<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE ARNOLD PALMER GOLF COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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)(1) 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> 2
THE ARNOLD PALMER GOLF COMPANY
6201 MOUNTAIN VIEW ROAD
OOLTEWAH, TENNESSEE 37363
January 26, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
The Arnold Palmer Golf Company (the "Company") to be held at 10:00 a.m., Friday,
February 20, 1998, at the offices of the Company, 6201 Mountain View Road,
Ooltewah, Tennessee 37363. At the meeting, you will be asked to elect seven
directors to serve on the Board of Directors for the ensuing year, to ratify the
appointment of Arthur Andersen LLP as independent public accountants for the
upcoming fiscal year and to transact such other business as may properly come
before the meeting or any adjournment thereof.
Your vote is very important, regardless of the number of shares you own.
Whether or not you plan to attend the meeting in person, we urge you to sign,
date and mail the enclosed proxy card promptly in the accompanying postage
prepaid envelope. If you attend the meeting, you may vote your shares in person,
even though you have previously signed and returned your proxy.
You should also note that, as of January 21, 1998, the Company's common
stock will no longer be listed on the NASDAQ SmallCap Market. The common stock
will continue to trade under the symbol APGC through the OTC Bulletin Board and
the National Quotation Bureau 'Pink Sheets.'
Sincerely,
/S/ JOHN T. LUPTON
JOHN T. LUPTON
Chairman and Chief Executive Officer
<PAGE> 3
THE ARNOLD PALMER GOLF COMPANY
6201 MOUNTAIN VIEW ROAD
OOLTEWAH, TENNESSEE 37363
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 20, 1998
---------------------
To the Shareholders of The Arnold Palmer Golf Company:
The Annual Meeting of Shareholders of The Arnold Palmer Golf Company (the
"Company") will be held at 10:00 a.m., Friday, February 20, 1998, at the offices
of the Company at 6201 Mountain View Road, Ooltewah, Tennessee 37363, for the
following purposes:
1. To elect seven Directors for the ensuing year;
2. To ratify the appointment of Arthur Andersen LLP as independent
public accountants for the upcoming fiscal year; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on December 31, 1997 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournment thereof.
A copy of The Arnold Palmer Golf Company Annual Report on Form 10-K for the
fiscal year ended September 30, 1997 is being mailed to shareholders with this
Notice and Proxy Statement.
Whether or not you plan to attend the meeting, please mark, date and sign
the accompanying proxy and promptly return it in the enclosed envelope. If you
attend the meeting, you may vote your shares in person, even though you have
previously signed and returned your proxy.
By Order of the Board of Directors
DAVID J. KIRBY
Vice President -- Finance
January 26, 1998
Ooltewah, Tennessee
<PAGE> 4
THE ARNOLD PALMER GOLF COMPANY
6201 MOUNTAIN VIEW ROAD
OOLTEWAH, TENNESSEE 37363
---------------------
PROXY STATEMENT
---------------------
This proxy statement is being mailed to shareholders of The Arnold Palmer
Golf Company, a Tennessee corporation (the "Company"), on or about January 26,
1998 in connection with the solicitation of proxies by the Board of Directors of
the Company for use at the Annual Meeting of Shareholders (the "Annual Meeting")
of the Company to be held at 10:00 a.m. on Friday, February 20, 1998, at the
offices of the Company at 6201 Mountain View Road, Ooltewah, Tennessee 37363.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies and will
reimburse brokers, custodians, nominees and fiduciaries for their reasonable
expenses in sending solicitation material to the beneficial owners of the
Company's shares. In addition to soliciting proxies through the mail, proxies
may also be solicited by officers and employees of the Company by telephone or
otherwise.
Granting a proxy does not preclude the right of the person giving the proxy
to vote in person, and a person may revoke his or her proxy at any time before
it has been exercised, by giving written notice to the Company, by delivering a
later dated proxy or by voting in person at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock, $.50 par value (the "Common Stock") and
Series NB Preferred Stock, $.50 par value (the "Preferred Stock") which are
entitled to vote is necessary to constitute a quorum at the Annual Meeting. If a
quorum is not present or represented at the Annual Meeting, the shareholders
entitled to vote, whether present in person or represented by proxy, have the
power to adjourn the Annual Meeting from time to time, without notice other than
announcement at the Annual Meeting, until a quorum is present or represented. At
any such adjourned Annual Meeting at which a quorum is present or represented,
any business may be transacted that might have been transacted at the Annual
Meeting as originally noticed.
