include many of the peer companies reflected in the following Performance
Graph; both the surveys and the graph are based upon the same standard
industrial code as that of the Company.
Annual bonuses, if granted, are based primarily upon the individual
executive`s contribution to the Company. Bonuses are determined by the
Compensation and Stock Option Committee and then proposed to the full Board
of Directors for ratification and approval, with tentative installments
paid quarterly. The Committee does not believe that the $35 million charge
to earnings relating to the closure of 77 Skipper`s units is necessarily
indicative of the overall performance of all management personnel, while
the operating management of Skipper`s did not receive any bonuses in fiscal
1994 or 1995. Because the relative performance and contribution of an
executive may not perfectly coincide with earnings reported in the
respective fiscal year, bonuses may not correlate directly with a
particular division`s or company-wide earnings results.
Executives participate in the NPC International, Inc. Profit Sharing
Plan (the ``Profit Sharing Plan``) along with store management and certain
corporate staff, to the extent they meet the requirements for the Profit
Sharing Plan. To qualify for the Profit Sharing Plan, an employee
generally must have two years of service, be 21 years of age or older and
be employed on the last day of the plan year. The Board of Directors
determines the overall contribution to the Profit Sharing Plan for each
division, and executives who participate in the Profit Sharing Plan receive
a pro-rata share of that contribution. A participant`s share of the annual
Profit Sharing Plan contribution generally is computed to be the proportion
of his/her salary (as adjusted to meet ERISA requirements) relative to the
combined salaries of all participants in the Profit Sharing Plan. With the
exception of Mr. Brown (former President of Skipper`s), the six executives
named in the Summary Compensation Table participated in the Profit Sharing
Plan, receiving an average of $4,350 in fiscal 1995. Because of Skipper`s
performance in calendar 1994, the Board elected to make no corresponding
contribution on behalf of that concept`s employees.
The Company utilizes long-term awards in the form of stock options to
strengthen the link between executive pay and overall stockholder return.
Stock options have been periodically issued pursuant to the Stock Option
Plans and are an integral part of executive officer compensation. The
Compensation and Stock Option Committee believes such options will align
the interests of the Company`s executives with those of its stockholders.
The Company has increased the use of stock options in fiscal 1995 to focus
the executives on long-term decisions which it believes will enhance the
value of the Company`s stock, thereby building stockholder value. For the
executives named in the Summary Compensation Table, options for a total of
205,000 shares were issued in fiscal 1995, compared with options for 30,000
shares in fiscal 1994. The Committee believes that Company performance is
reflected over time in the corresponding price of the Company`s stock and
that improving the stock price benefits the stockholders collectively in
addition to the individual executive.
The Compensation and Stock Option Committee does not impose strict
formulas or compare results to specific pre-set performance targets in
determining overall compensation for executive officers. Factors
considered by the Compensation and Stock Option Committee in determining
current performance and the related compensation for the Company`s
executive officers for the 1995 fiscal year include (i) the achievement of
minimum performance standards (generally prior year operating performance,
adjusted for those factors in the current or prior year which are outside
the control of the individual being considered), (ii) current year earnings
performance in relation to performance of the Company`s competitors, (iii)
overall stockholder return (in the form of stock price appreciation), (iv)
the organizational level at which the executive functions, (v) the
individual executive`s success in performing the requisite duties and
responsibilities of his or her office, and (vi) compensation levels for
executives at companies which are similar in size and complexity to the
Company.
While some or all of these factors are considered in judging the
performance of each executive, certain of the factors may have more or less
relevance in determining a specific individual`s performance and resulting
pay. For instance, fiscal 1995 sales in Pizza Hut operations were 5.4%
lower due to fewer product introductions, but relative operating
performance improved to 21.7% of sales from 21.3% of the prior fiscal year
sales. This particular factor may be considered more relevant to, and
weigh more heavily in determination of compensation for, the executive
which exercises operating control over Pizza Hut operations than for an
executive who performs a general function.
Chief Executive Officer Compensation
The Compensation and Stock Option Committee utilizes the same factors
in determining the compensation of its Chief Executive Officer as it does
for all executives of the Company. Although there are specific discussions
regarding overall company performance and the Chief Executive Officer`s
contribution in achieving those results, there is no unique criterion
applied to the Chief Executive Officer that is not also applied to other
key executives of the Company, as outlined above. Mr. Bicknell does not
participate in Committee deliberations regarding his own compensation, nor
does he participate in the discussion or vote when such matters are before
the Board of Directors, of which he is a member.
In determining Mr. Bicknell`s bonus in the current and prior year, the
Committee considered the amount of time he spent on activities which were
unrelated to the Company over the course of each fiscal year.
O. Gene Bicknell
Fran D. Jabara
Robert E. Cressler
COMPARATIVE PERFORMANCE GRAPH
Below is a graph comparing the total return on an indexed basis of a
$100 investment in (i) the Company`s Common Stock, (ii) a peer group of the
Company and (iii) the overall broad equity market in which the Company
participated. The Company`s index includes the average of Class A Stock and
Class B Stock share prices subsequent to when the Class B stock was issued
in July 1991. Management considers the Company`s peer group to be all
publicly-held companies with a primary Standard Industrial Code between
5800 and 5899 (Eating and Drinking Establishments) in existence during the
reporting period. The broad equity market index consists of all NASDAQ
companies. All indices are based upon total return, weighted for market
capitalization and with dividends reinvested; they are published by and
available through the University of Chicago`s Center for Research in
Security Prices. The historical stock price performance shown on this graph
is not indicative of future price performance.
