SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PCA International, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PCA INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 28, 1997
The Annual Meeting of Shareholders of PCA International, Inc. (the
"Company"), will be held on May 28, 1997, 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 nine directors to serve until the 1998 Annual Meeting of
Shareholders and to serve until their successors are elected and
qualified.
(2) To approve an amendment to the Company's Amended and Restated 1996
Omnibus Long-Term Compensation Plan.
(3) To ratify the selection of KPMG Peat Marwick LLP as Independent
Auditors.
(4) 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, 1997, 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 28, 1997
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 28, 1997 (the "1997 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 28, 1997. Only shareholders of record at the
close of business on March 31, 1997, 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, 1997, the Company had
7,631,829 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 1997 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 1997 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 1997 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.
ITEM 1
ELECTION OF DIRECTORS
The Company's directors are elected at each Annual Meeting to serve for
a one-year term, or until their respective successors are elected and qualified.
Nine nominees are to be elected this year to serve until the Annual Meeting in
1998.
In accordance with the Company's Bylaws, the Board of Directors has
fixed the number of directors at nine. Nominees for election to the Board of
Directors are selected by action of the entire Board. Unless contrary
instructions are given, the enclosed proxy will be voted for the nine nominees
named below. Each nominee has consented to be
<PAGE>
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 1997 Annual Meeting. All nominees,
with the exception of Mr. Greenberg, have been heretofore elected by the
shareholders and are standing for reelection as directors.
<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 62 Chairman of the 1987
Managing Partner of Centennial Associates, L.P. since April 1989. Board
JOHN GROSSO 50 President, Chief 1987
President and Chief Executive Officer of the Company since 1987. Executive
Officer, and Director
R. STUART DICKSON 67 Director 1983
Chairman of the Executive Committee, Ruddick Corporation; Chairman of the Board
of Ruddick Corporation from 1968 to 1994; Director of First Union Corporation,
Textron, Inc., and of United Dominion Industries, Inc., for more than five
years, and Director of Dimon Incorporated since 1995.
PETER B. FOREMAN 61 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.
GEORGE FRIEDMAN 62 Director 1994
Chairman and CEO of Parallel Communications, Inc., since 1994.
Chairman and CEO of Gryphon Development Ltd. from 1986 to 1992.
DONALD P. GREENBERG 63 Director 1996
Faculty of Cornell University since 1968. Director, Program of
Computer Graphics, Cornell University, since 1973. Founding
Director, National Science and Technology Center for Computer
Graphics and Scientific Visualization. Director of Data
Broadcasting Corporation since 1995 and of Chyron Corporation
since 1996.
CHARLOTTE H. MASON 41 Director 1995
Associate Professor, Kenan-Flagler Business School, The University
of North Carolina since 1985.
ALBERT F. SLOAN 67 Director 1981
Director of Bassett Furniture Industries, Inc., and RichFoods,
Incorporated for more than five years; and Cato Corporation since 1994.
2
<PAGE>
STANLEY TULCHIN
Director and Chairman of the Board of Reprise Capital Corporation 70 Director 1987
and Stanley Tulchin Associates, Director of the Topps Company,
Inc., and Chairman of the Board of STA Credit Corporation for at least five
years.
</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 nonemployee
director receives a $12,000 flat annual fee, plus $1,000 for serving on one or
more committees plus an additional $1,500 as Chairman for a committee, and the
Chairman of the Board receives $52,000 per annum. Nonemployee directors may
elect yearly to receive payment of all, but not less than all, of their fees for
service as directors in the form of options to purchase the Common Stock of the
Company. Additionally, all directors are reimbursed for expenses incurred in
connection with attending Board and Committee meetings.
During the last fiscal year, there were four regularly scheduled
meetings and four special meetings of the Board of Directors. Each director
attended 75% or more of the total number of meetings of the Board of Directors
and meetings of all Committees on which he or she served, except for Mr.
Dickson, Mr. Greenberg, and Mr. Tulchin.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE. Messrs. Dickson (Chairman), Sloan, and Tulchin served
as members of the Audit Committee during fiscal year 1996. 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. Foreman (Chairman), Reich, and Friedman
served as members of the Compensation Committee during fiscal year 1996. 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. Foreman (Chairman),
Reich, and Friedman served as members of the Stock Option Plan Administration
Committee for each of the Company's Stock Option Plans during fiscal year 1996.
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.
3
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the beneficial ownership as of March 31,
1997, 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) 26.5%
$0.20 par value c/o Mr. Joseph H. Reich
900 Third Avenue
New York, New York 10022
Common Stock, Mr. Joseph H. Reich 510,650(1) 33.1%(2)
$0.20 par value 900 Third Avenue 2,018,957(2)
New York, New York 10022 ----------
2,529,607(1)
Common Stock, Furman Selz LLC 724,400 9.5%
$0.20 par value c/o Ms. Valerie King
230 Park Avenue
New York, New York 10169
Common Stock, Reprise Capital Corporation 485,394(3) 6.4%
$0.20 par value c/o Mr. Stanley Tulchin
400 Post Avenue
Westbury, New York 11590
Common Stock Putnam Investments, Inc. 380,100(4) 5.0%
$0.20 par value One Post Office Square
Boston, Massachusetts 02109
</TABLE>
(1)See Note (4) 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 certain shares as to which Mr. Tulchin disclaims beneficial
ownership. See Notes (2) and (6) to the table under "Stock Ownership of
Directors and Executive Officers" below.
