SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 SEC.240.14A-11(C) OR SEC.240.14A-12
BERLITZ INTERNATIONAL, INC.
________________________________________________________________________________
(Name of Registrant as Specified in its Charter)
BERLITZ INTERNATIONAL, INC.
________________________________________________________________________________
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
/X/ $125 per Exchange Act Rules 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 transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-111:
4) Proposed maximum aggregate value of transaction:
1Set forth the amount on which the filing fee is calculated and state how it was
determined.
/ / 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 No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[BERLITZ LOGO]
July 21, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 annual meeting of
shareholders that will be held on Tuesday, August 8, 1995 at 10:00 a.m.
in New York, New York.
The Notice and Proxy Statement on the following pages contains
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.
Soichiro Fukutake
Chairman
<PAGE>
[BERLITZ LOGO]
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 8, 1995
Notice is hereby given that the 1995 annual meeting of shareholders (the
"Meeting") of Berlitz International, Inc. (the "Company") will be held at the
Rihga Royal Hotel, 151 West 54th Street, New York, New York 10019 on Tuesday,
August 8, 1995 at 10:00 a.m. local time for the following purposes:
1. To elect five directors to serve for two-year terms until the 1997
annual meeting of shareholders;
2. To ratify the selection by the Board of Directors of the Company of
Deloitte & Touche LLP, independent accountants, to audit the Company's
consolidated financial statements for 1995; 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 14, 1995 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
Robert C. Hendon, Jr.
Secretary
Princeton, New Jersey
July 21, 1995
<PAGE>
BERLITZ INTERNATIONAL, INC.
293 WALL STREET
PRINCETON, NEW JERSEY 08540
PROXY STATEMENT
1995 ANNUAL MEETING OF SHAREHOLDERS
AUGUST 8, 1995
The enclosed proxy is solicited by the Board of Directors of Berlitz
International, Inc. (the "Company") for use at the 1995 annual meeting of
shareholders (the "Meeting") to be held at the Rihga Royal Hotel, 151 West 54th
Street, New York, New York 10019 on Tuesday, August 8, 1995, 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 LLP as
independent accountants for the Company for 1995. 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 14, 1995, the record date for
determining shareholders entitled to vote at the Meeting, the Company had issued
and outstanding 10,033,013 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 21, 1995.
ELECTION OF DIRECTORS
The Board of Directors of the Company presently consists of nine members
divided into two classes. At the Meeting, five directors will be elected to hold
office for two-year terms until the 1997 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 five
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, as of
June 30, 1995. All nominees are currently directors of the Company. There is no
family relationship between any of the directors of the Company.
<PAGE>
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS TO EXPIRE IN 1997
Soichiro Fukutake, 49
Mr. Fukutake has served as Chairman of the Board of the Company since
February 1993. Mr. Fukutake joined Benesse Corporation ("Benesse") (formerly
Fukutake Publishing Company, Ltd., and currently the beneficial owner of
6,735,338 shares of New Common) 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, 52
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 a director of Benesse 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 also serves on the Board of Directors and Compensation Committee of
La Petite Academy. Mr. Kojima was elected as a Director of the Company in
February 1993. He is currently a member of the Executive Committee.
Robert Minsky, 50
Mr. Minsky has served as Executive Vice President and Chief Operating
Officer--Translations and Publishing of the Company since January 1, 1995. Prior
thereto, he served as Executive Vice President--Translations of the Company from
October 1, 1993 to January 1995, and as Chief Financial Officer of the Company
from November 1990 to January 1995. 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, 58
Mr. Fernandez has served as Executive Vice President and Chief Operating
Officer--Worldwide Language Instruction of the Company since January 1, 1995.
Prior thereto, he was Executive Vice President--Language Services of the Company
from September 1993 to January 1995 and Vice President--European Operations of
the Company from October 1989 to September 1993. He previously served as Vice
President--European Operations for Berlitz Languages, Inc., which is currently a
subsidiary of the Company ("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
2
<PAGE>
President in 1983. Mr. Fernandez has served as a Director of the Company since
July 1993. He is currently a member of the Executive Committee.
Aritoshi Soejima, 69
Mr. Soejima served as Senior Counselor of Benesse from December 1980 until
his appointment as a member of the Disinterested Directors and Compensation
Committees of the Company. From 1950 to 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 Osaka, Tokyo
Bay, Nagoya Hilton Company, Ltd., Counselor of Nippon Hilton Company, Ltd. and
Director and Counselor of 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE FIVE
DIRECTORS NAMED ABOVE.
