<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
( ) Filed by the Registrant
( ) 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 (section mark)240.14a-11(c) or
(section mark)240.14a-12
PCA INTERNATIONAL, INC.
(Name of Registrant as Specified In Its Charter)
PCA INTERNATIONAL, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $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.
( ) 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:
( ) Filing Fee of $ was previously paid on , 199 ,
the date the Preliminary Proxy Statement was filed.
<PAGE>
PCA INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 24, 1995
The Annual Meeting of Shareholders of PCA International, Inc. (the "Company")
will be held on May 24, 1995, at 10:00 a.m. at the Company's principal
executive offices located at 815 Matthews-Mint Hill Road, Matthews, North
Carolina, for the following purposes:
(1) To elect eight Directors to serve until the 1996
Annual Meeting of Shareholders and to serve until
their successors are elected and qualified.
(2) To approve amendments to the Company's 1992 Non-Qualified
Stock Option Plan to grant certain stock options to
non-employee Directors pursuant to a formula and to
allow non-employee Directors to elect to receive
their Director's compensation in the form of stock
in lieu of cash.
(3) To approve an amendment to the Company's Articles of
Incorporation to eliminate certain potential liability
of Directors for monetary damages.
(4) To ratify the selection of KPMG Peat Marwick as Independent
Auditors.
(5) To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 31,
1995, as the record date for the meeting. Only shareholders of record
at that time are entitled to notice of and to vote at the meeting.
The enclosed proxy is solicited by the Board of Directors of the
Company. Reference is made to the attached proxy statement for
further information with respect to the business to be transacted
at the meeting. Management urges you to date, sign and return the
enclosed proxy promptly. You are cordially invited to attend the
meeting in person, and the giving of the proxy will not affect your
right to vote in person if you elect to do so at the meeting.
By order of the Board of Directors,
Bruce A. Fisher
Secretary
April 24, 1995
Matthews, North Carolina
<PAGE>
PCA INTERNATIONAL, INC.
815 Matthews-Mint Hill Road
Matthews, North Carolina 28105
PROXY STATEMENT
This proxy statement is furnished to the shareholders of PCA
International, Inc. (the "Company") in connection with the solicitation
of proxies by the Board of Directors of the Company to be voted at
the Annual Meeting of Shareholders to be held on May 24, 1995 (the "1995
Annual Meeting"), or any adjournment or postponement thereof for the
purposes set forth in the Notice of Annual Meeting of Shareholders. The
cost of soliciting proxies will be borne by the Company.
GENERAL
This proxy statement and form of proxy are expected to be mailed
to shareholders on or about April 24, 1995. Only shareholders of
record at the close of business on March 31, 1995, will be entitled to
receive notice of, and vote at, the meeting or any adjournment thereof.
As of the close of business on March 31, 1995, the Company had _________
outstanding shares of Common Stock, par value $0.20 per share (the
"Common Stock"). Each shareholder of record is entitled to one vote
for each share of Common Stock then held and shall have the right to
vote the number of shares so owned for each proposal and for each
Director to be elected.
The presence, in person or by proxy, of the holders of a majority
of the shares of Common Stock entitled to vote at the 1995 Annual
Meeting of Shareholders constitutes a quorum for the transaction of
business. Any proxy may be revoked at any time prior to its exercise
by notifying the Secretary in writing, by delivering a duly executed
proxy bearing a later date, or by attending the meeting and voting in
person.
If the enclosed proxy is properly executed and returned in time to
be voted at the 1995 Annual Meeting, the shares of Common Stock
represented thereby will be voted in accordance with the instructions
marked thereon. Unless instructions to the contrary are marked
thereon, a proxy will be voted "FOR" the matters listed in the
accompanying Notice of Annual Meeting of Shareholders. For purposes of
determining the presence of a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers
or nominees do not have discretionary power) will be treated as shares
that are present but which have not been voted. Directors will be
elected by a plurality of the votes cast at the 1995 Annual Meeting.
Provided a quorum is present, abstentions and shares not voted are not
taken into account in determining a plurality. Abstentions and broker
"non-votes" will be voted neither FOR nor AGAINST the approval of
each of the matters to be voted upon.
<PAGE>
STOCK OWNERSHIP
Stock Ownership of Certain Beneficial Owners
The following table shows the beneficial ownership as of March 31,
1995, of each person known to the Company to be the beneficial owner of
more than 5% of the outstanding shares of the Company's Common Stock:
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Common Stock, Centennial Associates, L.P. 2,018,957(1) 24.7%
$0.20 par value c/o Mr. Joseph H. Reich
900 Third Avenue
New York, New York 10022
Common Stock, Mr. Joseph H. Reich 510,350(1) 30.9%(2)
$0.20 par value 900 Third Avenue 2,018,957(2)
New York, New York 10022 2,529,307(1)
Common Stock Tiger Management Corporation 699,400(3) 8.6%
$0.20 par value 101 Park Avenue
New York, New York 10178
Common Stock, Reprise Capital Corporation 678,055(4) 8.1%
$0.20 par value c/o Mr. Stanley Tulchin
400 Post Avenue
Westbury, New York 11590
Common Stock Furman Selz Incorporated 623,000 7.6%
$0.20 par value c/o Ms Valerie King
230 Park Avenue
New York, New York 10169
</TABLE>
(1)See Note (5) to the table under "Stock Ownership of Directors and
Executive Officers" below.
(2)Includes Centennial ownership listed above. Joseph H. Reich is
deemed the beneficial owner of shares in Centennial Associates, L.P., due to
his position as Managing Partner of that entity.
(3)Includes 57,570 shares (0.7% of outstanding) owned by Panther
Partners, L.P., whose advisor, Panther Management Company L.P. (a registered
investment advisor), is affiliated with Tiger Management Corporation.
(4)Includes certain shares as to which Mr. Tulchin disclaims beneficial
ownership. See Notes (2) and (7) to the table under "Stock Ownership of
Directors and Executive Officers" below.
-2-
<PAGE>
Stock Ownership of Directors and Executive Officers
The following table shows the beneficial stock ownership as of March
31, 1995 of each of the current Directors of the Company and of all
Directors and Executive Officers as a group of the outstanding shares
of the Company's Common Stock, $0.20 par value, which is the only class
of voting securities outstanding. Each of the individuals listed below
possesses sole voting and investment power with respect to the shares
listed opposite his or her name, unless noted otherwise:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership(1) of Class
<S> <C> <C>
Anders C. Brag 26,250 (3) *
R. Stuart Dickson 53,034 (4) *
Peter B. Foreman 263,308 (9) 3.2%
George Friedman 8,900 *
John Grosso 191,900 (2) 2.3%
Joseph H. Reich 2,529,307 (5) 30.9%
Sara Lee Schupf 50,000 (8) *
Albert F. Sloan 1,850 (6) *
Stanley Tulchin 678,055 (2)(7) 8.1%
Jan M. Rivenbark 35,500 (2) *
Eric H. Jeltrup 97,300 (2) 1.2%
Bruce A. Fisher 64,335 (2) *
R. Michael Spencer 45,454 (2) *
All Executive Officers and Directors as a
group (13 persons listed above)(10) 4,043,693 (2) 46.9%
</TABLE>
*Less than 1% of the outstanding shares of Common Stock of the Company.
