<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[_] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
North Pittsburgh Systems, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
^--Enter Company Name Here--^
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
PRELIMINARY
IT WILL ASSIST MATERIALLY IN THE PREPARATION FOR THE ANNUAL MEETING
IF SHAREHOLDERS RETURN THEIR PROXIES PROMPTLY.
NORTH PITTSBURGH SYSTEMS, INC.
4008 GIBSONIA ROAD
GIBSONIA, PENNSYLVANIA 15044-9311
TELEPHONE NO. 412-443-9600
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 1996
------------------
The Annual Meeting of Shareholders of North Pittsburgh Systems, Inc. will
be held on Friday, May 17, 1996 at 2:00 p.m., Eastern Daylight Time, at THE
COMPANY'S PRINCIPAL OFFICE, 4008 GIBSONIA ROAD, GIBSONIA, PENNSYLVANIA, for the
purpose of considering and acting upon the following matters, as described in
the accompanying Proxy Statement:
1. To elect Directors.
2. To act upon a proposal to:
(i) Increase the authorized Capital Stock and reduce the par value of
the Common Stock by amending the Company's Articles of Incorporation to
increase the total authorized Capital Stock from 10,000,000 shares of
Common Stock, par value $.3125 per share, to 50,000,000 shares,
40,000,000 shares of which will be Common Stock, par value $.15625 per
share, and 10,000,000 shares of which will be Capital Stock carrying no
designation as to terms and classes until so designated by the Company's
Board of Directors (see Exhibit A); and
(ii) Effect a 2 for 1 stock split-up of the Company's Common Stock by
issuing 1 additional share of Common Stock at the new par value of
$.15625 per share for each Common share already outstanding at the old
par value of $.3125 per share.
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on April 9, 1996, as
the record date for the determination of Shareholders entitled to notice of and
to vote at the meeting.
You are cordially invited to attend the meeting. If you are unable to do
so, please sign and date the enclosed proxy and return it promptly by mail in
the enclosed envelope. No postage is required if mailed in the United States.
By Order of the Board of Directors
Allen P. Kimble
Secretary
Dated: Gibsonia, PA
April 19, 1996
<PAGE>
NORTH PITTSBURGH SYSTEMS, INC.
4008 Gibsonia Road
Gibsonia, Pennsylvania 15044-9311
Telephone No. 412-443-9600
------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 17, 1996
------------------
GENERAL
This Statement is furnished in connection with the solicitation by and on
behalf of the Board of Directors of North Pittsburgh Systems, Inc. (North
Pittsburgh or Company) of Proxies to be used at the Annual Meeting of
Shareholders of the Company and any adjournments thereof, to be held at THE
COMPANY'S PRINCIPAL OFFICE, 4008 GIBSONIA ROAD, GIBSONIA, PENNSYLVANIA, on May
17, 1996, at 2:00 p.m., Eastern Daylight Time for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The Board of Directors
has fixed the close of business on April 9, 1996, as the record date for the
determination of Shareholders entitled to notice of and to vote at the Annual
Meeting.
It is anticipated that this Proxy Statement and accompanying proxy card
(Proxy) will be mailed to Shareholders for the first time on or about April 19,
1996. Shares represented by a valid Proxy received in time for voting will be
voted in accordance with the Shareholder's instructions. If no such instructions
are specified, the Proxy will be voted FOR each of the nominees for election as
a Director and FOR the proposal to increase the authorized Capital Stock and
reduce the par value by amending the Articles of Incorporation to increase the
total authorized Capital Stock from 10,000,000 shares of Common Stock, par value
$.3125 per share, to 50,000,000 shares, 40,000,000 shares of which will be
Common Stock, par value $.15625 per share, and 10,000,000 shares of which will
be Capital Stock carrying no designation as to terms and classes until so
designated by the Company's Board of Directors and then to effect a 2 for 1
split-up of the Company's issued and outstanding Common Stock. Shareholders may
revoke their proxies at any time before such proxies are exercised by giving
notice in writing to Allen P. Kimble, Secretary, North Pittsburgh Systems, Inc.,
4008 Gibsonia Road, Gibsonia, Pennsylvania 15044-9311, by execution and
submission of a Proxy bearing a later date, or by appearing at the Annual
Meeting and giving notice of the revocation in person.
The Company will bear the cost of solicitation of proxies. In addition to
the use of the mails, the Company, if necessary, may use its officers and its
regular employees, who will receive no compensation in addition to regular
salary or pay, to solicit proxies from Shareholders, either personally, by
telephone, facsimile, telegraph or letters. Arrangements will be made by the
Company with brokers and other custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of the shares held of record, and
the Company will reimburse these persons for reasonable out-of-pocket expenses
incurred.
VOTING RIGHTS
Only Shareholders of record at the close of business on April 9, 1996 are
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. At that date, the Company had outstanding and entitled to vote
7,520,000 shares of Common Stock. Holders of Common Stock are entitled to one
vote for each share held in respect to the election of Directors and one vote
per share for the proposal to amend the Articles of Incorporation and effect a 2
for 1 Common Stock split-up. Three Judges of Election were appointed by the
Company's Board of Directors under the authority of the By-Laws of the Company
and the Pennsylvania Business Corporation Law to conduct the tabulation of votes
in respect to the election of Directors and the proposal to amend the Articles
of Incorporation and effect a 2 for 1 Common Stock split-up and to report the
results thereof. Election as a Director and approval of the proposal to amend
the Articles of Incorporation and effect a 2 for 1 Common Stock split-up
requires a favorable vote of the majority of the total shares represented at the
meeting. The total shares represented includes abstentions, withheld votes and
broker non-votes.
