VICTORIA CREATIONS, INC.
30 Jefferson Park Road
Warwick, Rhode Island 02888
Notice of Annual Meeting of Stockholders
Notice is hereby given that the Annual Meeting of Stockholders of VICTORIA
CREATIONS, INC. will be held in the Company's offices, 4th Floor, 385
Fifth Avenue, New York, New York, on Tuesday, November 15, 1994 at 2:00
P.M., for the following purposes:
1. To elect a Board of six Directors to serve for the ensuing year and
until their successors are elected and qualified.
2. To consider and act upon the selection of KPMG Peat Marwick LLP as
auditors for current fiscal year.
3. To transact such other business as may be properly brought before
the meeting or any adjournment thereof.
Holders of record of the Common Stock of the Company at the close of
business on September 16, 1994 will be entitled to vote at the meeting or
any adjournment thereof.
Norman R. Forson
Secretary
Dated: October 5, 1994
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VICTORIA CREATIONS, INC.
30 Jefferson Park Road
Warwick, Rhode Island 02888
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being furnished
in connection with the solicitation of proxies by the Board of Directors
of VICTORIA CREATIONS, INC., a Rhode Island corporation (the "Company"),
for the Annual Meeting of Stockholders to be held on Tuesday, November 15,
1994 at 2:00 P.M., in the Company's offices, 4th Floor, 385 Fifth Avenue,
New York, New York and any adjournments thereof.
Only owners of record of the Common Stock of the Company at the close of
business on September 16, 1994 will be entitled to vote. As of that date,
there were outstanding and entitled to vote 7,800,000 shares of Common
Stock, the only class of voting securities of the Company. Each share of
Common Stock is entitled to one vote on all matters properly brought
before the meeting.
This proxy statement and the accompanying proxy card are first being
mailed by the Company on or about October 5, 1994 to such holders of
Common Stock. The cost of solicitation of proxies will be borne by the
Company.
Whether or not you plan to attend the Annual Meeting, please sign and
return the enclosed proxy in the accompanying postage-paid, addressed
envelope. Each proxy executed and returned by a stockholder may be
revoked at any time thereafter except as to any matter or matters upon
which, prior to such revocation, a vote will have been cast pursuant to
the authority conferred by such proxy. If you attend the meeting you may,
if you wish, vote in person, thereby cancelling any proxy previously
given. Alternatively, you may revoke your proxy by notifying the
Secretary of the Company in writing prior to the Annual Meeting or by
signing a later-dated proxy.
The mailing address of the Company is 30 Jefferson Park Road, Warwick, RI
02888.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of Directors, in voting by
proxy, Stockholders may vote in favor of all nominees or withhold their
votes as to all nominees or withhold their votes as to specific nominees.
With respect to the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors, Stockholders may vote in favor of the
proposal, against the proposal or may abstain from voting. Stockholders
should specify their choices on the enclosed form of proxy. If no
specific instructions are given with respect to the matters to be acted
upon, the shares represented by a signed proxy will be voted FOR the
election of all nominees and FOR the proposal to ratify the appointment of
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KPMG Peat Marwick LLP as independent auditors. The affirmative vote of
the majority of shares present, or represented, and entitled to vote at
the meeting is required to elect a Board of Directors and to approve the
selection by the Board of Directors of KPMG Peat Marwick LLP to serve as
independent auditors for the current year. Thus, abstentions and broker
non-votes will not be included in vote totals and will have no effect on
the outcome of the vote.
The Annual Report to Stockholders of the Company for the fiscal year ended
June 30, 1994, including financial statements as of June 30, 1994 and for
the year then ended, is being mailed herewith to each stockholder of
record.
--------------------
The Board of Directors Recommends a Vote "FOR" Approval of Each of the
Proposals to be Considered at the Annual Meeting.
--------------------
United Merchants and Manufacturers, Inc. ("UM&M"), a publicly held company
whose stock is traded on the New York Stock Exchange, owns 6,222,800
shares, or 79.8%, of the Company's outstanding Common Stock and has
informed the Company that its shares will be voted in favor of the
proposals to be considered at the Annual Meeting. Accordingly, the
adoption of each of the proposals is assured.