(4)Certain Putnam investment managers (together with their parent corporations,
Putnam Investments, Inc. and Marsh & McLennan Companies, Inc.) are
considered "beneficial owners" in the aggregate of 380,100 shares, or 5.0% of
shares outstanding, of the Company's voting Common Stock, which shares were
acquired for investment purposes by such investment managers for certain of
their advisory clients.
4
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the beneficial stock ownership as of March
31, 1997, 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>
R. Stuart Dickson........................... 60,834 (2)(3) *
Peter B. Foreman............................ 277,108 (2)(7) 3.6%
George Friedman............................. 21,800 (2) *
Donald P. Greenberg......................... - *
John Grosso................................. 198,400 (2) 2.6%
Charlotte H. Mason.......................... 4,300 (2) *
Joseph H. Reich............................. 2,529,607 (4) 33.1%
Albert F. Sloan............................. 12,050 (2)(5) *
Stanley Tulchin............................. 485,394 (2)(6) 6.4%
Jan M. Rivenbark............................ 62,000 (2) *
Eric H. Jeltrup............................. 103,300 (2) 1.3%
Bruce A. Fisher............................. 53,835 (2) *
R. Michael Spencer.......................... 42,454 (2) *
All Executive Officers and Directors as a
group....................................... 3,851,082 (2) 48.0%
</TABLE>
*Less than 1% of the outstanding shares of Common Stock of the Company.
The mailing address for each listed individual is: 815 Matthews-Mint Hill
Road, Matthews, NC 28105
(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, 1997 as
follows: Mr. Tulchin--4,000; Mr. Grosso--134,500; Mr. Rivenbark--60,000 (Mr.
Rivenbark resigned from the Company on March 13, 1997); Mr. Jeltrup--73,000;
Mr. Fisher--28,000; Mr. Spencer--39,000; Mr. Dickson--7,800; Mr.
Foreman--13,800; Mr. Friedman--12,900; Ms. Mason--4,000; and Mr.
Sloan--10,200; and all executive officers and directors as a group (including
such individuals)--387,200. Such persons and members of such group disclaim
any beneficial ownership of the shares subject to such options.
(3)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.
(4)Joseph H. Reich, Centennial Associates, L.P. and Carol F. Reich, jointly
reported beneficial ownership of 391,350; 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. In addition, the Pumpkin Foundation, a 501(c)(3) charitable
organization reported beneficial ownership of 72,800 shares. It was reported
that Joseph H. and Carol F. Reich, in their role as Trustees, had shared
dispositive power or shared investment power with respect to such shares.
Such persons have stated that the 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.
(5)Includes 450 shares beneficially owned by Mr. Sloan's wife as to which he
disclaims beneficial ownership.
5
<PAGE>
(6)Includes (i) 77,591 shares beneficially owned by Mr. Tulchin, (ii) 330,803
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 35% equity owners, (iii) 15,000 shares owned by a trust for Jill Tulchin
of which Mr. Tulchin is a trustee and disclaims any beneficial ownership, and
(iv) 58,000 shares owned by a charitable trust of which Mr. Tulchin is a
trustee and disclaims any beneficial ownership. His brother, Norman Tulchin,
beneficially owns 118,719 shares. Stanley Tulchin disclaims beneficial
ownership of the shares owned by his brother and by Reprise Capital
Corporation.
(7)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. The shares shown are held by Descendants Trust
F/B/O Peter B. Foreman under Jane Revocable Trust DTD 1/30/84.
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 1996 fiscal year were met.
ITEM 2
PROPOSAL TO APPROVE AN AMENDMENT TO THE
AMENDED AND RESTATED 1996 OMNIBUS LONG-TERM COMPENSATION PLAN
On May 22, 1996, the shareholders adopted the 1996 PCA International,
Inc. Omnibus Long-Term Compensation Plan, which has been subsequently amended
and restated in part by the Board of Directors and renamed The Amended and
Restated 1996 Omnibus Long-Term Compensation Plan (the "Plan"). The Plan is
intended to allow the Company (including its subsidiaries) to attract and retain
key employees, to stimulate the efforts of such employees, and to strengthen
their desire to remain with the Company. In addition, the Plan is intended to
aid the Company in attracting superior individuals to serve as nonemployee
directors and in providing appropriate compensation to such nonemployee
directors for their service.
The amendment to the Plan (the "Amendment") that the Board of Directors
is submitting to the shareholders for approval would increase the annual maximum
award of shares for which Employee Stock Options may be granted under the Plan
to any one Participant from 20,000 to 150,000 shares of the Company's Common
Stock. The reason for the Amendment is that the Board of Directors and the
Compensation Committee of the Board believes that the current limit on Employee
Stock Option awards does not allow the Company sufficient flexibility to use
Employee Stock Options in compensating and retaining the executive officers of
the Company.