(1)Pursuant to Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, beneficial ownership of a security consists of sole or shared voting
power (including power to vote or direct the vote) and/or sole or shared
investment power (including the power to dispose or direct the
disposition) with respect to the security through any contract,
arrangement, understanding, relationship or otherwise. Unless otherwise
indicated, beneficial ownership disclosed consists of sole voting and
investment power.
(2)The numbers and percentages of shares shown in the table above
include stock options covering Common Stock exercisable within 60 days of
March 31, 1995 as follows: Mr. Tulchin--150,000; Mr. Grosso--125,000; Mr.
Rivenbark--31,000; Mr. Jeltrup--67,000; Mr. Fisher--38,500; and Mr.
Spencer--42,000; and all Executive Officers and Directors as a group
(including such individuals)--453,500. Such persons and members of such
group disclaim any beneficial ownership of the shares subject to such options.
(3)Includes (i) 13,750 shares beneficially owned by Mr. Brag, and (ii)
12,500 shares beneficially owned by his wife. Mr. Brag disclaims beneficial
ownership of the shares owned by his wife. Mr. Brag has advised the Company
of his intention to resign as a Director as of May 23, 1995.
(4)Includes (i) 300 shares beneficially owned by Mr. Dickson and (ii)
52,734 shares beneficially owned by a wholly-owned subsidiary of Ruddick
Corporation of which Mr. Dickson is Chairman of the Executive Committee.
(5)Joseph H. Reich, Centennial Associates, L.P., and Carol F. Reich,
jointly reported beneficial ownership of 463,850, 2,018,957 and 46,500
shares, respectively. It was reported that each of such persons had sole
dispositive power or sole investment power with respect to the shares held
individually by each of them. Such persons have stated that the
-3-
<PAGE>
fact that their beneficial ownership was reported jointly did not constitute an
admission that each of them should be deemed to be part of a group.
(6)Includes 450 shares beneficially owned by Mr. Sloan's wife as to which
he disclaims beneficial ownership.
(7)Includes (i) 135,591 shares beneficially owned by Mr. Tulchin, (ii)
392,464 shares beneficially owned by Reprise Capital Corporation of which
Stanley Tulchin is Chairman of the Board and he and his brother, Norman
Tulchin, are each 29% equity owners. His brother, Norman Tulchin,
beneficially owns 121,719 shares. Stanley Tulchin disclaims beneficial
ownership of the shares owned by his brother and by Reprise Capital
Corporation.
(8)50,000 shares are owned by the Tillie K. Lubin Marital Trust of which
Sara Lee Schupf is the trustee and a beneficiary. Ms Schupf has advised the
Company of her intention to resign as a Director as of May 23, 1995.
(9)Mr. Foreman is a limited partner in Centennial Associates, L.P.,
owning less than a 5% interest therein. The shares shown exclude any
indirect ownership of the Company s shares which might be attributable to him
by reason of his limited partnership interest.
(10)Figure does not include 61,850 shares beneficially owned by John
Cornelius and 50,109 shares beneficially owned by Pierre Masse, both of whom
resigned as executive officers during fiscal year 1994.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Officers and Directors and persons who own more than 10% of
the Company's Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC").
Based on Company records and other information, the Company
believes that all such SEC filing requirements with respect to the 1994
fiscal year were met.
ITEM 1
ELECTION OF DIRECTORS
The Company's Directors are elected at each Annual Meeting to serve
for a one-year term and until their respective successors are elected
and qualified. Pursuant to the Company s Bylaws, the Board of
Directors has reduced the size of the Company s Board of Directors from
nine to eight Directors, effective at the close of business on May 23,
1995. Eight nominees are to be elected this year to serve until the
Annual Meeting in 1996. Unless contrary instructions are given, the
enclosed proxy will be voted for the eight nominees named below. All
nominees, other than Ms. Mason, are presently serving as Directors
of the Company. Each nominee has consented to be named herein as
standing for election to the Board of Directors and has consented to
serve if elected. If any nominee is unable or unwilling to serve at
the time of the election, or is otherwise unavailable for election,
the proxies will have discretionary authority to vote in accordance
with their judgment for any other nominee. The Board of Directors
knows of no reason to anticipate this will occur.
The following table sets forth certain information relating to each
nominee for Director to be elected at the 1995 Annual Meeting. All
nominees, except Mr. Friedman and Ms. Mason, have been heretofore
elected by the shareholders and are standing for re-election as
Directors. Mr. Friedman has been a Director since August 25, 1994.
Ms. Mason has not previously served as a Director.
-4-
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
Occupation, Business Experience
During Last Five Years, Positions and Offices Director
Other Directorships Age With the Company Since
<S> <C> <C> <C>
Joseph H. Reich 60 Chairman of the 1987
Managing Partner of Centennial Associates, L.P., since April Board
1989.
John Grosso 48 President, Chief 1987
President and Chief Executive Officer of the Company Executive
since 1987. Officer and Director
Stanley Tulchin
Mr. Tulchin is, and for at least five years has been, a 68 Director 1987
Director and Chairman of the Board of Reprise Capital
Corporation and Stanley Tulchin Associates. He has been a
Director of the Topps Company, Inc., since 1987 and Chairman of
the Board of STA Credit Corporation since 1991.
R. Stuart Dickson 65 Director 1983
Chairman of the Executive Committee, Ruddick Corporation;
Chairman of the Board of Ruddick Corporation 1968 to 1994;
Director of First Union Corporation and Textron, Inc., since
1985 and 1984, respectively, and of United Dominion Industries,
Inc. since 1990.
Peter B. Foreman 59 Director 1994
President of Sirius Corporation since 1994; Founding Partner of
Harris Associates, L.P. from 1976-1993; Director of Eagle Food
Centers, Glacier Water Services, and National Picture and Frame
Company. He is also Chairman of the Board of Iliad Partners
(IFM Asset Management-Bermuda).
George Friedman 60 Director 1994
Chairman and CEO of Parallel Communications, Inc., since 1994.
Chairman and CEO of Gryphon Development Ltd. from 1986-1992.
Charlotte H. Mason
Associate Professor, Kenan-Flagler Business School, The University 39 Nominee --
of North Carolina since 1985.
Albert F. Sloan 65 Director 1981
Chairman of the Board of Lance, Inc., until 1991; Director of
Lance, Inc., and Bassett Furniture Industries, Inc., for more
than five years; and RichFoods, Incorporated since 1990, and
Cato Corporation since 1994.
</TABLE>
Directors' Remuneration; Attendance
The Company's policy on Director compensation is to pay Directors' fees
only to Directors who are not employees of the Company. Each
non-employee Director receives an $8,000 flat annual fee, plus $1,000
for each Board of Directors meeting attended, and the Chairman of
the Board receives $52,000 per annum. Additionally, all Directors
are reimbursed for expenses incurred in connection with attending
Board and Committee meetings. The Board of Directors has adopted an
amendment to the Company's 1992 Non-Qualified Stock Option Plan,
subject to shareholder approval as discussed in Item 2 of this Proxy
Statement, to grant to non-employee Directors certain options to
purchase shares of the Company's Common Stock.
-5-
<PAGE>
During the last fiscal year, there were four regularly scheduled
meetings and one special meeting of the Board of Directors. Each
Director attended 80% or more of the total number of meetings of the
Board of Directors and meetings of all Committees on which he or she
served.
