AMPLICON, INC.
5 Hutton Centre Drive, Suite 500
Santa Ana, CA 92707
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 31, 1997
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of
Directors of Amplicon, Inc. (the "Company" or "Amplicon") for use
at the Company's Annual Meeting of Shareholders to be held at the
Company's corporate offices at Five Hutton Centre Drive, Suite
500, Santa Ana, California on Friday, October 31, 1997, 10:00
a.m., local time, and at any and all adjournments thereof. All
shares represented by each properly executed, unrevoked proxy
received in time for the Annual Meeting will be voted in the
manner specified therein. Where no specification is made on a
properly executed and returned proxy, and unless otherwise
indicated in this proxy statement, the shares will be voted FOR
the election of all nominees for Directors named in the proxy.
Any shareholder has the power to revoke his or her proxy at any
time before the Annual Meeting. A proxy may be revoked by
delivering a written notice of revocation to the Secretary of the
Company, by a subsequent proxy executed by the person executing
the proxy and presented to the Annual Meeting or by attendance at
the Annual Meeting and voting in person by the person executing
the proxy.
This Proxy Statement is being mailed to the Company's
shareholders on or about October 10, 1997. The solicitation of
proxies will be made by mail and expenses will be paid by the
Company, and will include forwarding solicitation materials
regarding the meeting to beneficial owners of the Company's
Common Stock. Further solicitation of proxies may be made by
telephone or oral communication with some shareholders. All such
further solicitation will be made by the Company's regular
employees who will not receive additional compensation for that
solicitation. The mailing address of the Company's principal
executive office is Five Hutton Centre Drive, Suite 500, Santa
Ana, California 92707.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the 5,894,859 shares of the
Company's Common Stock outstanding at the close of business on
September 26, 1997, the record date with respect to this
solicitation, will be entitled to notice of and to vote at the
Annual Meeting and any adjournments thereof. In order to
constitute a quorum for the conduct of business at the Annual
Meeting, a majority of the outstanding shares of Common Stock of
the Company entitled to vote at the meeting must be represented
in person or by proxy at the Meeting. Shares represented by
proxies that reflect abstentions or "broker non-votes" (shares
held by a broker or nominee which are represented at the Meeting,
but with respect to which the broker or nominee is not empowered
to vote on a particular proposal) will be counted as shares that
are present and entitled to vote for purposes of determining the
presence of a quorum. Abstentions are counted in tabulations of
the votes cast on proposals presented to shareholders, and
therefore will have the same effect as a negative vote, whereas
broker non-votes are not counted for purposes of determining
whether a proposal has been approved.
No shareholder will be entitled to cumulate votes (i.e.,
cast for any candidate for election to the Board of Directors, a
number of votes greater than the number of the shareholders'
shares) unless the names of the candidate or candidates for whom
votes will be cumulated have been placed in nomination prior to
the voting and the shareholder has given notice at the meeting,
prior to voting, of the shareholder's intention to cumulate
votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates who have
been nominated. If voting for directors is conducted
<PAGE>
by cumulative voting, each share will be entitled to a number of
votes equal to the number of directors to be elected and the
votes may be cast for a single candidate or may be distributed
among two or more candidates in such proportions as the
shareholder may determine. In the event of cumulative voting,
the proxy holders intend to distribute the votes represented by
the proxies solicited hereby in such proportions as they see fit.
If the voting is not conducted by cumulative voting, each share
will be entitled to one vote and the holders of the majority of
the shares voting at the meeting will be able to elect all of the
directors if they choose to do so. The candidates receiving the
highest number of votes, up to the number of directors to be
elected, will be elected. On all other matters, each share is
entitled to one vote.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of September 26, 1997
certain information as to the number of shares of the Company's
Common Stock beneficially owned by each person who is known by
the Company to beneficially own more than five percent of the
outstanding shares of the Company's Common Stock and by all
directors and officers as a group.
