3
<PAGE>
GENICOM CORPORATION
14800 Conference Center Drive, Suite 400, Westfields
Chantilly, Virginia 22021-3806
Notice of Annual Meeting of Stockholders
To Be Held Wednesday, April 27, 1994
TO THE HOLDERS OF GENICOM CORPORATION COMMON STOCK:
The annual meeting of stockholders of GENICOM Corporation (the
"Company") will be held at the Company's headquarters, 14800
Conference Center Drive, Suite 400 Westfields, Chantilly,
Virginia 22021-3806 on April 27, 1994 at 2:00 P.M. Eastern
Daylight Time, for the following purposes:
1. To elect four directors for a one-year term;
2. To consider and vote upon an amendment to the Company's
Stock Option Plan to increase the number of shares of Common
Stock issuable under the Plan by 400,000 shares;
3.To ratify the selection of Coopers & Lybrand as the Company's
independent certified public accountants for fiscal year
1994; and
4.To transact such other business as may properly come before
the meeting and any adjournments thereof.
Only stockholders of record at the close of business on March 11,
1994 are entitled to notice of, and to vote at, the meeting and
any adjournments thereof.
Whether or not you expect to attend the meeting, please sign,
date and return promptly the enclosed proxy. The proxy is
revocable and you may vote your shares in person if you attend
the meeting and wish to do so.
Your attention is directed to the accompanying proxy statement.
You are cordially invited to attend the meeting,
By Order of the Board of Directors
April 4, 1994 Robert L. Burrus, Jr.
Secretary
<PAGE>
GENICOM CORPORATION
14800 Conference Center Drive, Suite 400, Westfields
Chantilly, Virginia 22021-3806
PROXY STATEMENT
General Information
This Proxy Statement is furnished in connection with the
solicitation of proxies by GENICOM Corporation, a Delaware
corporation (the "Company"), from the holders of the Company's
common stock for use at the annual meeting of stockholders to be
held on April 27, 1994, and at any adjournments thereof (the
"Annual Meeting"). This Proxy Statement and the accompanying
form of proxy are being sent or given to stockholders on or about
April 4, 1994. A copy of the Company's annual report for the
fiscal year ended January 2, 1994, is being mailed with this
Proxy Statement.
In addition to the solicitation of proxies by mail, the Company's
officers and regular employees, without compensation other than
their regular compensation, may solicit proxies by telephone,
facsimile, telegraph and personal interview. The Company will
bear the cost of all solicitation.
On March 11, 1994, the date for determining stockholders entitled
to vote at the meeting, there were 10,626,699 shares of the
Company's common stock (the "Common Stock") outstanding and
entitled to vote. Each such share of Common Stock entitles the
holder thereof to one vote at the Annual Meeting.
The holders of the majority of the issued and outstanding stock
of the Company, present in person or by properly executed
proxies, is required to constitute a quorum to transact business
at the Annual Meeting. The directors shall be elected by a
plurality of the votes cast by the holders of Common Stock
entitled to vote at the Annual Meeting, if a quorum is present.
Approval of each of the other proposals shall be decided by
majority vote of the shares of Common Stock entitled to vote held
by stockholders present in person or by proxy. With regard to
the election of directors, stockholders may vote in favor of all
nominees, withhold their votes as to all nominees or withhold
their votes as to specific nominees. Stockholders may not
abstain with respect to election of directors. With respect to
the stockholder proposal to increase the number of shares of
Common Stock issuable under the Stock Option Plan by 400,000
shares, stockholders may vote in favor of or against the proposal
or may abstain from voting. With respect to the stockholder
proposal and ratification of the selection of Coopers & Lybrand
as the Company's independent accountants for the current year,
stockholders may vote in favor of or against the proposal and
ratification, or they may abstain from voting.
Stockholders should specify their choices on the enclosed form of
proxy card. If no specific instructions are given with respect
to the matters to be acted upon, the shares represented by a
properly signed proxy card will be voted FOR the election of all
nominees for the office of director, FOR approval of the
amendment to the Stock Option Plan and FOR ratification of the
appointment of Coopers & Lybrand as the Company's independent
accountants. If any other matters properly come before the
Annual Meeting, the persons named as proxies will vote on such
matters at their discretion.