INCUMBENT DIRECTORS--TERMS EXPIRE IN 1996
Hiromasa Yokoi, 56
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 Benesse since June
1992 and as Benesse's 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 Benesse from October 1990 to
March 1994 and as General Manager of the President's Office of Benesse 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.
Saburo Nagai, 64
Mr. Nagai has served as Senior Managing Director of Benesse since June 1994
and as Managing Director of Benesse 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
Benesse 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.
3
<PAGE>
Edward G. Nelson, 64
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, 60
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 (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
has served on the Board of Directors of Holophane Corporation since 1994. In
addition, he has been 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 served as a Director of the Company since
August 1994. He is currently a member of the Audit Committee and the
Disinterested Directors Committee.
1994 BOARD OF DIRECTORS MEETINGS, COMMITTEES AND FEES
During 1994, the Board of Directors of the Company met in person four times
and took action by unanimous written consent one time.
In 1994, 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 1994.
The Audit Committee recommends to the Board of Directors the engagement of
the independent auditors of the Company and reviews with the independent
auditors 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 auditors 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 auditors and the Board of Directors. The Audit Committee
met three times during 1994.
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
("Maxwell Communication") and its affiliates. As a result of the Merger
(hereinafter
4
<PAGE>
defined), the Disinterested Directors Committee's role was retained and
reconstituted to review and monitor all matters affecting the relationship
between the Company and Benesse and its affiliates. During 1994, the
Disinterested Directors Committee met in person one time and took action by
unanimous consent three 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 1993 Short-Term Executive Incentive Compensation
Plan (the "Short-Term Incentive Plan") and the 1993 Long-Term Executive
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 1994, the Compensation Committee met three times.
The Company's standard retainer payable to each director who is not an
employee of the Company or any of 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 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 any of its affiliates are
eligible to participate in the health benefit plan maintained by the Company.
Directors employed by the Company or any of its affiliates receive no
compensation in consideration of their duties as directors. The outside
directors earned an aggregate of approximately $128,000 as cash compensation for
their services during 1994.
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, omission, neglect or breach of duty which he commits while
acting in his capacity as a director and solely because of his being a director,
subject to limitations imposed by the New York Business Corporation Law
("NYBCL").
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number and percentage of outstanding
shares of New Common beneficially owned as of June 30, 1995 by each director,
nominee, all individuals serving as the Company's chief executive officer during
the fiscal year ended December 31, 1994, the four most highly compensated
executive officers of the Company as of December 31, 1994 and all officers and
directors, as a group, who served as such as of December 31, 1994. If not
mentioned, the individual did not beneficially own any shares of New Common as
of June 30, 1995. 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.
AMOUNT AND
NATION OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME OWNERSHIP OF CLASS
-------------- --------------------- ---------- --------
New Common.... Soichiro Fukutake 6,735,338 (1) 67.13%
New Common.... Manuel Fernandez 8,745 *
New Common.... Robert Minsky 2,857 *
New Common.... Edward G. Nelson 1,500 (2) *
New Common.... Henry D. James 7,672 *
New Common.... All Officers and
Direcors as a Group
(15 in number) 6,775,746 67.54%
To the best of registrant's knowledge, there are no events of delinquent
filing requiring disclosure under Item 405 of Regulation S-K.
- ------------
(1) Soichiro Fukutake is the President, Representative Director and principal
shareholder of Benesse Corporation, which is the beneficial owner of
6,735,338 shares of New Common. See "Security Ownership of Certain
Beneficial Owners".
(2) An additional 1,000 shares of New Common, for which Mr. Nelson has
disclaimed ownership, are owned by Mr. Nelson's wife.
* Less than 1%.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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
New Common on June 30, 1995.
<TABLE>
<CAPTION>
PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------- ------------------------------------ --------- --------
<C> <S> <C> <C>
New Common Benesse Corporation (1) 6,735,338 67.13%
3-17-17 Minamigata
Okayama-shi 700, Japan
New Common Maxwell Communication 627,000(2) 6.25%
Corporation plc (In Administration)
c/o Price Waterhouse l
London Bridge
London SE1 9QL England
</TABLE>
- ------------
(1) Fukutake Publishing Company, Ltd. changed its name to Benesse Corporation on
April 1, 1995. 6,722,138 shares of New Common are held by a wholly owned
subsidiary of Benesse and 13,200 shares of New Common are held directly by
Benesse. Soichiro Fukutake is the President, Representative Director and
principal shareholder of Benesse Corporation.
(2) These 627,000 shares of New Common currently are held in escrow pursuant to
an Escrow Agreement among the Company, Maxwell Communication and IBJ
Schroder Bank & Trust Company, and subject to a Stock Purchase Agreement
between the Company and Maxwell Communication. See "Certain Relationships
and Related Transactions".