1
<PAGE>
STOCK OWNERSHIP
As of March 15, 1996, Armstrong Utilities, Inc. (Armstrong), a Pennsylvania
corporation, the principal business of which is cable television and all of the
stock of which is owned by Armstrong Holdings, Inc., a Delaware corporation,
held of record 467,870 shares or 6.22% of the Company's 7,520,000 shares of
outstanding Common Stock. As of that date, no other entity or individual held of
record more than 5% of such stock. A Schedule 13D and amendments thereto have
been filed with the Securities and Exchange Commission on the joint behalf of
(i) Jud, Incorporated, a Pennsylvania corporation (holder of 130,520 shares)
providing management services, the stock of which is owned by Armstrong
Holdings, Inc., (ii) Armstrong, (iii) Armstrong Holdings, Inc. (holder of 18,478
shares) and (iv) Director Jay L. Sedwick and his spouse, Jay L. Sedwick's
brother-in-law and his spouse, an unrelated officer of Jud, Incorporated,
Armstrong and Armstrong Holdings, Inc., and his spouse and certain other
persons, both individually and in respect of certain of their capacities as
officers of Jud, Incorporated, Armstrong and Armstrong Holdings, Inc. The
aggregate beneficial ownership at March 15, 1996 of those filing the Schedule
13D, or subject to the reporting requirements thereof, was 661,738 shares or
8.80% of the Company's outstanding Common Stock. Each of such persons disclaimed
any membership in any "group" as such term is defined in Rule 13d-5 under the
Securities Exchange Act of 1934 and the reporting persons have indicated that
the stock has been acquired for investment.
The following table sets forth information with respect to all persons
known to the Company who could be beneficial owners of more than 5% of the
Company's voting securities as of March 15, 1996 including those persons who by
virtue of their relationship to Jud, Incorporated, Armstrong and Armstrong
Holdings, Inc. might be deemed to be beneficial owners of the North Pittsburgh
stock held by those corporations:
TABLE I
BENEFICIAL OWNERS OF MORE THAN 5%
OF OUTSTANDING VOTING SECURITIES
<TABLE>
<CAPTION>
(1) (2) (3) (4)
TITLE OWNER'S NAME AND AMOUNT AND NATURE PERCENT
OF CLASS BUSINESS ADDRESS OF OWNERSHIP OF CLASS
-------- ---------------- ----------------- --------
<S> <C> <C> <C>
Common Stock Armstrong Utilities, Inc. 467,870 Direct 6.22%
One Armstrong Place
Butler, PA 16001
Common Stock Jay L. Sedwick 1,061 Direct 0.01%
One Armstrong Place 645,207 Indirect (1) 8.58%
Butler, PA 16001
Common Stock William C. Stewart 8,820 Direct 0.12%
One Armstrong Place 632,187 Indirect (2) 8.41%
Butler, PA 16001
Common Stock Kirby J. Campbell 5,300 Direct 0.07%
One Armstrong Place 633,387 Indirect (3) 8.42%
Butler, PA 16001
</TABLE>
- ---------
(1) Jay L. Sedwick, a Director of the Company, is a Director and President of
Jud, Incorporated, Chairman of the Board, President and Chief Executive
Officer of Armstrong and a Director and President of Armstrong Holdings,
Inc. If he were deemed the beneficial owner of the 130,520, 467,870 and
18,478 shares respectively held by such corporations, the 12,820 shares
held individually by his wife, the 15,319 shares held by the Sedwick
Foundation, of which Jay L. Sedwick is a Co-Trustee, and the 200 shares
held by the Estate of Jud L. Sedwick, of which Jay L. Sedwick is a
Co-Executor, his indirect beneficial ownership would total 645,207 shares.
(2) William C. Stewart, brother-in-law of Jay L. Sedwick, is a Director and
Secretary of Jud, Incorporated, a Director, Chief Operating Officer,
Executive Vice President and Secretary of Armstrong and a Director and
Secretary of Armstrong Holdings, Inc. If he were deemed the beneficial
owner of the 130,520, 467,870 and
2
<PAGE>
18,478 shares respectively held by such corporations and the 15,319 shares
held by the Sedwick Foundation, of which William C. Stewart is a
Co-Trustee, his indirect beneficial ownership would total 632,187 shares.
(3) Kirby J. Campbell is a Director, Chief Financial Officer, Executive Vice
President and Treasurer of Jud, Incorporated, Armstrong and Armstrong
Holdings, Inc. If he were deemed the beneficial owner of the 130,520,
467,870 and 18,478 shares respectively held by such corporations, the
15,319 shares held by the Sedwick Foundation, of which Kirby J. Campbell is
a Co-Trustee, the 200 shares held by the Estate of Jud L. Sedwick, of which
Kirby J. Campbell is a Co-Executor, and the 1,000 shares held by him under
the PA Uniform Transfers to Minors Act as custodian for two children, his
indirect beneficial ownership would total 633,387 shares.
