SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
BAILEY CORPORATION
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
* Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
BAILEY CORPORATION
700 LAFAYETTE ROAD
SEABROOK, NEW HAMPSHIRE 03874
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 14, 1995
TO THE STOCKHOLDERS OF BAILEY CORPORATION:
The Annual Meeting of Stockholders of Bailey Corporation for the fiscal year
ended July 30, 1995, will be held at the Hampshire Inn, located at the
intersection of Routes 107 and Interstate I-95, Seabrook, New Hampshire, on
Thursday, December 14, 1995, beginning at 10:30 a.m. (E.S.T.), for the following
purposes:
1. To elect directors;
2. To consider and vote upon a Board of Directors proposal to amend the
Company's Certificate of Incorporation to increase the authorized Common
Stock to 40,000,000 shares; and
3. To transact any other business which properly may be brought before the
meeting.
Stockholders of record at the close of business on November 10, 1995, are
entitled to notice of and to vote at the meeting or any adjournment,
continuation, or postponement thereof.
You are cordially invited to attend the meeting. Regardless of whether you
plan to attend the meeting, you are urged to complete, sign, and date the
enclosed proxy and return it promptly.
By order of the Board of Directors,
ROGER R. PHILLIPS
Secretary
Seabrook, New Hampshire
November 17, 1995
YOUR VOTE IS IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, SIGN, DATE,
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO
ADDITIONAL POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
BAILEY CORPORATION
700 LAFAYETTE ROAD
SEABROOK, NEW HAMPSHIRE 03874
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 14, 1995
GENERAL MATTERS
This proxy statement (the "Proxy Statement") is being furnished in
connection with the solicitation of proxies (the "Proxies") by the Board of
Directors of Bailey Corporation (the "Company") for use at the Annual Meeting of
Stockholders for the fiscal year ended July 30, 1995, to be held at the
Hampshire Inn, located at the intersection of Routes 107 and Interstate I-95,
Seabrook, New Hampshire, on Wednesday, December 14, 1995, beginning at 10:30
a.m. (E.S.T.), and at any adjournment, continuation, or postponement thereof.
The Board of Directors of the Company unanimously recommends that the
stockholders vote FOR each of the individuals referred to in this Proxy
Statement as nominees for the Board of Directors and FOR the proposed amendment
to the Company's Certificate of Incorporation to increase the authorized Common
Stock to 40,000,000 shares. The shares of Common Stock, par value $.10 per share
("Common Stock"), of the Company represented by Proxies will be voted as
instructed on the Proxies and, in the absence of instructions, as set forth
herein. A Proxy may be revoked by written notice delivered to the Secretary of
the Company at any time prior to the commencement of the meeting, by the
submission of another Proxy dated after the date of the Proxy initially
submitted, or by a vote in person at the meeting. This Proxy Statement and the
enclosed form of Proxy are being mailed to the stockholders of the Company on or
about November 17, 1995.
The Company will bear the cost of this solicitation of Proxies. In addition
to solicitation by mail, officers and other employees of the Company may solicit
Proxies in person or by telephone without compensation other than reimbursement
for their actual expenses. Upon request, the Company will reimburse persons
holding Common Stock in their names, or those of their nominees for the benefit
of others, for their reasonable expenses in sending Proxy solicitation materials
to such other persons.
VOTING RIGHTS
Only the holders of Common Stock of record at the close of business on
November 10, 1995, the record date for the meeting, will be entitled to notice
and to vote at the meeting or any adjournment, continuation, or postponement
thereof. On November 10, 1995, there were shares of Common Stock issued
and outstanding which were held of record by stockholders. Each share of
Common Stock is entitled to one vote. The presence at the meeting, in person
or by Proxy, of the holders of a majority of the outstanding shares of Common
Stock as of November 10, 1995, is necessary to constitute a quorum at the
meeting. The affirmative votes of the holders of a majority of the shares of
Common Stock present at the meeting are required to elect directors and to
transact any other business which properly may be brought before the meeting.
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of November 10, 1995, with
respect to the Common Stock beneficially owned by (1) each person known by the
Board of Directors to be the beneficial owner of more than 5% of the outstanding
shares of Common Stock, (2) each director of the Company and nominee for such
position, and (3) all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF OF COMMON STOCK OUTSTANDING
BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) COMMON STOCK(2)
<S> <C> <C>
Roger R. Phillips .............. 522,041(4) 9.40%
700 Lafayette Road
Seabrook, New Hampshire 03874
William A. Taylor .............. 377,648 7.02%
232 Bridal Path Lane
New Canaan, Connecticut 06840
Louis T. Enos .................. 208,682(4) 3.79%
700 Lafayette Road
Seabrook, New Hampshire 03874
E Gordon Young ................. 192,083(4) 3.55%
700 Lafayette Road
Seabrook, New Hampshire 03874
John G. Owens .................. 180,682(4) 3.34%
700 Lafayette Road
Seabrook, New Hampshire 03874
Allan B. Freedman .............. 152,500(5) 2.81%
Sutton Terrace Apartments,
#410 50 Belmont Avenue
Bala Cynwyd, Pennsylvania 19004
All directors and officers as a 1,822,136 30.47%
group (10 persons)(3)
(1) Includes shares of Common Stock owned by the wives and minor children of the
named individuals and shares of Common Stock held by custodians for the
benefit of such minors, as to which beneficial ownership may be disclaimed.
