<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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BERLITZ INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
BERLITZ INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
/ / 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:
- - --------------------------------------------------------------------------------
/1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[BERLITZ LOGO]
July 11, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 annual meeting of shareholders
which will be held on Monday, August 1, 1994 at 10:00 a.m. in Denver, Colorado.
The Notice and Proxy Statement on the following pages contain details
concerning the business to come before the meeting. Management will report on
current operations and there will be an opportunity for discussion concerning
Berlitz International, Inc. and its activities. Please sign and return your
proxy card in the enclosed envelope to ensure that your shares will be
represented and voted at the meeting even if you cannot attend. You are urged to
sign and return the enclosed proxy card even if you plan to attend the meeting.
I look forward to personally greeting all shareholders who are able to
attend.
[Form of Signature]
SOICHIRO FUKUTAKE
Chairman
<PAGE> 3
[BERLITZ LOGO]
NOTICE OF 1994 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 1, 1994
Notice is hereby given that the 1994 annual meeting of shareholders (the
"Meeting") of Berlitz International, Inc. (the "Company") will be held at the
Westin Hotel, Tabor Center Denver, 1672 Lawrence Street, Denver, Colorado 80202
on Monday, August 1, 1994 at 10:00 a.m. local time for the following purposes:
1. To elect four directors to serve for two-year terms until the 1996
annual meeting of shareholders;
2. To ratify the selection by the Board of Directors of the Company of
Deloitte & Touche, independent accountants, to audit the Company's
consolidated financial statements for 1994; and
3. To transact such other business as may properly come before the
Meeting in connection with the foregoing or otherwise.
The Board of Directors has fixed the close of business on July 8, 1994 as
the record date for the purpose of determining shareholders entitled to notice
of and to vote at the Meeting or any postponement or adjournment thereof. A list
of such shareholders will be open to the examination of any shareholder during
regular business hours for a period of ten days prior to the meeting at the
offices of the Company at 293 Wall Street, Princeton, New Jersey 08540-1555.
In order to assure a quorum, it is important that the shareholders who do
not expect to attend the Meeting in person fill in, sign, date and return the
enclosed proxy in the accompanying envelope.
By order of the Board of Directors,
[Form of Signature]
ROBERT C. HENDON, JR.
Secretary
Princeton, New Jersey
July 11, 1994
<PAGE> 4
BERLITZ INTERNATIONAL, INC.
293 WALL STREET
PRINCETON, NEW JERSEY 08540
PROXY STATEMENT
1994 ANNUAL MEETING OF SHAREHOLDERS
AUGUST 1, 1994
The enclosed proxy is solicited by the Board of Directors of Berlitz
International, Inc. (the "Company") for use at the 1994 annual meeting of
shareholders (the "Meeting") to be held at the Westin Hotel, Tabor Center
Denver, 1672 Lawrence Street, Denver, Colorado 80202 on Monday, August 1, 1994
at 10:00 a.m. local time, and at any postponement or adjournment thereof. The
enclosed proxy, properly executed and received by the Company prior to the
Meeting, and not revoked, will be voted in accordance with the directions
thereon; and if no directions are indicated, the proxy will be voted for each
nominee for election as a director and for approval of the selection of Deloitte
& Touche as independent accountants for the Company for 1994. If any other
matter should be presented at the Meeting upon which a vote may properly be
taken, the shares represented by the proxy will be voted with respect thereto at
the discretion of the person or persons holding such proxy. Proxies may be
revoked by shareholders at any time prior to the voting of the proxy by written
notice to the Company, by submitting a new proxy or by personal ballot at the
Meeting.
As of the close of business on July 8, 1994, the record date for
determining shareholders entitled to vote at the Meeting, the Company had issued
and outstanding 10,032,903 shares of its $.10 par value common stock (the "New
Common"). Each share of New Common is entitled to one vote at the Meeting. The
first date on which this Proxy Statement and the enclosed form of proxy are
being sent to the Company's shareholders is on or about July 11, 1994.
ELECTION OF DIRECTORS
The Board of Directors of the Company presently consists of nine members
divided into two classes. At the Meeting, four directors will be elected to hold
office for two-year terms until the 1996 annual meeting of shareholders, and
until their successors have been elected and qualified or until their earlier
death, resignation or removal. The proxy will be voted in accordance with the
directions thereon or, if no directions are indicated, for election of the four
directors named below whose election has been proposed and recommended by the
Board of Directors. If any nominee shall, prior to the Meeting, become
unavailable for election as a director, the persons named in the accompanying
form of proxy will vote, in their discretion, for a nominee, if any, as may be
recommended by the Board of Directors, or the Board of Directors may reduce the
number of directors to eliminate the vacancy.
INFORMATION AS TO OFFICERS AND NOMINEES FOR ELECTION AS DIRECTORS
The respective ages, positions with the Company, business experience,
directorships in other companies and Board committee memberships of the nominees
for election and the continuing incumbent directors are set forth below. All
nominees are currently directors of the Company, except for Robert L. Purdum.
There is no family relationship between any of the Directors of the Company.
<PAGE> 5
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS TO EXPIRE IN 1996
Hiromasa Yokoi, 55
Mr. Yokoi was elected Vice Chairman of the Board and Chief Executive
Officer of the Company in February 1993 and additionally was elected President
effective on August 31, 1993. Mr. Yokoi has served as a director of Fukutake
Publishing Company, Ltd. ("Fukutake") since June 1992 and Director for Berlitz
and North American Sector since April 1994. Prior to that, he served as General
Manager of the Overseas Operations Division (formerly the International
Division) of Fukutake from October 1990 to March 1994 and as General Manager of
the President's Office of Fukutake from July 1990 to September 1990. From June
1987 to July 1990, he was General Manager of the Corporate International Trade
division of Matsushita Electric Industries Co., Ltd. between April 1981 and June
1987, he served as Managing Director and Chief Executive Officer of National
Panasonic (Australia) PTY Ltd. in Sydney, Australia. Mr. Yokoi has served as a
Director of the Company since January 1991. He is currently a member of the
Executive Committee.
Saburou Nagai, 63
Mr. Nagai has served as Senior Managing Director of Fukutake since June
1994 and as Managing Director of Fukutake from April 1988 to June 1994. He has
also supervised its general administration and accounting departments since
April 1988 and its Capital Strategic Planning Office since April 1993. Since
joining Fukutake in April 1985, he served as General Manager and Head of its
accounting department until April 1988 and supervised, concurrently with his
other duties, its corporate identity department (July 1991-April 1992) and
personnel department (April 1990-July 1991). Mr. Nagai became a Director of the
Company in February 1993.
Edward G. Nelson, 63
Since January 1985, Mr. Nelson has served as Chairman and President of
Nelson Capital Corporation. From 1983 to 1985, he was Chairman and Chief
Executive Officer of Commerce Union Corporation. He also serves on the Board of
Directors of Clintrials, Inc., Osborn Communications Corporation, A+
Communications, Inc. and Advocate, Inc. He is a trustee of Vanderbilt
University. Mr. Nelson became a Director of the Company in February 1993. He is
currently a member of the Audit Committee, the Compensation Committee and the
Disinterested Directors Committee.