The Board of Directors does not have a Nominating Committee; nominees
for election to the Board of Directors are selected by action of the
entire Board.
Committees of the Board
Executive Committee. Messrs. Grosso, Reich (Chairman), and Tulchin
are members of the Executive Committee. The Executive Committee has
been delegated authority to act on behalf of the Board of Directors
when such Board is not in session.
Audit Committee. Messrs. Dickson (Chairman), Sloan, and Tulchin are
members of the Audit Committee. The Audit Committee makes
recommendations to the Board concerning the selection of the
independent accountants of the Company, reviews the scope of the
audit, reviews the audit report, and makes recommendations to the
Board concerning accounting principles and practices, internal
controls, financial reporting, and other related matters. The Audit
Committee had one formal meeting during the last fiscal year.
Compensation Committee. Messrs. Brag (Chairman) and Foreman and Ms
Schupf served as members of the Compensation Committee during fiscal
year 1994(*). The Compensation Committee has the responsibility for
reviewing, monitoring and recommending overall compensation plans and
policies, including amounts of all compensation for the Company's
Directors and Officers at or above the level of Executive Vice
President. The Compensation Committee held one formal meeting and met
informally at various times during the last fiscal year.
Stock Option Plan Administration Committee. Messrs. Brag (Chairman) and
Foreman and Ms Schupf served as members of the Stock Option Plan
Administration Committee for each of the Company's Stock Option Plans
during fiscal year 1994(*). The Stock Option Plan Administration
Committee, which has the responsibility for granting options under the
Company's Stock Option Plans, met informally at various times during
the last fiscal year to make decisions regarding the grant of options.
(*)Mr. Brag and Ms Schupf have advised the Company of their intention
to resign as Directors as of May 23, 1995. Their replacements on the
Compensation and Stock Option Plan Committees will be selected by the
Board of Directors.
Executive Compensation
Report of the Compensation and Stock Option Plan Administration
Committees
The Company's executive compensation and incentive programs are
designed to attract and retain able
and talented executives who can build shareholder value and accelerate
the growth of the Company.
The Compensation Committee believes the best interests of the
shareholders are served if a significant portion of the
compensation paid to the Company s executive group is dependent upon
overall Company performance. This approach links executive
remuneration more closely to gains enjoyed by the Company s
shareholders. The Committee also believes that it is important to
formulate a compensation program that will motivate and retain
executives with superior abilities.
The principal component of the Company's executive compensation
program is cash compensation that consists of a base salary and
annual cash bonuses. Each year, the Compensation Committee reviews
total compensation levels for the executive group and recommends to
the Board of Directors the annual salaries to be paid and the levels
of bonuses to be established under a cash bonus plan. The Committee
subjectively considers such factors as achievement of the prior year's
financial targets and goals for the coming year with respect to
sales, growth, earnings, income from
-6-
<PAGE>
operations, earnings per share and
return on capital. Finally, the Committee considers the compensation
levels of executives with other companies with which the Company
competes for executive talent, including the compensation levels of
direct industry competitors.
In 1994, the Board, upon the Committee s recommendation, awarded
Mr. Grosso a 3.5% base salary increase and increased salaries of
other key executives 3.5% to 10%. Certain key executives received
salary adjustments that reflected increased responsibilities. The
Compensation Committee believes the level of base salaries for senior
executives is equivalent to or lower than salaries of executives
with similar responsibilities for competing companies.
The Company also has a cash bonus plan for senior management and
executive officers. Because the Board of Directors considered 1994 a
transitional year for the Company, 1994 cash awards were made at the
discretion of the Board of Directors, upon the recommendation of
the Compensation Committee, following completion of the annual
audit. The Committee subjectively considered achievement of
divisional and departmental operating and financial objectives,
Company-wide operating and financial objectives, and individual
performance in making its recommendation. The Committee also took into
account anticipated future responsibilities, and employee loyalty and
continuity of service.
The Company uses stock options as its primary incentive for long-term
commitment. The Stock Option Plan Administration Committee believes
that the use of stock-based incentives most closely aligns the
interests of the Company's executives with those of its shareholders.
These options generally vest over a five-year period. In addition,
stock options with a shorter vesting period have been granted under
the Company's 1992 Stock Option Plan. The Stock Option Plan
Administration Committee has the responsibility for identifying the
optionees to receive grants and establishing terms of the options,
including the conditions for exercise and the amount of the exercise
price. Normally, the number of shares subject to a stock option
granted to a particular officer or employee depends upon past
performance of the optionee and the position held by the optionee.
The Stock Option Plan Administration Committee has placed significant
emphasis on stock options for the Company s senior executives. Because
of the direct link created between shareholder value and the value of
each optionee s investment in the Company, it is the Committee s
view that stock options encourage executives to take a longer term,
shareholder-oriented view of the impact of their decisions and
actions. Over the past three years, stock options were granted to
approximately 90 executives and key employees.
Regulations of the SEC require the Compensation Committee and the
Stock Option Plan Administration Committee to disclose their bases for
compensation reported for Mr. Grosso, the Chief Executive Officer, in
1994 and to discuss the relationship between the Company's performance
during the last fiscal year and Mr. Grosso's compensation.
The Compensation Committee has followed the philosophy described
above in determining Mr. Grosso s compensation. In considering his
base salary and stock options granted to him during 1994, the
Committee considered both the Company s overall performance and Mr.
Grosso s individual performance for the previous fiscal year. Mr.
Grosso received no cash bonus for 1994, reflecting the Committee s
view that 1994 was a transitional year. In determining stock option
grants, the Committee particularly took into consideration Mr. Grosso s
efforts in restructuring the Company s top management roles, his greater
emphasis during 1994 on longer term, strategic planning for the
Company s business, and his leadership in better positioning the
Company to take full advantage of its technological capabilities. The
Committee also took into account the compensation levels of chief
executives of other companies with which the Company competes for
executive talent, including the compensation levels of direct industry
competitors.
The above report is presented by the non-employee Directors who
compose the Compensation Committee and the Stock Option Plan
Administration Committee of the 1990 and 1992 Stock Option Plans.
Anders C. Brag Peter B. Foreman Sara Lee Schupf
-7-
<PAGE>
The tables that follow reflect the decisions included in this report:
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Name and Principal Fiscal Salary Bonus Other Annual Restricted LTIP All Other
Position Year ($) ($) Compensation Stock Awards Option No. Payouts Compensation
($) ($) of Shares ($) ($)(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Grosso 1994 $220,644 $0 25,000 $X,XXX
President 1993 $208,125 $1,250 25,000 $4,842
Chief Executive Officer 1992 $185,906 $0 30,000 $9,887
Jan M. Rivenbark 1994 $168,533 $28,160 15,000 $X,XXX
Executive Vice President 1993 $155,000 $1,250 $3,529(2) 20,000 $1,551
Chief Operating Officer 1992 $64,256 $0 $20,117(2) 40,000 0
Eric H. Jeltrup 1994 $172,000 $46,000 15,000 $X,XXX
Executive Vice President 1993 $152,350 $1,250 20,000 $3,545
Chief Technical Officer 1992 $128,300 $0 18,000 $6,823
Bruce A. Fisher 1994 $137,767 $23,200 10,000 $X,XXX
Senior Vice President 1993 $123,375 $1,250 15,000 $5,458
Chief Financial Officer 1992 $102,625 $8,258 15,000 $2,871
R. Michael Spencer 1994 $133,412 $21,528 0 $X,XXX
Senior Vice President 1993 $123,375 $1,250 15,000 $5,458
Treasurer 1992 $102,625 $8,258 15,000 $2,871
John F. Cornelius(3) 1994 $160,000 $0 0 $X,XXX
Senior Vice President 1993 $151,050 $1,250 20,000 $3,514
Field Operations 1992 $123,150 $0 18,000 $6,550
J. Pierre Masse 1994 $146,791(4) $0 0 $27,600(5)
Formerly Executive Vice 1993 $150,000 $1,250 20,000 $3,490
President Marketing 1992 $150,000 $8,258 15,000 $6,116
_________________
(1)Company's portion of Profit Sharing Plan contribution.