(2) Includes options and warrants to purchase Common Stock exercisable within 60
days as specified in applicable rules under the Securities Exchange Act of
1934, as amended.
(3) Includes 59,500 shares of Common Stock issuable upon the exercise of
currently exercisable options granted by the Company pursuant to the
Amended and Restated 1986 Incentive Stock Option Plan. Also includes 12,500
shares of Common Stock issuable upon exercise of currently exercisable
warrants issued to one director of the Company.
(4) Includes Common Stock held in self-directed pension and other accounts for
the benefit of the named individual over which such individual holds voting
or investment control.
(5) Includes currently exercisable warrants to purchase 12,500 shares of Common
Stock.
</TABLE>
MATTERS TO BE ACTED UPON AT THE MEETING
I. ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors consisting of a
minimum of three and a maximum of seven directors. By resolutions adopted on
August 24, 1995, the number of directors was fixed at six and the persons named
below were designated as nominees for election as directors. All nominees have
indicated in writing to the Company their willingness to be nominated and, if
elected, to serve as directors:
Roger R. Phillips John G. Owens
E Gordon Young William A. Taylor
Allan B. Freedman Louis T. Enos
Each director will be elected to hold office until the Annual Meeting of
Stockholders for the fiscal year ending July 28, 1996, and until his successor
is elected and qualified.
The shares of Common Stock represented by Proxies will be voted FOR the
election of the foregoing nominees as directors in the absence of contrary
instructions. If any nominee becomes unable or unwilling to accept such
nomination and election, the shares of Common Stock represented by Proxies will
be voted FOR the election of such other person, if any, as the Board of
Directors of the Company may designate.
A. INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following table sets forth certain information concerning the nominees
for election as directors:
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, BUSINESS
NAME EXPERIENCE, AND RELATED INFORMATION
<S> <C>
Roger R. Phillips Mr. Phillips, age 65, has served in various
management capacities with the Company and
Bailey Manufacturing Corporation since
1982. He has been a director and President,
Chief Executive Officer, and Secretary of
the Company since 1986 and has served as
Chairman of the Board of Directors since
February 1991. Mr. Phillips holds the same
positions with Bailey Manufacturing
Corporation ("BMC"), a wholly- owned
subsidiary of the Company. Since June 1992
Mr. Phillips has been a director, Chairman
of the Board of Directors, and Chief
Executive Officer of Bailey Transportation
Products, Inc. ("BTP"), a wholly- owned
subsidiary of the Company.
E Gordon Young Mr. Young, age 61, has held various
management positions with the Company and
Bailey Manufacturing Corporation since
1982. He has been a director of the Company
since 1986 and was Executive Vice President
from 1989 to 1994. He holds the same
positions with BMC. Mr. Young previously
was Executive Vice President -- Research
and Development of the Company from 1986 to
1989. Mr. Young is also a director of BTP.
Allan B. Freedman Mr. Freedman, age 65, has been associated
with the Company and BMC since 1983. He has
been a director of the Company since 1986
and currently serves as a director of BMC.
Mr. Freedman served as Chairman and
Treasurer of Edward P. Dolbey & Co., Inc.,
a distributor of optical and laboratory
supplies, until 1992. Since 1992 Mr.
Freedman has been a consultant and private
investor.
John G. Owens Mr. Owens, age 62, has served in various
management capacities with the Company
since 1986. He has been a director of the
Company since 1986 and currently serves as
a director of BMC. He was Executive Vice
President, Chief Operating Officer and
Assistant Secretary of the Company from
1986 to 1987. Mr. Owens also was a
director, the Chairman of the Board,
President, and Chief Executive Officer of
Universal Components Corp. and its
predecessor, Douglas Components
Corporation, an industrial equipment
manufacturer from 1987 until 1994.
William A. Taylor Mr. Taylor, age 69, became Vice Chairman and
Senior Vice President -- Corporate
Development in fiscal year 1994. He has
been associated with the Company and BMC
since 1983, has served as a director of the
Company since 1986 and currently also
serves as a director of BTP. His primary
responsibility has involved the
identification and analysis of potential
acquisition opportunities including the
acquisition of the assets and business of
TransPlastics, Inc., in June 1992 (the
"Conneaut Acquisition"), the assets and
business of Contour Technologies, a
division of The Boler Company., in July
1993 (the "Contour Acquisition"), and the
assets and business of Premix/E.M.S. Inc.
in August 1994 (the "Premix/EMS
Acquisition").