Robert L. Purdum, 59
Mr. Purdum served as Chairman of the Board of Armco, Inc. from December
1993 to April 1994 and currently is an independent consultant. He served in
various positions since first joining Armco in 1962, including Chairman and
Chief Executive Officer (November 1990 to December 1993), President and Chief
Executive Officer (April 1990 to November 1990), President (October 1986 to
April 1990), Chief Operating Officer (February 1985 to October 1986) and Chief
Executive Officer -- Steel Group (November 1982 to February 1985). Mr. Purdum
also serves on the Board of Directors of Holophane Corporation since 1994. In
addition, he is a member of the Board of Trustees of GMI Engineering and
Management Institute since 1991 and serves on their International Committee and
Capital Campaign Committee. He is also a member of the Corporate Affairs
Committee of the Japan Society and served as a trustee for the Committee for
Economic Development. Mr. Purdum has been nominated to fill the Berlitz
directorship previously held by Mr. Owen Bradford Butler, who is retiring. It is
contemplated that Mr. Purdum will become a member of the Audit Committee and the
Disinterested Directors Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE FOUR
DIRECTORS NAMED ABOVE.
2
<PAGE> 6
INCUMBENT DIRECTORS -- TERMS EXPIRE IN 1995
Soichiro Fukutake, 48
Mr. Fukutake has served as Chairman of the Board of the Company since
February 1993. Mr. Fukutake joined Fukutake in 1973, and since May 1986 has
served as its President and Representative Director. He also serves on the Board
of Directors of a number of companies, private foundations and associations in
Japan. Mr. Fukutake became a Director of the Company in February 1993. He is
currently a member of the Executive Committee and the Compensation Committee.
Susumu Kojima, 51
Mr. Kojima has served as Executive Vice President, Corporate Planning of
the Company since September 1993. Prior thereto, he was Senior Vice President,
Corporate Planning of the Company from February 1993 to September 1993. Mr.
Kojima has served as Director of Fukutake since March 1993. Prior to that, he
was Joint General Manager of the Business Development Department of The
Industrial Bank of Japan, Limited ("I.B.J.") from June 1991 to February 1993.
Between November 1987 and June 1991, he served as Senior Deputy General Manager,
Industrial Research Department of I.B.J. after having served as Chief
Representative of I.B.J.'s Washington Representative Office from September 1983.
Mr. Kojima was elected as a Director of the Company in February 1993. He is
currently a member of the Executive Committee.
Robert Minsky, 49
Mr. Minsky has served as Executive Vice President, Translations of the
Company since October 1, 1993, and as Chief Financial Officer of the Company
since November 1990. From November 1990 to October 1993, he also served as Vice
President. From January 1990 to October 1990, Mr. Minsky was Vice President and
Chief Financial Officer of DRI/McGraw-Hill, Inc. Between January 1986 and June
1989, Mr. Minsky served as Vice President and Chief Financial Officer of
McCormack & Dodge Corporation, a subsidiary of The Dun & Bradstreet Corporation.
Mr. Minsky has served as a Director of the Company since April 1991. He is
currently a member of the Executive Committee.
Manuel Fernandez, 57
Mr. Fernandez has served as Executive Vice President, Language Services of
the Company since September 1993. Prior thereto, he was Vice President, European
Operations of the Company from October 1989 to September 1993. He previously
served as Vice President, European Operations for Berlitz Languages from January
1983 to October 1989. Mr. Fernandez was first employed by Berlitz Languages in
1963 and served in various positions until becoming Vice President in 1983. Mr.
Fernandez has served as a Director of the Company since July 1993, at which date
he was appointed by the Board to fill the vacancy caused by Elio Boccitto's
resignation. He is currently a member of the Executive Committee.
Aritoshi Soejima, 68
Mr. Soejima served as Senior Counselor of Fukutake from December 1980 until
his appointment as a member of the Disinterested Directors and Compensation
Committees of the Company. From 1950 to
3
<PAGE> 7
1981, Mr. Soejima served in various positions with the Japanese government
(including the Ministry of Finance) and multilateral financial institutions
(including the World Bank and International Monetary Fund). Mr. Soejima also
currently serves as Chairman of Tokyo, Osaka, Tokyo Bay, Nagoya Hilton Company,
Ltd. and Counselor of Nippon Hilton Company, Ltd. and Capital International
Company, Ltd. and as special advisor to the Board of Directors of the Nippon
Fire & Marine Insurance Company, Ltd. In addition, he serves on the Board of
Directors of a number of companies, private foundations and associations in
Japan. Mr. Soejima became a Director of the Company in February 1993. He is
currently a member of the Audit Committee, the Compensation Committee and the
Disinterested Directors Committee.
1993 BOARD OF DIRECTORS MEETINGS, COMMITTEES AND FEES
During 1993, the Board of Directors of the Company met in person four
times, held two telephonic meetings and took action by unanimous written consent
four times.
In 1993, the Board of Directors had standing Executive, Audit,
Disinterested Directors, and Compensation Committees. The Company does not have
a standing Nominating Committee.
The Executive Committee, during the intervals between meetings of the Board
of Directors, may, with certain exceptions, exercise the powers of the Board of
Directors. The Executive Committee did not meet during 1993.
The Audit Committee recommends to the Board of Directors the engagement of
the independent accountants of the Company and reviews with the independent
accountants the scope and results of the Company's audits. The Audit Committee
reviews the terms of all agreements between the Company and its affiliates. The
Audit Committee meets with management and with the Company's internal auditors
and independent accountants to review matters relating to the quality of
financial reporting and internal accounting control, including the nature,
extent and results of their audits, and otherwise maintains communications
between the Company's independent accountants and the Board of Directors. The
Audit Committee met five times during 1993.
Initially, the Disinterested Directors Committee was established for the
purpose of protecting the long-term interests of the Company and its minority
shareholders by independently reviewing and monitoring all matters affecting the
relationship between the Company and Maxwell Communication Corporation plc
("MCC") and its affiliates. As a result of the Merger (as hereinafter defined)
in February 1993, the Disinterested Directors Committee's role was retained and
reconstituted to review and monitor all matters affecting the relationship
between the Company and Fukutake and its affiliates. During 1993, the
Disinterested Directors Committee met in person four times, held two telephonic
meetings, and took action by unanimous written consent two times.
The Compensation Committee reviews performance of corporate officers,
establishes overall employee compensation policies and recommends to the Board
of Directors major compensation programs. The Compensation Committee also
reviews and approves salary arrangements and other remuneration for executive
officers of the Company and is responsible for review of certain employee
benefit plans. The Compensation Committee oversees and approves grants of stock
options and other stock-based awards pursuant to the Stock Option Plan and the
Company's Non-Employee Directors Stock Plan (the "Directors' Stock Plan"). The
Committee also administers the Short-Term Executive Incentive Compensation Plan
(the "Short-Term Incentive Plan") and the Long-Term Executive
4
<PAGE> 8
Incentive Compensation Plan (the "Long-Term Incentive Plan") and approves awards
and discretionary bonuses under these plans. No member of the Compensation
Committee is eligible to participate in the Stock Option Plan or the Short-Term
Incentive Plan. During 1993, the Compensation Committee met in person three
times and the Awards Committee, a subcommittee of the Compensation Committee
established prior to the Merger which ceased to exist after the Merger date,
took action by unanimous written consent once.
The Company's standard retainer payable to each director who is not an
employee of the Company or its affiliates is $30,000 per annum plus expenses,
with an additional $2,000 for each Committee meeting attended in person and
$1,000 for each Committee meeting participated in by telephone. No fees are paid
for actions taken by unanimous written consent. Only those directors who are
also full-time employees of the Company or its affiliates are eligible to
participate in the health benefit plan maintained by the Company. Directors
employed by the Company or its affiliates receive no compensation in
consideration of their duties as directors. The outside directors earned an
aggregate of approximately $131,000 as cash compensation for their services
during 1993.