(2)Relocation cost reimbursed by the Company.
(3)After a medical leave of absence, the duties of Mr. Cornelius were
restructured and he did not serve as an executive officer of the Company
as of the end of fiscal 1994.
(4)Salary to December 1, 1994, the date of resignation of Mr. Masse.
(5)Amounts paid pursuant to an employment separation agreement with the
Company. The separation agreement includes non-disclosure and
non-competition clauses and provides for equal monthly payments to Mr. Masse
totaling $193,200 for the period from December 1, 1994 through January 31,
1996.
II. OPTION GRANT TABLE
Options Granted in the Last Fiscal Year and Potential Realizable Values
</TABLE>
<TABLE>
<CAPTION>
Individual Grants Realizable Value
% of at Assumed Annual
Total Options Total Rates of
Granted Options Exercise or Stock Price
in Fiscal Year Granted Base Price Expiration Appreciation for
Name (#)(1) in Fiscal Year ($/SH) Date Option Term(2)
5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
John Grosso 25,000 11.5% $9.50 8/26/2004 $118,750 $237,50
Jan M. Rivenbark 15,000 6.9% $9.50 8/26/2004 $71,250 $142,50
Eric H. Jeltrup 15,000 6.9% $9.50 8/26/2004 $71,250 $142,50
Bruce A. Fisher 10,000 4.6% $9.50 8/26/2004 $47,500 $95,000
(1)The options vest pro rata over a five-year period from the date of grant,
August 26, 1994.
(2)These values are hypothetical; there is no assurance that the stock will
achieve these rates of appreciation.
-8-
III. OPTIONS EXERCISED AND YEAR-END VALUE TABLE
Aggregated Options Exercised in the Last Fiscal Year and Fiscal
Year-End Option Values
</TABLE>
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
Shares Acquired Value Held Held
On Exercise Realized at January 29, 1995 at January 29, 1995
Name (#) ($) Exercisable/ Exercisable/
Unexercisable (#) Unexercisable ($)(1)
<S> <C> <C> <C> <C>
John Grosso 0 $0 95,000/ $159,250/
94,500 $73,375
Eric H. Jeltrup 0 $0 58,000/ $273,000/
40,000 $64,500
Bruce A. Fisher 0 $0 37,500/ $79,625/
34,000 $43,000
R. Michael Spencer 0 $0 39,000/ $91,000/
21,000 $22,750
Jan M. Rivenbark 0 $0 31,000/ $0/
58,000 $0
</TABLE>
(1)Based on closing price of $9.25 per Common Share on January 29, 1995.
IV. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PCA INTERNATIONAL, INC.
NASDAQ U.S. and NASDAQ NON-FINANCIAL INDICES
(Please note that chart appears below with plot points listed as follows.)
<TABLE>
<CAPTION>
NASDAQ "PCA International, Inc."
Year NASDAQ US Index Non-Financial Index International Price Dividends Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jan 90 123 $100 130 $100 $100 $3.17 $0.00 31.57894
Jan 91 127 $103 140 $108 $205 $6.50 $0.00 31.57894
Jan 92 195 $158 214 $164 $546 $17.00 $6.69 32.14333
Jan 93 220 $178 226 $174 $587 $18.00 $6.80 32.65763
Jan 94 252 $204 261 $201 $349 $10.50 $6.93 33.29932
Jan 95 240 $195 241 $185 $316 $9.25 $7.09 34.2435
</TABLE>
Assumes $100 invested on January 31, 1990 in PCA Common stock.
NASDAQ US Index and NASDAQ Non-Financial Index.
Total Return assumes reinvestment of dividends.
There are 12 industry peer group indices developed for NASDAQ by the Center
for Research in Securities Prices at the University of Chicago. The
Non-Financial "Index includes PCA International, Inc."
-9-
<PAGE>
The Board of Directors recommends that shareholders vote FOR the
election of all nominees for Director.
ITEM 2
PROPOSAL TO AMEND THE COMPANY'S
1992 NON-QUALIFIED STOCK OPTION PLAN
The Board of Directors is submitting to the shareholders, for their
approval, a Second Amendment to the Company's 1992 Non-Qualified Stock
Option Plan (the "1992 Plan"). The Second Amendment to the 1992 Plan
(the "Second Amendment") has been adopted by the Company's Board of
Directors (the "Board") and will become effective as of the date of
adoption, if approved by the shareholders. The Second Amendment
primarily provides for stock options to be granted pursuant to a formula
to non-employee Directors of the Company. The Board believes that the
1992 Plan has been an important means of attracting, retaining and
motivating key employees and that the Second Amendment will extend
the 1992 Plan to serve the important purpose of attracting,
retaining and motivating non-employee Directors.
Summary of the Existing 1992 Plan
The Company's 1992 Plan was adopted and approved by the shareholders
at the 1992 Annual Meeting and was amended by the shareholders at the
1993 Annual Meeting. The current 1992 Plan, as amended in 1993,
provides for the discretionary grant of non-qualified stock options by
the Stock Option Plan Administration Committee of the Board of
Directors (the "Plan Administration Committee") to key employees and
non-employee Directors of the Company. (The proposed Second Amendment
would make non-employee Directors ineligible for such discretionary
grants.) The Company has more than 250 key employees eligible to
receive grants under the 1992 Plan, in addition to eight non-employee
Directors. As of March 31, 1995, options have been granted under the
currently approved 1992 Plan to 48 key employees and to no
non-employee Directors. Under the second amendment of the 1992 Plan,
subject to shareholders approval, options have been granted to seven
non- employee Directors.
Non-qualified stock options granted pursuant to the 1992 Plan entitle
the holders thereof to purchase shares of the Company's Common Stock.
The number of shares that the holder may purchase, the price at which
the shares may be purchased, and the vesting and expiration dates of
the option are established by the Plan Administration Committee at the
time of grant. The 1992 Plan provides that options cannot be
exercised sooner than six months from the date of grant, and must expire
no sooner than three months after the exercise date and no later than
ten years from the date of grant. Unexercised options terminate
immediately upon the holder's termination of employment for any reason
other than death, disability or normal retirement. In the event of a
holder's death, disability or normal retirement, options must be
exercised, if at all, within certain limited periods of time. Options
are not transferable other than upon death. (The Second Amendment would
allow additional limited transferability pursuant to qualified domestic
relations orders.) The maximum number of shares available to be issued
under the 1992 Plan is 1,725,000, subject to adjustment to reflect any
change in the capitalization of the Company. The closing sales price
for the Company's Common Stock as quoted on the NASDAQ Stock Market on
March 31, 1995 was $_____ per share.