The following table sets forth information with respect to the beneficial
ownership as of March 15, 1996 of individual Directors and of all Directors and
Officers as a Group:
TABLE II
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
(1) (2) (3) (4)
TITLE NAME OF AMOUNT AND NATURE PERCENT
OF CLASS BENEFICIAL OWNER OF OWNERSHIP (1) OF CLASS
-------- ---------------- ----------------- --------
<S> <C> <C> <C>
Common Stock Harry R. Brown 16,213 Direct (2) 0.22%
6,036 Indirect (3) 0.08%
Common Stock Charles E. Cole 29,295 Direct (4) 0.39%
11,286 Indirect (5) 0.15%
Common Stock Gerald A. Gorman 8,000 Direct (6) 0.11%
3,500 Indirect (7) 0.05%
Common Stock Richard R. Kauffman 21,200 Direct 0.28%
Common Stock Frank D. Reese 4,950 Direct 0.07%
4,950 Indirect (8) 0.07%
Common Stock Jay L. Sedwick 1,061 Direct 0.01%
645,207 Indirect (9) 8.58%
Common Stock Charles E. Thomas, Sr. 41,815 Direct 0.56%
12,843 Indirect (10) 0.17%
Common Stock Charles E. Thomas, Jr. 13,605 Direct (11) 0.18%
10,500 Indirect (12) 0.14%
Common Stock Barton B. Williams 14,610 Direct (13) 0.19%
Common Stock All Directors and Officers 159,914 Direct 2.13%
as a Group (15 Persons) 695,847 Indirect (14) 9.25%
</TABLE>
- ---------
(1) Included in the shares set forth in the table above are (a) shares
beneficially owned by the Director, his wife, minor children, and
relatives living in his house, and, includable in such table under rules
of the Securities and Exchange Commission and (b) shares which are deemed
to be beneficially owned because the Director has voting power or power
of disposition with respect to the shares. Share amounts are reported as
of March 15, 1996 and percentages of share ownership are calculated based
upon 7,520,000 shares of Common Stock outstanding as of that date.
(2) Of the 16,213 shares directly owned by Harry R. Brown, 2,152 shares are
held jointly with his wife.
(3) The 6,036 shares indirectly owned by Harry R. Brown are held individually
by his wife.
(4) Of the 29,295 shares directly owned by Charles E. Cole, 25,648 shares are
held jointly with his wife and 87 shares are held for the benefit of
Charles E. Cole, IRA.
3
<PAGE>
(5) Of the 11,286 shares indirectly owned by Charles E. Cole, 7,786 shares are
held individually by his wife and 3,500 shares are held by The Profit
Sharing Plan of Cole & Huber Medical Associates, a Pennsylvania
corporation. Dr. Cole is a participant in the Plan and a major shareholder
in the corporation.
(6) Of the 8,000 shares directly owned by Gerald A. Gorman, 4,500 shares are
held jointly with his wife.
(7) The 3,500 shares indirectly owned by Gerald A. Gorman are held
individually by his wife.
(8) The 4,950 shares indirectly owned by Frank D. Reese are held individually
by his wife.
(9) For information with respect to the 645,207 shares indirectly owned by Jay
L. Sedwick, please refer to Note 1 to Table I above.
(10) The 12,843 shares indirectly owned by Charles E. Thomas, Sr. are held
individually by his wife.
(11) Of the 13,605 shares directly owned by Charles E. Thomas, Jr., 5,900
shares are held jointly with his wife.
(12) The 10,500 shares indirectly owned by Charles E. Thomas, Jr., are held by
him under the PA Uniform Transfers to Minors Act as custodian for five
children.
(13) The 14,610 shares directly owned by Barton B. Williams are held jointly
with his wife.
(14) The 695,847 shares indirectly owned by all Directors and Officers as a
Group include the 645,207 shares indirectly owned by Jay L. Sedwick and
described in Note 1 to Table I above.
No Director, officer or "group" as defined in Rule 13d-5 under the
Securities Exchange Act of 1934 is a beneficial owner of more than 5% of the
Company's Common Stock by virtue of any voting trust or similar arrangement.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The By-Laws provide that North Pittsburgh shall be managed by a Board of
Directors of not less than seven (7) nor more than nine (9) members and that the
number of Directors to be elected shall be determined by the Board of Directors
prior to the Annual Meeting at which such Directors are to be elected. The Board
of Directors has established the number of Directors at nine (9) for the coming
year.
The persons named in the following table will be nominated for election as
Directors of North Pittsburgh to serve until the 1997 Annual Meeting of
Shareholders and until their successors are elected. All nominees are present
Directors of North Pittsburgh and were elected at the 1995 Annual Meeting of
Shareholders. The number of shares of Common Stock represented by proxy at the
1995 Annual Meeting of Shareholders held May 19, 1995 was 6,885,605 or 91.6% of
the 7,520,000 outstanding shares of such stock on that date.