Pursuant to the Merger, Rozanne L. Ridgway and Rudy G. Perpich, former
directors of the Company, received $10,724 and $21,449, respectively, as a
result of the conversion of stock equivalents (455.968 and 911.933,
respectively) which they held under the Directors' Stock Plan. There are no
outstanding stock equivalents under the Directors' Stock Plan as of December 31,
1993.
The Company has entered into indemnification agreements with each director
pursuant to which the Company agreed to pay any amount such director becomes
obligated to pay as a result of any claims made against such director because of
any alleged act or omission or neglect or breach of duty which he or she commits
while acting in his or her capacity as a director and solely because of his or
her being a director, subject to limitations imposed by the NYBCL.
5
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
MANAGEMENT SECURITY OWNERSHIP
The following table sets forth the number and percentage of outstanding
shares of New Common beneficially owned by each director, nominee, all
individuals serving as the Company's chief executive officer during the fiscal
year ended December 31, 1993, the four most highly compensated executive
officers of the Company at December 31, 1993, two former officers, and all
officers and directors serving at December 31, 1993 as a group, as of June 15,
1994. If not mentioned, the individual does not beneficially own any shares of
New Common as of June 15, 1994. No security set forth in the third column of the
following table reflects an amount as to which the beneficial owner has joint
voting or investment power, or is under an existing option held by such
beneficial owner.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME OWNERSHIP OF CLASS
- - ------------------------------------- ----------------------- ---------- --------
<S> <C> <C> <C>
New Common........................... Manuel Fernandez 8,745 *
New Common........................... Robert Minsky 2,857 *
New Common........................... Owen Bradford Butler 1,000 *
New Common........................... Edward G. Nelson 1,500 *
New Common........................... Anthony Tedesco 8,332 *
New Common........................... Elio Boccitto 24,750 *
New Common........................... Jacques Meon 10,395 *
New Common........................... All Officers and 41,408 *
Directors as a Group
(14 in number)
</TABLE>
- - ---------------
* Less than 1%
To the best of registrant's knowledge, there are no events of delinquent
filing requiring disclosure under Item 405 of Regulation S-K.
OTHER SECURITY OWNERSHIP
The following table sets forth the ownership by each person or group who
owned of record or was known by the Company to own beneficially more than 5% of
shares of New Common on June 15, 1994.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
- - ------------------------------ ---------------------------- ---------- ----------
<S> <C> <C> <C>
New Common.................... Fukutake Publishing Co., 6,735,338 67%
Ltd.(1)
3-17-17 Minamigata
Okayama-shi 700, Japan
New Common.................... Macmillan, Inc. 627,000 6%
55 Railroad Ave.
Greenwich, CT 06830
</TABLE>
- - ---------------
(1) 6,722,138 shares of New Common are held by a wholly-owned subsidiary of
Fukutake and 13,200 shares of New Common are held directly by Fukutake.
6
<PAGE> 10
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
On December 9, 1992, the Company and Fukutake entered into an amended and
restated merger agreement (the "Merger Agreement") pursuant to which Fukutake
agreed to acquire, through a merger of the Company with an indirect wholly-owned
U.S. subsidiary (the "Merger"), approximately 67% of the outstanding New Common,
par value $.10 per share, of the Company. The compensation disclosed below
incorporates amounts received by executive officers as a result of the Merger.
The following Summary Compensation Table sets forth the compensation
awarded to, earned by or paid to each of the Chief Executive Officer ("CEO") and
certain executive officers during the fiscal years ended December 31, 1993, 1992
and 1991 for services rendered in all capacities to the Company and its
subsidiaries. The compensation disclosed below pertains to (a) all individuals
who served as the Company's CEO during the fiscal year ended December 31, 1993,
(b) to certain executive officers serving at the end of the fiscal year ended
December 31, 1993 and (c) to certain former executive officers, as required by
Item 402 of Regulation S-K (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(11)
------------------------------- ------------
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND SALARY BONUS COMPENSATION SARS(12) COMPENSATION
PRINCIPAL POSITION YEAR ($)(9) ($) ($)(10) (#) ($)(13)
- - ------------------------------ ----- -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Hiromasa Yokoi(1)............. 1993 271,058 None 10,000 None None
Vice Chairman of the Board, 1992 -- -- -- -- --
CEO and President 1991 -- -- -- -- --
Susumu Kojima(2).............. 1993 143,962 None 14,000 None None
Executive Vice President 1992 -- -- -- -- --
1991 -- -- -- -- --
Manuel Fernandez(3)........... 1993 157,400 30,000 10,494 None 404,681
Executive Vice President 1992 141,800 None None 8,000 6,517
1991 132,800 29,590 None 7,500 6,502
Robert Minsky(4).............. 1993 177,723 30,000 None None 287,902
Executive Vice President 1992 172,425 None 16,024 8,000 11,215
and Chief Financial Officer 1991 163,750 49,500 None 10,000 2,063
Anthony Tedesco(5)............ 1993 153,000 23,000 28,200 None 400,207
Vice President 1992 128,620 60,000 None 7,000 7,209
1991 124,439 36,900 None 7,500 8,089
Joe M. Rodgers(6)............. 1993 34,615 None None None 608,730
Former CEO 1992 300,000 None None 90,000 None
1991 11,538 None None None None
Elio Boccitto(7).............. 1993 182,769 None None None 1,359,631
Former President 1992 215,000 None None 15,000 13,990
1991 195,000 60,000 None 20,000 13,150
Jacques Meon(8)............... 1993 118,400 None 31,315 None 800,683
Former Vice President 1992 179,984 None 52,186 8,000 1,374
1991 161,498 50,700 50,150 7,500 1,200
</TABLE>
7
<PAGE> 11
- - ---------------
(1) Mr. Yokoi joined the Company as an officer in 1993 and his base salary of
$355,000 became effective April 1, 1993. Therefore, amounts shown for him
for 1993 reflect less than a full year of compensation. Mr. Yokoi's salary
increased to $361,000 effective August 30, 1993 and to $404,000 effective
January 1, 1994. During 1991 and 1992, Mr. Yokoi was not employed by the
Company but served as a Director; however, there was no compensation paid
to or earned by him in respect of such years.
(2) Mr. Kojima joined the Company as an officer in 1993 and his base salary of
$190,000 became effective on April 1, 1993. Therefore, amounts shown for
him for 1993 reflect less than a full year of compensation. Mr. Kojima's
salary increased to $200,000 effective January 1, 1994. During 1991 and
1992, Mr. Kojima was not employed by the Company and, accordingly, there is
no compensation information to report for him in respect of such years.
(3) Mr. Fernandez's salary increased from a base salary of $135,300 effective
April 1, 1991 to $143,418 effective April 1, 1992, to $185,000 effective
August 30, 1993, and to $207,200 effective January 1, 1994. Mr. Fernandez's
1993 percentage increase in base salary is based on the additional
responsibilities he assumed as a result of his promotion to Executive Vice
President -- Language Services from Vice President -- European Operations.
(4) Mr. Minsky's salary increased from a base salary of $165,000 effective
April 1, 1991 to $174,900 effective April 1, 1992, to $178,000 effective
August 30, 1993, to $185,000 effective October 4, 1993, and to $207,200
effective January 1, 1994.
(5) Mr. Tedesco's salary increased from a base salary of $123,000 effective
April 1, 1991 to $130,380 effective April 1, 1992, to $185,000 effective
July 17, 1993, and to $192,000 effective January 1, 1994. Mr. Tedesco's
1993 percentage increase in base salary is disproportionate to those of
other executive officers based on his relocation from the United States to
Japan and to his assumption of responsibilities as Vice President -- East
Asian Operations. A significant portion of Mr. Tedesco's salary after July
17, 1993 is paid in yen.