The 1992 Plan may be amended, modified, suspended or terminated by the
Board of Directors, provided any such modification or amendment must be
made subject to shareholder approval when the Board of Directors deems
such shareholder approval necessary in order to comply with applicable
laws, rules or regulations, or otherwise desirable.
Stock options granted under the Plan do not receive the tax treatment
available to "incentive stock
options" under the Internal Revenue Code of 1986. Upon the grant of a
non-qualified stock option, an option holder will not recognize ordinary
income and the Company will not receive a corresponding deduction. On
the date any such option is exercised, an option holder generally
will recognize ordinary income equal to the amount by which the fair
market value of the Common Stock on the exercise date exceeds the
option price paid for such stock, and the Company will generally
receive a deduction in the same amount. However, any option holder who
is subject to the provisions of
-10-
<PAGE>
Section 16(b) of the Securities
Exchange Act of 1934 (officers, directors and beneficial owners of
more than ten percent of any class of equity securities of the
Company) who exercises an option for which the option price is greater
than the fair market value of the Company's Common Stock on the
exercise date will not recognize income on the date of exercise but
rather will recognize a gain or loss six months after the date of
exercise, unless the option holder elects to recognize the loss at the
date of exercise. If such an election is made, the option holder will
recognize ordinary loss equal to the amount by which the option price
exceeds the fair market value of the Common Stock on the date of
exercise. If such an election is not made, the option holder will
recognize a gain or a loss based on the fair market value of the
Common Stock on the date six months after the exercise. If, on the
date six months after the exercise, the fair market value of the Common
Stock exceeds the option price, the option holder will recognize
ordinary income equal to the amount by which the fair market value of
the Common Stock exceeds the option price. If, on that date, the
option price exceeds the fair market value of the Common Stock, the
option holder will recognize ordinary loss equal to the amount by
which the option price exceeds the fair market value of the Common
Stock.
Any such ordinary income recognized by an option holder who also is
an employee of the Company is subject to income tax withholding by the
Company and may also be subject to withholding of certain employment
taxes. The Company generally will be entitled to a deduction in an
amount equal to the income recognized by the option holder and such
deduction shall be allowed for the taxable year of the Company in which
the option is exercised. The Company's deduction is conditioned upon
its withholding of the required amount of income tax for those option
holders who are employees of the Company. The Company will have no
withholding obligations upon the recognition of ordinary income
resulting from the exercise of options by any non-- employee option
holder; and consequently, the Company's deduction will not be
conditioned upon satisfaction of any obligation.
The above summary of the 1992 Plan is qualified in its entirety by
reference to the full text of the 1992 Plan, a copy of which may be
obtained without charge by written request to the Company, 815
Matthews- Mint Hill Road, Matthews, North Carolina 28105, Attention:
Bruce A. Fisher.
Summary of the Proposed 1992 Plan Second Amendment
The proposed Second Amendment to the 1992 Plan adds provisions
pursuant to which non-employee Directors of the Company are issued
stock options in accordance with a predetermined formula. Although
non- employee Directors were eligible for grants of discretionary
stock options under the 1992 Plan, the discretionary nature of
such grants would have created potential "short-swing" profits
liability under Section 16(b) of the Securities and Exchange Act of
1934 for non-employee Directors serving on the Plan Administration
Committee. Because the Plan Administration Committee must be made up
of at least three non- employee Directors, options under the 1992
Plan effectively have been unavailable to the Company's non- employee
Directors.
The Second Amendment will make available two kinds of options under
the 1992 Plan. The form of discretionary options that have been
granted to date, and that will continue to be available for grant by the
Plan Administration Committee to key employees, are termed
"Discretionary Stock Options" in the Second Amendment. The Second
Amendment excludes non-employee Directors from eligibility for grants of
Discretionary Stock Options.
The Second Amendment adds a second form of option termed "Formula
Plan Options." Formula Plan
Options are issued automatically by the Company to non-employee
Directors and are not subject to discretionary control by the Plan
Administration Committee. There are currently eight non-employee
Directors eligible for the grant of Formula Plan Options, and
such options, have been granted to seven nonemployee Directors, subject
to shareholder approval. The consideration received by the Company for
the granting of either form of option is the past service provided to
the Company by the option holder, or the prospect of the option holder's
future services to the Company.
The Second Amendment, subject to subsequent approval by the Company's
shareholders, grants to each non-employee member of the Board of
Directors on August 25, 1994, Formula Plan Options to purchase 10,000
shares of the Company's Common Stock. Each person thereafter becoming
a Director and who is not a Company employee will similarly be granted
an option to purchase 10,000 shares of Common Stock. In addition, on
the day following the Company's annual meeting of shareholders each
year, every member of the Board of Directors who is not an employee
shall receive an option to purchase 2,000 shares of Common Stock. The
formula for the grant of Formula Plan Options
-11-
<PAGE>
may be amended or altered
in the same manner as provided in the 1992 Plan, but not more often than
once every six months except as necessary to comply with the Internal
Revenue Code.
The purchase price to be paid upon the exercise of Formula Plan Options
is the per share fair market value of the Common Stock on the date
the option is granted. Formula Plan Options may not be exercised
sooner than six months from (i) the date of grant or (ii) the date of
shareholder approval of the plan or amendment allowing the grant,
whichever is later. The tax treatment of Formula Plan Options will be
the same as the tax treatment of non-employee option holders subject
to Section 16(b) as described in the above Summary of the Existing
1992 Plan.
-12-
<PAGE>
NEW PLAN BENEFITS
Under 1992 Stock Option Plan
with Proposed Second Amendment(1)
<TABLE>
<CAPTION>
Name and Position Dollar Value ($)(2) Number of Units
<S> <C> <C>
John Grosso(3) 0 0
President and Chief Executive Officer
Director and Director Nominee
Jan M. Rivenbark(3) 0 0
Executive Vice President
Chief Operating Officer
Eric H. Jeltrup(3) 0 0
Executive Vice President
Chief Technical Officer
Bruce A. Fisher(3) 0 0
Senior Vice President
Chief Financial Officer
R. Michael Spencer(3) 0 0
Senior Vice President
Treasurer
John F. Cornelius(3) 0 0
Senior Vice President
Field Operations
J. Pierre Masse(3) 0 0
Formerly Executive Vice President
Marketing
Joseph H. Reich(4)(5) 0 0
Stanley Tulchin(4) 10,000(6)
Anders C. Brag(4) 10,000(6)
R. Stuart Dickson(4) 10,000(6)
Peter B. Foreman(4) 10,000(6)
George Friedman(4) 10,000(6)
Sara Lee Schupf(4) 10,000(6)
Albert F. Sloan(4) 10,000(6)
Executive Group(2) 0 0
Non-Executive Director Group 70,000(4)
Non-Executive Officer
Employee Group(3) 70,000
</TABLE>
(1)Benefits received by or allocated to each of the following for the
last fiscal year assuming shareholder approval of proposed amendment.
(2)Based on closing price of $______ per Common Share on March 31, 1995.
(3)The proposed Second Amendment would have no effect on options granted to
these individuals.
(4)Non-employee Directors and, excluding Mr. Brag and Ms Schupf, nominees for
election as Directors.