Principal Holder of Voting Securities
As stated above, United Merchants and Manufacturers, Inc., 1650 Palisade
Avenue, Teaneck, New Jersey 07666 is the beneficial owner of 6,222,800
shares of the Common Stock of the Company, which represents 79.8% of the
outstanding shares of the Company. UM&M has sole voting and investment
power as to all of such shares. UM&M is a "Control Person" of the Company
within the meaning of that term under the rules and regulations of the
Securities Exchange Act of 1934. The Company knows of no other person who
beneficially owned more than five percent of the Common Stock of the
Company as of August 20, 1994.
Relationship Between the Company and UM&M
Pursuant to a service agreement dated as of September 1, 1986, between the
Company and UM&M, UM&M performs certain limited administrative functions
for the Company for so long as UM&M shall own more than 50% of the
Company's outstanding Common Stock.
Services provided to the Company include (1) accounting, administrative,
legal and personnel functions, including credit and collection and
maintenance of detailed records of accounts payable and certain accounts
receivable; (2) functioning as the Company's disbursing agent for trade
accounts payable; (3) management consulting services regarding
manufacturing and data processing; (4) record keeping and advisory
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services regarding the Company's insurance and benefit programs and (5)
the purchasing of equipment. UM&M also assists the Company in preparing
state tax returns and reports required to be filed with various
governmental agencies and authorities, including documents relating to the
Company's reporting requirements under the Federal securities laws. The
Company also utilizes UM&M's data processing equipment, computer software
programs and other related support services.
Fees for services performed by UM&M under the aforesaid agreement are
computed at an annual rate equal to 1-1/2% of the first $50 million of the
Company's annual net sales, and at 1/2% of annual net sales in excess of
that amount, reduced by amounts expended by the Company directly for these
services. The Company maintains a staff of accountants and bookkeepers
and also has its own computer system which it uses for certain functions
such as inventory and production control. During the year ended June 30,
1994, the amounts expended by the Company exceeded the charge for services
by UM&M, therefore, no fee was charged to the Company.
Prior to 1991, UM&M acted as a banker for the Company. The Company would
borrow from UM&M funds necessary to meet operational and capital needs,
and lend funds to UM&M when the Company had excess funds available.
During the 1991 fiscal year, the Company established other banking
facilities and no longer relies on UM&M to be its banker. The Company
currently owes UM&M for past borrowings, for interest expense on amounts
due, for rent and for amounts paid by UM&M on behalf of the Company which
were not reimbursed by the Company. The Company is charged interest on
its net outstanding balance with UM&M at the annual rate paid by UM&M on
UM&M's borrowings; however, UM&M has waived interest charges on the amount
due to it for the three months ended June 30, 1993 and for the 1994 fiscal
year. There is no repayment schedule for this debt and UM&M has indicated
that it has no intention of making demands for payment during the 1995
fiscal year.
The Company and UM&M believe that the service and financial arrangements
described above are as favorable to the Company as could be obtained from
third parties.
Through December 30, 1992, the Company's items of income, loss, deductions
and credits were included in the consolidated tax returns of UM&M with
respect to Federal and certain state income taxes. The provision for
income taxes was computed based on the earnings (loss) as reflected in the
financial statements, using applicable Federal or state income tax law and
rates. The Company was charged or credited by UM&M for an amount equal to
the income taxes or benefits that would have been applicable to the
Company if it were filing a separate return. As of December 30, 1992, as
a result of the sale by the Company of 300,000 shares of authorized, but
previously unissued, Common Stock of the Company, UM&M's ownership of the
Company dropped below the percentage required for consolidation for income
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taxes and, therefore, the results of operations will not be included in
consolidated Federal and certain state income tax returns of UM&M.
The Company leases its Warren, Rhode Island and Warwick, Rhode Island
facilities from UM&M under leases expiring on June 30, 1996. Rental
payments to UM&M pursuant to these leases for the year ended June 30, 1994
totaled $317,000 (an average of $4.22 per square foot). The rent is
subject to annual cost-of-living adjustments. The leases also require the
Company to pay taxes, assessments and other governmental charges relating
to the leased properties.
During the year ended June 30, 1994, the Company's sales to the UM&M's
retail outlet stores amounted to approximately $702,000.
The Company and UM&M believe that the terms of such leases and prices for
such sales are at least as favorable to the Company as those that could be
obtained from third parties.
UM&M holds an option to purchase 800,000 shares of Common Stock of the
Company at $10.80 a share exercisable in whole or in part until August 31,
1996.