Following is a summary of the material features of the Plan and certain
other information regarding the Plan. A copy of the Plan is available upon
request, at no cost, from the Secretary of the Company at the address set forth
in the accompanying Notice of Annual Meeting. The following discussion does not
purport to be complete and is subject to and qualified in its entirety by
reference to the full text of the Plan.
MATERIAL FEATURES OF THE PLAN
The Plan is designed to give the Board of Directors, acting through a
committee of non-employee, outside directors (the "Committee"), flexibility to
adapt the long-term incentive compensation of key employees to changing business
conditions through a variety of long-term incentive arrangements. Under the
Plan, the Committee may grant Employee Stock Options (including both
non-qualified and "incentive" stock options), Stock Appreciation Rights,
Performance Restricted Stock Awards, Performance Awards and Performance Units
("Awards") to senior level employees of the Company holding positions of
responsibility in managerial, administrative, or professional capacities ("Key
Employees"). The Plan also provides for the grant of options to nonemployee
directors upon their election to the Board and allows the nonemployee directors
to elect to take their yearly compensation as directors in the form of stock
options. In addition to the enumerated incentive compensation Awards, the
Committee may establish other types of Key Employee Awards that it determines
are consistent with the Plan's purposes.
6
<PAGE>
KEY EMPLOYEE STOCK OPTIONS. Under the Plan, the Committee may grant
Awards in the form of non-qualified and incentive stock options to purchase
shares of the Company's Common Stock. The Committee will, for each such stock
option, determine the number of shares subject to the option, the manner and
time of the option's exercise, and the exercise price per share of stock subject
to the option. In no event may the exercise price of a stock option be less than
100% of the fair-market value of the Company's Common Stock on the date of the
grant. All stock options under the Plan will expire no later than ten years from
the date of the grant, and the exercise price of outstanding options may not be
altered by the Committee. The Plan provides for the grant to Key Employees of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code, as amended (the "Code").
STOCK APPRECIATION RIGHTS. The Plan authorizes the Committee to grant
stock appreciation rights ("SARs") to Key Employees. An SAR consists of the
right to receive a payment equal to the appreciation in market value of stated
number of shares of Common Stock from the SAR exercise price to the market value
on the date of its exercise.
The Committee determines the number of shares of the Company's Common
Stock subject to the SARs, the manner and time of the SAR's exercise and
exercise price of the SAR, which exercise price may in no event be less than
100% of the fair-market value of the Common Stock on the date of grant of the
SAR. SARs may be granted either in tandem with Key Employee stock options or
independent of the grant of such options.
PERFORMANCE RESTRICTED STOCK PROGRAM. The Performance Restricted Stock
Program provides Key Employee participants the opportunity to earn shares of the
Company's Common Stock based upon the achievement of objective goals determined
by the Committee. Under this program, the Committee may establish for any Key
Employee a Target Award for a Performance Cycle, which target is expressed as a
fixed number of shares of restricted Common Stock.
Each Performance Cycle will be one year or longer as set by the
Committee. Within the first 90 days of a Performance Cycle, the Committee will
establish written Performance Goals based on objective business criteria
enumerated in the Plan, including return on shareholders' equity, return on
assets, return on capital, profit margin, earnings per share, net earnings,
operating earnings, Common Stock price per share, and sales or market share.
Awards are paid for the Performance Cycle only if the Performance Goals are
attained. At the same time, the Committee will establish a Performance Formula
that will determine, assuming the Performance Goals for the Performance Cycle
are achieved, what percentage of the participant's Target Award for the
Performance Cycle has been earned.
After the close of each Performance Cycle, the Committee will
calculate, based upon application of the Performance Formula to the Performance
Goals, what percentage of the Target Award has been earned for the period,
although the Committee will have the authority to reduce or eliminate an Award
based on any other objective or subjective criteria it deems appropriate.
Awards under this program will be paid in restricted Common Stock. Such
stock may not be sold, transferred or encumbered by the participant during the
restriction period established by the Committee, which shall be at least three
years.
Except in the case of a Change in Control, in the event a participant's
employment is terminated prior to completion of a Performance Cycle for any
reason other than death, disability, retirement or another reason approved by
the Committee (an "Approved Reason"), all of the Awards granted to the
participant for such cycle shall be forfeited. In addition, any such termination
(whether or not it occurs during a Performance Cycle) will cause the participant
to forfeit any restricted Common Stock that is subject to an unexpired
restriction period. In the event a participant's employment is terminated due to
death, disability, retirement or an Approved Reason prior to the completion of
such cycle, he or she shall receive, assuming Awards are earned for such cycle,
a pro rata Award based upon his or her employment during the cycle prior to
termination of employment and the participant will be entitled to keep
restricted Common Stock subject to an unexpired restriction period in a pro rata
amount based on the elapsed portion of the restriction period prior to
termination.
PERFORMANCE AWARD PROGRAM. The Performance Award Program is structured
similarly to the Performance Restricted Stock Program, and provides participants
the opportunity to earn Awards in the form of cash or Common Stock, subject to
such restrictions as the Committee determines.