(5)Declined to accept options for 10,000 shares under Second Amendment.
(6)Includes grant of options for 10,000 shares to each
non-employee Director on 8/25/94. Additional grants of options for 2,000
shares will be made to each non-employee Director after each annual meeting
and options for 10,000 shares to each newly appointed non-employee Director.
-13-
<PAGE>
The Second Amendment was approved by the Board of Directors on August
25, 1994. That date will be the effective date of the 1992 Plan as
amended by the Second Amendment if the Second Amendment is approved by
the shareholders at the Annual Meeting. If such shareholder
approval is not obtained, all Formula Plan Options granted to
non-employee Directors pursuant to the Second Amendment shall be null and
void.
The Second Amendment also includes a technical change to the 1992 Plan
allowing for the transfer of unexercised options pursuant to a
domestic relations order satisfying the conditions of the applicable
sections of the Internal Revenue Code of 1986.
The proposed Second Amendment is set forth in its entirety as Exhibit
1 hereto and will be voted on as a single proposal at the Annual
Meeting.
Reasons for Shareholder Adoption of the Second Amendment
The Second Amendment is being submitted to the shareholders for their
approval in order to qualify the grant of Formula Plan Options for an
exemption from the six-month, short-swing profit rules of Section
16(b) of the Securities and Exchange Act of 1934 (the "Section 16
Rules"). Unless a plan qualifies for an exemption under the Section 16
Rules (which qualification requires receipt of shareholder approval),
the grant of an option to a non-employee Director could be matched with
a sale of shares by the same Director to create liability under Section
16(b). Under the 1992 Plan in its current form, the grant of
discretionary options to Plan Administration Committee members, who all
are non-employee Directors, may be considered the equivalent of a
"purchase" of Company stock. Such a "purchase" could be matched with
any stock sale by such Director within six months before or after
and thereby possibly trigger Section 16 liability for the Director.
The significant threat of Section 16 liability has effectively
prevented the issuance of discretionary options under the 1992 Plan to
non-employee Directors.
The Board of Directors believes that the 1992 Plan has been
beneficial to the Company and its shareholders by more closely
aligning the interests of key employees with the shareholders. The
grant of options to key employees effectively reinforces the
relationship between shareholder gains and participant rewards. The
Board further believes that the 1992 Plan has allowed the Company to
retain and motivate its key employees. The purpose of the Second
Amendment is to extend the 1992 Plan to effectively include non-
employee Directors. As a result of the Second Amendment, the Company
and shareholders should benefit from the closer alignment of the
economic interests and incentives of shareholders and non-employee
Directors. The availability of Formula Plan Options also is intended to
allow the Company to retain, and to recruit as necessary, highly
qualified non-employee Directors who serve the critical function of
providing essential "outsider" oversight, analysis and leadership to
the Company. The Board of Directors acknowledges that current and
future Directors will personally benefit from the approval of the
Second Amendment and in this connection the Board of Directors may be
considered to have a conflict of interest. However, for the reasons
stated above, approval of the Second Amendment is recommended by the
Board of Directors.
The Board of Directors recommends that shareholders vote "FOR" the Second
Amendment to the 1992 Plan.
ITEM 3
PROPOSAL TO AMEND CHARTER TO LIMIT POTENTIAL
LIABILITY OF DIRECTORS
The Company's Board of Directors recommends that the shareholders
consider and approve a proposal to amend the Company's Articles of
Incorporation to include a new Article 11, which would limit the
personal liability of the Company's Directors to the Company or its
shareholders for monetary damages for certain breaches of fiduciary
duty.
The proposed Article 11 is consistent with Section 55-7(11) of
the North Carolina Business Corporation Act (the "Business Corporation
Act"), enacted by the General Assembly of North Carolina in July 1987
and effective October 1, 1987. This legislation, which is described
more fully below, is designed, among other things, to encourage
-14-
<PAGE>
qualified individuals to serve as Directors of North Carolina
corporations by permitting North Carolina corporations to include in
their charters a provision limiting director's liability for monetary
damages for breach of the duty of care. Section 55-7(11) of the
Business Corporation Act is an enabling provision only: an amendment to
the Articles of Incorporation approved by shareholders is required to
effect the permitted limitation on liability.
The text of the proposed Article 11 is as follows:
"Elimination of Certain Liability of Directors. No person who is
serving or who has served as a director of the Corporation shall be
personally liable to the Corporation or any of its shareholders for
monetary damages for breach of duty as a director, except for liability
with respect to (i) acts or omissions that the director at the time
of such breach knew or believed were clearly in conflict with the
best interests of the Corporation, (ii) any transaction from which
the director derived an improper personal benefit, (iii) acts or
omissions occurring prior to the effective date of this article or
(iv) acts or omissions with respect to which the North Carolina Business
Corporation Act does not permit the limitation of liability. As used
herein, the term "improper personal benefit" does not include a
director's reasonable compensation or other reasonable incidental
benefit for or on account of his service as a director, officer,
employee, independent contractor, attorney or consultant of the
Corporation. No amendment or repeal of this article, nor the adoption
of any provision to these Articles of Incorporation inconsistent
with this article, shall eliminate or reduce the protection granted
herein with respect to any matter that occurred prior to such
amendment, repeal or adoption."
The Company's Board of Directors believes that it is appropriate and
advisable that the shareholders adopt the proposed amendment to the
Articles of Incorporation and recommends that the shareholders vote to
approve and adopt the proposed amendment. The adoption of the
proposed amendment will require the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock. The
amendment, if adopted, would be effected only by the filing of Articles
of Amendment to such effect with the Secretary of State of North
Carolina.
Background and Reasons for Proposed Amendment
In performing their duties, directors of a North Carolina corporation
stand in a fiduciary relation to the Corporation and to its
shareholders, and are required to discharge their duties as directors
in good faith and "with that diligence and care which ordinarily
prudent men would exercise under similar circumstances in like
positions." Corporate directors, however, are only required to
exercise reasonable care and business judgment; they are not guarantors
that they will make no mistakes in the management of the corporation
business, and they are not personally responsible for mere errors of
judgment or slight omissions made in good faith, after appropriate
consideration and determined by them to be in the best interests of the
corporation and its shareholders. Such actions are protected by the
so-called "business judgment rule." The
business judgment rule is designed to protect a director from personal
liability to the corporation or its shareholders when their business
decisions are subsequently challenged. However, due to the expense
of defending lawsuits, the frequency with which unwarranted litigation
is brought against directors and the inevitable uncertainties with
respect to the application of the business judgment rule to particular
facts and circumstances, as a practical matter, directors and officers
of a corporation rely on indemnity from, and insurance procured by, the
corporation they serve as a financial backstop in the event of such
expense or unforeseen liability. The North Carolina General
Assembly has recognized that adequate insurance and indemnity
provisions are often a condition of an individual's willingness to
serve as a director of a North Carolina corporation. The Business
Corporation Act has for some time specifically permitted corporations
to provide indemnity and procure insurance for its directors and
officers; the Corporation's bylaws presently provide for indemnification
of officers and directors to the fullest extent permitted under North
Carolina law against reasonable expenses incurred by them and
reasonable payments made by them in connection with actions or claims
against them in their capacities as directors or officers.