On all matters submitted to a vote of the shareholders at the Annual
Meeting or any adjournment(s) thereof, each shareholder will be entitled to one
vote for each share of Common Stock and one vote for each share of Preferred
Stock owned of record at the close of business on December 31, 1997.
Proxies in the accompanying form that are properly executed and returned
will be voted at the Annual Meeting and any adjournment(s) thereof in accordance
with the directions on such proxies. If no directions are specified, such
proxies will be voted according to the recommendations of the Board of Directors
as stated on the proxy.
Management knows of no other matters or business to be presented for
consideration at the Annual Meeting. If, however, any other matters properly
come before the Annual Meeting or any adjournment(s) thereof, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with their best judgment on any such matters. The persons named in
the enclosed proxy may also, if they deem it advisable, vote such proxy to
adjourn the Annual Meeting from time to time.
<PAGE> 5
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On December 31, 1997, the record date for determining shareholders entitled
to notice of, and to vote at, the Annual Meeting, the Company had issued and
outstanding and entitled to vote 3,004,367 shares of Common Stock and 833,333
shares of Preferred Stock. The following table sets forth information regarding
beneficial ownership of the Company's Common Stock and Preferred Stock as of
December 31, 1997, except as otherwise noted, with respect to (i) each person
known by the Company to own beneficially more than five percent of the
outstanding Common Stock or Preferred Stock, (ii) each director and nominee,
(iii) the Chief Executive Officer, and the four other most highly compensated
executive officers during the fiscal year ended September 30, 1997, and (iv) all
directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
------------------------ ----------------------- ----------
<S> <C> <C>
DIRECTORS AND NOMINEES
David S. Gonzenbach......................................... 1,000 *
James L. E. Hill............................................ 4,000 *
Richard J. Horton........................................... 500(3) *
John T. Lupton(4)........................................... 2,233,272(5) 47.2
Charles S. Mechem, Jr....................................... 0 *
Arnold D. Palmer(6)......................................... 354,445(7) 9.0
Joel W. Richardson, Jr...................................... 0 *
EXECUTIVE OFFICERS
George H. Nichols........................................... 200,200 5.0
Roger M. Helms.............................................. 75,000 1.9
Frederick J. Frazier, III................................... 10,000 *
Robert R. Winskowicz........................................ 7,000 *
D. Scudder Graybeal......................................... 29,862 *
5% OR MORE SHAREHOLDERS
Arthur P. Becker(8)......................................... 235,013 5.9
C. C. Wang(9)............................................... 538,500(10) 12.7
Richard E. Wenz(11)......................................... 240,392 6.0
All Executive Officers and Directors as a group (14
persons).................................................. 2,930,279 56.6
</TABLE>
- ---------------
* Less than 1.0% of the Common Stock.
(1) Includes the following number of shares subject to purchase pursuant to
options that are exercisable within 60 days of December 31, 1997 under the
Company's Amended and Restated Employee Incentive Stock Option Plan or the
1992 Stock Option Plan: Mr. Nichols -- 200,000 shares; Mr. Helms -- 75,000
shares; Mr. Frazier -- 10,000 shares; Mr. Winskowicz -- 7,000 shares; Mr.
Graybeal -- 10,000 shares; Mr. Becker -- 135,013 shares; Mr.
Wenz -- 165,392 shares; and all executive officers and directors as a
group -- 317,000 shares. Also includes the following numbers of shares
subject to purchase pursuant to the exercise of warrants that are
exercisable within 60 days of December 31, 1997; Mr. Lupton -- 890,000
shares; Mr. Palmer -- 100,000 shares; and all executive officers and
directors as a group -- 990,000 shares.
(2) For the purpose of computing the percentage of outstanding shares owned by
each beneficial owner, shares of Common Stock and Preferred Stock are
included. In addition, the shares issuable pursuant to presently
exercisable stock options or warrants held by such beneficial owner are
deemed to be outstanding. Such shares are not deemed to be outstanding for
the purpose of computing the percentage owned by any other person.