(6) Mr. Rodgers resigned from the Company effective February 8, 1993, the date
on which the consummation of the Merger occurred. Therefore, amounts shown
for him for 1993 reflect less than two months' compensation. Mr. Rodgers
joined the Company as an officer in December 1991. Therefore, amounts shown
for him for 1991 reflect less than one month's compensation.
(7) Mr. Boccitto retired from the Company effective August 31, 1993. Therefore,
amounts shown for him for 1993 represent less than a full year's
compensation. Mr. Boccitto's base salary increased from $200,000 effective
April 1, 1991 to $220,000 effective April 1, 1992.
(8) Mr. Meon resigned from the Company effective July 16, 1993. Therefore,
amounts shown for him for 1993 represent less than a full year's
compensation. Mr. Meon's base salary increased from $165,865 in 1991 to
$184,691 effective April 1, 1992. A significant portion of Mr. Meon's
salary was paid in yen.
(9) Amounts shown represent base salary earned in the respective years.
(10) Other Annual Compensation for Mr. Yokoi and Mr. Kojima represents monthly
housing allowances of $2,500 and $3,500, respectively, effective beginning
September 1, 1993. For Mr. Fernandez, this column represents a relocation
allowance of $10,494, paid by the Company in 1993. For Mr. Tedesco, $28,200
was paid, representing housing allowance and relocation expense
reimbursement. For Mr. Meon, $31,315 was paid, representing housing
allowance.
(11) The column designated by the SEC to report Long-Term Incentive Plan Payouts
has been excluded because the Company had no performance-based long-term
compensation plans for
8
<PAGE> 12
employees effective during any portion of fiscal years 1993, 1992 or 1991. The
Compensation Committee of the Company's Board of Directors approved a long-term
incentive plan, effective January 1, 1994, as discussed in the Compensation
Committee report under "Long-Term Executive Incentive Compensation Plan".
The column designated by the SEC to report Restricted Stock Awards has been
excluded because the Company made no awards of restricted stock to the
Named Executive Officers during any portion of fiscal years 1993, 1992 or
1991. Prior to the Merger, all restricted stock awards had vested in twenty
percent increments over a five year period commencing on the first
anniversary of the date of grant. Shareholders of restricted stock received
dividends at the same rate and at the same time as shareholders of common
stock of the Company. In connection with the Merger on February 8, 1993,
all restrictions on shares of restricted stock lapsed, as discussed below.
Consequently, there are no New Common restricted shares outstanding at
December 31, 1993.
(12) The awards set forth in this column are of grants of stock options only.
The Company has not granted SARs to any of the Named Executive Officers
during fiscal years 1993, 1992, and 1991.
(13) The amounts reported in this column for the fiscal year 1993 include
consideration paid to Named Executive Officers for the settlement of stock
options and restricted stock in accordance with the Merger Agreement,
valued as follows: Mr. Fernandez, $397,208; Mr. Minsky, $276,350; Mr.
Tedesco, $391,691; Mr. Rodgers, $564,030; Mr. Boccitto, $1,094,038; and Mr.
Meon, $467,378. The amounts reported for fiscal 1993 also include
severance-related payments for Mr. Rodgers, Mr. Boccitto, and Mr. Meon of
$44,700, $220,000, and $332,097, respectively. In addition, consulting
payments to Mr. Boccitto of $36,384 are included for 1993. Furthermore, the
amounts reported include contributions made by the Company for the accounts
of the Named Executive Officers pursuant to the thrift portion (the "401(k)
Plan") of the Berlitz Retirement Savings Plan (the "Retirement Savings
Plan"). For fiscal 1993, such contributions were as follows: Mr. Fernandez,
$3,449; Mr. Minsky, $5,332; Mr. Tedesco, $3,907; and Mr. Boccitto, $4,315.
The amounts reported also include contributions made by the Company for the
accounts of the Named Executive Officers pursuant to the retirement portion
(the "Pension Plan") of the Retirement Savings Plan. During fiscal year
1993, such contributions were as follows: Mr. Fernandez, $4,024; Mr.
Minsky, $6,220; Mr. Tedesco, $4,609; and Mr. Boccitto, $4,894. The amount
reported for Mr. Meon also includes $1,208, representing contributions made
by the Company during fiscal year 1993 to the retirement plan of The
Berlitz Schools of Languages, Inc. (Japan) ("Berlitz-Japan").
STOCK OPTIONS, RESTRICTED STOCK AND STOCK APPRECIATION RIGHTS
There were no grants of stock options or restricted stock to the Named
Executive Officers during fiscal year 1993 under the Berlitz International, Inc.
1989 Stock Option and Incentive Plan (the "Stock Option Plan"). In addition, as
indicated under the Summary Compensation Table above, although Stock
Appreciation Rights ("SARs") are authorized under the Stock Option Plan, the
Compensation Committee (or the Awards Committee, as the case may be) did not
grant SARs to any of the Named Executive Officers during the fiscal years ended
December 31, 1993, 1992 and 1991.
Pursuant to the Merger Agreement and the Stock Option Plan, on February 8,
1993, each outstanding option became fully vested and was converted into the
right to receive (i) 0.165 share of New Common; (ii) $19.50 minus the exercise
price of such option; and (iii) $1.48, representing the net proceeds from the
disposition of the Company's claims arising from three promissory notes issued
by MCC and an affiliate of MCC in favor of the Company or a subsidiary of the
Company (the "Maxwell
9
<PAGE> 13
Notes"). In addition, pursuant to the terms of the Merger Agreement and the
Stock Option Plan, on February 8, 1993, all restrictions on restricted stock
lapsed and the holders of such shares received (i) $19.50; (ii) 0.165 share of
New Common; and (iii) $1.48, representing the net proceeds from the disposition
of the Company's claims arising from the Maxwell Notes. In addition, holders of
restricted stock received $.01 per share at such time in consideration for the
redemption of the Common Share Purchase Rights (each, a "Right") granted
pursuant to the terms of the Amended and Restated Safeguard Rights Agreement,
dated as of February 5, 1992, between the Company and United States Trust
Company of New York (the "Rights Agreement").
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the exercise
of all options and the lapse of restricted stock in accordance with the Merger
Agreement. All options and restricted stock prior to the Merger were converted,
as discussed above, into the right to receive certain cash and non-cash
consideration pursuant to the terms of the Merger. At December 31, 1993, there
were no options, restricted stock, or SARs outstanding.
AGGREGATED OPTION/SAR EXERCISES/RESTRICTED STOCK LAPSES
IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
OPTIONS
----------------------------------- RESTRICTED SHARES
NEW COMMON -----------------------------------
SHARES RESTRICTED NEW COMMON
OPTIONS RECEIVED SHARES SHARES NUMBER NUMBER OF
OUTSTANDING ON VALUE OUTSTANDING RECEIVED VALUE OF RESTRICTED
PRIOR TO CONVERSION REALIZED PRIOR TO ON REALIZED OPTIONS SHARES
MERGER (#) ($)(1) MERGER LAPSE(#) ($)(2) AT FY-END AT FY-END
----------- ---------- -------- ----------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hiromasa
Yokoi....... 0 0 0 0 0 0 0 0
Susumu
Kojima...... 0 0 0 0 0 0 0 0
Manuel
Fernandez... 45,500 7,507 291,336 4,500 743 105,872 0 0
Robert
Minsky...... 30,500 5,032 205,769 3,000 495 70,581 0 0
Anthony
Tedesco..... 44,500 7,342 285,819 4,500 743 105,872 0 0
Joe M.