A stockholder who has returned a proxy may revoke it at any time
before it is voted at the Annual Meeting. Proxies may be revoked
by filing with the Secretary of the Company written notice of
revocation bearing a later date than the proxy, by duly executing
a later dated proxy relating to the same shares of Common Stock
or by attending the Annual Meeting and voting in person (although
attendance at the annual meeting will not in and of itself
constitute revocation of a proxy). Any written notice revoking a
proxy should be sent to Secretary, GENICOM Corporation, c/o
McGuire Woods Battle & Boothe, One James Center, 901 East Cary
Street, Richmond, Virginia 23219-4030, Attention: Robert L.
Burrus, Jr., Esquire.
<PAGE>
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth information as of February 4,
1994, with respect to the ownership of shares of Common Stock by
owners of more than 5% of the Company's outstanding Common Stock,
each director, the named executive officers, and directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION> Amount and Percentage of
Nature of Ownership
Ownership
Name and Address of Beneficial Owner (1)(2)
<S> <C> <C>
Welsh, Carson, Anderson & Stowe III 2,162,667 20.4%
(3)
One World Financial Center
200 Liberty Street, Suite 3601
New York, New York 10281
J.H. Whitney & Co. (4) 1,198,259 11.3%
630 Fifth Avenue
New York, New York 10111
J.H. Whitney Associates (5) 1,653,833 15.6%
630 Fifth Avenue
New York, New York 10111
General Electric Company 1,517,167 14.3%
3135 Easton Turnpike
Fairfield, Connecticut 06431
Dimensional Fund Advisors Inc. (6) 590,700 5.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Don E. Ackerman (2) (7) 212,386 2.0%
Bruce K. Anderson (8) 2,205,132 20.8%
Edward E. Lucente (2) 3,300 *
Paul T. Winn (2) (9) 264,263 2.5%
W. Allen Surber (2) 32,200 *
James C. Gale (2) 30,000 *
Raymond D. Stapleton (2) 60,000 *
Charles L. Dumas (2) 24,000 *
All directors and officers as a group 2,891,783 27.2%
(2)
<FN>
* Indicates beneficial ownership
less than 1.0%
(1) Includes all shares that each officer or director directly,
through any contract, arrangement, understanding, relationship or
otherwise, has or shares the power to vote or to direct voting of
such shares or to dispose or to direct the disposition of such
shares.
(2) Includes shares of Common Stock that, as of February 4, 1994,
were subject to outstanding stock options exercisable within 60
days: Mr. Ackerman - 66,000, Mr. Lucente - 3,300, Mr. Winn -
249,000, Mr. Surber - 27,200, Mr. Gale - 30,000, Mr.
Dumas - 24,000, Mr. Stapleton - 54,000 and all officers and
directors as a group - 509,900.
(3) Excludes shares purchased by Welsh, Carson, Anderson & Stowe
III ("WCAS III") that have been distributed to its limited partners
and the general partners of its sole general partner of WCAS III.
WCAS III disclaims beneficial ownership of such shares.
(4) Excludes shares purchased by J. H. Whitney & Co. ("JHW") that
have been distributed to its general, limited and retired partners.
JHW disclaims beneficial ownership of such shares.
(5) JHW is the sole general partner of J. H. Whitney Associates
("Associates").
(6) Includes 134,800 shares owned by DFA Investment Dimensions
Group Inc. (the "Fund") and 6,100 shares owned by The Investment
Trust Company (the "Trust"), each an open-end management investment
company. Persons who are officers of Dimensional Advisors Inc. also
serve as officers of the Fund and the Trust. In their capacity as
officers of the Fund and the Trust, these persons vote 134,800
additional shares which are owned by the Fund and 6,100 shares which
are owned by the Trust.
(7) Mr. Ackerman was a general partner of JHW, which is the sole
general partner of Associates, until his retirement in November
1991.
(8) Includes the 2,162,667 shares of Common Stock owned by WCAS
III. Mr. Anderson may be deemed to own beneficially these shares
because he is a general partner of the sole general partner of WCAS
III.
(9) Includes 14,000 shares owned by Mr. Winn's children, of which
Mr. Winn disclaims beneficial ownership.