It is the intention of the proxies to vote for the election of nine (9)
Directors and unless authority to vote for any or all individual nominees is
withheld, it is the intention of the proxies to vote for the election of the
nominees listed in the following table. If any of the following nominees should
become unavailable as a candidate for any reason, which is not anticipated, the
Board of Directors in its discretion may designate a substitute nominee, in
which event votes will be cast for such substitute nominee pursuant to the
accompanying Proxy, or offer a resolution to the meeting to reduce the number to
be nominated.
The information in the table which follows includes as to each such
nominee, the nominee's age, the year in which service commenced as a Director of
North Pittsburgh, the nominee's current positions and offices held with North
Pittsburgh, the nominee's business experience during the past five years and
certain other information. Individual shareholdings of each nominee may be found
above in Table II, Security Ownership of Management.
4
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
AND INFORMATION CONCERNING THEM
BIOGRAPHICAL SUMMARIES OF NOMINEES /1/
Unless otherwise specified, "North Pittsburgh" as used below means North
Pittsburgh Systems, Inc. since May 31, 1985 and North Pittsburgh Telephone
Company, its predecessor, before that date. Positions and experience related
only to North Pittsburgh Telephone Company, the Company's principal subsidiary,
are also presented.
HARRY R. BROWN Director of North Pittsburgh since 1989
Vice President of North Pittsburgh Systems, Inc. and Vice President--Operations
of North Pittsburgh Telephone Company
Mr. Brown, 59, has been Vice President of North Pittsburgh Systems, Inc.
since 1992 and Vice President--Operations of North Pittsburgh Telephone Company
since 1987. Mr. Brown also held the following North Pittsburgh positions:
Assistant Vice President--Operations from 1986 to 1987, Network Engineering
Manager from 1984 to 1986 and Equipment Supervisor from 1975 to 1984.
DR. CHARLES E. COLE Director of North Pittsburgh since 1968
Physician--Cole & Huber Medical Associates
Dr. Cole, 65, is a physician practicing as Cole & Huber Medical Associates
in the Town of McCandless, PA.
GERALD A. GORMAN Director of North Pittsburgh since 1979
President of North Pittsburgh Systems, Inc. and President and General Manager of
North Pittsburgh Telephone Company
Mr. Gorman, 66, has been President of North Pittsburgh Systems, Inc. since
1994, President since 1993 and General Manager since 1992 of North Pittsburgh
Telephone Company, Executive Vice President of both Companies from 1992 to 1994,
Vice President--Finance from 1972 to 1992, Assistant General Manager from 1986
to 1992, Secretary from 1968 to 1993 and Treasurer from 1968 to 1979.
RICHARD R. KAUFFMAN Director of North Pittsburgh since 1980
Executive Vice President and Chief Executive Officer of The National Bank of
Coxsackie
Mr. Kauffman, 54, has been Executive Vice President and Chief Executive
Officer of The National Bank of Coxsackie, Coxsackie, NY, since August, 1991. He
previously served as Executive Vice President and Chief Operating Officer of The
Sussex Trust Company, Georgetown, DE from January, 1991 to July, 1991 and
Executive Vice President for the same company from March, 1990 to January, 1991.
Prior thereto, Mr. Kauffman was a private investor in 1989, President of Valley
National Bank in Freeport, PA from 1982 to 1988 and Executive Vice President of
the same bank from 1978 to 1982.
FRANK D. REESE Director of North Pittsburgh since 1974
Director of Future Technology and Product Planning of North Pittsburgh Telephone
Company
Mr. Reese, 78, has been Director of Future Technology and Product Planning
of North Pittsburgh Telephone Company since May, 1994. Mr. Reese also held the
following North Pittsburgh positions: President from 1979 to
- ---------
/1/Unless otherwise indicated, a nominee has had the same principal occupation
for the past five years. Only directorships in companies with a class of
equity securities registered pursuant to the Securities Exchange Act of
1934, or otherwise subject to its periodic reporting requirements, are
listed. No corporation or organization listed herein is a parent, subsidiary
or other affiliate of North Pittsburgh Systems, Inc. or its subsidiaries.
There are no arrangements or understandings among any director, North
Pittsburgh Systems, Inc. or its subsidiaries or any other person pursuant
to which a director was or is to be selected.
5
<PAGE>
1994, Chief Executive Officer from 1992 to 1993, General Manager from 1975 to
1992, Executive Vice President from 1972 to 1979 and Assistant General Manager
from 1974 to 1975.
JAY L. SEDWICK Director of North Pittsburgh since 1980
Chairman, President and Chief Executive Officer of Armstrong Utilities, Inc.
Mr. Sedwick, 61, is Chairman, President and Chief Executive Officer in a
number of companies comprising the Armstrong Group of Companies (engaged in the
business of telephony, cable television, home security and real estate in
several states). He has been the Chairman of Armstrong Utilities, Inc. in
Butler, PA since 1993 and President and Chief Executive Officer of the same
company since 1988. Mr. Sedwick also served in various officer capacities for
Armstrong Utilities, Inc. from 1963 to 1988.