Rodgers..... 90,000 14,850 564,030 0 0 0 0 0
Elio
Boccitto.... 135,000 22,275 882,295 9,000 1,485 211,743 0 0
Jacques Meon.. 55,500 9,158 361,506 4,500 743 105,872 0 0
</TABLE>
- - ---------------
(1) For each option outstanding prior to the Merger, the value realized includes
(i) 0.165 share of New Common having a fair market value per share on
February 8, 1993 (the date of conversion) of $15.38; (ii) $19.50 minus the
exercise price of such option; and (iii) $1.48, representing the net
proceeds from the disposition of the Company's claims on the Maxwell Notes.
(2) For each unvested restricted share outstanding prior to the Merger, the
value realized includes (i) 0.165 share of New Common having a fair market
value per share on February 8, 1993 (the date of lapse) of $15.38; (ii)
$19.50; (iii) $1.48, representing the net proceeds from the disposition of
the Company's claims on the Maxwell Notes; and (iv) $.01 in consideration
for the redemption of each Right under the Rights Agreement.
10
<PAGE> 14
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
During 1993, the Company entered into a severance agreement with Robert
Minsky, replacing all previous agreements entered into between Mr. Minsky and
the Company, which provides that if Mr. Minsky is terminated other than for
cause (1) at any time prior to August 8, 1995, he is to be paid two years'
severance at his then current annual base salary plus a prorated amount of the
award under the Company's Short-Term Incentive Plan to which he would have been
entitled for both years and the continuation of certain other benefits; or (2)
at any time after August 8, 1995, such benefits would be payable for one year.
The Company also has a severance agreement with Manuel Fernandez, dated
February 6, 1992, which provides that if, within 18 months following a change of
control occurring at any time before February 6, 1994, the Company terminates
Mr. Fernandez's employment other than for cause, Mr. Fernandez would receive
amounts equal to his annual base salary for one year plus a prorated share of
the award under the Company's short-term bonus plan to which he would have been
entitled and the continuation of certain other benefits.
In addition, the Company entered into a severance agreement, dated June 15,
1993, with Anthony Tedesco, which provides that if, during the period which Mr.
Tedesco serves as Vice President -- East Asian Operations, plus two years
thereafter, the Company terminates Mr. Tedesco's employment other than for
cause, Mr. Tedesco would receive amounts equal to two years' salary and the
continuation of certain other benefits.
In connection with his resignation as an executive officer and director of
the Company in 1993, Elio Boccitto received a severance payment of $220,000. In
addition, Mr. Boccitto entered into a consulting agreement with the Company for
the two year period ending August 31, 1995 pursuant to which Mr. Boccitto
receives a monthly fee of $9,167, subject to certain conditions.
The Company is a party to indemnification agreements with each director and
executive officer pursuant to which the Company agrees to pay, subject to
limitations imposed by the NYBCL, any amount such director or executive officer
becomes obligated to pay as a result of any claims made against such director or
executive officer because of any alleged act or omission or neglect or breach of
duty which he or she commits while acting in his or her capacity as a director
or executive officer, as the case may be.
COMPENSATION COMMITTEE REPORT FOR FISCAL YEAR 1993
The Compensation Committee of the Board of Directors reviews and determines
the compensation of the Company's executive officers. It also reviews and
approves any employment, severance or similar agreements for executive officers.
The Committee determines the amount, if any, of the Company's contributions
pursuant to the Retirement Savings Plan, and oversees and approves grants of
stock options and other stock-based awards pursuant to the Stock Option Plan and
the Directors' Stock Plan. The Committee also administers the Short-Term
Incentive Plan and the Long-Term Incentive Plan and approves awards and
discretionary bonuses under each of such plans.
The Company seeks to compensate executive officers at levels competitive
with other companies with similar annual revenues and to provide incentives for
superior individual and corporate performance. Salaries are set to correspond to
the mid-range of salaries paid by competitive companies. In setting
compensation, the Company compares itself with companies with similar annual
revenues rather than with industry peers because the Company is the only
publicly-held language instruction company.
11
<PAGE> 15
The key components of executive officer compensation are base salary, cash
bonuses, and awards pursuant to incentive-based plans. The Committee attempts to
combine these components in such a way to attract, motivate and retain key
executives critical to the long-term success of the Company. A discussion of the
various components of executive compensation for fiscal year 1993 follows.
BASE SALARY
Each executive officer receives a base salary and the potential for annual
salary increases is largely based on merit from prior annual performance.
The proposed annual compensation of Company employees was discussed at two
of the three Compensation Committee meetings held in 1993. Presentations by an
outside consultant were given regarding the Company's current compensation and
benefits plans. Among other things, the presentations included a compensation
survey comparing the Company's compensation for 37 job titles to the
consultant's database of comparable marketplace salary ranges and midpoints.
Committee members were given sufficient time to review the consultant's
presentations. Base salary recommendations were made by management for the
Committee to approve. After review and consideration by the Committee of
management's recommendations, the Committee approved base salary adjustments to
comparable marketplace levels provided by the consultant, considering individual
and Company performance. The criteria used to evaluate Company performance were
salary and earnings figures, and return on equity. The Committee believes that
all such criteria were accorded equal weight.
BONUSES
At the third Compensation Committee meeting, held on December 2, 1993, the
Committee approved the Short-Term Incentive Plan, commencing with the 1993
calendar year, pursuant to which each executive officer is eligible for an
annual bonus based upon the officer's present employment position, individual
performance, and the Company's performance compared to earnings goals. The
Committee believes that individual performance and Company performance are given
approximately equal weight. The Short-Term Incentive Plan also permits the
Committee to award discretionary cash awards to employees, who may or may not be
participants under the Short-Term Incentive Plan, subject to those terms and
conditions as the Committee shall determine in its sole discretion. At the
December meeting, the Committee approved, after discussion, a 1993 discretionary
bonus proposal for certain executive officers, recommended by management based
upon exceptional individual performance. Bonuses that accrued for 1993 for such
executive officers ranged from 14.6% to 17.7% of their total salary.
STOCK OPTIONS AND RESTRICTED STOCK
The Stock Option Plan provides for the award of stock options, restricted
stock and other stock-based awards to senior management of the Company. Grants
under this plan are intended to provide executives with the promise of
longer-term rewards which appreciate in value with favorable future performance
of the Company. In determining grants of stock options and restricted stock, the
Compensation Committee reviews individual performance and Company performance.
The criteria used to evaluate Company performance include sales and earnings
figures and return on equity. The Committee believes that all such criteria are
accorded equal weight. The Committee did not approve, and the Company did not
make, any grants of stock options, restricted stock, or any other stock-based
award under the Stock Option Plan in 1993.
12
<PAGE> 16
LONG-TERM EXECUTIVE INCENTIVE COMPENSATION PLAN
At the Compensation Committee meeting held on December 2, 1993, the
Committee approved the Long-Term Incentive Plan, effective January 1, 1994,
pursuant to which officers and certain key employees are eligible to receive,
for each performance unit granted to the individual by the Committee, cash
awards based on Company performance and common stock price results over a five
year period ending on December 31, 1998. The plan was instituted to, among other
things, provide executives with a direct economic interest in meeting long-term
business objectives. Performance units are granted by the Committee to each
executive officer in its discretion. Criteria used to evaluate Company
performance are earnings and sales figures. The weight assigned to the earnings
component of Company performance is 60% and the weight assigned to the sales
component of Company performance is 40%. For each performance unit granted by
the Committee, each executive officer will receive a cash award based on Company
performance and the Company's common stock price results from January 1, 1994
through December 31, 1998. The Long-Term Incentive Plan also contains provisions
governing such awards in the event of a change of control of the Company or a
"going private" transaction with Fukutake or its affiliates.