</TABLE>
<PAGE>
Election of Directors
The terms of Messrs. Don E. Ackerman, Bruce K. Anderson, Edward
E. Lucente and Paul T. Winn as directors of the Company will
expire at the time of the 1994 Annual Meeting. The Company
proposes the re-election of each of Messrs. Ackerman, Anderson,
Lucente and Winn for a term ending at the 1995 Annual Meeting.
Although all of the nominees have indicated their willingness to
serve if elected, if at the time of the meeting any nominee is
unable or unwilling to serve, shares represented by properly
executed proxies will be voted at the discretion of the persons
named therein for such other person as the Board may designate.
The directors shall be elected by a plurality of the votes cast
by the holders of Common Stock entitled to vote at the Annual
Meeting, if a quorum is present. Votes withheld from any
director are counted as present for purposes of determining the
presence or absence of a quorum for the transaction of business
but will have no effect on the outcome of the election of
directors. Broker non-votes are also counted as present for the
purposes of determining the presence or absence of a quorum and
will have no effect on the outcome of the election of directors.
DON E. ACKERMAN, 60, Chairman of the Board and a director since
the Company was founded in 1983.
Mr. Ackerman is currently the President of Chandelle Ventures,
Inc. and was a general partner of JHW from 1969 until his
retirement in November 1991. JHW is a venture capital
partnership and a principal stockholder of the Company as is
Associates of which JHW is the sole general partner. Mr.
Ackerman serves as a director of Schlumberger Ltd.
BRUCE K. ANDERSON, 54, a director of the Company since it was
founded in 1983, has been a general partner of the sole general
partner of WCAS III since it was formed in 1983 and a general
partner of the sole general partner of Welsh, Carson, Anderson &
Stowe ("WCAS") since 1979. WCAS and WCAS III are venture capital
partnerships and WCAS III is a principal stockholder of the
Company. Mr. Anderson serves as a director of The Continuum Co.,
Inc., Comdata Holdings Corporation, FIserv, Inc., Bradway &
Seymour and American Residential Mortgage Corporation.
EDWARD E. LUCENTE, 54, a director of the Company since his
appointment by the Board in January 1993.
Mr. Lucente is currently the Vice President of Sales and
Marketing of Digital Equipment Corporation ("DEC"). Prior to
joining DEC, he was the executive vice president of Northern
Telecom Limited from 1991 until March 1993. Prior to joining
Northern Telecom Limited, Mr. Lucente was employed by IBM
Corporation ("IBM"), where he served for 30 years in various
capacities, most recently as Vice President and President of
Asia/Pacific Group Tokyo, Japan. Mr. Lucente serves as a
director of Information Resources, Inc.
PAUL T. WINN, 49, President and Chief Executive Officer since his
employment with Genicom in April 1990, and his appointment as a
director since May 1990. Previously, Mr. Winn was employed by
IBM Corporation, where he served for 22 years in various
capacities, most recently as Vice President to Graphics Systems
in the Advanced Work Station Division. Prior to that position,
Mr. Winn served as Vice President of Worldwide System Printers,
responsible for technology, software, product development and
manufacturing.
Certain Information Concerning the
Board of Directors and Its Committees
The Board held three meetings during the fiscal year ended
January 2, 1994. All Board members, except Mr. Anderson,
attended at least 75% of the aggregate of the total number of
Board meetings plus meetings of committees of which they were
members. In addition, the Board took action by unanimous consent
on numerous occasions during the fiscal year ended January 2,
1994.
The Board has an Audit Committee which is responsible for
reviewing the adequacy of the Company's internal accounting
controls, as well as the independent auditors' proposed audit
scope, conducting a post-audit review of the audit findings and
the Company's financial statements and performing other oversight
functions as requested by the Board. During the 1993 fiscal
year, the Audit Committee was composed of Don E. Ackerman, Bruce
K. Anderson and Edward E. Lucente. The Committee held one
meeting during the fiscal year ended January 2, 1994.