CHARLES E. THOMAS, SR. Director of North Pittsburgh since 1957
Chairman of Board of Directors of North Pittsburgh
Mr. Thomas, 82, has been Chairman of the Board of Directors of North
Pittsburgh since 1968. Mr. Thomas has also been a partner in the law firm of
Thomas, Thomas, Armstrong & Niesen, Harrisburg, PA, since the formation in 1991
of this firm which is retained as general counsel for North Pittsburgh. Previous
thereto, he was a partner in the law firm of Thomas & Thomas from 1977 to 1990.
Mr. Thomas is also a director of Denver and Ephrata Telephone and Telegraph
Company, Ephrata, PA.
CHARLES E. THOMAS, JR. Director of North Pittsburgh since 1993
Partner of Thomas, Thomas, Armstrong & Niesen
Mr. Thomas, Jr., 53, son of Charles E. Thomas, Sr., Chairman of the Board,
has been a partner in the law firm of Thomas, Thomas, Armstrong & Niesen,
Harrisburg, PA, since the formation of this firm in 1991, concentrating in
public utility, securities regulation and corporate law. Previous thereto, he
was a partner in the law firm of Thomas & Thomas from 1977 to 1990.
BARTON B. WILLIAMS Director of North Pittsburgh since 1986
President of Parks Moving and Storage, Inc.
Mr. Williams, 54, has been President of Parks Moving and Storage, Inc.,
Warrendale, PA since 1973.
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors, which held seventeen meetings during 1995, does not
have standing audit or nominating committees, but rather acts as a committee of
the whole with respect to these functions. Charles E. Thomas, Sr., Chairman of
the Committee, Charles E. Cole, Frank D. Reese and Gerald A. Gorman serve,
without compensation, as an Executive Committee of North Pittsburgh Systems,
Inc. and subsidiaries with full power of the Board of Directors when the Board
is not in session and action is considered necessary and in the best interests
of each company. Two Executive Committee meetings were held in 1995. Charles E.
Thomas, Sr., Chairman of the Committee, Charles E. Cole, Richard R. Kauffman,
Frank D. Reese, Jay L. Sedwick, Charles E. Thomas, Jr. and Barton B. Williams
serve, without compensation, as a Compensation Committee and, in respect to
compensation for 1995, held one meeting (see Compensation Committee Report on
Executive Compensation).
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The Summary Compensation Table below shows the
total compensation of Gerald A. Gorman and of Harry R. Brown, the only Executive
Officers whose compensation exceeded $100,000 during 1995.
6
<PAGE>
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
(a)
NAME (c) (i)
AND (b) ANNUAL COMPENSATION ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION
------------------ ---- ------------------- ------------
<S> <C> <C> <C>
Gerald A. Gorman* 1995 $135,450(2) $15,891(3)
1994 129,000 15,065
1993 121,917 13,129
Harry R. Brown** 1995 $113,600(2) $15,126(3)
1994 108,200 14,337
1993 104,200 12,647
</TABLE>
- ---------
* President of North Pittsburgh Systems, Inc. since 1994; President since
1993 and General Manager since 1992 of North Pittsburgh Telephone Company;
Executive Vice President from 1992 to 1994, Vice President--Finance and
Assistant General Manager in 1992, Secretary in 1992 and 1993 of both
companies. Mr. Gorman was also a Director of both companies in all three
years.
** Vice President of North Pittsburgh Systems, Inc.; Vice
President--Operations of North Pittsburgh Telephone Company and a Director
of both companies in all three years.
NOTES TO SUMMARY COMPENSATION TABLE:
(1) The Summary Compensation Table reflects salary (both cash and deferred),
Director fees and Company contributions to a defined contribution plan
only. No other forms of compensation such as Bonus, Restricted Stock
Awards, Stock Appreciation Rights, Options or Long Term Incentive Payments
exist.
(2) The Company has a Deferred Compensation Plan (Plan) under which the
Chairman of the Board of Directors, the President, any Vice President and
the Treasurer of the Company can elect to defer portions of their regular
monthly salaries up to a maximum of $5,000 per month. Any individual
deferred compensation agreements executed under the Plan expire on the date
of retirement or on such other date as may be agreed upon. Distribution of
deferred salary amounts begins upon the individual's retirement,
termination, death or disability, whichever event occurs first. Under such
Deferred Compensation Plan, Mr. Gorman, during 1995, deferred $1,000 per
month of his regular monthly salary. The distribution of such deferred
amount will begin within thirty (30) days of the earliest of Mr. Gorman's
actual retirement date, termination date, date of death or date of
permanent disability, whichever first occurs.
(3) Messrs. Gorman and Brown received, in 1995, $11,150 each as compensation as
Directors. No amounts were paid for special or committee assignments. In
1995, annual contributions were made to the North Pittsburgh Telephone
Company Employees' Savings and Retirement Plan (401-K) for the benefit of
Messrs. Gorman and Brown in the amounts of $4,741 and $3,976, respectively.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Directors Charles