Louis T. Enos Mr. Enos, age 58, has been associated with
the Company and BMC since 1982 as a
shareholder and consultant. He has been a
director of the Company since 1991 and
currently serves as a director of BMC. From
January 1990 through January 1993, he
served as Executive Vice President of
Universal Components Corp., an industrial
equipment manufacturer. Mr. Enos was a
management consultant and Vice President of
Exeter Consulting Group from 1989 to 1995.
</TABLE>
B. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
CASH COMPENSATION
The following table sets forth the cash compensation paid directly and
indirectly by the Company for services in all capacities rendered in fiscal
years 1993, 1994, and 1995 to the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers of the Company (the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
LONG-TERM
COMPENSATION
NAME AND PRINCIPAL FISCAL AWARDS/STOCK ALL OTHER
POSITION(2) YEAR SALARY BONUS OPTIONS (SHARES) COMPENSATION(3)
<S> <C> <C> <C> <C> <C>
Roger R. Phillips .... 1995 $240,000.00 -- -- Use of leased auto
Chief Executive Of- 1994 $244,000.00 -- 100,000 Use of leased auto
ficer, Chairman of share option(4)
the Board President, 1993 $144,000.00 -- -- Use of leased auto
and Secretary
Leonard J. Heilman ... 1995 $150,000.00 $20,000.00 45,000 Auto allowance
Executive Vice Pres- share options(5)
ident -- Finance and 1994 $150,000.00 $67,000.00 -- Auto allowance
Administration, 1993 $104,000.00 -- 7,500 None
Chief Financial Of- share option(6)
ficer, Treasurer,
and Assistant Secre-
tary
Dennis G. Walters .... 1995 $150,000.00 $20,000.00 40,000 Use of leased auto
Executive Vice Pres- share option(7)
ident -- Bailey Man- 1994 $150,000.00 $ 9,750.00 -- Use of leased auto
ufacturing Division 1993 $114,000.00 $35,000.00 5,000 Use of leased auto
share option(6)
Phillip J. Kusky .... 1995 $150,000 -- 30,000 Use of leased auto
Executive Vice Pres- share option(8)
ident and Chief Op- 1994 N/A N/A N/A N/A
erating Officer 1993 N/A N/A N/A N/A
William A. Taylor ... 1995 $144,000.00 -- -- Auto allowance
Vice Chairman and 1994 $144,000.00 -- 50,000 Auto allowance
Senior Vice Presi- share option(9)
dent -- Corporate 1993 N/A N/A N/A N/A
Development
(1) Compensation deferred at election of executive must be included in category
and fiscal year in which earned.
(2) Includes Chief Executive Officer and the four most highly compensated
executives whose salary and bonus exceed $100,000.
(3) Includes (a) perquisites; (b) payments of above-market or preferential
earnings on deferred compensation; (c) payments of earnings with respect to
long-term incentive plans prior to settlement or maturation; (d) tax payment
reimbursements; and (e) preferential discounts on stock.
(4) Grant on August 25, 1993 of options to purchase 100,000 shares of Common
Stock at an exercise price of $11.00 per share, exercisable for 25,000
shares on or after the date the exercise price is set, and for an additional
25,000 shares on each of October 1, 1994, October 1, 1995, and October 1,
1996.
(5) Includes: (a) Grant on November 2, 1994, pursuant to the Company's Amended
and Restated 1986 Incentive Stock Option Plan, of options to purchase 10,000
shares of Common Stock at an exercise price of $7.18 per share, exercisable
for 2,500 shares on or after November 2, 1994, and for an additional 2,500
shares on each of November 2, 1995, November 2, 1996 and November 2, 1997;
and (b) Grant on November 2, 1994 of options to purchase 35,000 shares of
Common Stock at an exercise price of $7.18 per share, exercisable for 8,750
shares on or after November 2, 1994, and for an additional 8,750 shares on
each of November 2, 1995, November 2, 1996 and November 2, 1997.
(6) Grant pursuant to the Company's Amended and Restated 1986 Incentive Stock
Option Plan, exercisable immediately for 25% of the number of shares listed,
and for an additional 25% of that number each of the following three years,
at an exercise price of $5.875 per share.
(7) Grant on November 2, 1994 of options to purchase 40,000 shares of Common
Stock at an exercise price of $7.18 per share, exercisable for 10,000 shares
on or after November 2, 1994, and for an additional 10,000 shares on each of
November 2, 1995, November 2, 1996 and November 2, 1997.
(8) Grant on November 2, 1994 of options to purchase 30,000 shares of Common
Stock at an exercise price of $7.18 per share, exercisable for 7,500 shares
on or after November 2, 1994, and for an additional 7,500 shares on each of
November 2, 1995, November 2, 1996 and November 2, 1997.
(9) Grant on March 1, 1994, of options to purchase 50,000 shares of Common Stock
at an exercise price of $6.125 per share, exercisable for 12,500 shares on
or after the date the exercise price is set, and for an additional 12,500
shares on each of March 1, 1995, March 1, 1996, and March 1, 1997.
</TABLE>
EMPLOYMENT AGREEMENTS
Phillips Employment and Option Agreements. On February 18, 1994, the Company
entered into an Employment Agreement (the "Phillips Employment Agreement") with
Roger R. Phillips. Under the terms of the Phillips Employment Agreement, Mr.