Total Returns Index:
3/28/90 3/26/91 3/31/92 3/30/93 3/29/94 3/28/95
NPC International, Inc. 100.0 135.1 93.1 72.1 63.0 51.2
Nasdaq Stock Market
(U.S. Companies) 100.0 113.1 145.2 165.9 183.0 203.0
Nasdaq Stock
(SIC 5800-5899
U.S. Companies) 100.0 114.5 164.6 185.0 190.2 154.5
TRANSACTIONS WITH MANAGEMENT
The Board of Directors on January 24, 1995, authorized the purchase of
real estate owned by an affiliate of Mr. Bicknell, the Chairman of the
Company. The Company engaged an MAI-certified appraisal company to perform
an appraisal of the property. The Board of Directors upon review of the
proposal and the appraisal, and with the Chairman abstaining from any
participation in the vote, approved the purchase of this site for the
appraised value of $750,000. An additional $50,000 in excess equipment
remaining in the facility was also purchased.
The Board of Directors has authorized a loan to Mr. Bicknell in the
amount of $575,000, which is scheduled to be repaid on September 27, 1995.
The loan bears interest at 100 basis points over the Company`s weighted
average cost of capital, adjusted monthly. This loan was reduced to
$450,000 as of June 30, 1995.
Certain Company employees perform accounting and other services for
Mr. Bicknell and his affiliates. At March 28, 1995, Mr. Bicknell and his
affiliates owed the Company approximately $200,000 as reimbursement for
such services. The Company continually monitors all officer-related
receivables and considers all such amounts to be collectible.
During the fiscal year ended March 28, 1995, the Company leased a
total of five properties from Mr. Bicknell and one property from Mr.
Elliott, a Director of the Company. The Company paid a total of $73,643 to
Mr. Bicknell and $31,769 to Mr. Elliott as rent for these properties in the
fiscal year just ended. The Company continues to rent two properties from
Mr. Bicknell, subject to normal lease terms set to expire no later than May
1998, at a combined monthly rent of $2,084 per month. In addition, one
restaurant is leased from Mr. Elliott at a monthly rate of $1,891 with a
lease term expiring January 1999. Management believes these leases are at
least as favorable as could be obtained from unrelated parties.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
``Exchange Act``), requires the Company`s directors, executive officers,
and persons owning more than ten percent of a registered class of the
Company`s securities to file with the United States Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership
of equity securities of the Company. Officers, directors, and greater-than-
ten-percent stockholders are required by the Securities and Exchange
Commission`s regulations to furnish the Company with copies of all Section
16(a) forms that they file.
To the Company`s knowledge, based solely on its review of copies of
reports furnished to the Company and written representations that no other
reports were required, all filing requirements under Section 16(a) of the
Exchange Act were satisfied with two exceptions. In one case, the Company
determined Mr. David Short did not file on a timely basis the appropriate
form to disclose options he held when he was promoted into his current
position, as well as additional options he subsequently received. In the
second, Mr. Bicknell was three days late in reporting a June 1995 sale of
Class A stock. Both forms have subsequently been filed and all requirements
are believed to be satisfied.
PROPOSAL TWO
APPROVAL OF STOCK RECAPITALIZATION PLAN
Overview
The stockholders of the Company in July 1991 approved an amendment to
the Restated Articles of Incorporation increasing the authorized capital to
100,000,000 shares of common stock, consisting of 50,000,000 shares of
Class A Stock and 50,000,000 shares of Class B Stock. The amendment was
filed with the Kansas Secretary of State on July 31, 1991, and
automatically converted all of the then outstanding shares of common stock
into Class A Stock. The Board of Directors contemporaneously distributed
to the stockholders as a stock dividend one share of Class B Stock for each
share of Class A Stock held. The Company`s franchise agreements with Pizza
Hut, Inc. (the ``Franchisor``) require Mr. Bicknell to own at least 51% of
the Company`s stock at all times. The creation of two classes of stock was
intended to allow continued compliance with the voting control requirements
of the franchise agreements while at the same time (a) avoiding the
necessity for Mr. Bicknell`s estate to sell voting stock of the Company to
provide for payment of estate tax liabilities in the event of Mr.
Bicknell`s death, and (b) providing the Company the ability to (i) raise
additional equity capital by selling Class B Stock, (ii) use Class B Stock
in employee benefit and incentive plans, (iii) use Class B Stock in
acquisitions of Pizza Hut restaurants, and (iv) use Class B Stock for
general corporate purposes.
Subsequent to the 1991 recapitalization, the Franchisor notified the
Company that in the opinion of the Franchisor the voting control
requirements in the franchise agreements applied to all capital stock of
the Company and that the Franchisor would not recognize the independent
purposes of the two classes of common stock. While subsequent negotiations
with the Franchisor have provided certain assurances that the selling of
Class B Stock to provide for estate tax liabilities would not violate the
franchise agreements, the other anticipated benefits of the 1991
recapitalization have not been realized. Also, in informal discussions
with various institutional investors, the Company has learned that some
institutional investors are reluctant to invest, or are prohibited by
policy from investing, in non-voting securities. In addition, the Board of
Directors believes that having two classes of stock with different voting
rights has a negative impact on the liquidity of the Company`s stock.
Consequently, the Board of Directors undertook an evaluation of the
alternatives available to simplify the capital structure of the Company.