Performance Awards will be based on written objective Performance Goals
for a Performance Period established by the Committee. Awards will be determined
by applying a Performance Formula to the Performance Goals attained in the
7
<PAGE>
Performance Period to determine an Award expressed as a percentage of the
participant's base salary. The Committee will have the authority to reduce or
eliminate Awards in the same manner as under the Performance Restricted Stock
Program. The termination of a participant during a Performance Period will be
treated in the same manner as under the Performance Restricted Stock Program.
PERFORMANCE UNITS. The Plan allows the Committee to grant Awards in the
form of Performance Units, which are units valued by reference to criteria
chosen by the Committee, and which are payable in forms other than the Company's
Common Stock. Performance Units are similar to Performance Restricted Stock
Program Awards in that they are contingently awarded based on the attainment of
certain performance objectives over a fixed period. The length of such period,
the performance objectives to be achieved during the period, and the measure of
whether and to what degree such objectives have been achieved will be determined
by the Committee.
LIMITATION ON AWARDS. The maximum number of shares of Common Stock for
which stock options may be granted to any Key Employee in a calendar year
currently is 20,000. If the Amendment is approved by the shareholders, the
maximum number of shares will be increased to 150,000. The maximum number of
shares of Common Stock for which stock appreciation rights may be granted to any
Key Employee in a calendar year is 20,000. The maximum number of shares of
Common Stock for which an Award may be made under the Performance Restricted
Stock Program in any Performance Cycle (which can in no event be shorter than 1
year) is 5,000. The maximum Award that may be granted under the Performance
Award Program for any Performance Period (which can in no event be shorter than
1 year) is $100,000 or, in the event the Performance Award is paid in shares of
Common Stock, the Common Stock equivalent.
DIRECTOR FORMULA OPTIONS AND DEFERRAL OPTIONS. The Plan provides for
the grant, upon a nonemployee director's initial election or appointment as
director, of a Formula Option to purchase 10,000 shares of the Company's Common
Stock at an exercise price of no less than 100% of the fair-market value of the
Company's Common Stock on the date of grant. The formula for the grant of
Formula Options may not be altered by the Committee more often than once every
six months except as necessary to comply with the Code or the Employee
Retirement Income Security Act. Formula 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, whichever is later. Formula Options become immediately exercisable
upon a director's death, disability, or retirement, or upon a Change in Control
of the Company.
The Plan also provides that nonemployee directors may elect annually to
receive their compensation for service as a director for the following year (not
including reimbursement of expenses) in the form of Deferral Options. Deferral
Options are granted at the commencement of the 12-month period for which the
election has been made. The number of Deferral Options granted to an electing
nonemployee director in any year shall be an amount whose value, as determined
by any generally accepted option pricing model, is equivalent on the date of
grant to the cash compensation which the nonemployee director would otherwise
have been entitled to receive for the year.
In general, Deferral Options become exercisable one year after the date
of grant (or such later date as the Committee shall determine) and are
exercisable at a price equal to the market price of the Company's Common Stock
at the close of business on the day of grant, or the preceding trading day if
the date of grant is not a trading day. Deferral Options become immediately
exercisable upon a director's death, disability, or retirement, or upon a Change
in Control of the Company. If a director's tenure ends for a reason other than
death, disability, retirement, or Change in Control, then the number of Deferral
Options granted for the year in which the tenure ends shall be reduced to
reflect the amount of compensation actually earned by the director in that year.
OTHER TERMS OF AWARDS. Awards may be paid in cash, Common Stock (with
restrictions as determined by the Committee), a combination of cash and Common
Stock, or any other form of property, as the Committee determines. If an Award
is granted in the form of a stock option, restricted stock award, or any other
stock-based grant, the Committee may include as a part of such Award an
entitlement to receive dividends or dividend equivalents. At the discretion of
the Committee, payment of a stock option, restricted stock award, dividend or
dividend equivalent may be deferred by a participant.
The Plan provides for the forfeiture of Awards (other than Formula
Options and Deferral Awards) in the event of termination of employment for a
reason other than death, disability, retirement, or an Approved Reason. The Plan
authorizes the
8
<PAGE>
Committee to promulgate administrative guidelines for the purpose
of determining what treatment will be afforded to a participant under the Plan
in the event of his death, disability, retirement, or termination for an
Approved Reason.
Upon the grant of any Award, the Committee may, by way of an Award
Notice or otherwise, establish such other terms, conditions, restrictions and/or
limitations governing the grant of such Award as are not inconsistent with the
Plan.
AVAILABLE SHARES. The maximum amount of Common Stock reserved and
available for issuance under the Plan is 811,550 shares, which number may be
adjusted by the Committee to reflect future stock splits, stock dividends, and
other changes in the capital structure of the Company. Shares of Common Stock
related to Awards that terminate by expiration, forfeiture, cancellation or
otherwise without the issuance of shares, are restored as available for grant
under the Plan.
ELIGIBILITY FOR PARTICIPATION. The selection of Key Employees to
participate in the Plan is within the discretion of the Committee. The Committee
has not determined how many Key Employees will ultimately participate in the
Plan. However, the Committee intends to grant Awards under the Plan to Key
Employees who the Committee believes can have a significant effect on the
growth, profitability, and success of the Company. There are approximately 150
employees of the Company from whom the Committee may select participants. Only
nonemployee directors are eligible to receive Formula Options and Deferral
Options. There are currently eight nonemployee directors.