Past changes in the market for directors and officers liability
insurance have resulted at times in the unavailability for directors
and officers of many corporations of any meaningful liability
insurance coverage. Insurance carriers have in certain cases
declined to renew existing directors and officers liability
policies, or have increased premiums to such an extent that the cost
of obtaining such insurance becomes prohibitive. Moreover, policies
may exclude coverage for areas where the service of qualified
independent directors is most needed. For example, many policies do
not cover liabilities or expenses arising from directors and officers
activities in response to attempts to take
-15-
<PAGE>
over a corporation. Such
limitations on the scope of insurance coverage, along with high
deductibles and low limits of liability, can undermine meaningful
directors and officers liability insurance coverage.
Although the Company has to date been able to obtain insurance coverage
for directors and officers on a basis which it believes acceptable, the
Company has experienced the increase in premiums and limitations in the
scope of coverage that are symptomatic of the problems generally in
the liability insurance industry. Moreover, the Company's current
policies expire yearly. Hence, the Company is exposed to
yearly renegotiation of premiums and coverage, as well as
cancellation, in the future. The proposed amendment is designed to
assure that the Company's directors and officers do not lose the
protection they have had in the past if insurance coverage continues to
decrease or becomes unavailable.
According to published sources, the inability of corporations to
provide meaningful director and officer liability insurance has had a
damaging effect on the ability of public corporations to recruit and
retain corporate directors. Although the Company has not directly
experienced this problem, the Company's Board of Directors believes that
the Company should take every possible step to ensure that the Company
will continue to be able to attract the best possible officers and
directors.
In July of 1987, the North Carolina General Assembly enacted an
amendment to the Business Corporation Act to permit North Carolina
corporations to limit director liability under certain circumstances.
Other states, including Delaware, have passed similar statutes, and
corporations in North Carolina and elsewhere have broadly incorporated
provisions limiting director liability into their charters. The
proposed amendment to the Articles of Incorporation is consistent with
the North Carolina amendment. The primary purpose of the proposed
amendment and the reason it is being recommended to shareholders is to
ensure that the Company will continue to be able to attract individuals
of the highest quality and ability to serve as its Directors.
Proposed Amendment
Proposed Article 11 would protect the Company's Directors from
personal liability for breaches of their fiduciary duty as a
Director. If adopted by the shareholders, proposed Article 11
would absolve Directors of liability for negligence in the
performance of their duties, including gross negligence. Directors
would remain liable for acts or omissions not made in good faith that
the Director at the time of
such breach knew or believed were in conflict with the best interests of
the corporation and for liability in connection with any transaction
from which the Director derived an improper personal benefit.
Proposed Article 11 would likely not absolve Directors of liability
under Section 55-32 of the Business Corporation Act, which makes
Directors personally liable for unlawful dividends or unlawful
stock repurchases or redemptions, for the making of loans or
guarantees to or in favor of Directors, officers or dominant
shareholders of the Company and certain other matters. The proposed
Article 11 would not be applicable to acts or omissions that occur
prior to the date the provision becomes effective, and would not
eliminate or limit liability of Directors arising in connection with
causes of action brought under federal securities laws.
Proposed Article 11 provides Directors with protection from awards of
monetary damages for breach of their duty as a Director; it does not
eliminate the Director's fiduciary duties of good faith and due care.
Accordingly, proposed Article 11 would have no effect on the
availability of equitable remedies such as an injunction or rescission
based upon a Director's breach of the duty of due care. In
addition, proposed Article 11 would apply only to claims against a
Director arising out of his or her role as a Director, and would not
apply, if he or she is also an officer, to his or her role as an
officer or in any capacity other than that of a Director. Under
proposed Article 11, Directors would not be liable for money damages
for a grossly negligent business decision made in connection with
attempts to acquire the Company.
The Board of Directors acknowledges that current and future Directors
would personally benefit from the approval of the foregoing amendment
and in this connection the Board of Directors may be considered to
have a conflict of interest. However, for the reasons stated in
this section captioned "Background and Reasons for Proposed Amendment,"
approval of such amendment is recommended by the Board of Directors.
-16-
<PAGE>
The Board of Directors recommends that shareholders vote "FOR" the
Amendment to the Articles of Incorporation.
ITEM 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has recommended that KPMG Peat Marwick, which
firm has been the independent accountants of the Company since 1990,
be continued as the Company's independent accountant for the fiscal
year ending January 28, 1996. Services provided to the Company and
its subsidiaries by KPMG Peat Marwick with respect to fiscal year 1994
included the examination of the Company's consolidated financial
statements, limited reviews of quarterly reports, services related to
filings with the Securities and Exchange Commission and consultations on
various tax and information services matters. Representatives of KPMG
Peat Marwick will be present at the Annual Meeting to respond to
appropriate questions and to make such statements as they may desire.
The Board of Directors recommends that shareholders vote "FOR"
ratification of the appointment of KPMG Peat Marwick as the Company's
independent accountants for the 1995 fiscal year.
ITEM 5
OTHER BUSINESS
Matters to be Presented
As of the date of this proxy statement, the only business which the
Board of Directors intends to present, and knows that others will
present, at the meeting is that hereinabove set forth. If any other
matter or matters are properly brought before the meeting or any
adjournments or postponements thereof, the
persons named in the accompanying form of proxy will vote the proxy on
such matters in accordance with their best judgment.
Shareholders' Proposals
If a shareholder intends to present a proposal at the 1996 Annual
Meeting of Shareholders of the Company, such a proposal, if otherwise
eligible for inclusion in Management's proxy statement under the rules
promulgated by the Securities and Exchange Commission, must be received
at the Company's principal executive offices shown on the first page
of this proxy statement no later than December 18, 1995, in order to
be included in Management's proxy statement for that meeting.
Solicitation
The expenses of the solicitation of proxies, including the costs of
preparing and distributing the proxy materials, the handling and
tabulation of proxies received and charges of brokerage houses and
other institutions, nominees or fiduciaries in forwarding such documents
to beneficial owners, will be paid by the Company. In addition to the
mailing of proxy materials, solicitation may be made in person or by
telephone or facsimile by Directors, Officers or regular employees of
the Company, or by other persons who may be engaged to perform
soliciting activities. The Company presently plans to engage
Wachovia Bank of North Carolina, N.A., to assist in the soliciting of
proxies from street name holders of shares. The anticipated cost is
approximately $5,000.
Additional Information Available on Request
The Company will provide without charge to each person solicited by
this proxy statement, on the written request of any such person, a
copy of the Company's Annual Report on Form 10-K (including the
financial statements
-17-
<PAGE>
and the schedules thereto) as filed with the Securities and Exchange
Commission for the Company s most recent fiscal year. Such written
requests should be directed to Mr. Bruce A. Fisher, PCA International,
Inc., 815 Matthews-Mint Hill Road, Matthews, North Carolina 28105.
By order of the Board of Directors,
Bruce A. Fisher
Senior Vice President and Secretary
April 24, 1995
-18-
EXHIBIT 1
SECOND AMENDMENT TO PCA INTERNATIONAL, INC.
1992 NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Second Amendment to PCA International, Inc. 1992
Non-Qualified Stock Option Plan (this "Amendment") is to include a
formula pursuant to which PCA International, Inc. will award stock
options to its non-employee directors.