The Board of Directors of the Company (with only Mr. Bicknell
abstaining) has approved and recommends that the stockholders of the
Company approve the following plan to recapitalize the Company (the
``Recapitalization Plan``):
1. Amendment of the Restated Articles of Incorporation of the Company
to allow payment of a special dividend solely to the Class A
Stockholders (the ``First Amendment``). The text of the First
Amendment is included as Exhibit A to this Proxy Statement;
2. Subsequent payment of a cash dividend to the Class A Stockholders
as of the closing of the transfer books of the Company on August 8,
1995 (the ``Dividend Record Date``) in the amount of $0.421875 per
share of Class A Common Stock (the ``Dividend``); and
3. Subsequent amendment of the Restated Articles of Incorporation of
the Company (the ``Second Amendment``) to reclassify and convert each
outstanding share of Class A Stock and of Class B Stock (collectively,
the ``Existing Common Stock``) into one new share of common stock, par
value $.01 per share, of the Company (the ``New Common Stock``). The
text of the Second Amendment is included as Exhibit B to this Proxy
Statement.
The Board of Directors has approved the Recapitalization Plan because
it believes that the new, simplified capital structure will increase the
liquidity of the stock and enhance investor interest in the Company.
The principal effects of the Recapitalization Plan are (i) to
reclassify and convert the two currently authorized classes of Existing
Common Stock into a single class of New Common Stock, each share of which
will have full voting rights; and (ii) to pay to the holders of the Class A
Stock the Dividend to compensate them for the dilution in their voting
power that will occur as a result of the issuance of voting New Common
Stock to the holders of nonvoting Class B Stock.
Vote on Proposal Two
The various aspects of the Recapitalization Plan will be voted on as
one proposal. A vote in favor of Proposal Two will constitute a vote in
favor of the First Amendment (thus allowing payment of the Dividend) and
the Second Amendment. THE BOARD OF DIRECTORS OF THE COMPANY HAS
DETERMINED THAT THE RECAPITALIZATION PLAN AND THE DIVIDEND ARE IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND ARE FAIR TO ALL OF THE
STOCKHOLDERS OF THE COMPANY. THE DISINTERESTED MEMBERS OF THE BOARD OF
DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE IN FAVOR OF PROPOSAL TWO.
The Recapitalization Plan must be approved at the Annual Meeting by
the affirmative vote of the holders of a majority of the total outstanding
shares, as of the closing of the transfer books of the Company on June 30,
1995 (the ``Annual Meeting Record Date``), of Class A Stock and Class B
Stock, EACH VOTING AS A SEPARATE CLASS. Votes submitted as abstentions
will be deemed to be votes cast against the proposal. Broker non-votes
will be deemed to be votes cast against Proposal Two. A broker ``non-
vote`` occurs when a nominee holding shares for a beneficial holder does
not have discretionary voting power and does not receive voting
instructions from the beneficial owner. Under Kansas law, stockholders of
the Company do not have any appraisal rights (i.e., the right to be paid
the value of their shares in cash) if they dissent from or object to the
Recapitalization Plan. Thus, the stockholders of either Class A Stock or
Class B Stock will automatically become holders of the New Common Stock if
the Recapitalization Plan is approved at the Annual Meeting and implemented
thereafter.
AS OF THE ANNUAL MEETING RECORD DATE, MR. BICKNELL, CHIEF EXECUTIVE
OFFICER AND THE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE COMPANY, HELD
7,605,651 SHARES OF CLASS A STOCK, CONSTITUTING APPROXIMATELY 61.6% OF THE
CLASS A STOCK, AND 7,597,478 SHARES OF THE CLASS B STOCK, CONSTITUTING
APPROXIMATELY 62.5% OF THE CLASS B STOCK. MR. BICKNELL HAS INFORMED THE
COMPANY THAT HE INTENDS TO VOTE ALL SUCH SHARES IN FAVOR OF PROPOSAL TWO.
IF HE VOTES SUCH SHARES IN FAVOR OF PROPOSAL TWO, THEN PROPOSAL TWO WILL BE
APPROVED REGARDLESS OF HOW ANY OTHER HOLDER OF SHARES OF CLASS A STOCK OR
CLASS B STOCK VOTES WITH RESPECT TO PROPOSAL TWO. FOLLOWING THE
IMPLEMENTATION OF THE PROPOSAL, MR. BICKNELL WILL HOLD 15,203,129 SHARES OF
THE NEW COMMON STOCK, CONSTITUTING APPROXIMATELY 62% OF THE OUTSTANDING NEW
COMMON STOCK OF THE COMPANY.
If the Recapitalization Plan is approved by the Stockholders at the
Annual Meeting, the First Amendment will become effective upon the filing
and recording with the Kansas Secretary of State of a Certificate of
Amendment as required by the Kansas General Corporation Code (a
``Certificate of Amendment``). The Dividend will be paid immediately after
the filing of the Certificate of Amendment relating to the First Amendment,
and the Second Amendment will become effective upon the filing and
recording of the Certificate of Amendment relating to the Second Amendment
as soon as practicable after payment of the Dividend. The date on which
the last of such actions is taken is referred to herein as the ``Effective
Time.``
If Proposal Two is not approved by the Stockholders at the Annual
Meeting, then the Restated Articles of Incorporation of the Company will
not be amended, the Dividend will not be paid and its declaration will
become null and void, and the Recapitalization Plan will not be
implemented, with the result that the capital structure of the Company will
remain the same after the Annual Meeting as before.
Current Capital Structure
The authorized capital of the Company currently consists of 50,000,000
shares of Class A Stock and 50,000,000 shares of Class B Stock. As of the
Annual Meeting Record Date, there were issued and outstanding 12,356,755
shares of Class A Stock and 12,150,569 issued and outstanding shares of
Class B Stock. The Class A Stock and the Class B Stock are currently
listed on the NASDAQ National Market System under the symbol NPCIA and
NPCIB, respectively.