In fiscal year 1993, the Board formed a compensation committee
consisting of Messrs. Ackerman, Anderson and Lucente. The
Committee held one meeting during the fiscal year ended January
2, 1994. The Committee administered and interpreted the
Company's Stock Option Plan and determined which eligible
employees were to be granted stock options, the number of options
to be granted, the price at which options were granted, the time
options were exercisable and the form of consideration used to
pay for shares upon exercise. The Committee took action by
unanimous consent on one occasion during such fiscal year.
During the 1993 fiscal year, the Board did not have a nominating
committee. Directors who are not employees receive annual
compensation of $10,000. Employees who are also directors do not
receive directors' fees.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table on page 6 reports the compensation
for the past three years of each of the Company's five most
highly compensated executive officers, including the Chief
Executive Officer (the "named executive officers").
OPTION/SAR GRANTS TABLE
The Company has in effect an employee stock option plan pursuant
to which options to purchase Common Stock of the Company are
granted to officers and other key employees of the Company and
its subsidiaries. The table on page 7 shows stock option grants
during the 1993 fiscal year to the named executive officers.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR
VALUE TABLE
The table on page 7 shows information concerning the fiscal year-
end value of unexercised options held by the named executive
officers.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payo
uts
Other
Name Annual Restri All
cted Other
and Compen- Stock LTIP Compen-
Principal sation Award( Options/ Payo sation
s) uts
Position Year( Salary Bonus ($) ($) SARs(#) ($) ($)(c)
a) ($) ($)(b)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. T. WINN 1993 300,000 75,000
99,984
President and 1992 296,154 48,750 50,000
101,271
CEO 1991 244,440
50,255
W.A. SURBER (d) 1993 181,991 225,833 30,000
6,000
Sr. V-Pres 1992 18,000
82,210
Printer 1991 50,000
Solutions 7,077
Business
J. C. GALE (d) 1993 165,000 22,500
41,588
Sr. V-Pres 1992 169,808 19,305 15,000 112,697
and CFO 1991 55,542 60,000
13,529
R.D. STAPLETON 1993 150,000 17,500
14,860
Sr. V-Pres and 1992 146,539 25,000 15,000
Gen. 14,849
Mgr. 1991 105,542
Enterprising 6,000
Service
Solutions
Business
C. L. DUMAS 1993 125,000 44,000
8,519
V-Pres and 1992 129,808 12,285 15,000 12,047
General
Mgr-Relay 1991 122,220 9,500 84,889
Products
Division
<FN>
(a) The 1992 fiscal year included 53 weeks, while the 1993 and
1991 fiscal years had 52 weeks.
(b) Bonus includes sign-on bonus to Mr. Surber in 1993.
All other bonuses were management awards in 1993, 1992
and 1991.
(c) Includes for Mr. Winn: $93,984, $95,271 and $47,075 for
relocation costs and $6,000, $6,000 and $3,181 for 401(k)
matching contributions in 1993, 1992 and 1991, respectively.
Includes for Mr. Surber: $82,210 and $7,077 for relocation
costs in 1992 and 1991, respectively and $6,000 for 401(k)
matching contributions in 1993. Includes for Mr. Gale:
$35,588, $110,937 and $13,529 for relocation costs in 1993,
1992 and 1991, respectively and $6,000 and $1,759 for 401(k)
matching contributions in 1993 and 1992, respectively.
Includes for Mr. Stapleton: $8,860 and $8,849 for relocation
costs in 1993 and 1992, respectively and $6,000 for 401(k)
matching contributions in 1993, 1992 and 1991. Includes for
Mr. Dumas: $2,519, $6,047 and $82,176 for relocation costs
and $6,000, $6,000 and $2,713 for 401(k) matching
contributions in 1993, 1992 and 1991, respectively.
(d) Messrs. Surber and Gale joined Genicom in July 1991 and
August 1991, respectively.