OTHER COMPENSATION
The executive officers also are eligible to participate in the Pension
Plan. The Pension Plan provides for the Company to make regular contributions
based on salaries of eligible employees. During 1993, the Compensation Committee
determined that the Company would contribute 3.5% of eligible employees'
respective base salary to the Pension Plan. During 1993, the Compensation
Committee also determined that matching contributions by the Company would be
provided under the 401(k) Plan to all domestic employees up to a maximum of 3%
of the employee's salary. A participant in the Pension Plan is immediately
vested in their voluntary contributions plus actual earnings thereon. Such
participant vests with respect to employer contributions and income thereon at a
rate of 20% after two full years of service, 40% after three full years of
service, 60% after four full years of service and 100% after five or more years
of service. Full vesting also occurs upon attainment of the normal retirement
date (age 65), or termination due to permanent disability or death. If such
participant in the Pension Plan terminates employment, the nonvested portion of
employer contributions and income thereon is forfeited.
CHIEF EXECUTIVE OFFICER COMPENSATION
Subsequent to the Merger, Hiromasa Yokoi was appointed by the Board of
Directors to be the CEO and Vice Chairman of the Board of the Company, effective
as of February 8, 1993. At the time, Mr. Yokoi was serving as a director of the
Company and had been serving as a director of the Company since January 1991.
The Company entered into an employment agreement with Mr. Yokoi, pursuant to
which he was entitled to receive $355,000 per annum and certain other benefits.
On August 31, 1993, Elio Boccitto resigned as President of the Company, and Mr.
Yokoi assumed the additional responsibilities of President. Mr. Yokoi's salary
increased to $361,000 effective August 30, 1993 and to $404,000 effective
January 1, 1994, based on his additional responsibilities as President.
The Compensation Committee approved and ratified the compensation paid to
Mr. Yokoi for fiscal year 1993 based on Mr. Yokoi's business experience and
familiarity with the Company, and his responsibilities to guide, among other
things, the Company's daily affairs and the Company's long-term strategic plan
in a global marketplace. The Company's 1993 performance was not a factor in
determining Mr. Yokoi's 1993 compensation package. The Committee believes that
Mr. Yokoi's 1993 compensation package was in line with compensation packages of
chief executive officers of other companies with similar annual revenues.
13
<PAGE> 17
TAX LEGISLATION
During 1993, the U.S. Internal Revenue Code was amended to limit deductions
for certain compensation in excess of $1 million annually paid to executive
officers of public companies. The legislation imposing this change is unclear on
a number of critical issues, and the ultimate effect of the change on the
Company and other public companies will depend to a significant extent on the
implementing regulations. Proposed regulations have been issued, but these
regulations are not final and also are subject to a number of interpretations.
The Committee intends to continue to evaluate this change during 1994. At this
time, however, the Committee and the Board of Directors have not taken action in
respect of the Company's compensation policy as a result of the change.
COMPENSATION COMMITTEE MEMBERSHIP
Subsequent to the Merger, during 1993, the Compensation Committee consisted
of Soichiro Fukutake, Edward G. Nelson, and Aritoshi Soejima. All of the views
expressed by the Compensation Committee in 1993 may not have been the views of
each member of the Compensation Committee individually. However, all decisions
affecting compensation were approved by all of the members of the Compensation
Committee.
Compensation Committee for Fiscal Year 1993
Soichiro Fukutake
Edward G. Nelson
Aritoshi Soejima
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above, subsequent to the Merger and at July 11, 1994, the
Compensation Committee consisted of Soichiro Fukutake, Edward G. Nelson, and
Aritoshi Soejima. None of these committee members was an officer of the Company
or any of its subsidiaries during 1993.
Mr. Fukutake serves as the Chairman of the Board of the Company. In
addition to his role in presiding over board meetings, Mr. Fukutake is actively
involved in creating and monitoring strategies for the Company's global growth.
As a result, upon recommendation of management and after discussion, the
Compensation Committee, with Mr. Fukutake absent, approved the inclusion of Mr.
Fukutake as a participant in the Long-Term Incentive Plan, based upon the
considerable time and effort spent by Mr. Fukutake in monitoring long-term
strategies for the Company, apart from his duties as Chairman of the Board.
Aritoshi Soejima previously served as an advisor to Fukutake. He resigned
such position prior to his appointment as a Disinterested Director and a member
of the Compensation Committee.
Mr. Yokoi, who had been a member of the Compensation Committee prior to the
Merger, was elected to the Board of Directors in January 1991 pursuant to
Fukutake's acquisition of a 20% interest in Berlitz-Japan for an aggregate
consideration of $27.1 million. On February 8, 1993, Mr. Yokoi was appointed CEO
and Vice Chairman of the Board of the Company as a result of the Merger. He
attended the Compensation Committee meeting held on February 27, 1993; however,
he excused himself after roll call and, as a result, did not participate in
compensation discussions or decisions. He resigned from the Compensation
Committee effective as of February 28, 1993.
14
<PAGE> 18
PERFORMANCE GRAPH
The following graphs set forth the Company's total shareholder return as
compared to the S&P 400 Industrial Index and two peer groups (described below)
over a four-year period, beginning December 31, 1989, and ending December 31,
1993. In December 1989, the Company completed an initial public offering of
approximately 8.4 million shares of common stock. See "Certain Relationships and
Related Transactions" for further discussion. The total shareholder return
assumes one hundred dollars invested at the beginning of the period in the
Company's common stock, the S&P 400 Industrial Index and the peer group indices.
It also assumes reinvestment of all dividends.
As the Company is the only publicly-held language instruction company,
there are no directly comparable companies. The two closest industry groups to
the Company are education companies and educational publishers. Therefore, the
Company has created an index of selected publicly held companies in each of
these two industries. These indices have been plotted against the Company's
total shareholder return and the S&P 400 Industrial Index. The companies
included in the education companies index are Flightsafety International, which
sells primarily flight training materials, and National Education Corporation,
which sells primarily technical and vocational training materials. The companies
included in the educational publishing index are Houghton Mifflin, John Wiley &
Sons and McGraw-Hill, Inc. While none of these companies is directly comparable
to the Company, the Company believes they come under either the same broad
rubric of education-related activities as the Company, in the case of the
education companies index, or educational publishers, in the case of the
educational publishing index.
COMPARISON OF STOCK PRICES
BERLITZ INTERNATIONAL, INC., THE S&P 400 INDUSTRIAL INDEX,
AND SELECTED EDUCATION COMPANIES
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P 400 IN- EDUCATION
(FISCAL YEAR COVERED) BERLITZ DEX COMPANIES
<S> <C> <C> <C>
1989 100 100 100
1990 81 96 91
1991 119 122 100
1992 132 126 111
1993 83(1) 134 124
</TABLE>
- - ---------------
(1) As a result of the Merger, each share of the Company's common stock
outstanding prior to the Merger ("Old Common") was converted into the right
to receive (i) $19.50; (ii) 0.165 share of New Common; (iii) $1.48,
representing the net proceeds from the disposition of the Company's claims
on the Maxwell Notes; and (iv) $.01, representing consideration paid for the
redemption of each Right under the Rights Agreement. As of July 8, 1994,
10,032,903 shares of New Common were outstanding. Prior to the Merger,
19,075,584 shares of Old Common were outstanding.