The following is a brief description of the rights and privileges
currently attaching to the Existing Common Stock, which also will attach to
the New Common Stock after the Effective Time, except as expressly noted
below.
The Class A Stock and the Class B Stock are equal in all respects and
grant to their holders the same powers, preferences, qualifications,
limitations and other rights, with the exception that Class A Stock has the
exclusive right to vote for the election of directors and for all other
purposes. Class B Stock does not have the right to vote, except as
required by law.
The Company`s Restated Articles of Incorporation, as amended, provides
for cumulative voting in the election of directors and eliminates all
preemptive rights to purchase additional or new securities issued by the
Company. Shares of Existing Common Stock are not subject to further call
or assessment.
As of June 30, 1995, under the Company`s Stock Option Plans, options
to acquire 590,968 shares of Class A Stock had been granted, and had not
been exercised or canceled, and options to acquire 1,100,688 shares of
Class B Stock had been granted, and had not been exercised or canceled.
See ``Executive Compensation`` and ``Transactions with Management.``
Recapitalization of Existing Common Stock into New Common Stock
The Recapitalization Plan will result in the reclassification of each
share of Class A Stock and each share of Class B Stock outstanding as of
the close of business on the date of the Annual Meeting into one share of
New Common Stock. Each share of New Common Stock will have one vote per
share and will otherwise have rights that are identical to the Existing
Common Stock, as presently constituted.
The Second Amendment also will eliminate from the Restated Articles of
Incorporation certain technical provisions relating to the fact that two
classes of common stock previously were authorized, including the price
parity provisions which were intended to encourage trading of Class A Stock
and Class B Stock at approximately equal market prices.
Thus, the only substantive impact of the Recapitalization Plan on the
rights and privileges of the holders of the Existing Common Stock is that
the holders of the Class B Stock, who do not have voting rights except as
required by applicable law (such as the separate class vote on Proposal
Two) prior to the Effective Time of the Recapitalization Plan, will have
full voting rights, with one vote per share after the Effective Time.
The voting control of the holders of the Class A Stock will be diluted
as a result of the Recapitalization Plan. Currently, the Class A
Stockholders have 100% of the voting rights in the Company and the Class B
Stockholders have voting rights only under limited circumstances. After
the Effective Time, the existing Class A Stockholders will have control of
approximately 50.4% of the voting rights while the existing Class B
Stockholders will have control of approximately 49.6% of the voting rights
of the Company.
Interests of Certain Persons
Mr. Bicknell beneficially owns approximately 61.6% of the
outstanding shares of the Class A Stock. Mr. Bicknell has informed the
Company that he intends to vote in favor of the Proposal. If he votes such
shares accordingly, then this proposal will be approved regardless of how
any other holder of shares of Class A Stock votes. In addition, as the
holder of approximately 61.6% of the Class A Stock, he will receive
approximately 61.6% of the Dividends payable (or approximately $3,208,634).
After the Effective Time, Mr. Bicknell will maintain control of
approximately 62% of the Company`s voting shares. The following table
shows, on a pro forma basis as of March 28, 1995, the ownership of common
stock by the principal stockholder and the officers and directors of the
Company that would exist after the Effective Time and the dilution to the
voting power of the holders of the Class A Stock resulting therefrom.
Shares of Common Stock Owned by Certain Persons
Before and After Recapitalization
Current Current Pro Forma Pro Forma
Class of Number of Percentage Number of Percentage
Name Common Shares (1) of Shares Shares (1) of Shares
Stock
O. Gene A 7,605,651 61.6%
Bicknell (1) B 7,597,478 62.5%
New Common
Stock 15,203,129 62.0%
James K. --- --- --- --- ---
Schwartz
J. Mitchell B 1,000 *
Boyd New Common
Stock 1,000 *
Marty D. B 806 *
Couk New Common
Stock 806 *
Robert B. --- --- --- --- ---
Page
David G. --- --- --- --- ---
Short
J. Frank --- --- --- --- ---
Brown
Gordon W. A 275,958 2.2%
Elliott B 427,258 3.5%
New Common
Stock 703,216 2.9%
John W. --- --- --- --- ---
Carlin
Robert E. --- --- --- --- ---
Cressler
Fran D. A 1,999 *
Jabara B 1,999 *
New Common
Stock 3,998 *
All executive A 7,983,608 64.6%
officers and B 8,027,541 66.1%
directors as New Common
a group Stock 16,011,149 65.3%
(1) Includes shares owned of record by Mr. Bicknell and beneficially owned
by affiliates of Mr. Bicknell.
* Less than 1% ownership.
New Capital Structure
As of and immediately after the Effective Time of the Recapitalization
Plan, the Company`s authorized capitalization will consist of 100,000,000
shares of New Common Stock, of which approximately 24,507,324 shares will
be outstanding based on the number of shares of Class A Stock and Class B
Stock outstanding as of the close of business on the date of the Annual
Meeting.
If Proposal Two is approved, stockholders will not be required to
surrender their certificates for shares of Existing Common Stock.
Certificates labeled Class A Stock or Class B Stock will be deemed to
represent the same number of shares of New Common Stock of the Company and
will be treated in the same manner in all respects as certificates
representing New Common Stock. Certificates representing shares of New
Common Stock will be issued if and when the currently outstanding
certificates for shares of Existing Common Stock are surrendered in the
future for transfer.