CHANGE IN OWNERSHIP OR CONTROL. For all Awards (other than Formula
Options and Deferral Options, the treatment of which has been discussed above)
in the event of a Change in Control (defined as a change in a majority of
directors resulting from a tender offer, merger or similar transaction), a
participant whose employment is terminated for a reason other than death,
disability, cause, voluntary resignation or retirement, within two years of the
date of such event will be entitled to the following treatment under the Plan:
(i) all of the terms, conditions, restrictions and limitations in effect on any
of the participant's outstanding Awards will immediately lapse, (ii) all of the
participant's outstanding Awards will automatically become 100% vested, (iii)
all of the participant's outstanding stock options, SARs, Common Stock Awards,
unpaid Performance Restricted Stock and Performance Awards and other stock-based
Awards will be immediately paid, and (iv) all of the participant's outstanding
Performance Units will be paid.
The Plan also provides that, if the Company's Common Stock ceases to be
actively traded on the exchange or quotation system on which it is then traded,
then all participants, regardless of whether their employment is terminated,
will automatically receive the same treatment afforded to a participant
terminated without cause upon a Change in Control.
PLAN ADMINISTRATION AND TERMINATION. The Committee that administers the
Plan may be either the Compensation Committee of the Board or another committee
designated by the Board, provided that each of the members of the Committee must
be both a "nonemployee director" and an "outside director" as defined under
applicable law. No member of the Committee is eligible to be selected to
participate in the Plan except through Formula Options and Deferral Options.
Among the powers granted to the Committee are the authority to interpret the
Plan, establish rules and regulations for its operation, select Key Employees of
the Company and its subsidiaries to receive Awards, and determine the form and
amount and other terms and conditions of such Awards.
The Plan authorizes the Committee to grant Common Stock Awards to Key
Employees during the period from May 22, 1996 through May 21, 2001; except that
the Committee may grant Awards under the Performance Award Program and
Performance Restricted Stock Program after such date in recognition of
performance for Performance Cycles and Performance Periods commencing prior to
such date. The Committee may amend, suspend or terminate the Plan at any time,
with or without prior notice. In general, the Committee may not make amendments
to the Plan requiring shareholder approval under applicable law.
9
<PAGE>
AMENDED PLAN BENEFITS
The following awards were made during fiscal year 1996, a portion of
which were made contingent upon amendment of the Plan:
AMENDED AND RESTATED 1996 PCA INTERNATIONAL, INC.
OMNIBUS LONG-TERM COMPENSATION PLAN
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF UNITS
John Grosso 0 0
President
Chief Executive Officer
Jan M. Rivenbark (2) 0 0
Executive Vice President
Chief Operating Officer
Eric H. Jeltrup 0 0
Executive Vice President
Chief Technical Officer
Bruce A. Fisher 0 0
Senior Vice President
Chief Financial Officer
R. Michael Spencer 0 0
Senior Vice President
Treasurer
Executive Group............................. $ 0 150,000
Non-Executive Director Group................ $6,850 18,700
Non-Executive Officer Employee Group........ $ 0 300,000
(1)Based on closing price of $16.75 per Common Share on March 31, 1996.
(2)Mr. Rivenbark resigned from the Company on March 13, 1997.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States federal
income tax consequences under current federal income tax laws related to Awards
under the Plan. This summary is not intended to be exhaustive and, among other
things, does not describe state or local tax consequences.
STOCK OPTIONS. A participant who is granted an incentive stock option
within the meaning of Section 422 of the Code should not realize any taxable
income at the time of the grant or at the time of exercise. Similarly, the
Company is not entitled to any deduction at the time of grant or at the time of
exercise. If the participant makes no disposition of the shares acquired
pursuant to an incentive stock option before the latter of two years from the
date of grant of such option and one year from the exercise of such option, any
gain or loss realized on a subsequent disposition of the shares will be treated
as a
10
<PAGE>
long-term capital gain or loss. Under such circumstances, the Company will
not be entitled to any deduction for federal income tax purposes.
A participant who is granted a non-qualified stock option will not have
taxable income at the time of grant, but will have taxable income at the time of
exercise equal to the difference between the exercise price of the shares and
the market value of the shares on the date of exercise. The Company will be
entitled to a corresponding deduction for the same amount.
OTHER AWARDS. The grant of an SAR has no federal tax consequences for
the participant or the Company. The exercise of an SAR results in taxable income
to the participant equal to the difference between the exercise price of the
shares and the market price of such shares as of the date of exercise and a
corresponding deduction by the Company.
A participant who has been granted either Performance Awards or
Performance Units will not realize taxable income at the time of grant, and the
Company will not be entitled to a deduction at such time. A participant will
realize ordinary income at the time the Award is paid, and the Company will have
a corresponding deduction. If an Award is paid in the form of Common Stock, the
participant will be treated as having received taxable compensation in an amount
equal to the then fair-market value of the Common Stock distributed to him or
her and the Company will receive a corresponding deduction for the same amount.