Phillips will serve as President and Chief Executive Officer of the Company for
a three-year period at a base salary of $240,000 annually, together with certain
other benefits, subject to termination by the Company for cause. In addition,
pursuant to an Option Agreement dated as of September 1, 1993, between the
Company and Mr. Phillips (the "Phillips Option Agreement"), Mr. Phillips was
granted options to purchase 100,000 shares of Common Stock, exercisable as
follows: 25,000 shares on or after the date the exercise price is set, and an
additional 25,000 shares on or after each of October 1, 1994, October 1, 1995,
and October 1, 1996 (each, a "Vesting Date"). The options are exercisable at
$11.00 per share. The options expire on the fifth anniversary of their
applicable Vesting Date. As of October 26, 1994, Mr. Phillips had exercised none
of the options granted under the Phillips Option Agreement. The market price of
the Company's Common Stock was $11.00 on August 23, 1993, the date on which the
options were granted to Mr. Phillips. In conjunction with the options, Mr.
Phillips was given certain short-form demand and piggyback registration rights.
Taylor Employment and Option Agreement. On February 18, 1994, the Company
entered into an Employment Agreement (the "Taylor Employment Agreement") with
William A. Taylor. Under the terms of the Taylor Employment Agreement, Mr.
Taylor will serve as Senior Vice President of the Company for a three-year
period at a base salary of $144,000 annually, together with certain other
benefits, subject to termination by the Company for cause. In addition, pursuant
to an Option Agreement dated as of November 1, 1993, between the Company and Mr.
Taylor (the "Taylor Option Agreement"), the Company agreed, provided that Mr.
Taylor was in the Company's employ on March 1, 1994, to grant Mr. Taylor options
to purchase 50,000 shares of Common Stock, exercisable as follows: 12,500 shares
on or after the date the exercise price is set, and an additional 12,500 shares
on or after each of March 1, 1995, March 1, 1996, and March 1, 1997 (each, a
"Vesting Date"). The options are exercisable at $6.125 per share. The options
expire on the fifth anniversary of their applicable Vesting Date. As of October
26, 1994, Mr. Taylor had exercised none of the options granted under the Taylor
Option Agreement. The market price of the Company's Common Stock was $13.375 on
March 1, 1994, the date on which the options were granted to Mr. Taylor. In
conjunction with the options, Mr. Taylor was given certain short-form demand and
piggyback registration rights.
COMPENSATION PURSUANT TO PLANS
Incentive Stock Option Plan. The Company has established the Amended and
Restated 1986 Incentive Stock Option Plan (the "Stock Option Plan"). Pursuant to
the Stock Option Plan, executive officers and other key employees of the Company
are eligible to receive options to purchase shares of Common Stock. There are
200,000 shares of Common Stock reserved for issuance under the Stock Option
Plan. The options are intended to be "incentive stock options" within the
meaning of the Internal Revenue Code of 1986, as amended. The exercise price per
share may not be less than the fair market value of the Common Stock at the time
the option is granted; provided, however, that if an optionee owns more than 10%
of the outstanding shares of Common Stock at the time the option is granted, the
option price may not be less than 110% of the fair market value of the Common
Stock at the time of the grant. The Executive Compensation and Stock Option
Committee decides upon the employees to whom options are to be granted, the
number of shares, and the other terms of the options to be granted based upon
the employee's position, his duties and responsibilities, and other factors.
During fiscal year 1995, the Company granted options for 10,000 shares of
Common Stock under the Stock Option Plan. As of July 30, 1995, 70,525 such
options were exercised. The following table shows the number of shares of Common
Stock subject to unexercised options held by certain eligible executive officers
of the Company and all eligible executive officers as a group and the average
exercise price per share of such options:
<TABLE>
<CAPTION>
ELIGIBLE EXECUTIVE
LEONARD J. DENNIS G. OFFICERS AS A
HEILMAN WALTERS GROUP (2 PERSONS)
<S> <C> <C> <C>
Number of shares cov-
ered by unexercised
options at July 30,
1995 37,500 27,000 64,500
Average option exer-
cise price per share $3.78 $2.09 $3.07
</TABLE>
Pension Plans. The Company, through its wholly-owned subsidiary, BMC, has
established qualified, non-contributory, defined benefit plans (the "Pension
Plans") covering substantially all of its full-time employees (the "Salaried
Pension Plan") and hourly employees (the "Hourly Pension Plan"). The benefits
under the Hourly Pension Plan are subject to collective bargaining. The Pension
Plans generally provide for the Company to make monthly payments to covered
employees upon their retirement at age 65; however, they also provide for the
payment of benefits upon early retirement. The payments are based on the
employee's years of credited service with the Company and average annual
compensation for the highest five consecutive years of the final ten years prior
to retirement. For the purposes of the Pension Plans, the Company's employees
who previously were employed by USM Corporation ("USM") generally are credited
with their years of service with USM; however, the benefits payable to these
employees under the Pension Plans are reduced by any amounts that they receive
from USM under its pension plans with respect to their prior service. The
maximum benefits payable under the Pension Plans are limited to $90,000 under
the Internal Revenue Code of 1986, as amended. The Company makes annual
contributions to the Pension Plans determined on an actuarial basis. The Company
also bears the expenses of administering the Pension Plans.