<TABLE>
<CAPTION>
Amount of the Company's Percent of the Company's
Name and Address of Common Stock Common Stock
Beneficial Owners Beneficially Owned Beneficially Owned
- ----------------- ------------------ ------------------
<S> <C> <C>
Patrick E. Paddon 3,291,664 <F1,F2> 54.5%
c/o Amplicon, Inc.
5 Hutton Centre Drive
Santa Ana, CA 92707
Glen T. Tsuma 678,386 11.5%
c/o Amplicon, Inc.
5 Hutton Centre Drive
Santa Ana, CA 92707
Donald P. Moriarty 566,350 9.6%
c/o McGrath, Doyle & Phair
150 Broadway
New York, N.Y. 10038
Wellington Management Company 446,600 <F3> 7.6%
75 State Street
Boston, MA 02109
All Directors and Officers 4,044,183 <F2,F4> 66.2%
as a Group (6 persons)
<FN>
<F1> Includes options to purchase 150,000 shares which are
exercisable within 60 days of September 26, 1997.
<F2> Does not include 11,595 shares of Common Stock held by
Mr. Paddon's children, as to which Mr. Paddon disclaims
any beneficial interest.
<F3> Wellington Management Company, in its capacity as
investment adviser, may be deemed to have beneficial
ownership of such shares that are owned by numerous
investment advisory clients, none of which is known to
have such interest with respect to more than five
percent.
<F4> Includes options to purchase 215,833 shares which are
exercisable within 60 days of September 26, 1997.
</FN>
</TABLE>
ITEM 1
ELECTION OF DIRECTORS
Directors are elected at each Annual Meeting of Shareholders
and hold office until their respective successors are duly
elected and qualified. It is the intention of the persons named
in the enclosed form of proxy, unless the proxy specifies
otherwise, to vote the shares represented by the proxy FOR the
election of the nominees set forth below. Although it is
anticipated that each nominee will be available to serve as a
director, should any nominee become unavailable to serve, the
proxies will be voted for such other person as may be designated
by the Company's Board of Directors.
<PAGE>
The nominees for the Board of Directors are Patrick E.
Paddon, Glen T. Tsuma, Michael H. Lowry, and Harris Ravine.
Certain information as of September 26, 1997 with respect to the
nominees for election as directors, including the number of
shares of the Company's Common Stock beneficially owned by each
of them as of September 26, 1997, is set forth under "Directors
and Executive Officers" below.
The Board of Directors met four times during the year ended
June 30, 1997. The Board has established an Audit Committee. The
Audit Committee consists of Messrs. Tsuma, Lowry and Ravine. The
Audit Committee has responsibility for consulting with the
Company's officers regarding the scope of the auditor's
examination and review of the annual financial statements and
accounting policies of the Company. The Audit Committee met two
times during the year ended June 30, 1997. Effective January
1997, the entire Board of Directors reviews and approves the
granting of stock options. Three stock option meetings were held
during the year ended June 30, 1997. All board and committee
meetings were attended by each director. The entire Board of
Directors of the Company serves as the Compensation Committee.
Directors who are employees of the Company do not receive
any fees for their services as directors. Directors of the
Company who are not employees are paid a quarterly retainer of
$2,500 plus expenses.
DIRECTORS AND EXECUTIVE OFFICERS
Current members of the Board of Directors and executive
officers, together with certain information regarding them, are
as follows:
<TABLE>
<CAPTION>
Shares of Percent of
Common Stock Common Stock
Beneficially Beneficially
Name Age Position Owned Owned
- ---- --- -------- ------------ ------------
<S> <C> <C> <C> <C>
Patrick E. Paddon 46 Chief Executive 3,291,664 <F1> 54.5%
Officer, President,
Director
Glen T. Tsuma 44 Chief Operating 678,386 11.5%
Officer, Secretary,
Director
Michael H. Lowry 52 Director 12,000 <F2> *
Harris Ravine 55 Director 6,000 <F3> *
S. Leslie Jewett 42 Chief Financial 48,633 <F4> *
Officer
Neil G. Kenduck 42 General Counsel 7,500 <F5> *
* Less than one percent
<FN>
<F1>Includes options to purchase 150,000 shares which are
exercisable within 60 days of September 26, 1997 but
excludes 11,595 shares held by Mr. Paddon's children, as
to which Mr. Paddon disclaims any beneficial interest.