</TABLE>
<PAGE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value
at Assumed Annual
Rates of
Stock Price
Appreciation
Individual Grants for Option Term ($)
Number
of
Securiti % of Total
es
Underlyi Options/SA
ng Rs
Options/ Granted to Exercise Market
or
SARs Employees Base Price Expiration
Price
Name Granted( in Fiscal ($/Sh) ($/Sh) Date 0% 5% 10%
a) Year
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. T. WINN 75,000 18.45% 1.00 1.125 11-9-2003 9,375 62,438 143,847
W.A. SURBER 30,000 7.38% 1.00 1.125 11-9-2003 3,750 24,975 57,539
J. C. GALE 22,500 5.54% 1.00 1.125 11-9-2003 2,813 18,731 43,154
R. D. 17,500 4.31% 1.00 1.125 11-9-2003 2,188 14,569 33,564
STAPLETON
C. L. DUMAS 0 0.00% N/A N/A N/A N/A N/A N/A
<FN>
(a)The options vest at a 20% annual rate beginning one year
after the grant date.
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FY AND FY-END OPTION/SAR
VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($) (a)
Shares Exercisable/ Exercisable/
Acquired
Name on Value Unexercisable Unexercisable
Exercise Realized
(#) ($)
<S> <C> <C> <C> <C>
P. T. WINN 0 0 235,000/190,000 56,250/37,500
W.A. SURBER 0 0 23,600/74,400 0/7,500
J. C. GALE 0 0 27,000/70,500 0/5,625
R. D. 0 0 43,000/49,500 10,000/9,375
STAPLETON
C. L. DUMAS 0 0 21,000/24,000 0/0
<FN>
(a) Based on fair market value of $1.25 per share at fiscal year
end.
</TABLE>
<PAGE>
Employment Contracts
The Company has an employment agreement with Mr. Winn, the
President and CEO. Upon termination without cause, the Company
will pay Mr. Winn the then existing base salary and benefits
until the earlier of twenty-four months or the date of his
employment with another entity. In the event Mr. Winn becomes
employed prior to the end of the twenty-four month severance
period, the Company will pay 25% of the remaining unpaid monthly
payments in final settlement and benefits would cease. In the
event of a change in control of the Company (as defined in the
agreement), the option for 300,000 shares granted to Mr. Winn on
May 30, 1990, would fully vest conditional upon his agreement to
continue with the acquirer for twelve months if so requested by
the acquirer.
Report of the Compensation Committee of the Board of Directors
The Compensation Committee of the Board of Directors (the
"Committee") is composed of non-employee directors. The
Committee is responsible for setting overall policies that govern
the Company's compensation programs, administering the Company's
Stock Option Plan and establishing the cash compensation of
executive officers.
The Committee's philosophy regarding executive compensation seeks
to align executive compensation with Company values and
objectives, business strategy, management initiatives and
business financial performance. To act on this philosophy, the
Committee focuses on the following goals and objectives:
To attract and retain key executives critical to the long-term
success of the Company and each of its business units.
To reward executives for long-term strategic management and
the enhancement of shareholder value.
To integrate compensation programs with both the Company's
annual and long-term strategic planning and measuring
processes.
To provide a performance-oriented environment that rewards
performance not only with respect to Company goals but also
Company performance as compared to its industry performance.
Annual Compensation
The annual compensation program consists of cash, management
awards and officer perquisites. The Committee determines salary
ranges for executive officers based on surveys of salary data
regarding similar positions held by executives in similar sized
companies in the computer printer and other peripherals industry.
The Committee intends for salaries to remain at or near the
industry median. Actual salary changes are primarily based upon
the Company's financial performance and to a lesser extent the
survey of salary data. Due to the Company's financial
performance in 1992, the Committee did not raise executive
salaries in fiscal year 1993.
The Committee may also pay special, one-time event management
awards to, among others, executive officers to reward notable
achievements that contribute to significant improvements in
quality, productivity, customer service, cost control, or the
work environment. The Committee's policy in determining
management awards is subjective and thus not tied to specific
criteria. Instead the Committee takes note of certain
achievements by officers and key employees that they deem as
beneficial to the Company and thus deserving of an award. On May
4, 1993, the Committee authorized payment of management awards to
a certain executive officer and key employees for significant
contributions to the Company's restructuring programs. In
addition, another executive officer received a management award
for managing the successful relocation of the Company's
headquarters.
Long-Term Incentive Compensation
The Company provides long-term incentives through incentive
compensation, stock options, and the Deferred Compensation and
Savings Plan which is qualified under Section 401(k) of the
Internal Revenue Code.