E. Thomas, Sr., Charles E. Cole, Richard R. Kauffman, Frank D. Reese, Jay L.
Sedwick, Charles E. Thomas, Jr. and Barton B. Williams, acting as a Compensation
Committee met on December 2, 1994 for the purpose of determining Officers'
Compensation for 1995. They had available for use, as a general basis for
consideration, information obtained from executive compensation seminars and
salary levels for comparable positions, both nationally and regionally, in other
utilities (including telephone companies) and in other general industry
segments. Also considered were Officer salary levels existing in 1994, changes
in the telephone industry as a whole, the effect of these changes on the Company
and the responsibilities of Officers relating to these changes. As was done for
1994, the Compensation Committee recommended setting the annual salary
compensation for Officers at levels which considered the Officer's
responsibilities, the salary structures of comparable telephone companies, the
salary structures of other industries in and around the Pittsburgh area,
inflation and merit. This latter factor, as determined by the Compensation
Committee, was not based solely on traditional performance measures which may
exist in other industries such as sales, earnings, return on equity, etc. (see
Performance Graph), but rather reflected one of the basic philosophies of the
Company, namely, that Officers are charged with the principal responsibility of
7
<PAGE>
providing quality telephone communication services at reasonable prices and, at
the same time, enhancing Shareholder values. In the opinion of the Committee,
these objectives have been met successfully over the past five or more years.
The amounts set forth in the Summary Compensation Table reflect the salary
levels recommended by the Compensation Committee in December, 1994.
The following Performance Graph provides Shareholders with a comparison of
the total return experienced by the Company in relation to the broad equity
market indexes shown thereon.
8
<PAGE>
PERFORMANCE GRAPH
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG NPSI, S&P TELEPHONE INDEX AND NASDAQ INDEX
<CAPTION>
Measurement period S&P Telephone NASDAQ
(Fiscal year Covered) NPSI Index Index
- -------------------- ------ ------------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/90 $100.00 $100.00 $100.00
FYE 12/31/91 114.39 107.54 156.85
FYE 12/31/92 125.96 117.85 181.08
FYE 12/31/93 141.64 136.02 207.79
FYE 12/31/94 174.12 134.43 201.17
FYE 12/31/95 285.49 202.81 288.24
</TABLE>
The above Performance Graph provides an indicator of cumulative total
shareholder returns over a five-year period for the Company (North Pittsburgh
Systems, Inc. (NPSI)) as compared with the National Association of Security
Dealers Automated Quotation System (NASDAQ) Composite Index and the Standard and
Poor's (S&P) Telephone Index. "Total shareholder returns" assumes the
reinvestment of dividends. The Graph also assumes that $100 was invested on
December 31, 1990 in NPSI, the S&P Telephone Index and the NASDAQ Index. For
example, NPSI's base of $100 at the beginning of the period, on a total return
basis, is calculated to be approximately $285 at the end of the five-year
period, a gain of approximately 185% over such period.
RETIREMENT BENEFIT TABLE. The following table illustrates estimated annual
benefits (average annual earnings multiplied by a benefit factor of 1.4%
multiplied by years of service) payable to Participants at their respective
retirement dates under the Company's Retirement Plan, or in the case of Mr.
Gorman, under both the Company's Retirement Plan and the Company's non-qualified
retirement benefits plan covering deferred compensation as explained in Note (3)
to this Table.
9
<PAGE>
RETIREMENT BENEFIT TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL EARNINGS USED YEARS OF SERVICE
AS BASIS FOR COMPUTING -----------------------------------
RETIREMENT BENEFITS 10 20 30 40
------------------- -- -- -- --
<S> <C> <C> <C> <C>
$100,000 $14,000 $28,000 $42,000 $56,000
110,000 15,400 30,800 46,200 61,600
120,000 16,800 33,600 50,400 67,200
130,000 18,200 36,400 54,600 72,800
140,000 19,600 39,200 58,800 78,400
150,000 21,000 42,000 63,000 84,000
160,000 22,400 44,800 67,200 89,600
</TABLE>
- ---------
NOTES TO RETIREMENT BENEFIT TABLE:
(1) The compensation amounts paid to Mr. Gorman and Mr. Brown for 1995 of
$135,450 and $113,600, respectively, as shown in the Annual
Compensation-Salary column of the Summary Compensation Table, are covered
under the Company's Retirement Plan and/or the Company's non-qualified
retirement benefits plan. Mr. Gorman and Mr. Brown as of December 31, 1995,
had accumulated 29.84 and 35.28 years of credited service, respectively,
under the Retirement Plan.
(2) Benefits listed in the Table are not subject to any deductions for Social
Security or other offset amounts.
(3) The Company's Retirement Plan (Retirement Plan) provides retirement
benefits to all full-time employees, age 21 and over, generally based on
average basic monthly compensation, excluding overtime earnings or other
amounts earned, during the highest sixty (60) months of employment. The
amount of contribution or accrual applicable to an individual in respect to
this defined benefit plan cannot be calculated readily. However, the
aggregate cash contribution required for the Retirement Plan year ended
October 31, 1995 was equal to 9.1% of the total covered remuneration of all
Participants in the Retirement Plan. Although deferrals of regular salary
amounts under the Company's Deferred Compensation Plan are not considered
as being covered remuneration in the Retirement Plan, the Company's
position in respect to an officer's fixed annual salary set by its Board of
Directors is that the entire amount of such salary, deferred or not, should
be included in the remuneration base used to calculate retirement benefits.