A participant who has been granted an Award of restricted shares of
Common Stock will not realize taxable income at the time of grant, and the
Company will not be entitled to a deduction at the time of grant, assuming that
the restrictions constitute a substantial risk of forfeiture for federal income
tax purposes. Generally, when such restrictions lapse, the participant will
receive taxable income in an amount equal to the excess of the fair-market value
of the shares at such time over the amount, if any, paid for such shares. The
Company will be entitled to a corresponding deduction.
LIMITATION ON INCOME TAX DEDUCTION. The Plan has been designed to
enable any Award granted by the Committee under the Plan to a Key Employee to
qualify as "performance-based compensation" under Section 162(m) of the Code.
Through such qualification, the Company can preserve the deductibility of
certain compensation in the event that the annual compensation of a Key Employee
exceeds $1,000,000.
OTHER INFORMATION
The Plan, as amended by the Amendment, shall become effective as of
January 1, 1997, subject to approval of the Amendment by the shareholders.
Approval of the Amendment requires the affirmative vote of a majority of the
shares of Common Stock present or represented by proxy and entitled to vote at
the Meeting.
FOR THE REASONS SET FORTH ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE FOR THE APPROVAL OF THE AMENDMENT.
ITEM 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has recommended that KPMG Peat Marwick LLP,
which firm has been the independent accountants of the Company since 1990, be
continued as the Company's independent accountants for the fiscal year ending
February 1, 1998. Services provided to the Company and its subsidiaries by KPMG
Peat Marwick LLP with respect to fiscal year 1996 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 accounting matters.
Representatives of KPMG Peat Marwick LLP 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 LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE 1997 FISCAL YEAR.
11
<PAGE>
ITEM 4
OTHER BUSINESS
OTHER 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.
REPORT OF THE COMPENSATION AND STOCK OPTION PLAN ADMINISTRATION COMMITTEES
The Company's executive compensation program is designed to provide
fair compensation to executives based on their performance and contribution to
PCA and to provide incentives which will attract and retain the executives,
instill a long-term commitment to the Company, and develop pride and a sense of
Company ownership, all in a manner consistent with shareholder interests. Given
these objectives, the executive officers' compensation package includes these
main elements: (1) base salary, which is reviewed annually; (2) annual cash
bonuses; and (3) long-term incentive compensation. A significant portion of all
executive compensation is directly dependent upon annual and long-term Company
performance.
The largest component of the Company's executive compensation program
is cash compensation in the form of a base salary. Each year, the Compensation
Committee reviews the base salary levels for the executive group and recommends
annual salaries to the Board of Directors. The Committee subjectively considers
each executive's individual achievements during the prior year and Company
performance factors such as achievement of the prior year's financial targets,
and goals for the coming year with respect to sales and return on capital. The
Committee also considers, both directly and through the use from time-to-time of
independent compensation consultants, the compensation levels of executives of
industry competitors and other companies similar to the Company (in terms of
size, nature of business, and geographic location) with which the Company
competes for executive talent. The Committee may also take into account
anticipated future responsibilities, employee loyalty and continuity of service.
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.
Annual cash bonuses are intended to reward executives for positive
performance in any given year. Cash bonuses are based on targets established for
each executive during the first three months of each fiscal year. The annual
cash bonus compensation for executives for each fiscal year is established by
the Compensation Committee, subject to Board approval, after the results for the
year are known. During fiscal 1996, approximately 50% of the target bonus
payment was based on the Committee's subjective evaluation of individual
performance during the year, and such compensation was discretionary in the
judgment of the Committee and the Board. The remaining 50% of the target bonus
payment was based on attainment of company-wide financial objectives. These
bonus criteria were established separately for each executive, and no standard
relative weights were given to any of the above factors.
The Committee has adopted a bonus plan for 1997 that eliminates the
subjective portion of the plan relating to attaining personal goals and focuses
entirely on the achievement of a corporate operating income objective. The 1997
formula provides that participants will not receive any bonus unless the Company
achieves its previously determined goal of operating income. In addition, the
Committee has included within the bonus plan all employees who are responsible
for a departmental or divisional budget and who have an annual base salary in
excess of $30,000.
The Company has used stock options as its primary incentive for
long-term commitment, although the Board may consider other forms of long-term
incentive compensation in the future. The Board believes that the use of
stock-based incentives helps to align the interests of the Company's executives
with those of its shareholders because of the direct link created between
shareholder value and the value of each optionee's investment in the Company.
Stock-based long-term incentive compensation encourages executives to take a
shareholder-oriented view of the impact of their decisions and actions. The
Compensation 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 executive or employee
depends upon past performance of the optionee and the position held
12
<PAGE>
by the optionee. On May 22, 1996, the shareholders of the Company approved the
1996 PCA International, Inc. Omnibus Long-Term Compensation Plan (the "Plan").
The Plan replaced and superseded the Company's 1990 Non-Qualified Stock Option
Plan and 1992 Non-Qualified Stock Option Plan, except for options that were
already outstanding pursuant to such plans. New options to acquire Company stock
were granted pursuant to the Plan in connection with the American Studios, Inc.