<F2>Includes options to purchase 10,000 shares which are
exercisable within 60 days of September 26, 1997.
<F3>Includes options to purchase 6,000 shares which are
exercisable within 60 days of September 26, 1997.
<F4>Includes options to purchase 43,333 shares which are
exercisable within 60 days of September 26, 1997.
<F5>Includes options to purchase 6,500 shares which are
exercisable within 60 days of September 26, 1997.
</FN>
</TABLE>
Patrick E. Paddon founded Amplicon in 1977 and has served
as the President and a Director of the Company since its
inception. Prior to 1977, Mr. Paddon was the Manager of
Corporate Planning and Budgets at Business Systems Technologies,
a manufacturer of IBM plug-compatible peripheral equipment. Mr.
Paddon is the spouse of Ms. Jewett.
Glen T. Tsuma joined the Company in May 1981 and has been
Chief Operating Officer since August 1989 and Secretary since
October 1991. Prior to joining Amplicon, he was an audit manager
with Arthur Young & Company.
<PAGE>
Michael H. Lowry was elected to the Board of Directors in
August 1992. Mr. Lowry is a Managing Director of Nomura
Securities International, Inc., an investment banking firm. Prior
to joining Nomura Securities in February 1994, Mr. Lowry had been
employed by the investment banking firm of Bear Stearns & Co.,
Inc. from 1991 to 1993 and by the investment banking firm of
Kidder, Peabody & Co., Incorporated from 1970 to 1990.
Harris Ravine was elected to the Board of Directors in
February 1994. Mr. Ravine is the Chairman and Chief Executive
Officer of Andataco/IPL Systems, Inc. since May 1997. Mr. Ravine
had been Managing Director of BI Capital, Limited and Technology
Investment Officer with The Broe Companies, a real estate
investment company from June 1994 to April 1997. Prior thereto,
Mr. Ravine was employed by Storage Technology Corporation, a
computer manufacturer, in various capacities, including Executive
Vice President, Chief Administrative Officer and Group Officer
for Midrange Markets from June 1992 to January 1994, Executive
Vice President -- Europe, Africa and Middle-East from March 1991
to June 1992, and Executive Vice President and Chief Financial
Officer from June 1989 to March 1991.
S. Leslie Jewett joined the Company in September 1991 as
Vice President - Finance. In April 1994, Ms. Jewett was named
Chief Financial Officer of the Company. From 1981 to 1990, she
held various management positions at Kidder, Peabody & Co.,
Incorporated, including Senior Vice President, Corporate Finance.
Ms. Jewett has a BA from Swarthmore College and an MBA from
Stanford University. From 1991 through May 1995, Ms. Jewett was a
director of Geonex Corporation which entered into Chapter 11
bankruptcy in 1995. Ms. Jewett is the spouse of Mr. Paddon.
Neil G. Kenduck joined the Company in September 1991 as
General Counsel. From 1986 to 1991 he was an attorney with the
law firm of Rutter, O'Sullivan, Greene & Hobbs. Prior to that he
was an attorney with O'Melveny & Myers from 1982 to 1986. Mr.
Kenduck graduated with honors from Hofstra Law School and was
editor of the law review.
Executive Compensation
The following table discloses compensation paid by the
Company to the Chief Executive Officer and the remaining most
highly-paid executive officers for the three fiscal years ended
June 30, 1997:
<TABLE>
<CAPTION>
Long-term
Name and Principal Annual Compensation Compensation Other
Position Year Salary Bonus Options Compensation<F1>
- ------------------ ---- -------- ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Patrick E. Paddon 1997 $375,000 -- -- $2,000
Chief Executive Officer 1996 375,000 -- -- 1,000
1995 375,000 -- -- 1,000
Glen T. Tsuma 1997 $180,000 -- -- $2,000
Chief Operating Officer 1996 180,000 -- -- 1,000
1995 180,000 -- -- 1,000
S. Leslie Jewett 1997 $180,000 -- -- $2,000
Chief Financial Officer 1996 150,000 -- -- 1,000
1995 150,000 -- -- 1,000
Neil G. Kenduck 1997 $160,000 $20,000 -- $2,000
General Counsel 1996 125,000 7,500 -- 1,000
1995 110,000 10,000 -- 1,000
_____________
<FN>
<F1> Company contribution under the Company's 401(k) Plan,
subject to certain vesting restrictions.