(3) Includes 500 shares held in a trust for the benefit of Mr. Horton's child,
as to which shares Mr. Horton disclaims beneficial ownership.
(4) The address for this beneficial owner is 702 Tallan Building, Two Union
Square, Chattanooga, Tennessee 37402.
(5) Includes 833,333 shares of Preferred Stock held by the Thomas Cartter
Lupton Trust f/b/o John T. Lupton and issue, which shares constitute all of
the outstanding Preferred Stock of the Company.
(6) The address of this beneficial owner is P.O. Box 52, Youngstown,
Pennsylvania 15696.
2
<PAGE> 6
(7) Includes 100,000 warrants exercisable within 60 days of December 31, 1997
held by Arnold Palmer Enterprises, Inc., a company in which Mr. Palmer is
the majority shareholder.
(8) The address of this beneficial owner is 345 Park Avenue South, New York,
New York 10010.
(9) The address for this beneficial owner is 600 Third Avenue, New York, New
York 10016.
(10) Includes 118,500 shares and 400,000 warrants exercisable within 60 days of
December 31, 1997, held by the Wang Group, Inc., an investment company
wholly-owned by Mr. Wang, and 20,000 shares held by U.S. Summit
Corporation, an investment company controlled by Mr. Wang. This information
is based solely upon a Schedule 13D filed by Mr. Wang on July 29, 1994, an
Amendment No. 1 to Schedule 13D filed on November 14, 1994 and an Amendment
No. 2 to Schedule 13D filed on December 29, 1994.
(11) The address for this beneficial owner is believed to be 1293 Old Mill Lane,
Elk Grove Village, Illinois 60007.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members. George H.
Nichols, formerly a director of the Company, resigned from the Board of
Directors since the date of the 1997 Annual Meeting of Shareholders. Charles S.
Mechem, Jr. was appointed to the Board of Directors since the date of the 1997
Annual Meeting of Shareholders. All directors hold their positions until the
next annual meeting of shareholders or until their successors are elected and
duly qualified. Executive officers of the Company are appointed annually by the
Board of Directors and serve at the Board's discretion.
If any nominee for election as a director is unable to serve, which the
Board of Directors does not anticipate, the persons named in the proxy may vote
for another person in accordance with their judgment. All of the nominees have
previously served as directors of the Company.
The names and ages of the nominees, their principal occupations or
employment during the past five years and other data regarding them, based upon
information received from them, are as follows:
NOMINEES FOR DIRECTORSHIPS
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
<S> <C> <C>
David S. Gonzenbach.................... 43 From 1988 to present, an executive
officer, and from 1994 to present,
Chief Financial Executive of The
Lupton Company, LLC, a private
investment company; a Director of the
Company since December, 1995.
James L. E. Hill....................... 62 From 1996 to present, Chairman of River
Valley Partners, Inc., a non-profit
economic development agency; from
1995 to 1996, President and Chief
Executive Officer of The Lupton
Company, LLC, a private investment
company; from 1993 to 1995,
President, and from 1992 to 1993,
Executive Vice President of the
Tennessee Aquarium, a non-profit
charitable and educational
organization; a Director of the
Company since March, 1995.
Richard J. Horton...................... 48 From 1973 to present, Executive
Director and Chief Executive Officer of
the Tennessee Section of the
Professional Golf Association of
America and the Tennessee Golf
Association; from 1991 to present,
President of the Tennessee Golf
Foundation; a Director of the Company
since February, 1996.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
<S> <C> <C>
John T. Lupton......................... 71 Private investor; from 1977 to 1986,
Chairman of JTL Corp., a soft-drink
bottling company; a Director of the
Company since January, 1995, and
Chairman and Chief Executive Officer
from March, 1995 through February,
1997 and since November, 1997.
Charles S. Mechem, Jr.................. 64 From 1995 to present, Chairman of the
Board of Cincinnati Bell Inc.; from
1991 to 1995, Commissioner of the
Ladies Professional Golf Association;
Director of Mead Corporation, Ohio
National Life Insurance Company, The
S.M. Smucker Company and Star Banc
Corporation; Director of the Company
since November, 1997.
Arnold D. Palmer....................... 68 Professional golfer; President of
Arnold Palmer Enterprises, Inc.;
President and Director of TBHC, Inc.
dba The Bay Hill Club and Lodge;
Director of TGC, Inc. dba The Golf
Channel; Director of the Company from
1972 to 1990 and since February,
1992.