Incentive Compensation Plan
In fiscal year 1984, the Company adopted an Incentive
Compensation Plan ("IC Plan"). The Committee reviews and
approves the participation of executive officers and key
employees in the IC Plan. Payments under the IC Plan are
contingent upon the Company's achievement of certain corporate
performance criteria. If these objectives are met, the payment
is determined by the achievement of a combination of corporate
goals and specific functional objectives. Corporate goals are
weighted at 70% of the aforementioned combination, while
functional objectives comprise 30%. Corporate goals comprise the
Company's sales, net income, receivables, inventory and debt
levels, while the functional objectives vary depending on the
officer's position. The Committee approves these criteria each
year.
The annual incentive compensation plan is funded from a pre-set
portion of the Company's pre-tax net income. The Committee
approves the IC Plan award value each year as a percentage of
base salary. Each participant, depending on position, could
potentially receive an award equal to a certain percentage of
salary ranging from 15% to 50%. The Committee has broad
authority to alter the manner in which payments are made in any
given year based on performance. The Committee did not make
awards in fiscal years 1993, 1992 and 1991, because the Company
did not substantially achieve targeted corporate performance
criteria.
Stock Option Plan
Under the Stock Option Plan (the "Plan"), the Committee grants
stock options annually with the objective of aligning executive
officers' long-range interests with those of the shareholders.
Management makes recommendations to the Committee regarding the
number of stock options awarded and to whom the stock options are
given. Management considers the amount and terms of the options
already held by the executive officer. Management's methodology
used to make recommendations are not based on specific criteria.
Instead its goal to achieve the retention of key employees by
providing them with the opportunity to build a meaningful
investment in the Company. The Company believes that the Plan
encourages superior performance that can result in significantly
enhanced shareholder value. On November 9, 1993, the Committee
awarded options to purchase shares of common stock to, among
others, the following officers: Mr. Winn - 75,000 shares, Mr.
Surber - 30,000 shares, Mr. Gale - 22,500 shares and Mr.
Stapleton - 17,500 shares.
Deferred Salary and Savings Plan
For plan years beginning after January 2, 1994, amounts
contributed by the Company to the Deferred Salary and Savings
Plan ("DSSP") are discretionary, may not exceed for any plan year
the lesser of 6% of an employees' salary or $9,000 with respect
to any employee and vest according to a 5 year vesting schedule
pursuant to which participants become 20% vested for each year of
vested service. Previously, the contributions were mandatory and
did not exceed $6,000. In addition, the vesting schedule for the
DSSP was previously modified from 10 to 7 years for plan years
beginning after December 31, 1988.
Chief Executive Officer Compensation
The Committee members determined the CEO's compensation for
fiscal year 1993. The CEO's salary was primarily based upon the
Company's financial performance and to a lesser extent the review
of the salaries of CEOs for companies of comparable sales and
upon the Board's review of the CEO's performance. Due to the
Company's financial performance in 1992, the Committee did not
increase the CEO's salary in 1993.
The Committee grants stock options to the CEO annually under the
Company's Stock Option Plan in order to promote long-term
retention and to balance the risk/reward element of the position.
In determining the number of shares to be awarded as stock
options in fiscal year 1993, the Committee considered the amount
concurrently awarded to the other officers and the performance of
the CEO. In November 1993, the Committee granted the CEO an
option to purchase 75,000 shares of common stock in recognition
of the Company's completion of major restructuring, entry into
the multivendor market, and penetration of the laser printer
market.
The CEO's maximum potential incentive compensation award is equal
to 50% of his base salary. The Committee did not award the CEO
incentive compensation for the fiscal year 1993 performance
because the Company did not substantially achieve specific
corporate performance criteria related to operating income.
Compensation Committee
Don E. Ackerman, Chairman
Bruce K. Anderson
Edward E. Lucente
Compensation Committee Interlocks and Insider Participation
Decision Data Computer Corporation ("Decision Data"), a wholly-
owned subsidiary of Onset Corporation, is one of the Company's
customers. The Company's Chairman of the Board, Don E. Ackerman,
is also a member of the Board of Directors of Onset Corporation.