15
<PAGE> 19
COMPARISON OF STOCK PRICES
BERLITZ INTERNATIONAL, INC., THE S&P 400 INDUSTRIAL INDEX,
AND SELECTED EDUCATIONAL PUBLISHING COMPANIES
<TABLE>
<CAPTION>
EDUCATIONAL
MEASUREMENT PERIOD S&P 400 IN- PUBLISHING
(FISCAL YEAR COVERED) BERLITZ DEX COMPANIES
<S> <C> <C> <C>
1989 100 100 100
1990 81 96 94
1991 119 122 101
1992 132 126 90
1993 83(1) 134 79
</TABLE>
- - ---------------
(1) As a result of the Merger, each share of Old Common was converted into the
right to receive (i) $19.50; (ii) 0.165 share of New Common; (iii) $1.48,
representing the net proceeds from the disposition of the Company's claims
on the Maxwell Notes; and (iv) $.01, representing consideration paid for the
redemption of each Right under the Rights Agreement. As of July 8, 1994,
10,032,903 shares of New Common were outstanding. Prior to the Merger,
19,075,584 shares of Old Common were outstanding.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Company's initial public offering in December 1989, the
Company was a wholly-owned subsidiary of Macmillan, Inc. ("Macmillan"). On
December 13, 1989, the Company sold 8.4 million shares of common stock to the
public in an initial public offering and issued to Macmillan 200,000 shares of
the Company's 7% non-cumulative preferred stock (the "Preferred Stock") (of
which 20,000 shares were subsequently retired and cancelled and 180,000 shares
remained outstanding) in exchange for the capital stock of its predecessor
companies.
Mr. Yokoi was elected to the Board of Directors in January 1991 pursuant to
Fukutake's acquisition of a 20% interest in Berlitz-Japan, a subsidiary of the
Company, for an aggregated consideration of $27.1 million. Pursuant to an
agreement with Fukutake entered into in connection with such acquisition,
Fukutake was entitled to nominate one director of the Company and had an option,
under certain circumstances, to sell back such interest to the Company,
including in the event that the Company
16
<PAGE> 20
should decide not to apply for public registration of its subsidiary in Japan.
Pursuant to the Merger, Fukutake relinquished the above-mentioned option. Mr.
Saburou Nagai currently serves as the Fukutake nominee on the Board of Directors
of the Company pursuant to the acquisition by Fukutake in January 1991 of a 20%
interest in Berlitz-Japan.
On December 9, 1992, the Company and Fukutake entered into the Merger
Agreement pursuant to which Fukutake agreed to acquire, through a Merger of the
Company with an indirect wholly-owned U.S. subsidiary of Fukutake, approximately
67% of the New Common. The Company's shareholders received for each of their
shares of common stock held prior to the Merger: (i) $19.50 in cash; (ii) 0.165
share of New Common; and (iii) $1.48, representing the net proceeds from the
disposition of the Company's claims arising from the Maxwell Notes. Public
shareholders of the Company hold the remaining approximately 33% of New Common.
In addition, at the time of the closing, the shareholders of record on February
17, 1992 received $.01 per share in consideration for the redemption of each
Right granted pursuant to the terms of the Rights Agreement.
The Merger Agreement and the transactions contemplated thereby were
approved by the required holders of at least two-thirds of the Company's
outstanding shares and were consummated on February 8, 1993.
In January 1993, the Company entered into agreements with MCC and Macmillan
(the "Disengagement Agreements") with respect to disengaging certain
relationships among such companies. Pursuant to these agreements, among other
things: (i) the Company redeemed from Macmillan all of the outstanding Preferred
Stock of the Company; (ii) MCC waived all claims that payments to the Company
should be considered preferential and other claims of MCC and its affiliates
against the Company and its subsidiaries that MCC may have as a result of MCC's
bankruptcy filing on December 16, 1991; and (iii) U.S. and U.K. bankruptcy
authorities allowed for all purposes a portion of the Maxwell Notes and a claim
by the Company against MCC as subrogee of Midland Bank plc in the Chapter 11
case (and any superseding Chapter 7 case) and in the MCC administration pending
in the High Court of Justice in the United Kingdom. In addition, the Company and
its subsidiaries (a) sold to Macmillan a promissory note of Macmillan with a
principal amount of $64.568 million and (b) reduced by $58 million the amount of
their claims against MCC in respect of the Maxwell Notes.
The Company also entered into an agreement with Macmillan clarifying
certain commercial relationships, including formally terminating the services
agreement with MCC and Macmillan as of December 31, 1991. Certain distribution
agreements with Macmillan and its affiliates were terminated in May 1994 with
respect to the United States and will be terminated effective in October 1994
with respect to Canada.
The Company was included in the consolidated tax returns of the affiliated
group of which Macmillan was the parent (the "Macmillan Group") prior to the
Company's initial public offering in December 1989 and, consequently, is
severally liable for any federal income tax liabilities of the Macmillan Group
arising prior to that date. Pursuant to the Disengagement Agreement, Macmillan
and a new obligor which owns 100% of Macmillan School Publishing, Inc. agreed to
pay all such Federal income tax liabilities pursuant to an amended and restated
tax allocation agreement (the "Tax Allocation Agreement") and MCC put into
escrow $39.5 million to secure Macmillan's obligation under the Tax Allocation
Agreement.
On November 10, 1993, Macmillan commenced a voluntary Chapter 11 case in
the United States Bankruptcy Court of the Southern District of New York and
filed a prepackaged plan of reorganization
17
<PAGE> 21
(the "Reorganization Plan"). The Reorganization Plan provides that the Tax
Allocation Agreement, along with many other contracts between Macmillan and
other parties, is to be assumed by Macmillan and assigned to a trust intended to
have sufficient assets to satisfy the obligations being assumed and assigned.
The Reorganization Plan also provides a cash reserve to pay tax claims that are
entitled to priority, which may include tax liabilities covered by the Tax
Allocation Agreement. On February 18, 1994, the Bankruptcy Court confirmed the
Reorganization Plan. Any tax liability assessed against the Company that would
otherwise be payable by Macmillan under the Tax Allocation Agreement is likely
to be paid either by the trust or from the cash reserve described above.
Management believes that any such liability will not result in a material effect
on the financial condition of the Company.
As part of the Merger, Fukutake established a $50.0 million irrevocable
letter of credit to be used in the event that income tax liabilities are imposed
on the Company that relate to the Macmillan Group. The Company is obligated to
pay fees as may be charged in connection with such letter of credit and to
reimburse Fukutake for amounts paid by Fukutake to the issuer of the letter of
credit to the extent that it is drawn upon.
Berlitz-Japan has a contract (the "Development Agreement") with Fukutake,
originally executed in 1992 and amended in 1993, for the development of English
conversation video taped programs for elementary and junior high school students
in Japan. Under this contract, Fukutake will reimburse Berlitz-Japan for
project-related production costs incurred, including employee salaries and
outside production fees, and pay to Berlitz-Japan a one-time development fee of
Yen 46,672,000 (approximately $420,000 based on the Yen/Dollar exchange rate at
the close of business on December 31, 1993) and a coordination fee of 10% of
project-related employee salaries, estimated at Yen 2.3 million (approximately
$21,000 based on the Yen/Dollar exchange rate at the close of business on
December 31, 1993).
Pursuant to the Development Agreement, the Company received reimbursement
for production costs of approximately $1.8 million and $296,000 during 1993 and
1992, respectively. In addition, the Company received the development fee of
approximately $420,000 in 1993.
Fukutake and Berlitz-Japan also entered into an agreement, dated as of
October 1, 1993, pursuant to which Berlitz-Japan would assist Fukutake in the
development of an English correspondence course and related audio visual
materials. Under the terms of the agreement, Fukutake would pay Berlitz-Japan a
minimum guaranty usage fee of Yen 6,592,416 (approximately $59,000 based on the
Yen/Dollar exchange rate at the close of business on December 31, 1993) and an
additional royalty for all courses sold beyond the first 1,200.