Joel W. Richardson, Jr................. 63 From 1977 to 1997, partner, and since
1997, of counsel, with the law firm of
Miller & Martin, general counsel to
the Company; Director of the Company
since July, 1996.
</TABLE>
DIRECTORS' MEETINGS
The Board of Directors held four meetings during the fiscal year ended
September 30, 1997. Each director attended in person or by telephone each of the
meetings of the Board during the tenure of such director except that Mr. Palmer
was absent from two meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established an Executive Committee. The
functions of the Executive Committee are to exercise the powers of the Board of
Directors, to the extent legally permissible, between meetings of the full Board
of Directors. Messrs. Lupton, Gonzenbach, Richardson and Palmer serve as the
members of the Executive Committee. The Executive Committee meets periodically.
In addition, the Executive Committee fulfills the functions of a
Compensation Committee for the Board of Directors. The Executive Committee thus
recommends to the Board of Directors policies and plans concerning the salaries,
bonuses and other compensation of the senior executives of the Company,
including reviewing the salaries of the senior executives; recommending bonuses,
stock options and other forms of additional compensation for them; establishing
and reviewing policies regarding management perquisites and performing such
other duties as shall be delegated to the Committee by the Board.
The Board of Directors has also established an Audit Committee for the
Company. Messrs. Lupton, Gonzenbach and Richardson serve as the members of the
Audit Committee. The Audit Committee meets with the independent public
accountants of the Company, reviews the audit plan for the Company, reviews the
annual audit of the Company with the accountants, together with any other
reports or recommendations made by the accountants, and recommends whether the
auditors should be continued as auditors for the Company. The Audit Committee is
also to review with the auditors for the Company the adequacy of the Company's
internal controls and to perform such other duties as shall be delegated to the
Committee by the Board of Directors. The Audit Committee met one time during the
fiscal year ended September 30, 1997.
4
<PAGE> 8
DIRECTOR COMPENSATION
Directors who receive no other compensation from the Company receive a fee
of $1,000 for each board meeting attended in person.
CERTAIN TRANSACTIONS
As of March 1, 1992, the Company entered into a license agreement (the
"License Agreement") with Arnold Palmer Enterprises, Inc. ("Enterprises"),
pursuant to which the Company obtained a license to use the name, likeness and
endorsement of Arnold Palmer ("Palmer") in connection with the advertisement,
promotion and sale of golf clubs, bags, balls, gloves and other products. The
License Agreement expands the scope of the Palmer license previously utilized by
the Company. In exchange for the grant of the license, the Company pays
Enterprises as a royalty a specified percentage of net sales of each different
product category. The Company also pays a minimum annual royalty regardless of
the royalty amount determined as a percentage of product sales. The License
Agreement also sets forth the manner in which the Company and Enterprises divide
sub-licensing royalties. The Company believes the License Agreement
significantly enhances its advertisement, promotion and sale of golf equipment.
The term of the License Agreement currently extends through March 1, 2007.
On August 21, 1996, the Company sold 833,333 shares of its Preferred Stock
to the Thomas Cartter Lupton Trust f/b/o John T. Lupton (the "Lupton Trust") in
exchange for $5 million in cash. Messrs. Lupton, Gonzenbach and Richardson,
directors of the Company, are also trustees of the Lupton Trust. The Preferred
Stock has a stated value of $6.00 per share, is entitled to one vote per share,
is convertible into an equal number of shares of Common Stock and has certain
dividend and liquidation preferences. The proceeds from the sale of the
Preferred Stock were used by the Company to purchase 625,000 shares of Series D
Preferred Stock of Nevada Bob's Holdings, Inc., parent company of a nationwide
retailer of golf equipment and accessories. The Preferred Stock is entitled to a
cumulative dividend equal to 30 percent of the earnings realized by the Company
from its investment in Nevada Bob's Holdings, Inc. The Company received an
opinion from an investment banking firm that the terms of the transaction were
fair to the shareholders from a financial point of view.