Accordingly, in addition to the Retirement Plan, the Company adopted a
non-qualified retirement benefit plan under which retirement benefits will
be calculated on any amounts of regular salary that have been deferred
under the Company's Deferred Compensation Plan. The non-qualified
retirement plan is designed so that an officer who has deferred part of his
regular fixed salary will receive exactly the same total retirement
benefits that he would have received if no deferments of monthly salary had
been made. As shown in Note (2) to the Summary Compensation Table, Mr.
Gorman has elected to defer part of his regular salary. The normal
retirement date under the Retirement Plan is the first day of the month
following a Participant's 65th birthday; however, employment after a
normal retirement date is includable in benefit calculations. Mr. Gorman
had 29.7 years of credited service on his normal retirement date.
PROPOSAL NO. 2: CHANGE IN THE AUTHORIZED CAPITAL STOCK AND COMMON STOCK SPLIT-UP
The authorized Capital Stock of the Company now consists of 10,000,000
shares of Common Stock with a par value of $.3125 per share, 7,520,000 shares of
which are issued and outstanding.
The Board of Directors unanimously believes that it would be in the best
interests of the Company and its Shareholders to:
(i) Amend the Company's Articles of Incorporation to increase the
total authorized Capital Stock from 10,000,000 shares of Common Stock,
par value $.3125 per share, to 50,000,000 shares, 40,000,000 shares of
which will be Common Stock, par value $.15625 per share, and
10,000,000 shares of which will be Capital Stock carrying no
designation as to terms and classes until so designated by the
Company's Board of Directors (see Exhibit A); and
10
<PAGE>
(ii) Effect a 2 for 1 stock split-up of the Company's Common
Stock by issuing 1 additional share of Common Stock at the new par
value of $.15625 per share for each Common share already outstanding
at the old par value of $.3125 per share.
Upon such increase in the authorized shares of Capital Stock and the Common
Stock split-up, the Common Stock of the Company would retain the same
designations and terms as presently exist except for the reduction in par value
to $.15625 per share. No holders of Common Stock of the Company have any
preemptive rights.
Resolutions authorizing the change in authorized Capital Stock and the
Common Stock split-up will be offered at the Annual Meeting of Shareholders and
for approval will require the affirmative vote of the holders of a majority of
the issued and outstanding shares of Common Stock.
If Proposal No. 2 is approved, the change in authorized Capital Stock will
be accomplished by the execution and filing of Articles of Amendment, amending
the Company's Articles of Incorporation. The proposed Amendment is set forth in
its entirety in Exhibit A to this Proxy Statement. In respect to the Common
Stock split-up, the Shareholders will not have to surrender their present stock
certificates. Instead, certificates for the additional shares of Common Stock to
which they are entitled will be mailed to Shareholders of record, on a record
date to be hereafter fixed by the Board of Directors with respect to the
effectuation of the stock split-up, together with an appropriate sticker to be
affixed to the presently outstanding Common Stock certificates showing the
change in the par value of the Company's Common Stock to $.15625 per share.
Shareholders will be advised of the record date and distribution date for the
additional shares as soon as such dates have been fixed by the Board of
Directors. Appropriate stickers and certificates representing additional shares
would be mailed as soon as practicable thereafter.
The Board of Directors believes that the Common Stock split-up is in the
best interests of the Company and its Shareholders as it will broaden the
market, lower the market price and improve the marketability of the Common
Stock. However, if the stock split-up is approved, in those instances thereafter
where stock is traded through a broker, the brokerage commission may be
increased assuming the same dollar amount of shares is traded.
It should also be noted that if Proposal No. 2 is approved and implemented,
24,960,000 shares of authorized Common Stock will remain unissued after the
split-up and will be subject to subsequent issue at the discretion of the Board
of Directors for any proper corporate purposes without Shareholder approval. In
addition, 10,000,000 shares of authorized Capital Stock, without designation as
to class and terms, will remain unissued and will be subject to subsequent
action as to designation, class, terms and issue at the discretion of the Board
of Directors for any proper corporate purposes without Shareholder approval (see
Exhibit A).
The authorization of shares over and above the number needed to carry out
the proposed Common Stock split-up is sought in order to obviate the necessity
of future amendments should the Company hereafter determine to issue additional
shares of Common Stock. Although the Board has no present plans for the issuance
of additional shares of Common Stock other than to effect the stock split-up, it
is believed that in connection with the Company's growth and development, it is
in the best interests of the Shareholders of the Company to have both additional
shares of Common Stock and shares of undesignated Capital Stock available for
issuance so that the Company is in a flexible position to meet future
contingencies for which the issuance of Common Stock or other class of shares
of Capital Stock may be deemed advisable.
In the opinion of Thomas, Thomas, Armstrong & Niesen, Harrisburg,
Pennsylvania, counsel for the Company, no taxable gain or loss will result to
the Company's Common Shareholders from the stock split-up under existing Federal
or Pennsylvania tax laws.
Once again, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required to approve Proposal No. 2. It is the intention of the proxies to vote
FOR Proposal No. 2.