The following table sets forth the estimated annual retirement benefits
payable by the Company under the Salaried Pension Plan to an employee who
retires at age 65 based on the greater of (a) 1.5% of the five-year average
compensation less 1.43% Social Security Benefits, or (b) 1% of the five-year
average compensation, in each case multiplied by the employee's years of
credited service with the Company, not to exceed 35 years.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
ANNUAL
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 5,230 $ 7,845 $10,460 $13,075 $15,690
75,000 8,355 12,533 16,710 20,888 25,065
100,000 11,480 17,220 22,960 28,700 34,440
125,000 14,605 21,908 29,210 36,513 43,815
150,000 17,730 26,595 35,460 44,325 53,190
</TABLE>
For vesting and benefit accrual purposes under the Salaried Pension Plan,
the years of credited service with the Company of the covered persons named in
the table under "Cash Compensation" herein as of December 31, 1992, were as
follows: Roger R. Phillips -- four years; E Gordon Young -- nine years; and
Dennis G. Walters -- 26 years. Leonard J. Heilman does not participate in the
Salaried Pension Plan.
On December 31, 1992, the Salaried Pension Plan was frozen and no further
service liability will accrue thereunder. Effective January 1, 1993, a
contributory 401k plan for salaried employees was established whereby eligible
employees may contribute up to 10% of their salary, with a dollar-for-dollar
match by the Company of up to 2% of an employee's salary.
Pension Plan Obligations Assumed as a Result of the Premix/EMS Acquisition.
As a result of the Premix/EMS Acquisition, the Company adopted certain tax
qualified retirement plans covering the former employees of Premix/E.M.S. Inc.
The three defined benefit plans adopted by the Company include the Salaried Plan
covering non-hourly, non-bargaining employees (the "Premix/EMS Salaried Pension
Plan"); the Hourly Employees' Retirement Plan covering collective bargaining
unit employees at the Lancaster, Ohio facility (the "Lancaster Hourly Pension
Plan"); and the Hartford City Hourly Employees' Retirement Plan covering hourly
employees at the Hartford City, Indiana facility (the "Hartford City Hourly
Pension Plan"). The Premix/EMS Salaried Pension Plan, the Lancaster Hourly
Pension Plan, and the Hartford City Hourly Pension Plan (collectively, the
"Premix/EMS Plans") call for the Company to make contributions not less than the
minimum amounts required under the provisions of the Employee Retirement Income
Security Act of 1974, as amended. The Premix/EMS Plans also provide for payment
of benefits upon early retirement, disability, or death. Employees become fully
vested in the respective Premix/EMS Plans after five years of service.
The Premix/EMS Salaried Pension Plan provides a benefit at age 65 of 50% of
the five-year average compensation, less 50% of Social Security, reduced
proportionately for employees with less than 30 years of service. The following
table sets forth the estimated annual retirement benefits payable under the
Premix/EMS Salaried Pension Plan to an employee who retires at age 65.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
ANNUAL
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 6,159 $ 9,239 $12,318 $15,398 $18,478
75,000 10,205 15,307 20,409 25,511 30,614
100,000 14,371 21,557 28,742 35,928 43,114
125,000 18,538 27,807 37,076 46,345 55,614
150,000 22,705 34,057 45,409 56,761 68,114
</TABLE>
The Lancaster Hourly Pension Plan provides a monthly benefit at age 65 of
$13.50 for each year of service to a maximum of 35 years of service.
The Hartford City Hourly Pension Plan provides a monthly benefit at age 65
of $10.00 for each year of service to a maximum of 30 years of service.
In addition to the defined benefit plans, the Company adopted the Employees'
Deferred Savings and Supplemental Retirement Plan, a 401(k) Plan covering the
former employees of Premix/E.M.S. Inc. (the "Premix/EMS 401(k) Plan"). Under the
Premix/EMS 401(k) Plan, employees may contribute up to 15% of compensation and
receive a Company matching contribution of $.10 for each $1.00 contributed by
the employee. Employees are 100% vested in Company matching contributions under
the Premix/EMS 401(k) Plan.
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
John G. Owens, a member of the Compensation Committee of the Board of
Directors, was Executive Vice President, Chief Operating Officer, and Assistant
Secretary of the Company from 1986 to 1987.
Louis T. Enos, a member of the Compensation Committee, has been associated
with the Company since 1982 as a shareholder and consultant.