On April 1, 1997, an affiliate of the Lupton Trust purchased the building
leased by the Company for its corporate offices and, pursuant to the purchase,
was assigned the existing lease with the Company. The existing lease with the
Company provided for rental payments of approximately $166,000 per year for
approximately 20,000 square feet of office space. The lease is to be amended
effective October 1, 1997, to provide approximately 77,000 square feet of
additional space to the Company for manufacturing and warehousing operations and
the base rental payments were correspondingly adjusted to approximately $378,000
per year. The Company believes that the terms of the lease are at least as
favorable as the terms that could be obtained from an unaffiliated third party.
Subsequent to September 30, 1997, the Company entered a new financing
arrangement, which, effective as of September 30, 1997, converted $10 million of
the current revolver debt of the Company to a two year unsecured term loan and
provided an additional unsecured revolving credit facility of $12 million. Both
the term loan and the revolving credit facility are unconditionally guaranteed
by Mr. Lupton. The Company's Board of Directors is considering appropriate
compensation to be paid to Mr. Lupton in consideration of his guarantee of the
new credit facility.
REPORTING SECURITIES TRANSACTIONS
Under the federal securities laws, the Company's directors, officers and
persons holding more than 10% of the Company's Common Stock are required to
report, within specified monthly and annual due dates, their initial ownership
of Common Stock and all subsequent acquisitions, dispositions or other transfers
of beneficial interest therein, if and to the extent reportable events occur
which require reporting by such due dates. The Company is required to describe
in this proxy statement whether, to its knowledge, any person required to file
such a report may have failed to do so in a timely manner. In this regard, all
of the Company's directors and officers are believed to have satisfied such
filing requirements in full except that Mr. Mechem inadvertently failed to file
a Form 3 upon his appointment to the Board of Directors and Mr. Gonzenbach
inadvertently failed to file a timely Form 4 with respect to a transaction in
the Company's Common Stock.
5
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth information concerning compensation paid or
accrued for the past four fiscal years, including the transition period ended
September 30, 1996, to the Chief Executive Officer of the Company and the four
other most highly compensated executive officers during the fiscal year ended
September 30, 1997. Salary amounts reported for the transition period ended
September 30, 1996, represent only a seven-month period and have not been
adjusted or annualized for comparative purposes.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
FISCAL ------------------- OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SARS(#) COMPENSATION
--------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
John T. Lupton(1)....................... 1997 $ 0 $ 0 -- $ 4,000(3)
Chairman and Chief Executive 1996(2) 0 0 -- 3,000(3)
Officer 1996 0 0 -- 3,000(3)
George H. Nichols(4).................... 1997 225,000 0 -- 1,829(5)
Chairman and Chief Executive 1996(2) 146,877 0 -- 42,927(6)
Officer 1996 29,168 0 200,000 34,155(7)
Roger M. Helms(8)....................... 1997 107,981 0 75,000 19,175(9)
President and Chief Operating Officer
Robert R. Winskowicz(10)................ 1997 100,625 0 -- 1,480(5)
Vice President -- Sales and 1996(2) 67,083 0 -- 6,069(11)
Marketing 1996 23,958 0 21,000 4,730(11)
Frederick J. Frazier, III(12)........... 1997 89,030 0 -- 1,105(5)
Vice President -- Golf Club 1996(2) 60,667 0 15,000 903(5)
Division 1996 100,888 0 15,000(13) 1,076(5)
1995 97,194 0 -- 720(5)
D. Scudder Graybeal..................... 1997 102,397 0 -- 1,480(5)
Vice President -- Special 1996(2) 58,422 0 -- 876(5)
Markets 1996 96,300 0 -- 1,355(5)
1995 94,941 0 -- 790(5)
</TABLE>
- ---------------
(1) Mr. Lupton was Chairman and Chief Executive Officer of the Company from
March 9, 1995, through February 20, 1997, and was re-appointed as Chairman
and Chief Executive Officer of the Company on November 21, 1997. Mr. Lupton
has served without compensation in such capacity.
(2) Represents the seven-month transition period ended September 30, 1996.
(3) Represents directors fees paid to the named individual.
(4) Mr. Nichols resigned as Chairman and Chief Executive Officer on November
21, 1997.
(5) Represents the Company's contributions to the Company's 401(k) profit
sharing plan on behalf of the named individual.
(6) Represents reimbursed relocation expenses of the named individual.
(7) Represents payments of $29,168 by the Company to Mr. Nichols under a
consulting arrangement prior to his employment with the Company on January
1, 1996 and reimbursed relocation expenses of $4,987.