For so long as UM&M owns more than 50% of the Company's outstanding Common
Stock, UM&M will be able, acting alone, to approve any action requiring
stockholder approval. Four of the six nominees for director of the
Company are, directly or indirectly, directors or employees of UM&M.
The Company and UM&M have not adopted any formal procedures designed to
ensure that conflicts of interest will not occur or, if they do occur, to
determine how they will be resolved. However, future arrangements and
transactions with UM&M will be on terms which the Company and UM&M
reasonably believe to be fair and reasonable to the Company.
The following table shows the shares of UM&M common stock beneficially
owned by each nominee for director of the Company who owns such stock, and
by all nominees for director and all executive officers of the Company as
a group, as of August 20, 1994.
Shares of UM&M Percent of UM&M
Common Stock Common Stock
Beneficially Beneficially
Person/Group Owned (1) Owned (1)
------------ -------------- ---------------
Uzi Ruskin..................... 1,165,519(2) 6.53%
Directors and officers as
a group ..................... 1,165,519 6.53%
- - ------------
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting of shares of UM&M's common stock
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and/or the sole or shared investment power with respect thereto (i.e.,
the power to dispose of or direct the disposition of such shares).
Except as otherwise indicated in these footnotes, such persons hold
sole voting and investment power with respect to the shares shown in
this column.
(2) Included in the number of shares listed as beneficially owned by Mr.
Ruskin are 165,519 shares owned directly and of record by Mr. Ruskin,
and 1,000,000 shares owned by Monzoral, Inc., a corporation
wholly-owned by Mr. Ruskin. Mr. Ruskin has the sole power to vote
and invest these shares. Such number of shares does not include, and
Mr. Ruskin disclaims any beneficial ownership of approximately
5,746,247 shares (32.2% of the shares of Common Stock of UM&M
outstanding) beneficially owned by Menachem Atzmon (consisting of
405,500 shares (2.27%) held by Saturn Corporation, Zurich,
Switzerland; 1,263,700 shares (7.08%) held by Kingsbridge Holdings
Ltd., Zurich, Switzerland and 4,077,047 shares (22.85%) held by
Buckingham Investment Ltd., Zurich, Switzerland) which, as a member
of a "group" (as such term is used in Rule 13(d) under the Exchange
Act) which includes such companies, Mr. Ruskin may, for purposes of
Sections 13(d) and 13(g) of the Exchange Act, be deemed to
beneficially own.
I. ELECTION OF DIRECTORS
Six directors are to be elected at the meeting. It is the intention of
the persons named in the accompanying proxy to vote each proxy executed
and returned by a stockholder for the election of each of the persons
listed below as a director of the Company unless authority to do so is
withheld on such proxy.
Should any candidate for director become unavailable for any reason, such
proxies will be voted for the alternate candidate, if any, chosen by the
Board of Directors. See "Relationship Between the Company and UM&M". The
nominees for director have consented to serve if elected. The Company has
no reason to believe that any of the nominees will be unable to serve.
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The following information concerning the nominees has been furnished by
the nominees. Unless otherwise indicated, such persons have held the
positions described below for more than five years.
Shares of Common
Stock of the
Company
Beneficially
Owned as of
August 20, 1994
(3)(4)(5)
Principal Occupation Director ---------------
Name Age or Employment Since Number Percent
- - ---- --- -------------------- -------- ------ -------
Richard M. Andreoli.. 38 Executive Vice 1992 75,000 0.96%
President and Chief
Operating Officer of
the Company since July
1993; Executive Vice
President - Operations
of the Company since
May 1992; Senior Vice
President - Operations
of the Company since
September 1991;
Executive of the
Company since 1982
Paul B. Markovits.... 51 Management consultant; 1989 21,000 0.27%
Chairman of the
Company to October 1993;
Chairman and Chief
Executive of the Company
from 1989 to July 1993
Uzi Ruskin........... 49 Chairman of the 1985 0 0%
Company since October
1993; President,
Chief Executive and
Chief Operating Officer
of UM&M (1) (2)
Patricia Stensrud.... 46 President and Chief 1992 75,000 0.96%
Executive Officer of
the Company since July
1993; Executive Vice
President - Sales and
Marketing of the
Company since June 1992;
Executive of the Company
since 1990; Vice President
of Marketing of Hambrecht
Terrell International
from 1989 to 1990;
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Robert J. Swartz..... 68 Financial Consultant 1991 0 0%
(1)(2)
Thomas J. Tisch...... 39 Managing Partner of 1986 0 0%
FLF Associates
- - ----------
(1) Mr. Ruskin also served as Chairman of the Company from April 1987 to
November 1989. Mr. Swartz was a Senior Partner in the firm of KPMG
Peat Marwick, independent certified public accountants, for more than
five years prior to March 31, 1991, at which time he retired from the
firm.