("ASI") acquisition. The Committee determined that no other options need be
granted in fiscal year 1996 to achieve the sought for results with stock-based
long-term incentive compensation.
Regulations of the SEC require the Compensation Committee to disclose
their bases for compensation reported for Mr. Grosso, the Chief Executive
Officer, in 1996 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. During fiscal 1996, Mr. Grosso's base
salary was increased 10% over this base salary for 1995. This increase reflected
a combination of objective and subjective factors, including the Company's
financial performance in 1995, his emphasis 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. In considering Mr.
Grosso's annual bonus to be paid in 1997 in respect of performance in fiscal
year 1996, the Committee has considered both the Company's financial performance
for 1996 and Mr. Grosso's successful and continuing efforts in diversifying the
business of the Company and improving its competitive position through the ASI
acquisition. This diversification effort was the principal subjective criterion
for Mr. Grosso's annual bonus compensation. In addition, the committee granted
the President and Chief Executive Officer options in fiscal year 1997 to
purchase 50,000 shares of common stock in respect of his fiscal year 1996
performance.
The above report is presented by the nonemployee directors who compose
the Compensation Committee.
Peter B. Foreman Joseph H. Reich George Friedman
13
<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
---------------------------------------
OTHER ANNUAL RESTRICTED OPTIONS - LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION STOCK AWARDS NO. OF SHARES PAYOUTS COMPENSATION
NAME AND PRINCIPAL YEAR ($) ($) ($) ($) UNDERLYING ($) ($)(1)
- - ------------------- ----- --- ---- --- ---- - ---- --------- ------ ------- ---- --------------
POSITION
- - ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Grosso 1996 $248,325 $120,000 50,000 $2,201
President 1995 $228,881 $ 68,664 0 $7,566
Chief Executive Officer 1994 $220,644 $ 0 25,000 $4,872
Jan M. Rivenbark 1996 $194,987 $44,998 0 $2,201
Executive Vice 1995 $186,500 $55,950 35,000 $7,566
President 1994 $168,533 $28,160 $ 3,529(2) 15,000 $4,872
Chief Operating
Officer
Eric H. Jeltrup 1996 $194,987 $41,248 0 $2,201
Executive Vice 1995 $186,500 $55,950 25,000 $7,566
President 1994 $172,000 $46,000 15,000 $4,872
Chief Technical Officer
Bruce A. Fisher 1996 $153,938 $43,090 0 $2,201
Senior Vice President 1995 $148,750 $44,625 0 $7,532
Chief Financial Officer 1994 $137,767 $23,200 10,000 $4,453
R. Michael Spencer 1996 $143,675 $31,551 0 $2,118
Senior Vice President 1995 $138,638 $27,728 0 $7,021
Treasurer 1994 $133,412 $21,528 0 $4,330
</TABLE>
- - -----------------
(1)Company's portion of Profit Sharing Plan contribution.
(2)Relocation cost reimbursed by the Company. Mr. Rivenbark resigned from the
Company on March 13, 1997.
14
<PAGE>
II. OPTIONS EXERCISED AND YEAR-END VALUE TABLE
AGGREGATED OPTIONS EXERCISED IN THE LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options Held In-the-Money Options Held
Shares Acquired Value at February 2, 1997 at February 2, 1997
On Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable (#) Unexercisable ($)(1)
- - ---- -------- ---- ------------------ -----------------
<S> <C> <C> <C> <C>
John Grosso.......... 0 $0 134,500/ $1,003,687/
25,000 $179,375
Jan M. Rivenbark(2).. 8,000 $57,000 53,000/ $171,375/
54,000 $300,500
Eric H. Jeltrup...... 0 $0 68,000/ $840,500/
37,000 $238,875
Bruce A. Fisher...... 11,500 $162,271 28,000/ $127,000/
12,000 $85,500
R. Michael Spencer... 0 $0 39,000/ $325,625/
6,000 $41,250
</TABLE>
- - ---------------------
(1)Based on closing price of $16.875 per Common Share on February 2, 1997.
(2)Mr. Rivenbark resigned from the Company on March 13, 1997.
15
<PAGE>
III. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PCA INTERNATIONAL, INC.
NASDAQ U.S. AND NASDAQ NON-FINANCIAL INDICES
Jan 92 Jan 93 Jan 94 Jan 95 Jan 96 Jan 97
Nasdaq U.S. $100 $113 $130 $124 $175 $230
Nasdaq Non-Financial $100 $106 $123 $114 $161 $209
PCA International, Inc. $100 $108 $ 64 $ 58 $ 58 $111
Assumes $100 invested on January 31, 1992, in PCA Common Stock, Nasdaq U.S.
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.