</FN>
</TABLE>
<PAGE>
Options Grants in Last Fiscal Year
During fiscal 1997, Neil Kenduck was the only named
executive officer to receive a stock option grant.
<TABLE>
<CAPTION>
% of Total
Options Granted Grant Date
Options to Employees in Exercise Expiration Present
Name Granted Fiscal Year Price Date Value <F1>
- --------------- ------- ----------- ----- ---- ---------
<S> <C> <C> <C> <C> <C>
Neil G. Kenduck 2,500 2.7% $22.75 4/25/07 $19,634
- --------------------------
<FN>
<F1>Based on the Black-Scholes Options Pricing model. The
Company's use of this model should not be construed as
an endorsement of its accuracy in valuing options or of the
assumptions used in the model. The actual value, if any, an
executive may realize from any option depends upon the
actual performance of Amplicon common stock during the
applicable period.
</FN>
</TABLE>
Aggregate Option Exercises and Fiscal Year End Option Value
There were no stock options exercised by any of the
executive officers during fiscal 1997. The following table sets
forth information with respect to the unexercised options held by
the executive officers as of the end of the fiscal year:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the-Money
Options at June 30, 1997 Options at June 30, 1997 <F1>
------------------------ ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Patrick E. Paddon 150,000 -- $2,550,000 --
Glen T. Tsuma -- -- -- --
S. Leslie Jewett 43,333 6,667 337,496 $25,000
Neil G. Kenduck 7,000 5,500 55,125 23,625
__________________________
<FN>
<F1>Represents the difference between the most recent closing
price of the Common Stock as of June 30, 1997 as reported
by NASDAQ and the exercise price of the options.
</FN>
</TABLE>
Board of Directors Report on Executive Compensation
Amplicon has not established a standing compensation
committee but instead all executive compensation issues are
subject to the review of the entire Board of Directors. The
compensation of the Company's Chief Executive Officer has been
reviewed and approved by the Company's Board of Directors. The
compensation of other key officers has generally been established
by the Chief Executive Officer, subject to the review of the
Board of Directors. Mr. Paddon and Mr. Tsuma, as executive
officers and directors of the Company, therefore participate in
all board executive compensation decisions. Mr. Paddon and Mr.
Tsuma also review all stock option grants, however, neither of
them has received any stock option grants in the last five years.
The Company's compensation practices have generally been
designed to bind the interests of the Company's key executives to
the long-term performance of the Company and its shareholders.
Compensation for all executives is comprised primarily of 1) base
salary and 2) equity participation through common stock
ownership or common stock options. Annual bonuses have been paid
to certain executives from time to time. Base salaries are
established according to the particular position of the
individual executive, the current economic and business
circumstances of the Company, and competitive conditions in the
employment marketplace. Bonus amounts are determined based upon
an analysis of individual and Company performance, but are not
tied to any direct quantitative or qualitative performance
factors. To assess the 1997 compensation level of Amplicon's key
executives relative to their peers, the Company examined the
compensation plans of other public leasing companies, comparable
financial service firms and similar emerging growth companies. In
fiscal 1997, the base
<PAGE>
salaries for Ms. Jewett and Mr. Kenduck were increased from the
prior year. The increases reflected efforts to maintain such
compensation at competitive levels. The Company believes that the
cash compensation paid to the Company's executive officers is
generally less than that paid to others in comparable positions.
However, the equity participation of Amplicon's executive
officers, both through direct ownership and common stock options,
is generally greater than other comparable companies. The
executive officers of Amplicon beneficially own approximately
66% of the Company's common stock outstanding. Through having
a substantial portion of each executive's long-term compensation
derived from participation in the Company's common stock, the
Board of Directors believe that the Company has aligned the
financial interests of the executive officers with those of the
Company's other shareholders.