(2) Mr. Ruskin is a director and an executive officer of UM&M. Mr. Swartz
is a director of UM&M. See "Relationship Between the Company and
UM&M". Mr. Swartz is also a director of Standard Motor Parts, Inc.
and Bed Bath & Beyond, Inc.
(3) As used in this table and elsewhere in this proxy statement,
"beneficial ownership" means the sole or shared power to vote or
direct the voting of shares of Common Stock and/or the sole or shared
investment power with respect thereto (i.e. the power to dispose of
or direct the disposition of such shares).
(4) Except as otherwise indicated in these footnotes, such persons hold
sole voting and investment power with respect to the shares shown in
this column.
(5) As of August 20, 1994, the Company's officers and directors as a group
(8 persons) beneficially owned 186,000 shares (2.37% of the number
outstanding) of the Common Stock of the Company.
(6) The shares and percentages of Common Stock of the Company beneficially
owned shown in the table and in footnote 5 above (1) include shares
subject to options granted by the Company which are exercisable
within 60 days of August 20, 1994 (see "Stock Options" below) held by
the officers and directors and (2) exclude the 6,222,800 shares owned
by and the option to purchase Common Stock of the Company held by
UM&M (see "Principal Holder of Voting Securities").
The Board of Directors has designated from among its members a
Compensation Committee, which consists of Messrs. Ruskin and Swartz. The
Committee has the responsibility to review and approve, as applicable,
salaries and bonuses of all employee directors and officers and certain
other employees and, as deemed appropriate, to cause the Company to enter
into employment agreements with such employees. The Committee also has
the responsibility of administering the Company's 1986 Stock Option Plan,
including determining the eligible employees, number of shares to be
granted, option price per share and the exercise period of options granted
thereunder. During the year ended June 30, 1994, the committee did not
meet.
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The Board of Directors has also designated an Audit Committee, which
consists of Messrs. Ruskin and Swartz. The Committee has the
responsibility to review with the independent auditors the planning and
scope of the audit of the financial statements, the results of those
audits and the adequacy of internal accounting controls and to monitor
financial policies of the Company. The committee met twice during the
year ended June 30, 1994.
The Board of Directors has not designated a standing nominating committee,
or any other committee performing a similar function.
During the year ended June 30, 1994, there were seven meetings of the
Board of Directors. All of the directors attended at least 75% of the
aggregate of all meetings of the Board and Committees of the Board on
which they served except Mr. Tisch.
All directors hold office until the next Annual Meeting of Stockholders
and until their successors are elected and qualified. Executive officers
serve at the discretion of the Board of Directors.
Executive Compensation
Summary Compensation Table
The following table sets forth all compensation earned by the Company's
chief executive officer and each of the Company's other executive officers
for services rendered in all capacities to the Company for the years
indicated.
Year
Name and Ended
Principal Position June 30 Salary
- - ------------------- ------- ------
Patricia Stensrud (1) 1994 $202,000
President and Chief 1993 152,000
Executive Officer 1992 129,615
Richard M. Andreoli (2) 1994 $181,200
Executive Vice President 1993 130,000
and Chief Operating 1992 105,962
Officer
Edgar L. Brinkworth (3) 1994 $105,000
Vice President and 1993 100,000
Controller 1992 100,000
- - ----------
(1) Ms. Stensrud and the Company entered into an employment agreement
effective July 1, 1993 which expires June 30, 1995 pursuant to which
Ms. Stensrud serves as President and Chief Executive Officer of the
Company at an annual salary of $202,000 plus incentive compensation
based on the Company's operating results.
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(2) Mr. Andreoli and the Company entered into an employment agreement
effective July 1, 1993 which expires June 30, 1995 pursuant to which
Mr. Andreoli serves as Executive Vice President and Chief Operating
Officer of the Company at an annual salary of $187,200 plus incentive
compensation based on the Company's operating results.