Mr. Ackerman was also a general partner of JHW until his
retirement in November 1991. JHW is a venture capital
partnership that is a principal stockholder of the Company and
Onset Corporation. Bruce K. Anderson, a director of the Company,
is a general partner of the sole general partner of WCAS, which
is the general partner of certain venture capital partnerships
which are principal stockholders of the Company and Onset
Corporation. Mr. Anderson is also a director of Onset
Corporation.
During fiscal year 1993, the Company sold Decision Data $1.8
million of printer products, and had $0.2 million receivables
from Decision Data at January 2, 1994. At this time the Company
expects sales to Decision Data to remain at their current levels.
The Company believes that the transactions with Decision Data
were on terms no less favorable to the Company than would have
been available in similar transactions with unaffiliated third
parties.
Performance Graph
Set forth on page 11 is a line graph comparing the cumulative
total shareholder return on the Company's Common Stock, based on
the market price of the Common Stock and assuming reinvestment of
dividends, with the cumulative total return of companies on the
National Association of Securities Dealers Automated Quotations
("NASDAQ") Stock Index and the Computers, Subsystems and
Peripherals Industry Group created by Media General Financial
Services, Inc.
See a paper copy of the performance graph under cover of Form SE.
Certain Transactions
Officers. In fiscal year 1991, the Company extended Mr. Surber,
Senior Vice President, Printer Solutions Business, a $200,000
loan to assist him in his relocation. Under the terms of the
promissory note, the principal amount, plus interest which
accrued at a rate of 10% per annum, were due on January 1, 1994.
On July 4, 1993, Mr. Surber paid in full the owed principal
amount plus interest.
See "Compensation Committee Interlocks and Insider
Participation."
Compliance With Section 16(a) of the Securities and Exchange Act
Section 16(a) of the Securities and Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more
than 10 percent of a registered class of the Company's equity
securities, to file reports of beneficial ownership and changes
in beneficial ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10 percent
shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms.
Based solely on its review of the copies of such forms received
by the Company, or written representations from certain reporting
persons that no Form 5's were required for those persons, the
Company believes that during fiscal year 1993 all filing
requirements applicable to its officers, directors, and greater
than 10 percent beneficial owners were complied with except that
the CEO did not file a Form 5 in a timely manner for stock
purchases made in 1993 and Mr. B. Garrett Buttner did not
complete a Form 3 in a timely manner when he became an executive
officer.
Stock Option Plan
The Company's Stock Option Plan (the "Plan") provides for grants
of stock options to employees of the Company selected by the
Compensation Committee (the "Committee"). Stock options granted
under the Plan may be nonstatutory stock options or incentive
stock options, as described in Section 422A of the Internal
Revenue Code. Incentive stock options are intended to qualify
for favorable Federal income tax treatment, while nonstatutory
stock options do not.
The Committee administers the Plan and determines the following:
(i) the Company's employees that shall be granted options; (ii)
the number of shares covered by each option; (iii) whether
options are nonstatutory stock options or incentive stock
options; (iv) the time or times that options are granted; (v) the
time or times that options become exercisable; and (vi) the form
of consideration that may be used to pay for shares upon exercise
of an option. The Committee is also responsible for other
questions involving the administration and interpretation of the
Plan. The Board of Directors administered the Plan from May 1990
to January 1993.
The option price of shares of Common Stock covered by incentive
stock options granted under the Plan may not be less than 100% of
the Common Stock's fair market value on the option grant date
(110% of fair market value if the stock option is an incentive
stock option that is granted to an employee who is a 10%
stockholder of the Company). The Board may grant nonstatutory
stock options under the Plan with an option price not less than
85% of the Common Stock's fair market value on the grant date.
An optionee does not incur Federal income tax when granted a
nonstatutory stock option or incentive stock option. Upon
exercise of a nonstatutory stock option, an optionee generally
recognizes taxable income, which is subject to income tax
withholding by the Company, equal to the difference between the
Common Stock's fair market value on the exercise date and the
option price. Upon exercising an incentive stock option, an
optionee generally does not recognize taxable income, unless
subject to the alternative minimum tax.
The Company usually is entitled to a business expense deduction
at the time and in the amount that the recipient of an option
recognizes ordinary income in connection with the option. This
usually occurs upon the exercise of nonstatutory stock options.