16
<PAGE>
TRANSACTIONS RELATED TO AMERICAN STUDIOS, INC. TENDER OFFER AND MERGER
On January 27, 1997, the Company's wholly-owned subsidiary, ASI
Acquisition Corp. ("Acquisition Corp."), purchased approximately 95% of the
shares of American Studios, Inc. ("ASI"), pursuant to a tender offer for ASI
(the "Tender Offer"). Thereafter, effective February 28, 1997, ASI merged with
and into Acquisition Corp. (the "Merger"). In connection with the Tender Offer
and Merger, the Company entered into an employment agreement (the "Employment
Agreement") with J. Robert Wren, Jr., the former chief executive officer of ASI,
for a three-year term commencing January 28, 1997. Pursuant to his Employment
Agreement, Mr. Wren is now serving as Executive Vice President and General
Counsel. Mr. Wren's base annual compensation is $250,000 and he is eligible to
participate in bonus programs available to other executive vice presidents of
the Company. If he is terminated by the Company without cause during such three
year term or if he voluntarily terminates following one year of employment, he
will receive a severance payment the amount of which will depend upon the time
of termination but which will be not less than one year's base compensation nor
more than the aggregate base annual compensation for the remaining term of
employment. Pursuant to Mr. Wren's Employment Agreement, the Company granted Mr.
Wren an option to purchase 150,000 shares of the Common Stock of the Company at
an exercise price of $17.125 per share, the trading price of the stock on the
effective date of the grant. Such option is exercisable in three equal annual
increments, or immediately upon the termination of such agreement by Mr. Wren or
by the Company without cause, and terminates 10 years from the date of grant
without regard to a termination of employment other than a termination for
cause.
The Company also agreed, in connection with the Tender Offer and
Merger, to be responsible for the termination, on the day following the Tender
Offer, of Mr. Wren's employment agreement with ASI, and the Company made a
payment to Mr. Wren of $539,000 in connection with such termination. Employees
of ASI, including Mr. Wren, were entitled to payment upon consummation of the
Tender Offer of the value, if any, of existing employee options for the purchase
of ASI shares. Mr. Wren received $168,750 from the Company for the purchase and
cancellation of such options. Mr. Wren sold his outstanding shares of ASI stock
in the Tender Offer on the same terms as other tendering ASI shareholders.
SHAREHOLDERS' PROPOSALS
If a shareholder intends to present a proposal at the 1998 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 15, 1997, 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.
17
<PAGE>
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 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 21, 1997
18
****************************************************************************
APPENDIX
****************************************************************************
<TABLE>
<CAPTION>
ABCDEFG1234567890
<S> <C> <C> <C> <C>
- - ----
PLEASE MARK VOTES AS IN THIS EXAMPLE For With-hold For
X All All All
Nominees Nominees Except*
- - ----
-- -- ---
1. Election of Directors:
-- -- ---
*If box is checked, write names of nominees for
whom authority is withheld.
---------------------------------------------------
---------------------------------------------------
------------ ----------- ------------ ---------------------------------------------------
-------------------------------------
R. Stuart Dickson, Peter B. Foreman, George
PCA INTERNATIONAL, INC. Friedman, Donald P. Greenberg, John Grosso,
Charlotte H. Mason, Joseph H. Reich, Albert F.
Sloan, Stanley Tulchin.
-------------------------------------
For Against
--- ----
2. To approve an amendment to
--- ----
the Company's Amended and Restated 1996
Omnibus Long-Term Compensation Plan.
For Against
--- ----
RECORD DATE SHARES: 3. To approve the selection of
--- ----
KPMG Peat Marwick LLP as Independent Auditors.
I AM A SHAREHOLDER
100 MAIN ST. 4. In their discretion the Proxies are authorized to
ANYTOWN USA 10000 vote on such other business as may properly come
before the meeting or any adjournment(s). This
Proxy may be revoked at any time prior to the
voting thereof.
Please review the reverse side of this card and
be sure to sign and date this proxy.
- - -------------------------------------------------
---
Date: Mark box at right if comments or address change
- - ------------------------ ------------------------ ---
have been noted on the reverse side of this card.
Shareholder sign here Co-owner sign here
- - -------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------
</TABLE>
DETACH CARD
PCA INTERNATIONAL, INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, May 28,
1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
PCA International, Inc.
I AM A SHAREHOLDER
100 MAIN ST.
ANYTOWN USA 10000
<PAGE>
PCA INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the 1997 Annual
Meeting of Shareholders and Proxy Statement and does hereby appoint John Grosso
and Bruce A. Fisher, or either of them, with full power of substitution, as
proxy or proxies of the undersigned, to represent the undersigned and to vote
all shares of PCA International, Inc. common stock which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
of PCA International, Inc. to be held at the administrative offices of the
Company, 815 Matthews-Mint Hill Road, Matthews, North Carolina at 10:00 a.m. on
May 28, 1997 and at any adjournment(s) thereof.
This Proxy, when properly executed, duly returned and not revoked, will be
voted. It will be voted in accordance with the directions given by the
undersigned shareholder. IF NO DIRECTION IS MADE, IT WILL BE VOTED IN FAVOR OF
THE NOMINEES AND PROPOSALS LISTED HEREIN.
Please sign on the front of this card exactly as your name(s) appear(s) hereon,
and when signing as attorney, executor, administrator, trustee or guardian, give
your full title as such. If the signatory is a corporation, sign the full
corporate name by a duly authorized officer.
<TABLE>
<CAPTION>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
<S> <C>
- - --------------------------------------------------------- ---------------------------------------------------
- - --------------------------------------------------------- ---------------------------------------------------
- - --------------------------------------------------------- ---------------------------------------------------
</TABLE>