Holders of shares of New Common Stock will be entitled to one vote per
share on any and all matters acted upon by the Company`s stockholders and
to dividends when, as and if declared by the Board of Directors out of
funds legally available therefor. There will be cumulative voting in the
election of directors. In the event of any liquidation, dissolution or
winding up of the Company, each holder of the New Common Stock will be
entitled to participate ratably as a single class in all assets of the
Company remaining after payment of liabilities. Holders of the New Common
Stock will have no preemptive or conversion rights and will not be subject
to further calls or assessments by the Company. After the Recapitalization
Plan is implemented, each outstanding option to purchase either one share
of Class A Stock or one share of Class B Stock will be deemed to be an
option to purchase one share of New Common Stock.
The Class A Stock and the Class B Stock currently are listed on the
NASDAQ National Market System under the symbol NPCIA and NPCIB,
respectively. Following the implementation of the Recapitalization Plan,
the New Common Stock will trade on the NASDAQ National Market System under
the symbol NPCI.
Payment of Dividend
As noted above, as a result of the Recapitalization Plan, the voting
power of the holders of the Class A Stock will be diluted by approximately
50%. The Board of Directors has determined that, as a part of adoption of
the Recapitalization Plan, it is in the best interests of the Company and
its stockholders and fair to the holders of the Class A Stock and the Class
B Stock to pay the Dividend to the holders of the Class A Stock as a part
of the Recapitalization Plan to compensate them for this dilution. The
Dividend will be paid out of the Company`s line of credit.
The Board of Directors has determined that the best measure of the
value of this dilution is the historical difference between the trading
prices on the NASDAQ National Market System of the Class A Stock and the
Class B Stock, since the sole difference between the rights of these two
classes of publicly-traded securities is the voting power that will be lost
by the holders of the Class A Stock as a result of the Recapitalization
Plan.
Tax Impact of Recapitalization Plan and Payment of Dividend
The Company believes that the Recapitalization Plan should be treated
as a recapitalization of the Company under Section 368(a)(1)(E) of the
Internal Revenue Code of 1986, as amended (the ``Code``).
A stockholder who receives cash in the Recapitalization Plan may be
required to recognize taxable income or gain. For federal income tax
purposes, each stockholder should be treated as having realized a gain to
the extent that (i)the sum of (a) the fair market value of the New Common
Stock received by the stockholder pursuant to the Recapitalization Plan
plus (b) the amount of cash received by the stockholder pursuant to the
Recapitalization Plan exceeds ii) the tax basis of the Existing Common
Stock surrendered by the stockholder pursuant to the Recapitalization Plan.
The stockholder should be required to recognize taxable income or gain (the
``Taxable Amount``), if any, equal to the lesser of (x) the amount of cash
received by the stockholder or (y) the amount of gain realized by the
stockholder (determined in accordance with the preceding sentence).
A distribution of cash to a stockholder of the Company pursuant to
the Recapitalization Plan should be treated as a taxable dividend, to
the extent of the Taxable Amount referred to in the preceding paragraph,
unless the distribution is ``not essentially equivalent to a
dividend`` with respect to the stockholder (as such term is used in
Section 302(b)(1) of the Code). Although not entirely free from doubt, a
distribution of cash to a stockholder pursuant to the
Recapitalization Plan should be treated as ``not essentially equivalent
to a dividend`` with respect to the stockholder if (i) there is no
possibility for the stockholder to participate in the control or
management of the Company and (ii) the percentage of the voting stock of
the Company owned by the stockholder immediately after the
consummation of the Recapitalization Plan is less than the
percentage of the voting stock of the Company owned by the
stockholder immediately prior to the commencement of the
Recapitalization Plan.
If a cash distribution to a stockholder of the Company is ``not
essentially equivalent to a dividend,`` the stockholder should be required
to recognize taxable gain equal to the Taxable Amount. Such gain will be
capital gain if the stockholder`s Existing Common Stock was held as a
capital asset, and will be long-term capital gain if the holding period for
such stock exceeded one year.
If a stockholder of the Company is unable to demonstrate
that a distribution of cash to him or her was ``not essentially
equivalent to a dividend``, then the distribution of cash to the
stockholder should be taxable as a dividend. In this situation, the amount
of cash received by the stockholder would be taxed first as a dividend to
the extent of the stockholder`s pro rata share of the Company`s current and
accumulated earnings and profits (up to the Taxable Amount) and then as
capital gain to the extent that the Taxable Amount exceeds the amount
treated as a taxable dividend.
Except as provided above, no gain should be recognized by (and no
amount should be included in the income of) a holder of Existing Common
stock in connection with the Recaptialization Plan
The aggregate tax basis of the New Common Stock in the hands of each
stockholder of the Company, after the consummation of the Recapitalization
Plan, will be the same as the tax basis of the Existing Common Stock held
by such stockholder immediately before the Recapitalization Plan, increased
by the Taxable Amount for such stockholder, and decreased by the amount of
cash received by such stockholder pursuant to the Recapitalization Plan.
Assuming that the Existing Common Stock is held as a capital asset,
the holding period for the New Common Stock received pursuant to the
Recapitalization Plan will include the period during which such Existing
Common Stock was held.
The foregoing summary of the federal income tax consequences of the
Recapitalization Plan and related transactions is for general information
only and there can be no assurance that the IRS will not take a position
contrary to that expressed above. Stockholders are urged to consult their
own tax advisors as to the particular consequences to them of the
Recapitalization Plan, including the application of state, local and
foreign tax laws. This summary may not be applicable to certain corporate
stockholders of the Company, stockholders who received their Existing
Common Stock pursuant to the exercise of options or otherwise as
compensation (including holders of restricted stock), or stockholders who
are not citizens or residents of the United States. Such stockholders
should consult their own tax advisors as to the tax consequences of the
Recapitalization Plan.