In some cases, such as the exercise of a nonstatutory stock
option, the Company's deduction is contingent upon the Company's
meeting withholding tax requirements. No deduction is allowed in
connection with an incentive stock option, unless the optionee
disposes of Common Stock received upon exercise in violation of
the holding period requirements set forth in the Internal Revenue
Code.
As of February 4, 1994, the plan had 76 participants out of the
approximately 2,147 eligible employees. The Committee, the Board
of Directors or the former Stock Option Committee has identified
participating employees as key personnel of the Company. As of
February 4, 1994, options covering 1,482,567 shares were
outstanding under the Plan, 570,032 shares had been previously
acquired upon exercise and 47,401 shares remained available for
future grants.
The Committee determines when options granted under the Plan
become exercisable. Options granted generally become exercisable
at the rate of 20% per year beginning on the first anniversary of
the option grant date, with the exception of 300,000 options
granted to Paul T. Winn on May 30, 1990, which become
excercisable at the rate of 25% per year. The Committee has not
granted options under the Plan to any current director other than
Paul T. Winn.
<PAGE>
Proposal 1- To Increase the Number of Shares
of Common Stock Issuable Under the Stock Option Plan
On January 17, 1994, the Board of Directors approved an
amendment, subject to stockholder approval, to increase the
number of shares of Common Stock issuable under the Plan by
400,000 shares. Of the shares previously approved by
shareholders for issuance under the Plan, 47,401 shares remain
available for future option grants. The Board of Directors
believes that the Plan has been and continues to be an important
incentive in attracting, retaining and motivating key employees
who are and will be necessary to the successful conduct of the
business and affairs of the Company and its subsidiaries. The
increase in the number of shares subject to the Plan will permit
the Compensation Committee to exercise needed flexibility in the
administration of the Plan and the granting of options
thereunder.
The Board believes that the addition of 400,000 shares to the
Plan reserve will be sufficient to meet the Company's needs for
the next year and has approved the addition of these shares
subject to stockholder approval. The Board believes that
approval of the addition of these shares to the Plan reserve is
in the best interest of the Company and its stockholders.
Vote Required for Approval
Approval of Proposal 1 requires the affirmative vote of the
holders of a majority of shares of Common Stock represented at
the annual meeting. Abstentions on Proposal 1 are counted as
present for purposes of determining the presence or absence of a
quorum for the transaction of business and will have the effect
of a negative vote on the outcome of Proposal 1. Broker non-
votes may be counted as present for the purposes of determining
the presence of a quorum an will have not effect on the outcome
of Proposal 1.
Board of Directors' Recommendation
The Board recommends a vote "FOR" Proposal 1 to increase the
number of shares issuable under the Plan. Because officers and
directors who are employees of the Company are eligible to
receive option grants under the Plan, each officer and director
who is an employee of the Company has an interest in and may
benefit from the approval of Proposal 1.
Proposal 2 - To Ratify Selection of
Independent Certified Public Accountants
The Board has selected Coopers & Lybrand to serve as independent
certified public accountants of the Company for the 1994 fiscal
year and has directed a vote of stockholders be taken to
ascertain their approval or disapproval of that selection. In
the event the stockholders do not ratify the appointment of
Coopers & Lybrand, the Board will consider selection of other
independent certified public accountants.
Board of Directors' Recommendation
The Board recommends a vote "FOR" Proposal 2 to ratify the
selection of Coopers & Lybrand as the Company's independent
certified public accountants for the 1994 fiscal year.
Representatives of Coopers & Lybrand will be present at the
Company's stockholder meeting. Such representatives will have
the opportunity to make a statement if they so desire, and will
be available to respond to appropriate questions.
Other Business
If any other business properly comes before the meeting, your
proxy may be voted by the persons named in it in such manner as
they seem proper. Presently management does not know of any
other business which will be presented at the meeting.
Proposal by Stockholders for Presentation
at 1995 Meeting
Proposals that any stockholder intends to present at the 1995
Annual Meeting of Stockholders must be received by the Company no
later than December 5, 1994.
By Order of the Board of Directors
April 4, 1994 Robert L. Burrus, Jr.
Secretary