CEO Compensation
Patrick E. Paddon, the Chief Executive Officer of the
Company, cash compensation was set at $375,000 for fiscal 1997.
Mr. Paddon's compensation in fiscal 1997 was not specifically
tied to any measures of return on equity or earnings targets. Mr.
Paddon's compensation was set at $375,000 by the Board of
Directors several years ago based upon a review of compensation
levels at comparable public companies. Following the most recent
review, the Board of Directors believes Mr. Paddon's compensation
is still reasonable and determined at that time that his
compensation in fiscal 1998 would remain at $375,000.
Common Stock Performance Graph
The graph below shows a comparison of five-year cumulative
return among Amplicon, the NASDAQ Composite Index and a peer
group of public leasing companies comprised of Comdisco, Inc.,
DVI, Inc. and Electro Rent Corporation, each of which are engaged
in the equipment leasing industry as a substantial part of their
business, and whose shares have traded publicly for at least five
years.
PERFORMANCE GRAPH OMITTED. REPRESENTED BY THE FOLLOWING TABLE:
<TABLE>
<CAPTION>
6/30/92 9/30/92 12/31/92 3/31/93 6/30/93 9/30/93 12/31/93
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
AMPI 100 128 136 169 170 166 172
NASD COMP. 100 104 121 123 126 136 139
PEER AVG. 100 80 76 72 70 87 102
(con't)
3/31/94 6/30/94 9/30/94 12/31/94 3/31/95 6/30/95 9/30/95
------- ------- ------- -------- ------- ------- -------
AMPI 170 174 166 157 138 134 138
NASD COMP. 133 127 137 136 148 169 190
PEER AVE. 97 102 111 119 143 150 169
(con't)
12/31/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
-------- ------- ------- ------- -------- ------- -------
AMPI 136 135 143 160 174 189 204
NASD COMP. 192 201 218 225 237 224 265
PEER AVE. 195 197 223 215 224 214 244
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not yet selected its independent public
accountants for the year ended June 30, 1998 because its Audit
Committee has not yet made a recommendation. Representatives of
Arthur Andersen LLP, the Company's independent public accountants
for the year ended June 30, 1997, are expected to be present at
the Annual Meeting and will be available to respond to
appropriate questions and to make such statements as they may
desire.
<PAGE>
ANNUAL REPORT AND OTHER SEC FILINGS
The Company's Annual Report, containing audited financial
statements for the fiscal years ended June 30, 1997 and 1996,
accompanies this Proxy Statement. Upon written request, the
Company will send to any shareholder, without charge, a copy of
the Annual Report on Form 10-K for the fiscal year ended June 30,
1997, including the financial statements and schedules thereto,
which the Company has filed with the Securities and Exchange
Commission. The written request must be directed to the
attention of the Secretary of the Company, at the address of the
Company set forth on the first page of this Proxy Statement.
Based solely on a review of the copies of Forms 3, 4 and 5
and amendments thereto furnished to the Company, the Company
believes that during fiscal 1997 no officer, director or more-
than 10% beneficial owner failed to file on a timely basis all
reports required by Section 16(a) of the Securities and Exchange
Act of 1934.
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at
the Company's 1998 Annual Meeting of Shareholders must be
directed to the attention of and received by the Secretary of the
Company, at the address of the Company set forth on the first
page of this Proxy Statement, before June 30, 1998 if they are to
be considered for inclusion in the Proxy Statement and form of
Proxy used in connection with the meeting, in accordance with the
rules and regulations of the Securities and Exchange Commission.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the
Board of Directors knows of no other matters which will be acted
upon at the Annual Meeting. If any other matters are properly
presented for action at the Annual Meeting or any adjournment
thereof, proxies will be voted with respect thereto in accordance
with the best judgment and in the discretion of the proxy
holders.
By Order of the Board of Directors
Glen T. Tsuma
Secretary
Santa Ana, California
October 10, 1997
