AMPLICON, INC.
5 Hutton Centre Drive, Suite 500
Santa Ana, CA 92707
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 23, 1998
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 5 Hutton Centre Drive, Suite 500,
Santa Ana, California on Friday, October 23, 1998, 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 1, 1998. 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 5 Hutton Centre Drive, Suite 500, Santa Ana,
California 92707.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the 11,835,318 shares of the
Company's Common Stock outstanding at the close of business on
September 25, 1998, 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 by
cumulative
<PAGE>
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 25, 1998,
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 6,550,328 (1,2) 54.0%
c/o Amplicon, Inc.
5 Hutton Centre Drive
Santa Ana, CA 92707
Glen T. Tsuma 1,356,772 11.5%
c/o Amplicon, Inc.
5 Hutton Centre Drive
Santa Ana, CA 92707
Donald P. Moriarty
c/o McGrath, Doyle
& Phair 1,141,700 9.6%
150 Broadway
New York, NY 10038
Wellington Management
Company 669,800 (3) 5.7%
75 State Street
Boston, MA 02109
Goldman Sachs Group 616,300 5.2%
85 Broad Street
New York, NY 10004
All Directors and
Officers as a Group 8,069,533 (2,4) 65.7%
(6 persons)
- ----------------------
(1) Includes options to purchase 300,000 shares which are
exercisable within 60 days of September 25, 1998.
(2) Does not include 25,190 shares of Common Stock held by
Mr. Paddon's children, as to which Mr. Paddon
disclaims any beneficial interest.
(3) 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 .
(4) Includes options to purchase 445,333 shares which are
exercisable within 60 days of September 25, 1998.
</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
2
<PAGE>
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.
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 25, 1998 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 25, 1998, is set forth under "Directors
and Executive Officers" below.
The Board of Directors met four times during the year ended
June 30, 1998. 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, 1998. Effective January
1997, the entire Board of Directors reviews and approves the
granting of stock options. Two stock option meetings were held
during the year ended June 30, 1998. 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 47 Chief Executive 6,550,328 (1) 54.0%
Officer, President,
Director
Glen T. Tsuma 45 Chief Operating 1,356,772 11.5%
Officer,
Secretary,
Director
Michael H. Lowry 53 Director 24,000 (2) *
Harris Ravine 56 Director 16,000 (3) *
S. Leslie Jewett 43 Chief Financial 104,433 (4) *
Officer
Neil G. Kenduck 43 General Counsel 18,000 (5) *
- --------------------------
* Less than one percent
1) Includes options to purchase 300,000 shares which are exercisable
within 60 days of September 25, 1998 but excludes 25,190 shares
held by Mr. Paddon's children, as to which Mr. Paddon disclaims
any beneficial interest.
2) Includes options to purchase 20,000 shares which are exercisable
within 60 days of September 25, 1998.
3) Includes options to purchase 16,000 shares which are exercisable
within 60 days of September 25, 1998.
4) Includes options to purchase 93,333 shares which are exercisable
within 60 days of September 25, 1998.
5) Includes options to purchase 16,000 shares which are exercisable
within 60 days of September 25, 1998.
</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.
3
<PAGE>
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.
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, 1998:
<TABLE>
<CAPTION>
Long-term
Name and Principal Annual Compensation Compensation Other
Position Year Salary Bonus Options Compensation (1)
- ------------------ ---- -------- ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Patrick E. Paddon 1998 $375,000 -- -- $2,000
Chief Executive 1997 375,000 -- -- 2,000
Officer 1996 375,000 -- -- 1,000
Glen T. Tsuma 1998 $180,000 -- -- $2,000
Chief Operating 1997 180,000 -- -- 2,000
Officer 1996 180,000 -- -- 1,000
S. Leslie Jewett 1998 $180,000 -- -- $2,000
Chief Financial 1997 180,000 -- -- 2,000
Officer 1996 150,000 -- -- 1,000
Neil G. Kenduck 1998 $176,000 $30,000 -- $2,000
General Counsel 1997 160,000 20,000 -- 2,000
1996 125,000 7,500 -- 1,000
- ----------------
1) Company contribution under the Company's 401(k) Plan, subject
to certain vesting restrictions.
</TABLE>
4
<PAGE>
Options Grants in Last Fiscal Year
There were no options granted to any executive officer
during fiscal year 1998.
Aggregate Option Exercises and Fiscal Year End Option Value
During fiscal year 1998 Neil G. Kenduck exercised his option
to purchase 2,000 shares. 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, 1998 Options at June 30, 1998 (1)
------------------------ ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Patrick E. Paddon 300,000 -- $2,850,000 --
Glen T. Tsuma -- -- -- --
S. Leslie Jewett 93,333 6,667 443,331 $19,168
Neil G. Kenduck 16,000 7,000 73,000 19,750
__________________________
1) Represents the difference between the most recent closing price
of the Common Stock as of June 30, 1998 as reported by NASDAQ
and the exercise price of the options.
</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 1998 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 1998, the base salary for Mr. Kenduck was increased from
the prior year. This increase reflects 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.
5
<PAGE>
CEO Compensation
Patrick E. Paddon's, Chief Executive Officer, cash
compensation was set at $375,000 for fiscal 1998. Mr. Paddon's
compensation in fiscal 1998 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 1999 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
6/30/93 9/30/93 12/31/93 3/31/94 6/30/94 9/30/94 12/31/94
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
AMPI 100 98 101 100 103 98 93
NASD COMP. 100 108 111 106 101 109 108
PEER AVG. 100 128 148 141 146 160 170
(con't)
3/31/95 6/30/95 9/30/95 12/31/95 3/31/96 6/30/96 9/30/96
------- ------- ------- -------- ------- ------- -------
AMPI 81 79 81 80 79 84 94
NASD COMP. 118 135 151 153 160 173 179
PEER AVG. 204 212 237 269 268 308 299
(cont')
12/31/96 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98
-------- ------- ------- ------- -------- ------- -------
AMPI 103 111 120 156 165 240 130
NASD COMP. 188 178 210 246 231 270 278
PEER AVG. 310 294 343 429 460 598 570
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not yet selected its independent public
accountants for the year ended June 30, 1999 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, 1998, 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.
ANNUAL REPORT AND OTHER SEC FILINGS
The Company's Annual Report, containing audited financial
statements for the fiscal years ended June 30, 1998 and 1997,
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
6
<PAGE>
ended June 30, 1998, 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 1998 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, except that Mr. Paddon filed a Form 4 for the sale
of 10,000 shares 60 days from its required filing date.
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at
the Company's 1999 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, 1999 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
September 25, 1998
7
<PAGE>