Fairness of the Recapitalization Plan and the Dividend
The Board of Directors of the Company (Mr. Bicknell abstaining) has
determined that the Recapitalization Plan, including the payment of the
Dividend, is in the best interests of the Company and is fair to all of the
holders of the outstanding shares of the Existing Common Stock.
Among other factors considered in reaching this determination, the
Board of Directors relied on the opinion of George K. Baum & Company
(``Baum & Co.``), an independent financial advisor retained by the Board
specifically for the purpose of advising it with respect to the
Recapitalization Plan. In the opinion of Baum & Co., the special, one
time, dividend payment of 42.1875 cents or 27/64th of a dollar, per share, to
the holders of Class A Stock in the Recapitalization Plan is fair from a
financial point of view to the holders of both the Class A Stock and the
Class B Stock who are neither officers or directors of the Company nor
beneficial owners of five percent or more of the issued and outstanding
Class A Stock and Class B Stock (the ``Opinion``).
In rendering its Opinion, Baum & Co. reviewed (i) the monthly Summary
of Activity created by the Nasdaq Stock Market, Inc. for both the Class A
Stock and the Class B Stock for the period of August 1991 through April
1995, (ii) the daily trading prices of both Class A Stock and Class B Stock
for the month of May 1995 through May 22, 1995 from Bloomberg Financial
Markets, and (iii) stock transfer information on Class A Stock and Class B
Stock from the American Stock Transfer & Trust Company. Baum & Co. assumed
and relied upon, without independent verification, the accuracy and
completeness of all of the financial and other information that was
available from public sources that was provided by the Company or its
representatives to Baum & Co., or that was otherwise reviewed by Baum & Co.
Baum & Co. compared the difference between the high, low and closing price
of the Class A Stock (Nasdaq symbol: NPCIA) and Class B Stock (Nasdaq
symbol: NPCIB) on all days on which the stock was traded between August 31,
1991 through May 22, 1995 (the ``entire period``).
This comparison revealed that:
a. The median difference of the high, low and close price between
the two classes of stock was 37.5 cents;
b. The mean difference for the high was 45.0 cents; the low was
43.6 cents; and the close was 44.7 cents;
c. The weighted average based on volume was 43.7305 cents for the
entire period based on 22,721,059 shares of Class A Stock
traded;
d. The weighted average based on volume since the first trading
day of 1995 through May 22, 1995 was 44.2026 cents on 1,401,656
shares of Class A Stock traded; and
e. The weighted average based on volume since the first trading
day of 1994 through May 22, 1995 was 39.7705 cents on 5,276,780
shares of Class A Stock traded which is approximately one turn
over of the publicly tradable shares.
As a result of its analysis, Baum & Co. considered the more recent
trading to be a better measure of the value differential. The weighted
average for the entire period was considered the maximum value that could
be attached to the voting interest. The weighted averages for the period
January 3, 1994 to May 22, 1995 and the period January 3, 1995 to May 22,
1995 were averaged and compared with the weighted average for the entire
period. The average differential of 41.9866 cents per share for these two
periods was less than the weighted average for the entire period. Baum &
Co. concluded that the difference of 41.9866 was a reasonable reflection of
the value of the voting interest. The price differential was rounded to
27/64ths to reflect a price at which a share could actually trade. Baum &
Co. further concluded that the resulting value of 27/64 or 42.1875 cents
per share is an accurate measure of the dollar value that should be placed
on the dilution of the Class A holder`s voting interest.
The Opinion is dated May 23, 1995, which is the day on which the
Recapitalization Plan was approved by the Board of Directors, and is
immediately prior to the public announcement of the Recapitalization Plan.
Baum & Co. has not been asked by the Board of Directors to update or
reissue the Opinion at a later date since the Board of Directors believes
that the announcement of the Recapitalization Plan will affect the trading
value of the Class A Stock and the Class B Stock from that date forward. A
copy of the Opinion is included as Exhibit C to this Proxy Statement.
Mr. Bicknell abstained from voting as a director on the
Recapitalization Plan. In his capacity as a stockholder of the Company,
however, Mr. Bicknell has advised the Company that he intends to vote his
shares of Class A Stock and Class B Stock in favor of Proposal Two, as
noted above, which will ensure that the Recapitalization Plan will be
approved.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has recommended and the Board of Directors has
approved the selection of Ernst & Young LLP as independent public
accountants of the Company for the fiscal year ended March 28, 1995. Ernst
and Young LLP examined the financial statements of the Company for the
most recent completed fiscal year. The Audit Committee, in its meeting on
January 24, 1995, recommended Ernst & Young LLP to be the independent
public accountants for the 1996 fiscal year. A representative of Ernst &
Young LLP will be present at the Annual Meeting with the opportunity to
make a statement if he desires to do so and will be available to respond to
appropriate questions.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders of the Company intended to be presented at
the Annual Meeting of Stockholders to be held in 1996 must be received at
the principal executive offices of the Company by the Board of Directors
for inclusion in the proxy statement and form of proxy relating to that
meeting no later than February 7, 1996.
MISCELLANEOUS
No business other than that described herein is expected by the Board
of Directors to come before this meeting, but should any other matters
requiring the vote of stockholders arise, the proxy holders will vote
thereon according to their best judgment.