(8) Mr. Helms was appointed President and Chief Operating Officer on February
20, 1997 and resigned from such position on November 21, 1997.
(9) Represents reimbursed relocation expenses of $18,800 of the named
individual and contributions to the Company's 401(k) profit sharing plan of
$375 on behalf of the named individual.
(10) Mr. Winskowicz resigned as Vice President -- Sales and Marketing on April
29, 1997.
(11) Represents temporary housing and meals allowance for the named individual.
(12) Mr. Frazier resigned as Director of Marketing -- Golf Club Division on
August 8, 1997.
(13) The options granted to Mr. Frazier in March, 1995 were cancelled in
conjunction with the issuance of new options in July, 1996.
6
<PAGE> 10
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's Amended and Restated Employee Incentive Stock Option
Plan to the named executives during the fiscal year ended September 30, 1997:
OPTIONS/GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
OF TOTAL ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
EMPLOYEES OR BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John T. Lupton..................... -- -- -- -- -- --
George H. Nichols.................. -- -- -- -- -- --
Roger M. Helms..................... 75,000 49.3% 4.25 2/20/07 200,460 508,005
Robert R. Winskowicz............... -- -- -- -- -- --
Frederick J. Frazier, III.......... -- -- -- -- -- --
D. Scudder Graybeal................ -- -- -- -- -- --
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executives concerning the exercise of options during the fiscal year ended
September 30, 1997 and unexercised options held as of September 30, 1997:
AGGREGATED EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES FY-END(#) OPTIONS AT FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- --------------------
<S> <C> <C> <C> <C>
John T. Lupton.......................... 0 0 0/0 --/--
George H. Nichols....................... 0 0 66,666/133,334 --/--
Roger M. Helms.......................... 0 0 0/75,000 --/--
Robert R. Winskowicz.................... 0 0 7,000/0 --/--
Frederick J. Frazier III................ 0 0 10,000/0 --/--
D. Scudder Graybeal..................... 0 0 10,000/0 --/--
</TABLE>
RETIREMENT PLAN
Prior to December 31, 1993, substantially all full-time salaried employees
of the Company who had completed one credited year of service were eligible to
receive benefits under the Company's Salaried Retirement Plan (the "Plan").
During fiscal 1994, the Company curtailed the benefits under the Plan. Under
this curtailment, nonunion employees that are not at least age 50 with at least
five years of service will accrue no further benefits under the Plan. During
fiscal 1994, the Company established a 401(k) profit-sharing plan covering
substantially all employees at least 21 years of age with six months of service.
The 401(k) plan allows for employees to contribute a portion of their
compensation subject to certain limitations. The Company may make discretionary
contributions to the 401(k) plan.
7
<PAGE> 11
COMPENSATION REPORT OF THE EXECUTIVE COMMITTEE
OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors establishes the general
compensation policies of the Company and the compensation plans and specific
compensation levels for executive officers, and administers the various stock
option, management incentive and retirement plans maintained by the Company. The
Executive Committee is composed of four independent, non-employee directors none
of whom have interlocking relationships as defined by the Securities and
Exchange Commission.
EMPLOYEE INCENTIVE STOCK OPTION PLAN
The Company maintains an Amended and Restated Employee Incentive Stock
Option Plan ("Incentive Option Plan"), pursuant to which key executive employees
are eligible for the grant of incentive options in Common Stock, as an incentive
and reward, such grants being determined by the Board of Directors based upon
the recommendations of the Executive Committee. The aggregate number of shares
that may be issued under the Incentive Option Plan is 950,000. As of September
30, 1997, 484,537 shares remained available for future issuance. The option
price per share cannot be less than the fair market value of the Common Stock at
the date of grant and the term of the option cannot exceed 10 years.
EXECUTIVE OFFICER COMPENSATION
The current Chief Executive Officer of the Company is not an employee of
the Company and serves without compensation. The Executive Committee has adopted
incentive-based policies with respect to compensation of the other executive
officers of the Company. Using salary survey data from various sources, the
committee establishes base salaries that are within the range of salaries for
persons holding similarly-responsible positions at other companies. In addition,
the committee considers factors such as relative Company performance, the
individual's past performance and future potential in establishing the base
salaries of executive officers.