REPORT OF THE COMPENSATION COMMITTEE
The Executive Compensation and Stock Option Committee of the Board of
Directors (the "Compensation Committee") is composed of three independent,
disinterested directors who are not employees of the Company, Messrs. Freedman,
Owens and Enos. The Compensation Committee regularly reviews and approves all
compensation and fringe benefit programs of the Company and also reviews and
makes recommendations to the Board of Directors concerning the actual
compensation of the Named Executive Officers as well as stock option grants to
employees. All actions taken by the Compensation Committee are reported to and
approved by the Board of Directors, as a whole. The Compensation Committee
reviews and administers the Company's Stock Option Plan.
The Compensation Committee uses base salary and, in certain instances,
bonuses, for Named Executive Officers to enhance short term profitability and
stockholder value and uses stock options to enhance long term growth and
profitability, return on equity and stockholder value. The Compensation
Committee periodically reviews the Company's performance and the performance of
the individual Named Executive Officers. In this process, the members of the
Compensation Committee individually meet and discuss the performance of the
Company and the Named Executive Officers with the Chief Executive Officer of the
Company. The Compensation Committee then meets in executive session to review
and discuss the performance of all the Named Executive Officers including the
Chief Executive Officer. The Compensation Committee then makes its
recommendations to the Board of Directors.
In evaluating the performance of the Chief Executive Officer the
Compensation Committee takes note of the Company's sales and net income, as well
as accomplishments with regard to the Company's strategic objectives, including,
among other things, the historical growth of the Company and the increase in its
value over the past several years.
Allan B. Freedman
John G. Owens
Louis T. Enos
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the change in the cumulative total
stockholder return on the Company's Common Stock against the change in the
cumulative total return of the NASDAQ Composite Index and the Standard and Poors
500 Index for the period of five fiscal years ending July 30, 1995.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG BAILEY CORPORATION, NASDAQ COMPOSITE INDEX
AND S&P 500 INDEX
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Bailey $100 $144 $688 $1,100 $613 $500
S&P 500 $100 $109 $119 $126 $129 $158
NASDAQ $100 $115 $133 $161 $165 $229
* Assumes the value of the investment in Bailey Corporation and each index was
$100 on July 30, 1990. No dividends were paid.
</TABLE>
DIRECTORS' COMPENSATION
Compensation of directors by the Company is as follows: non-employee
directors receive annual fees of $15,000, plus $1,000 for each meeting of the
Board of Directors attended and $750 for each meeting of a committee of the
Board of Directors attended; directors who are full-time employees of the
Company are not compensated for serving as directors. The Company uses the
consulting services of certain non-employee directors at a per diem rate of
compensation deemed reasonable by the Company given the nature of such services.
Compensation for consulting services paid by the Company to non-employee
directors was as follows: Louis T. Enos: $180,000.00; Allan B. Freedman:
$33,000.00; E Gordon Young: $37,500.00; and John G. Owens: $37,500.00.
C. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Convertible Debenture Offering. As part of the purchase price paid in
connection with the Premix/EMS Acquisition, the Company issued in favor of
Premix/E.M.S. Inc. a five-year debenture in principal amount of $9,000,000,
bearing interest at a fixed rate of eight percent per annum, and convertible on
or after July 31, 1995, into 900,000 shares of Common Stock at a conversion
price of $10.00 per share.
Subordinated Debenture Offering. As a part of the financing for the Conneaut
Acquisition, the Company issued an aggregate of $400,000 in principal amount of
debentures (the "Series A Debentures") bearing 11% annual interest and due on
June 26, 1996, and warrants to purchase 62,500 shares of Common Stock (the
"Warrants") pursuant to a Subordinated Debenture and Warrant Purchase Agreement
(the "Debenture and Warrant Agreement") to the following investors in the
following principal amounts: Allan B. Freedman, $50,000; Anthony A. Martino,
$200,000; Orion Group Money Purchase Pension Plan FBO Roger R. Phillips,
$100,000; and William A. Taylor, $50,000. Under the Debenture and Warrant
Agreement, Allan B. Freedman and Anthony A. Martino also acquired
non-transferable Warrants to purchase 12,500 and 50,000 shares of Common Stock,
respectively. The Series A Debentures were retired in the first quarter of
fiscal year 1994 in accordance with their terms; the Warrants remain
outstanding.
The Warrants are exercisable at any time prior to June 25, 1997, at an
option price of $6.00 per share. Each holder of Warrants has the right to demand
registration of the shares underlying the Warrants once at any time after June
26, 1993.
Mr. Phillips is Chairman of the Board, President, Chief Executive Officer
and Secretary, and a director of the Company; Mr. Taylor is Vice Chairman,
Senior Vice President -- Corporate Development, and a director of the Company;
Mr. Martino is President, Chief Administrative Officer, and a director of BTP;
and Mr. Freedman is a director of the Company.
The Company also issued an aggregate of $150,000 in principal amount of
debentures (the "Series B Debentures") bearing 12.5% interest and due on June
26, 1996, under a Subordinated Debenture Purchase Agreement to Louis T. Enos,
John G. Owens, and E Gordon Young, each in the principal amount of $50,000. The
Series B Debentures were retired in the first quarter of fiscal year 1994 in
accordance with their terms.