The Board of Directors recommends a vote FOR the adoption of Proposal No. 2.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Under the Company's By-Laws, the Board of Directors has the authority to
appoint a firm of accountants to conduct an annual examination of the financial
status, property and affairs of the Company. In accordance with
11
<PAGE>
such authority, KPMG Peat Marwick LLP, which has audited the financial
statements of the Company annually since 1952, has been appointed by the Board
of Directors to provide audit and tax services for the year ending December 31,
1996. As a consequence, no recommendations will be made at the 1996 Annual
Meeting in respect to accountants and this matter will not be submitted for a
vote at the meeting.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting, will be given an opportunity to make a statement, if he/she so
desires, and will be available to respond to appropriate questions by
Shareholders.
SHAREHOLDER PROPOSALS
Shareholder proposals intended for presentation at the 1997 Annual Meeting
must be received at the office of the Secretary, North Pittsburgh Systems, Inc.,
4008 Gibsonia Road, Gibsonia, PA 15044-9311 not later than December 20, 1996 in
order to be eligible to be included in the Company's Proxy Statement for that
meeting. It is recommended that Shareholder proposals be sent to the Company by
Certified Mail, Return-Receipt Requested.
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than that stated in the Notice of
Meeting. However, if any other business shall properly come before the meeting,
votes may be cast pursuant to the proxies solicited hereby in respect to such
other business in accordance with the best judgment of the person or persons
acting under the proxies.
Accompanying this Proxy solicitation material is a copy of the Company's
Annual Report for the year 1995, which includes the following audited financial
statements: Consolidated Balance Sheets as of December 31, 1995 and 1994, and
for each of the years in the three-year period ended December 31, 1995,
Consolidated Statements of Earnings, Consolidated Statements of Shareholders'
Equity and Consolidated Statements of Cash Flows. The Annual Report is submitted
for the general information of the Company's Shareholders and is not intended to
induce, or for use in connection with, any sale or purchase of securities of the
Company, nor should it be regarded as Proxy soliciting material or as a
communication by means of which any solicitation is made.
By Order of the Board of Directors
Allen P. Kimble
Secretary
Dated: April 19, 1996
12
<PAGE>
EXHIBIT A
CHANGE IN AUTHORIZED CAPITAL STOCK
If Proposal No. 2 is adopted, Article 5 of the Company's Articles of
Incorporation will be restated and amended to read in its entirety as follows:
"5. The aggregate number of shares which the corporation shall have
authority to issue is:
(a) The Corporation shall have the authority to issue a total of
50,000,000 shares of Capital Stock. Of the 50,000,000 shares of
Capital Stock, 40,000,000 shares shall be Common Stock, par value
$.15625 per share. The Board of Directors, at such time or times as it
believes appropriate, may divide the remaining 10,000,000 shares of
Capital Stock of the Corporation into one or more classes of shares of
Common Stock, the voting power per share of which shall not be greater
than the voting power per share of the Common Stock issued and
outstanding on April 9, 1996, and/or one or more classes and series of
Preferred Stock, with par or stated value. The determination of the
voting rights, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights and other special or relative
rights of the shares of any such class or classes of stock shall be
accomplished by an amendment to this Article 5 solely by action of the
Board of Directors, which shall have the full authority permitted by
law to make such divisions and determinations."
13
<PAGE>
NORTH PITTSBURGH SYSTEMS, INC.
4008 GIBSONIA ROAD
GIBSONIA, PA 15044-9311
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Gerald A. Gorman,
Allen P. Kimble and Charles E. Cole, and/or any one or more of them, each with
the power to appoint his substitute, as proxies of the undersigned and
authorizes them to represent and to vote, as designated below, all shares of
Common Stock of North Pittsburgh Systems, Inc., which the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held on May 17,
1996 and at any adjournments thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below: [ ] WITHHOLD AUTHORITY to vote for all
nominees listed below:
</TABLE>
Harry R. Brown, Charles E. Cole, Gerald A. Gorman, Richard R. Kauffman,
Frank D. Reese, Jay L. Sedwick, Charles E. Thomas, Sr., Charles E. Thomas,
Jr., Barton B. Williams
(INSTRUCTION--To withhold authority to vote for any individual nominee write
that nominee's name in the space below)
- --------------------------------------------------------------------------------
2. Proposal to:
(i) Amend the Company's Articles of Incorporation to increase the total
authorized Capital Stock from 10,000,000 shares of Common Stock, par
value $.3125 per share, to 50,000,000 shares, 40,000,000 shares of
which will be Common Stock, par value $.15625 per share, and
10,000,000 shares of which will be Capital Stock carrying no
designation as to terms and classes until so designated by the
Company's Board of Directors (see Exhibit A); and
(ii) Effect a 2 for 1 stock split-up of the Company's Common Stock by
issuing 1 additional share of Common Stock at the new par value of
$.15625 per share for each Common share already outstanding at the
old par value of $.3125 per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on other side)
<PAGE>
The Proxies may vote in their discretion on any other business as may
properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL LISTED NOMINEES IN THE ELECTION OF DIRECTORS AND FOR THE
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION AND THEN EFFECT A 2 FOR 1 COMMON
STOCK SPLIT-UP AS DESCRIBED IN ITEM 2 ABOVE.
Please sign exactly as name appears below. If stock is held in joint names,
both must sign. When signing as attorney, executor, administrator, custodian,
trustee or guardian, please give title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated ........................, 1996
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
...................................
(Signature)
...................................
(Signature if held jointly)