The committee's policy regarding other elements of the compensation package
for senior executive officers is similar. Incentive awards are granted on an
annual basis to the extent the Company has achieved certain target levels of
earnings before taxes approved by the Board of Directors. The Executive
Committee also considers the executive officer's achievement of individual
performance objectives relating to the overall success of the Company, such as
increased sales, improved productivity, enhanced operational efficiencies, and
other factors which lead to greater overall profitability.
Submitted by the Executive Committee of the Company's Board of Directors,
John T. Lupton, Chairman
David S. Gonzenbach, Member
Joel W. Richardson, Jr., Member
Arnold D. Palmer, Member
8
<PAGE> 12
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns to
shareholders of the Company, assuming reinvestment of dividends, for the prior
five fiscal years of the Company, including the seven-month transition period
ended September 30, 1996, ending at the end of the fiscal year ended September
30, 1997, with the return from: (i) the NASDAQ Stock Market Total Return Index
and (ii) an Index for NASDAQ stocks in Standard Industrial Classification 394
(Toys and Sporting Goods Companies).
Returns Chart
Legend
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 02/26/93 02/25/94 02/24/95 03/01/96 09/30/96 09/30/97
- ------ ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
______ - THE ARNOLD PALMER GOLF COMPANY 100.0 141.0 71.8 53.8 56.4 32.4
- ---__-- - Nasdaq Stock Market (US Companies) 100.0 117.0 119.6 165.0 187.9 258.0
- ------- - NASDAQ Stocks (SIC 3940-3949 US Companies) 100.0 124.1 94.9 89.0 86.1 66.0
Dolls, Toys, Games and Sporting and
Athletic Goods
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 02/26/93.
9
<PAGE> 13
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors
appointed Arthur Andersen LLP, independent public accountants, to serve for the
fiscal year ending September 30, 1998. Although shareholder ratification is not
required by the Company's Charter or by-laws, or under applicable law, the Board
of Directors requests your ratification.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting and will be given an opportunity to make a statement, if they desire,
and to respond to questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting of Shareholders, must be received by the Company not later than
September 28, 1998 for inclusion in its Proxy Statement and form of proxy
relating to that meeting. Any such proposals, as well as any questions relating
thereto, should be directed to the attention of David J. Kirby, Vice
President -- Finance, The Arnold Palmer Golf Company, 6201 Mountain View Road,
Ooltewah, Tennessee 37363.
January 26, 1998
10
<PAGE> 14
Appendix A
THE ARNOLD PALMER GOLF COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of THE ARNOLD PALMER GOLF COMPANY appoints John
T. Lupton and Joel W. Richardson, Jr., or either of them, proxies, with full
power of substitution, to vote at the offices of the Company at 6201 Mountain
View Road, Ooltewah, Tennessee at 10:00 a.m., Friday, February 20, 1998, and any
adjournment or adjournments thereof, the shares of Common Stock and Preferred
Stock of THE ARNOLD PALMER GOLF COMPANY which the undersigned is entitled to
vote, on all matters that may properly come before the Meeting.
1. The election of seven Directors for the ensuing year.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as [ ] WITHHOLD AUTHORITY to vote for all
marked to the contrary) nominees listed below.
</TABLE>
Nominees:
David S. Gonzenbach, James L. E. Hill, Richard J. Horton, John T.
Lupton, Charles S. Mechem, Jr., Arnold D. Palmer, Joel W. Richardson,
Jr.
(INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name in the space provided below.)
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending September 30, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED ON OTHER SIDE)
<PAGE> 15
(CONTINUED FROM OTHER SIDE)
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
You are urged to cast your vote by marking the appropriate boxes. PLEASE
NOTE THAT UNLESS A CONTRARY DISPOSITION IS INDICATED, THIS PROXY WILL BE VOTED
FOR ITEMS 1 AND 2.
--------------------------------
(Signature)
--------------------------------
(Signature)
Dated: 1998
--------------------,
IMPORTANT: Please sign your name
or names exactly as shown hereon
and date your proxy in the blank
space provided above. For joint
accounts, each joint owner must
sign. When signing as attorney,
executor, administrator,
trustee, or guardian, please
give your full title as such. If
the signer is a corporation,
please sign full corporate name
by duly authorized officer.