Mr. Young is a director of the Company and until April 1994 was Executive
Vice President of the Company; Messrs. Enos and Owens are directors of the
Company.
Equipment Leases. The Company entered into three sale/leaseback transactions
with Mr. Martino involving three separate injection molding machines whereby the
Company and BMC sold the machines to Mr. Martino for $90,000, $90,000, and
$75,000, respectively, and Mr. Martino in each case subsequently leased the
machines to BTP for noncancellable 60-month terms at $1,955, $1,978, and $1,630
per month, respectively. At the end of the lease term, BTP has the option to
purchase the machines for a nominal amount.
D. CERTAIN INFORMATION AS TO THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company (the "Board") held 12 meetings in
fiscal 1995. All directors attended at least 75% of the meetings held by the
Board and all committees thereof on which they served in fiscal 1994.
The Board has an Audit Committee consisting of Messrs. Freedman, Owens, and
Enos. The Audit Committee, which met two times in fiscal 1995, is responsible
for reviewing the independent audit of the Company by its independent public
accountants.
The Board has a Compensation Committee consisting of Messrs. Freedman,
Owens, and Enos. The Compensation Committee, which met three times in fiscal
1995, is charged with reviewing the compensation paid to senior management of
the Company, including the bonuses, stock options and other incentive payments,
if any, to be made under the Company's benefit plans.
The Board does not have a nominating committee; nominations of officers are
made by the Board. The Board will consider any such nominee suggested by
stockholders of the Company.
E. REPORTS OF BENEFICIAL OWNERSHIP
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission (the
"SEC") initial reports of ownership and reports of changes in ownership of
Common Stock of the Company. Officers, directors, and beneficial owners of more
than 10% of the equity of the Company are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Phillip J. Kusky became Chief Operating Officer of the Company on June 25,
1995. He neglected to file Form 3 at that time. However, this failure has been
corrected in the intervening period. Mr. Kusky has had no transactions in the
stock of the Company.
To the Company's knowledge, based solely on the review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the two fiscal years ended July 30, 1995, the
officers, directors, and beneficial owners of more than 10% of the equity of the
Company complied with all applicable Section 16(a) filing requirements.
II. INCREASE IN COMPANY'S AUTHORIZED COMMON STOCK
Article 4 of the Company's Certificate of Incorporation (as amended)
currently authorizes the Company to issue up to 20,000,000 shares of Common
Stock, $.10 par value per share.
As of November 1, 1995, there were 5,393,558 shares of Common Stock issued,
of which 5,353,558 shares were outstanding and 40,000 shares were held in the
Company's treasury. In addition, 129,475 shares are reserved for issuance under
the Company's Amended and Restated 1986 Incentive Stock Option Plan, 1,250,000
shares are reserved for issuance upon exercise of non-qualified stock options
granted to certain of the Executive Officers, 900,000 shares are reserved for
issuance upon conversion of outstanding debentures, and 62,500 shares are
reserved for issuance upon exercise of warrants issued to Messrs. Allan B.
Freedman and Anthony A. Martino. Finally, in connection with a Stockholder
Rights Plan adopted by the Company on September 28, 1995, the Company declared a
distribution of one Right per share of Common Stock on all outstanding shares.
Although the Rights are not currently exercisable, in the event that they do
become exercisable, they will entitle the holder to purchase from the Company
one share of Common Stock at a fixed purchase price and, under certain
circumstances, that number of shares of Common Stock having a market value of
twice the purchase price. Consequently, in order to provide for the event that
the Stockholder Rights Plan is activated, it is advisable that the Company
reserve at least one share of Common Stock for each share currently outstanding
and each share issued hereafter.
Because of the limited number of shares of Common Stock available to be
issued, the Board of Directors has declared it advisable that the Certificate of
Incorporation of Bailey Corporation, as amended, be further amended, subject to
approval by the stockholders, to increase the authorized Common Stock from
20,000,000 to 40,000,000 shares. The Board recommends that the stockholders
approve the amendment of subparagraph (a) of Article FOURTH of the Company's
Certificate of Incorporation so that, as amended, it shall read as follows:
"FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is as follows: (a) Forty Million shares of common stock
("Common Stock"), $.10 par value per share. The holders of Common Stock shall be
entitled to one vote for each share of stock and they shall not have cumulative
voting rights or any preemptive rights."
The additional shares of Common Stock would become part of the existing
class of Common Stock, and the additional shares, when issued, would have the
same rights and privileges as the shares of Common Stock now issued. There are
no preemptive rights or cumulative voting rights relating to the Common Stock.
If the proposed amendment is approved by the Stockholders, it will become
effective upon filing and recording a Certificate of Amendment as required by
the General Corporation Law of Delaware.