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary of Cash and Certain Other Compensation
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 (collectively, the "Named Executive Officers") during the
fiscal years ended December 31, 1994, 1993 and 1992 for services rendered in all
capacities to the Company and its subsidiaries.
On December 9, 1992, the Company and Benesse entered into an amended and
restated merger agreement (the "Merger Agreement") pursuant to which Benesse
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 $.10 per share, of the Company. The compensation disclosed below under
"All Other Compensation" incorporates amounts received by the Named Executive
Officers in 1993 as a result of the Merger.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION (8)
-------------------------------- ----------------
OTHER AWARDS OF
ANNUAL OPTIONS/ ALL OTHER
NAME AND SALARY BONUS COMPENSATION SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) (6) ($) ($) (7) (#) (9) ($) (10)
- ------------------------------------ ---- ------- ------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Hiromasa Yokoi (1).................. 1994 404,320 161,700 39,000 None 19,205
Vice Chairman of the Board, 1993 271,058 None 10,000 None None
CEO and President 1992 -- -- -- -- --
Susumu Kojima (2)................... 1994 200,000 45,000 42,000 None 9,500
Executive Vice President, 1993 143,962 None 14,000 None None
Corporate Planning 1992 -- -- -- -- --
Manuel Fernandez (3)................
Executive Vice President and 1994 207,200 72,500 20,978 None 13,386
Chief Operating Officer-- 1993 157,400 30,000 10,494 None 404,681
Worldwide Language Instruction 1992 141,800 None None 8,000 6,517
Robert Minsky (4)...................
Executive Vice President and 1994 207,200 46,600 None None 13,468
Chief Operating Officer-- 1993 177,723 30,000 None None 287,902
Translations and Publishing 1992 172,425 None 16,024 8,000 11,215
Henry D. James (5).................. 1994 168,000 78,800 None None 10,920
Vice President and 1993 157,755 25,000 None None 373,292
Chief Financial Officer 1992 155,625 None None 4,000 10,116
</TABLE>
- ------------
<TABLE>
<C> <S>
(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, to $404,320 effective January 1, 1994 and to $444,800 effective
January 1, 1995. During 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 year.
(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 and to $210,000 effective January 1, 1995. During 1992, Mr.
Kojima was not employed by the Company and, accordingly, there is no compensation
information to report for him in respect of such year.
(3) Mr. Fernandez's base salary increased from a base salary of $143,418 effective April 1,
1992, to $185,000 effective August 30, 1993, to $207,200 effective January 1, 1994 and
to $224,800 effective January 1, 1995. Mr. Fernandez's 1993 percentage increase in base
salary was 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 $174,900 effective April 1, 1992,
to $178,000 effective August 30, 1993, to $185,000 effective October 4, 1993, to
$207,200 effective January 1, 1994 and to $227,900 effective January 1, 1995.
(5) Mr. James' salary increased from a base salary of $157,755 effective April 1, 1992, to
$168,000 effective January 1, 1994 and to $182,300 effective January 1, 1995.
(6) Amounts shown represent base salary earned in the respective years.
</TABLE>
(Footnotes continued on following page)
8
<PAGE>
(Footnotes continued from preceding page)
<TABLE>
<C> <S>
(7) Other Annual Compensation for Mr. Yokoi and Mr. Kojima represents monthly housing
allowances commencing September 1, 1993. For Mr. Fernandez, this column includes
relocation expense reimbursements of $19,795 and $10,494 in 1994 and 1993,
respectively. For Mr. Minsky, this column represents relocation expense reimbursement.
(8) 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
employees effective during any portion of fiscal years 1993 or 1992. 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". No payouts have been made under such
plan in 1994.
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 1994, 1993 or 1992. 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.
Pursuant to the terms of the Merger Agreement and the 1989 Stock Option and Incentive
Plan (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 three promissory notes issued by Maxwell Communication
and an affiliate in favor of the Company or a subsidiary of the Company (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"). Consequently, there were no New Common
restricted shares outstanding at as of December 31, 1994.
(9) 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 1994,
1993 or 1992. There have been no exercises of options or SARs for the fiscal year 1994.
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 the Maxwell Notes.
At December 31, 1994, there were no options or SARs outstanding.
(10) The amounts reported in this column for the fiscal year 1994 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"), as follows: Mr. Yokoi, $8,864; Mr. Fernandez, $6,134; Mr. Minsky,
$6,216; Mr. Kojima, $4,385; and Mr. James, $5,040. 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,
as follows: Mr. Yokoi, $10,341; Mr. Fernandez, $7,252; Mr. Minsky, $7,252; Mr. Kojima,
$5,115; and Mr. James, $5,880.