(3) Mr. Brinkworth and the Company entered into an employment agreement
effective January 1990 which, as amended, expires December 31, 1994
pursuant to which Mr. Brinkworth serves as Vice President and
Controller of the Company at an annual salary of $111,000 plus
incentive compensation based on the Company's operating results.
(4) No long-term compensation was earned or awarded during the years shown
in the table.
Stock Options/SAR's
The Company has never granted stock appreciation rights. During the year
ended June 30, 1994, no stock options were granted nor were any stock
options exercised. The Company has never adjusted or amended the exercise
price of any stock option.
The following table sets forth the number and value of unexercised stock
options held by executive officers who hold such options at June 30, 1994.
Unexercised Options at June 30, 1994
------------------------------------------------------
Value of
Number in-the-money Options
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Patricia Stensrud 25,000 25,000 0 0
Richard Andreoli 25,000 25,000 0 0
The Company does not have a Long-Term Incentive Plan other than stock
options as described above.
The Company does not have a defined benefit or actuarial plan.
Compensation of Directors
Each director of the Company who is not an employee of the Company or UM&M
receives a fee for his services of $5,000 per year plus $500 for each
Board meeting attended. Directors who are employees of the Company or
UM&M receive no additional compensation for serving as directors.
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Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board of Directors of the
Company are Mr. Robert Swartz, Chairman, and Mr. Uzi Ruskin. Mr. Swartz
is a non-employee director and serves on the audit and compensation
committees of UM&M. Mr. Ruskin is a director and an executive officer and
serves on the compensation committee of UM&M. Mr. Ruskin is Chairman of
the Company and served as Chairman of the Company from April 1987 to
November 1989. The Committee is free from interlocking or other
relationships that might be considered a conflict of interest.
Report of Board Compensation Committee on Executive Compensation
The Compensation Committee's policy is to design compensation packages
that will attract and retain key executives for the Company and that will
motivate those employees to improve corporate performance and returns to
stockholders. In designing compensation packages, the Committee takes
into consideration, among other factors, compensation levels and practices
of competitive companies in similar business sectors and of general
industry as applicable. The compensation packages also recognize
individual contributions and achievements as well as business results.
The base salary and stock options for Ms. Stensrud, Chief Executive
Officer during the year ended June 30, 1994, was established by contract
in July 1993, at the time Ms. Stensrud became President and Chief
Executive Officer of the Company, based on compensation levels and
practices of competitive companies in similar businesses.
Salaries for executive officers are determined periodically by evaluating
the performance of the individuals reviewed and their contribution to the
performance of the Company, their responsibilities and compensation
practices at other companies. Financial results as well as appropriate
non-financial measures are considered.
Bonus amounts for executive officers of the Company are dependent on the
results of operations of the Company, with individual formulas established
at the beginning of the fiscal year.
by: Compensation Committee of the Board of Directors
Robert Swartz, Chairman Uzi Ruskin
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Performance Graph
The following provides a comparison with the stated indices of the yearly
percentage change in the Company's cumulative total stockholder return on
its common stock for a five year period ended June 30, 1994.
Stockholder value to base
year 1989 as of June 30 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------
Victoria Creations, Inc.: 100% 80% 20% 4% 1% 3%
NASDAQ (U.S.) 100% 106% 109% 129% 162% 162%
Peer Group 100% 111% 122% 123% 136% 178%
II. SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as independent
auditors for the Company for the current fiscal year. The stockholders
are requested to signify their approval or disapproval of the selection.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
As auditors of the Company, KPMG Peat Marwick LLP provide professional
services that include the examination of the Company's annual consolidated
financial statements and consultation with respect to accounting and
financial reporting matters.
III. OTHER MATTERS
Management does not intend to bring any business before the Annual Meeting
other than as set forth above nor does it know of any business that will
be presented by others for action by stockholders at the meeting.
However, if any other business shall properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to
vote said proxy in accordance with their judgement on such matters.
Stockholder Proposals
Any stockholder proposal intended to be presented at the 1995 Annual
Meeting must be received by the Company, addressed to the attention of the
Secretary of the Company, at its offices at 30 Jefferson Park Road,
Warwick, RI 02888 on or before June 1, 1995 to be eligible for inclusion
in the Company's proxy statement and form of proxy relating to that
meeting.
The above notice and proxy statement are being sent by order of the Board
of Directors.
Norman R. Forson
Secretary
Dated: October 5, 1994
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