Although the Company has no present plans, agreements, or understandings
regarding the issuance of the proposed additional shares, the Board of Directors
believes that adoption of the amendment is advisable because it will provide the
Company with greater flexibility in connection with possible future financing
transactions, acquisitions of other companies or business properties, stock
dividends or splits, employee benefit plans, and other proper corporate
purposes. Moreover, having such additional authorized shares available will give
the corporation the ability to issue shares without the expense and delay of a
special meeting of stockholders. Such a delay might deprive the Company of the
flexibility the Board views as important in facilitating the effective use of
the Company's shares. Except as otherwise required by applicable law or stock
exchange rules, authorized but unissued shares of Common Stock may be issued at
such time, for such purposes, and for such consideration as the Board of
Directors may determine to be appropriate, without further authorization by
stockholders.
Since the issuance of additional shares of Common Stock, other than on a pro
rata basis to all current stockholders, would dilute the ownership interest of a
person seeking to obtain control of the Company, such issuance could be used to
discourage a change in control of the Company by making it more difficult or
costly. The Company is not aware of anyone seeking to accumulate Common Stock or
obtain control of the Company that would trigger the Stockholder Rights Plan,
and has no present intention to use the additional authorized shares to deter a
change in control.
The affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote at the meeting is needed to approve the proposed amendment of
the Company's Certificate of Incorporation. Shares of Common Stock held by the
Company as treasury shares cannot be voted.
The shares of Common Stock represented by Proxies will be voted FOR the
proposal to amend the Company's Certificate of Incorporation, as set forth
above, in the absence of contrary instructions.
III. OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any matter to be presented to the meeting other
than as described above. If any other matters properly come before the meeting,
it is intended that the shares of Common Stock represented by Proxies will be
voted at the discretion of the Proxy holders in accordance with their best
judgment.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP has been selected as the Company's independent public
accountants for the fiscal year ending July 28, 1996. It is expected that
representatives of KPMG Peat Marwick LLP, the Company's independent public
accountants, will be present at the meeting to make a statement, if they desire
to do so, and will be available to respond to appropriate questions.
MISCELLANEOUS
Accompanying this Proxy Statement is a copy of the Annual Report to
Stockholders of the Company for the fiscal year ended July 30, 1995. The Annual
Report to Stockholders is not to be regarded as proxy soliciting material.
THE COMPANY WILL SUPPLY FREE OF CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST THEREFOR, A COPY OF THE ANNUAL REPORT ON FORM 10-K OF THE COMPANY
(EXCLUDING EXHIBITS) FOR THE FISCAL YEAR ENDED JULY 30, 1995. SUCH REQUEST MUST
BE ADDRESSED TO BAILEY CORPORATION, P.O. BOX 307, 700 LAFAYETTE ROAD, SEABROOK,
NEW HAMPSHIRE 03874, ATTN: OFFICE OF STOCKHOLDER RELATIONS.
STOCKHOLDER PROPOSALS
Under the rules of the Securities and Exchange Commission, any proposal by a
stockholder of the Company intended to be presented at the Annual Meeting of
Stockholders for the fiscal year ending July 28, 1996, must be received by the
Company at 700 Lafayette Road, Seabrook, New Hampshire 03874, by the close of
business on July 20, 1996; however, if the date of such meeting is changed by
more than 30 calendar days from December 14, 1996, the Company will receive
stockholder proposals a reasonable time before the solicitation is made. It is
suggested that a stockholder submit any proposal by certified mail -- return
receipt requested.
ROGER R. PHILLIPS
President
November 17, 1995
BAILEY CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Roger R. Phillips and Leonard J. Heilman and
each of them as Proxies of the undersigned, each with the power to appoint a
substitute, and hereby authorizes each of them to represent the undersigned at
the Annual Meeting of Stockholders to be held on December 14, 1995, or any
adjournment thereof, and there to vote all the shares of Bailey Corporation held
of record by the undersigned on November 10, 1995, as directed on the reverse
side hereof. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL NOMINEES
AND IN FAVOR OF INCREASING THE AUTHORIZED COMMON STOCK OF THE COMPANY. If any
nominee for director is unable or unwilling to serve, the shares represented
hereby will be voted for another person in accordance with the judgment of the
Proxies named herein.
In addition, in their discretion, the Proxies are hereby authorized to vote
upon such other business as may properly come before the meeting or any
adjournment thereof. This Proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder.
PLEASE VOTE AND SIGN ON OTHER SIDE AND
RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy card exactly as your name or names appear hereon.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
For Withhold For All Except For Against Abstain
1.) Election of Directors. 2.) Increase of Authorized Common
Stock to 40,000,000 Shares
ROGER R. PHILLIPS, E GORDON YOUNG, ALLAN B. FREEDMAN,
JOHN G. OWENS, WILLIAM A. TAYLOR AND LOUIS T. ENOS
Instruction: To withhold authority to
vote for any nominee, mark the "For All
Except" box and draw a line through the
name of the nominee in the list above.
RECORD DATE SHARES:
BAILEY
CORPORATION
Please be sure to sign and date Mark box at right if comments or address
this Proxy. Date change have been noted on the reverse
side of this card. [ ]
Stockholder sign here Co-owner sign here
DETACH CARD DETACH CARD
BAILEY CORPORATION
Dear Stockholder:
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the management and operation of
your Company that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders,
December 14, 1995.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Bailey Corporation