2. DEFINITIONS.
(a) Terms used in this Amendment and not defined herein shall have
the meanings ascribed to them in the PCA International, Inc. 1992
Non-Qualified Stock Option Plan (the "Plan").
(b) Paragraph 2(h) of the Plan is amended by inserting the phrase
", except with respect to a non-employee director," after the words
"'Normal Retirement'" at the beginning of the Paragraph.
(c) Paragraph 2(j) of the Plan is amended by inserting the following
at the end thereof:
The term "Discretionary Stock Option" or "Discretionary Stock Options"
shall mean and refer to any option authorized and granted by the Plan
Administration Committee at its discretion pursuant to Paragraph
6(a)(i). The term "Formula Plan Option" or "Formula Plan Options"
shall mean and refer to any option issued to a member of the Board of
Directors pursuant to Paragraph 6(a)(ii).
3. ADMINISTRATION.
Paragraph 3(b) of the Plan is amended by inserting the phrase "In
the case of Discretionary Stock Options issued pursuant to Paragraph
6(a)(i)," at the beginning thereof.
4. ELIGIBILITY.
Paragraph 4 of the Plan is amended by deleting it in its entirety
and substituting therefor the following paragraphs:
(a) Discretionary Stock Options may be granted to key
employees of the Company or any of its Subsidiaries, including
directors and officers of the Company who are also key employees.
(b) Formula Plan Options may be granted only to
members of the Board of Directors who are not also employees.
5. TERMS AND CONDITIONS OF OPTION GRANTS.
(a) Paragraph 6(a) of the Plan is amended by deleting the
subparagraph heading "(a)" and the words "Stock options" at the
beginning thereof and substituting therefor the subparagraph heading
"(a)(i)", and the words "Discretionary Stock Options."
1
<PAGE>
(b) Paragraph 6(a) of the Plan is further amended by inserting
the following as Paragraph 6(a)(ii) thereof:
(ii)(A) Formula Plan Options granted pursuant to this Plan
shall be issued pursuant to the terms and conditions set forth in
Paragraphs 6(a)(ii)(B) through 6(a)(ii)(D) hereof and shall be
evidenced by an Agreement substantially in the form of Exhibit B
which is attached hereto and is hereby incorporated by reference,
with such changes therein as the Board of Directors shall from
time to time approve, all subject to the limitations hereinafter
set forth in this Paragraph 6.
(B) On August 25, 1994, each member of the Board of
Directors who is not an employee shall receive, as of such date,
subject to subsequent approval by the Company's shareholders required
by Rule 16b-3 promulgated under Section 16(b) of the Securities
Exchange Act of 1934, an option to purchase 10,000 shares of Common
Stock, and thereafter, each new member of the Board of Directors who is
not an employee shall receive, upon his or her becoming a director,
subject to any subsequent approval by the Company's shareholders
required by Rule 16b-3 promulgated under Section 16(b) of the
Securities Exchange Act of 1934, an option to purchase 10,000 shares of
Common Stock.
(C) On the day following the Company's annual meeting of
shareholders each year, every member of the Board of Directors who is
not an employee shall receive an option to purchase 2,000 shares of
Common Stock.
(D) The Option Price per share of all Formula Plan Options
granted hereunder shall be the per share fair market value of the
Common Stock on the date the option is granted, determined in
accordance with Paragraph 7(b) of this Plan.
(E) The provisions of the formula contained in
Paragraphs 6(a)(ii)(A) - 6(a)(ii)(D) of this Plan shall not be
altered or amended more often than once every six (6) months except as
necessary to comply with the Internal Revenue Code of 1986, as
amended, or the rules thereunder.
(F) The formula contained in Paragraph 6(a)(ii)(A) -
6(a)(ii)(D) of this Plan is intended to comply with Rule
16b-3(c)(2)(ii) promulgated under Section 16(b) of the Securities
Exchange Act of 1934.
(c) Paragraph 6(c) of the Plan is amended by adding the words
"or Exhibit B" after the words "Exhibit A".
(d) Paragraph 6(e) of the Plan is amended by deleting it in
its entirety and substituting therefor the following:
(e) The grant date for each Discretionary Stock Option
shall be the date upon which the grant of the Discretionary Stock
Option is approved by the Plan Administration Committee, which shall
be the effective date of the Agreement evidencing such options, or
such later date as the Plan Administration Committee may specify in
the Agreement. The grant date for each Formula Plan Option shall be
the date upon which the Formula Plan Option is granted pursuant to
Paragraph 6(a)(ii)(B) or Paragraph 6(a)(ii)(C). Provided, however,
that for the purposes of Sections 16(a) and 16(b) of the Securities
Exchange Act only, the grant date of any Discretionary Stock Option or
Formula Plan Option subject to subsequent approval by the Company's
shareholders of the Plan or any amendment thereto shall be the date
upon which such approval is duly obtained. For all other purposes
under this
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Plan unless otherwise stated, the grant date for any Discretionary
Stock Option or any Formula Plan Option subject to subsequent
shareholder approval shall be the date upon which the grant of the
option is approved by the Plan Administration Committee or automatically
issued as a Formula Plan Option.
6. OPTION PRICE.
The phrase "Discretionary Stock Option" shall replace the first word
options" in the second sentence of Paragraph 7(a) of the Plan. The
following sentence shall be inserted after the second sentence:
The Option Price for all Formula Plan Options granted under the Plan
shall be the per share fair market value of the Common Stock on the
date the option is granted, determined in accordance with Paragraph
7(b) of this Plan.
7. NONTRANSFERABILITY.
The phrase "or pursuant to a domestic relations order, as defined
in Section 414(p)(1)(B) of the Internal Revenue Code of 1986, which
satisfies the conditions of Section 414(p)(1)(A) of the Internal
Revenue Code of 1986," shall be inserted in Paragraph 9 of the Plan after
the word "distribution".
8. CLAIM TO STOCK OWNERSHIP OR DIRECTORSHIP RIGHTS.
The phrase "Discretionary Stock Options" shall replace the word
"options" in the first sentence of Paragraph 12 of the Plan. The
third sentence shall be deleted in its entirety and replaced with
the following sentence:
Neither this Plan nor any action taken hereunder shall be construed
as giving any employee or member of the Board of Directors any rights
to be retained as an employee of the Company or any of its Subsidiaries
or as a member of the Board of Directors.
9. COMPLIANCE WITH FEDERAL REGULATIONS.
The following paragraph shall be added to the Plan as Paragraph 19:
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its
successors under the Securities Exchange Act of 1934. To the
extent any provision of the Plan or this Amendment or any action by
the Plan Administration Committee fails to so comply, such
provisions, the Plan, this Amendment, or such action shall be
deemed null and void, to the extent permitted by law and deemed
advisable by the Plan Administration Committee.
10. DATE OF THE AMENDMENT AND APPROVAL OF SHAREHOLDERS.
This Amendment is dated August 25, 1994, which is the date upon which
the Board of Directors adopted this Amendment. This Amendment is
subject to the approval by affirmative vote of the holders of a
majority of the shares present, either in person or by proxy, and
entitled to vote at a duly held meeting of the shareholders at which
a quorum is present representing a majority of all outstanding
shareholders either in person or by proxy. If such shareholder
approval is not obtained, all options granted to non-employee
directors pursuant to Paragraph 6(a)(ii) of the amended Plan shall be
null and void.
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