AVAILABLE INFORMATION
A copy of the Company`s 1995 Annual Report to Stockholders accompanies
this proxy. The financial statements which are included in such Annual
Report to Stockholders are incorporated herein by reference. Additional
copies of the Company`s Annual Report to Stockholders and copies of the
Company`s Annual Report to Stockholders on Form 10-K for the year ended
March 28, 1995 are available without charge upon request. Requests should
be addressed to the Chief Financial Officer, NPC International, Inc., 720
W. 20th Street, Pittsburg, KS 66762.
By Order of the Board of Directors
David G. Short
Secretary
Pittsburg, Kansas
July 17, 1995
EXHIBIT A
AMENDMENT ONE
If Proposal Two is approved by the stockholders and the
Certificate of Amendment relating thereto is properly filed with the Kansas
Secretary of State, then the second paragraph of section A of Article
FOURTH of the Restated Articles of Incorporation will be deleted and
replaced in its entirety with the following, with the remainder of Article
FOURTH to remain unmodified by the First Amendment:
Dividends may be paid upon the Common Stock as and
when declared by the Board of Directors out of funds
and other assets legally available for the payment of
dividends. The Board of Directors may declare a
dividend upon all shares of the Common Stock of the
Corporation or may declare a dividend upon only shares
of the Class A Common Stock or upon only shares of the
Class B Common Stock.
EXHIBIT B
AMENDMENT TWO
If Proposal Two is approved by the stockholders and the Certificate of
Amendment relating thereto is properly filed with the Kansas Secretary of
State, then Article FOURTH of the Restated Articles of Incorporation will
be deleted in its entirety and replaced with the following:
FOURTH: The aggregate number of shares which the
Corporation has authority to issue is one hundred
million (100,000,000) shares of common stock, par value
$.01 per share (``Common Stock``).
The authorized but unissued shares of common stock
as well as any shares of common stock now or hereafter
held as treasury shares shall be issued from time to
time, at such time or times, in such amounts and
manner, for such consideration, whether in cash or
property or otherwise, and to such persons as may be
fixed and determined by the Board of Directors of the
Corporation, subject to this Article FOURTH.
Each share of Common Stock shall be entitled to
one vote on all matters voted upon by the stockholders.
Dividends may be paid upon the Common Stock as and
when declared by the Board of Directors out of funds
and other assets legally available for the payment of
dividends, subject to all of the rights of any class of
stock authorized after this Certificate of Amendment of
the Restated Articles of Incorporation becomes
effective pursuant to the General Corporation Code of
the State of Kansas (the ``Effective Time``) that ranks
senior to the Common Stock as to dividends.
In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or
involuntary, and after the holders of any class of
stock authorized after the Effective Time ranking
senior to the Common Stock as to distributions of
assets shall have been paid in full the amounts to
which such holders shall be entitled, or an amount
sufficient to pay the aggregate amount to which such
holders shall be entitled shall have been set aside for
the benefit of the holders of such stock, the remaining
net assets of the Corporation shall be distributed pro
rata to the holders of the Common Stock.
No stockholder of this Corporation shall by reason
of holding shares of Common Stock have any preemptive
or preferential right to purchase or subscribe for any
shares of Common Stock of this Corporation, now or
hereafter authorized, or any notes, debentures, bonds,
or other securities convertible into or carrying
options or warrants to purchase shares of Common Stock,
now or hereafter authorized.
At the Effective Time, and without any further
action on the part of the Corporation or its
stockholders, each share of the Corporation`s Class A
Common Stock, par value $.01 par value per share
(``Class A Common Stock``) and Class B Common Stock,
par value $.01 par value per share (``Class B Common
Stock``), then issued, shall automatically be
reclassified and converted into one fully paid and
nonassessable share of Common Stock. Stock
certificates previously representing shares of Class A
Common Stock and certificates previously representing
Class B Common Stock shall thereafter represent the
same number of shares of the Common Stock.
EXHIBIT C
OPINION OF FINANCIAL ADVISOR
May 23, 1995
Board of Directors
NPC International, Inc.
c/o Mr. James K. Schwartz
President and Chief Operating Officer
720 W. 20th Street
Pittsburg, Kansas 66762
Gentlemen:
You have asked us to render our opinion as to the fairness, from a
financial point of view, to the Public Stockholders (as hereinafter
defined) of NPC International, Inc. (``NPC``) of the special, one time,
cash dividend payable to holders of Class A common stock in the proposed
recapitalization in which NPC`s Class A and Class B common stock will be
converted into a new, single class of voting Common Stock. ``Public
Stockholders`` shall mean, for purposes of this opinion, holders of NPC
Class A and Class B common stock who are neither officers or directors of
NPC nor beneficial owners of five percent or more of the issued and
outstanding NPC Class A and Class B common stock.
In rendering our opinions, George K. Baum & Company reviewed:
(1) the monthly Summary of Activity created by the Nasdaq
Stock Market, Inc. for both the Class A and Class B common
stock for the period of August 1991 through April 1995;
(2) the daily trading prices of both Class A and Class B
common stock for the month of May 1995 through May 22, 1995
from Bloomberg Financial Markets; and
(3) stock transfer information on Class A and Class B common
stock from American Stock Transfer & Trust Company.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of all of the financial and other information
used by us as the basis for our opinion.
It should be noted that this opinion is based, in part, on economic,
market and other conditions as in effect on, and information made available
to us as of, the date hereof, and does not represent an opinion as to what
value NPC Common Stock actually will have to NPC stockholders if and when
the recapitalization is consummated. Such actual value could be affected
by changes in such market conditions, general economic conditions and other
factors which generally influence the price of securities. Furthermore,
any valuation of securities is only an approximation, subject to
uncertainties and contingencies all of which are difficult to predict and
beyond the control of the firm preparing such opinion or valuation.