The Company and Fukutake entered into certain other joint business
arrangements in the ordinary course of business, as follows. Berlitz-Japan and
Fukutake entered into an extended industrial block contract whereby
Berlitz-Japan has waived a one-time registration charge and has provided
Fukutake with an industrial lesson rate which is approximately 20% below the
individual rate. In addition, the Company entered into a sublease with Fukutake
Information and Publishing for approximately 2,100 square feet of space in New
York at an annual base rent of $79,000 plus operating expenses. Furthermore,
Fukutake and Berlitz-Japan have entered into a cooperative advertising
arrangement pursuant to which Fukutake is allowed to include a Berlitz-Japan
advertisement and a discount coupon toward registration fees in a targeted
mailing to certain Fukutake customers.
Management believes that the Company has entered into all such agreements
on terms no less favorable than it would have received in an arms-length
transaction with independent third parties. Each of the transactions with
Fukutake entered into after the Merger was approved by the Disinterested
Directors Committee.
18
<PAGE> 22
Fukutake has advised the Company that it plans to change Fukutake's name to
"Benesse Corporation" on April 1, 1995, upon approval of Fukutake's
shareholders. Subject to receipt of all required Japanese approvals and
prevailing market conditions, Fukutake plans to make an initial public offering
of Fukutake securities no earlier than the later part of 1995. There is no
assurance that such a public offering will be made, the timing of any such
public offering, nor can the Company predict its possible impact on Berlitz.
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
Upon recommendation of the Audit Committee, on March 8, 1994, the Board of
Directors selected Deloitte & Touche to serve as independent accountants of the
Company for 1994. The Board of Directors proposes and recommends that the
shareholders ratify the selection of the firm of Deloitte & Touche to serve as
independent accounts of the Company for 1994. Deloitte & Touche served as the
Company's independent accountants for 1993; prior thereto, Coopers & Lybrand
served as the Company's independent accountants from 1989 to 1992.
During the Company's two most recent fiscal years and any subsequent
interim period preceding the selection of Deloitte & Touche, there were no
disagreements with Coopers & Lybrand on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope of procedure, which
disagreements, if not resolved to Coopers & Lybrand's satisfaction, would have
caused it to make reference to the subject matter of the disagreements in
connection with its report.
The Company did not consult Deloitte & Touche, prior to engaging it, with
respect to the application of accounting principles to a specified transaction,
the type of audit opinion that might be rendered on the Company's financial
statements, or any matter that was the subject of a disagreement.
Unless otherwise directed by the shareholders, proxies will be voted for
approval of the selection of Deloitte & Touche to audit the Company's
consolidated financial statements for the current year. A representative of
Deloitte & Touche will attend the Meeting, and will have an opportunity to make
a statement if he or she so desires and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
1994.
VOTE REQUIRED
Under the NYBCL, approval for each nominee for director requires the
affirmative vote of a plurality of the shares of New Common represented and
entitled to be voted at the Meeting.
The vote occurring at the Meeting will be overseen by an inspector. The
inspector's duties include determining the number of shares represented at the
Meeting, counting all votes and ballots and certifying the determination of the
number of shares represented and the outcome of the balloting. The aggregate
number of votes entitled to be cast by all shareholders present in person or
represented by proxy at the Meeting will be counted for purposes of determining
the minimum number of affirmative votes required for the election of directors
and for the ratification of appointment of auditors. Thus, an abstention from
voting will have the same effect as a vote against matters that are to be voted
on at the Meeting.
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<PAGE> 23
SHAREHOLDER PROPOSALS FOR THE 1995 ANNUAL MEETING OF SHAREHOLDERS
Appropriate proposals from shareholders intending to be present at the 1995
annual meeting of shareholders must be received by the Company for inclusion in
the Company's Proxy Statement and form of proxy relating to that meeting on or
before December 20, 1994.
MISCELLANEOUS
The Company will bear all of the costs of the solicitation of proxies for
use at the Meeting. In addition to the use of the mails, proxies may be
solicited by a personal interview, telephone and telegram by directors, officers
and employees of the Company, who will undertake such activities without
additional compensation. Banks, brokerage houses and other institutions,
nominees or fiduciaries will be requested to forward the proxy materials to the
beneficial owners of the shares or New Common held of record by such persons and
entities and will be reimbursed for their reasonable expenses incurred in
connection with forwarding such materials.
Shareholders who do not expect to attend in person are urged to sign, date
and return the enclosed proxy in the envelope provided. In order to avoid
unnecessary expense, we ask your cooperation in mailing your proxy promptly, no
matter how large or how small your holdings may be.
At the date of this Proxy Statement, management has no knowledge of any
business, other than that described herein, which will be presented for
consideration at the Meeting. In the event any other business is properly
presented at the Meeting, it is intended that the persons named in the enclosed
proxy will have authority to vote such proxy in accordance with their judgment
on such business.
The information required under Item 401 of Regulation S-K with respect to
executive officers of the Company is incorporated by reference herein to the
section entitled "Executive Officers and Directors of the Registrant" set forth
in Part I of the Company's Form 10-K.
The Company's annual report on Form 10-K for the fiscal year ended December
31, 1993, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto, will be mailed upon oral or written
request, without charge, to any shareholder of the Company. All such requests
should be directed to Robert C. Hendon, Jr., Company Secretary, Berlitz
International, Inc., 293 Wall Street, Princeton, New Jersey, 08540 (609)
924-8500.
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<PAGE> 24
BERLITZ INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF BERLITZ INTERNATIONAL, INC.
IN CONNECTION WITH ITS 1994 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 1, 1994
The undersigned shareholder of Berlitz International, Inc. (the
"Company") hereby appoints Robert C. Hendon, Jr. and Robert Minsky or either of
them, the true and lawful attorneys, agents and proxies of the undersigned,
with full power of substitution, to vote all shares of New Common which the
undersigned may be entitled to vote at the 1994 annual meeting of shareholders
of the Company to be held on August 1, 1994, and at any adjournment or
postponement of such meeting with all powers which the undersigned would
possess if personally present, for the following purposes:
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED
(CONTINUED ON THE REVERSE SIDE)
- - ------------------- /X/ Please mark
COMMON your votes
as this
BERLITZ INTERNATIONAL, INC. RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
NOMINEES AND PROPOSALS LISTED BELOW
1. ELECTION OF NOMINEES - To elect each of Hiromasa Yokoi, Saburou Nagai,
Edward G. Nelson and Robert L. Purdum, as a director of the Company to serve
until the Company's 1996 annual meeting of shareholders and until their
successors are elected and qualified of their earlier death, resignation or
removal.
FOR all nominees / / WITHHOLD AUTHORITY / /
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
--------------------------------------------------
2. RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS - To ratify the
selection of the firm of Deloitte & Touche to serve as independent accountants
of the Company for 1994.
FOR / / AGAINST / / ABSTAIN / /
3. OTHER - In their discretion upon such other matters, including withholding a
quorum, if necessary, as may properly come before the Meeting.
This Proxy will be voted as directed or, if no direction is indicated, will be
voted FOR the election of the nominees and the approval of the proposal
described above.
Dated: , 1994
-----------------------------------------
- - ------------------------------------------------------
(Signature)
- - ------------------------------------------------------
(Signature)
- - ------------------------------------------------------
(Title or Capacity)
(Please sign your name or names exactly as it appears on your stock
certificate(s). When signing as attorney, executor, administrator, trustee,
guardian or corporate executor, please give your full tile as such. For joint
accounts, all co-owners should sign.)