George K. Baum & Company, as part of its investment banking business,
is regularly engaged in the evaluation of businesses and securities in
connection with recapitalizations, mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements
and for corporate planning and other purposes. In the ordinary course of
our business, we may, from time to time, effect transactions for the
accounts of our customers in securities of NPC and receive customary
compensation in connection therewith. Prior to NPC`s engagement of George
K. Baum & Company to render this opinion, we had not been engaged during
the last five years to provide investment banking services to NPC, although
from time to time since April 15, 1994, George K. Baum & Company made a
market in NPC`s Class A and/or Class B common stock. As of this date,
George K. Baum & Company owned for its own account 743 shares of Class A
and 919 shares of Class B common stock.
It is understood that this letter is only for the information of the
Board of Directors of NPC and is not to be quoted or referred to, in whole
or in part, in any registration statement, prospectus, or proxy statement,
or in any other written document used in connection with the offering or
sale of securities, nor shall this letter be used for any other purposes,
without George K. Baum & Company`s prior written consent, provided,
however, that we hereby consent to the inclusion of this opinion in the
1995 Proxy Statement so long as the opinion is quoted in full.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, it is our opinion that, as of
the date hereof, the special, one time, dividend payment of 42.1875 cents
or 27/64th of a dollar, per share, to holders of Class A common stock in
the proposed recapitalization is fair from a financial point of view to the
NPC Public Stockholders.
Respectfully submitted,
GEORGE K. BAUM & COMPANY
PROXY CARDS
CLASS A STOCKHOLDERS WHITE
NPC INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For the Annual Meeting of Stockholders August 8, 1995
The undersigned hereby appoint O. Gene Bicknell and James K. Schwartz, and
each of them in the order named with full power of substitution, the proxy
or proxies of the undersigned to act at the Annual Meeting of Stockholders
of NPC International, Inc. to be held at 10:00 A.M. at the Memorial
Auditorium, 503 N. Pine, Pittsburg, Kansas, 66762 on Tuesday, August 8,
1995, and any adjournment or postponements thereof, and to vote all shares
of said Class A Common Stock which the undersigned would be entitled to
vote if personally present.
(1) TO ELECT TWO DIRECTORS:
___ FOR each nominee listed below (except as marked to the contrary below)
___ WITHHOLD AUTHORITY to vote for each nominee:
INSTRUCTION: To withhold authority to vote for individual nominee, strike
a line through the nominee`s name below.
O. Gene Bicknell ________% Mary M. Polfer ________%
You are allowed cumulative voting for the nominees. Unless indicated
otherwise, the proxies named herein will cumulate your votes and will
allocate them equally among the nominees for whom authority to vote is
granted. If you wish to allocate those votes other than equally, indicate
the percentage of your cumulative votes to be allocated to each nominee
in the blank beside their name. IF THE TOTAL PERCENTAGE OF VOTES
ALLOCATED TO SUCH NOMINEES DOES NOT EQUAL 100%, THEN THE PROXY MAY NOT BE
VALID.
(2) TO APPROVE THE STOCK RECAPITALIZATION PLAN AS DESCRIBED IN THE PROXY
STATEMENT:
_____FOR _____AGAINST _____ABSTAIN
(3) In the discretion of such proxies, upon such other matters as may
properly come before the meeting or any adjournment thereof.
IF NOT OTHERWISE DIRECTED, SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN FAVOR OF THE MATTERS SET FORTH ABOVE. Receipt is acknowledged of
Notice of and Proxy Statement for said Meeting and of the Annual Report to
Stockholders for the year ended March 28, 1995. PLEASE SIGN, DATE AND MAIL
TODAY IN THE ENCLOSED PREPAID ENVELOPE, or mail to American Stock Transfer,
40 Wall Street, New York, NY 10005.
Dated ______________________________________,1995
___________________________________________ (Seal)
___________________________________________ (Seal)
Please sign here exactly as your name appears
at the left. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as such. Each joint
owner or trustee should sign the proxy.
CLASS B STOCKHOLDERS BLUE
NPC INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For the Annual Meeting of Stockholders August 8, 1995
The undersigned hereby appoint O. Gene Bicknell and James K. Schwartz, and
each of them in the order named with full power of substitution, the proxy
or proxies of the undersigned to act at the Annual Meeting of Stockholders
of NPC International, Inc. to be held at 10:00 A.M. at the Memorial
Auditorium, 503 N. Pine, Pittsburg, Kansas, 66762 on Tuesday, August 8,
1995, and any adjournment or postponements thereof, and to vote all shares
of said Class B Common Stock which the undersigned would be entitled to
vote if personally present.
TO APPROVE THE STOCK RECAPITALIZATION PLAN AS DESCRIBED IN THE PROXY
STATEMENT:
_____FOR _____AGAINST _____ABSTAIN
IF NOT OTHERWISE DIRECTED, SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN FAVOR OF THE MATTERS SET FORTH ABOVE. Receipt is acknowledged of
Notice of and Proxy Statement for said Meeting and of the Annual Report to
Stockholders for the year ended March 28, 1995. PLEASE SIGN, DATE AND MAIL
TODAY IN THE ENCLOSED PREPAID ENVELOPE, or mail to American Stock Transfer,
40 Wall Street, New York, NY 10005.
Dated ______________________________________,1995
___________________________________________ (Seal)
___________________________________________ (Seal)
Please sign here exactly as your name appears
at the left. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as such. Each joint
owner or trustee should sign the proxy.