</TABLE>
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<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS EFFECTIVE IN FISCAL YEAR 1994
The following awards were made pursuant to the Long-Term Executive Incentive
Compensation Plan (the "Long-Term Incentive Plan"). See the "Compensation
Committee Report" for a further description.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS,
EXCLUSIVE OF THE EFFECT OF ESTIMATED FUTURE PAYOUT
CHANGES ASSUMING STOCK PRICE
IN STOCK PRICE (2) APPRECIATION
PERFORMANCE ----------------------------- ------------------------
NUMBER OF PERIOD THRESHOLD TARGET MAXIMUM MAXIMUM(3)
NAME UNITS(#) UNTIL PAYOUT ($)(1) ($) ($) ($)
- --------------------------- --------- ------------ --------- ------- ------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Hiromasa Yokoi............. 120,333 12/31/98 43,397 120,333 120,333 1,680,960
Susumu Kojima.............. 47,500 12/31/98 17,130 47,500 47,500 750,340
Manuel Fernandez........... 46,250 12/31/98 16,680 46,250 46,250 803,221
Robert Minsky.............. 46,250 12/31/98 16,680 46,250 46,250 814,298
Henry D. James............. 26,293 12/31/98 9,482 26,293 26,293 651,367
</TABLE>
- ------------
(1) Assumes that minimum revenues and earnings goals are met. Should such goals
not be met, no payments will be made.
(2) The threshold, target and maximum dollar amounts listed below will change
based on a multiplier related to the change in stock price, if any.
(3) Pursuant to the Long-Term Incentive Plan, maximum payouts are capped at
three times the participant's annual salary at December 31, 1998.
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 had severance agreements with Manuel Fernandez and Henry D.
James, dated February 6, 1992, which provided that if, within 18 months
following a change of control occurring at any time before February 6, 1994, the
Company terminated such executive officer's employment other than for cause,
such executive officer 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. These agreements lapsed in August 1994.
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, omission, neglect or breach of
duty which he commits while acting in his capacity as a director or executive
officer, as the case may be.
10
<PAGE>
COMPENSATION COMMITTEE REPORT FOR FISCAL YEAR 1994
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.
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 the fiscal year 1994 follows.
BASE SALARY
Each executive officer receives a base salary, with the potential for annual
salary increases based largely 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 1994. Base salary
recommendations were made by management of the Company for the Committee to
approve. After review and consideration by the Committee of management's
recommendations, the Committee approved base salary adjustments for executive
officers considering individual and Company performance. Such adjustments ranged
from 1.9% to 12% for 1994, and from 4.7% to 10% for 1995. The criteria used to
evaluate Company performance were sales and earnings figures, and return on
equity. The Committee believes that all such criteria were accorded equal
weight.
BONUSES
In 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, through 1994, the total 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.
11
<PAGE>
In 1995, the Committee amended the Short-Term Incentive Plan so that
Division Vice Presidents would receive 1995 and subsequent years' awards based
on 60% of divisional performance and 40% of total Company performance.
At its March 1995 meeting, the Committee approved, after discussion, 1994
bonuses for executive officers under the Short-Term Incentive Plan. Such bonuses
that accrued for 1994 ranged from 22.5% to 40% of each executive officer's base
salary. The Committee also approved a discretionary special bonus proposal for
certain executive officers, recommended by management based upon exceptional
individual performance. Such special bonuses that accrued for 1994 for such
executive officers ranged from 6.2% to 19.4% 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 1994.
LONG-TERM EXECUTIVE INCENTIVE COMPENSATION PLAN
In 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 Benesse 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 1994, the Compensation Committee
determined that the Company would contribute 3.5% of eligible employees'
respective base salary to the Pension Plan. During 1994, 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.
12
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Hiromasa Yokoi's salary increased to $444,800 effective January 1, 1995
from $404,320 effective January 1, 1994. Mr. Yokoi also earned a bonus of
$161,700 for 1994 under the Short-Term Incentive Plan.
The Compensation Committee approved and ratified the compensation paid to
Mr. Yokoi for fiscal year 1994 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 1994 performance was taken into
consideration in determining Mr. Yokoi's 1994 compensation package. The
Committee believes that Mr. Yokoi's 1994 compensation package was in line with
compensation packages of chief executive officers of other companies with
similar annual revenues.
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 1995. At this
time, however, the Committee and the Board of Directors have not taken action in
respect of the Company's compensation policy as result of the change.
COMPENSATION COMMITTEE MEMBERSHIP
During 1994, the Compensation Committee consisted of Soichiro Fukutake,
Edward G. Nelson, and Aritoshi Soejima. All of the views expressed by the
Compensation Committee in 1994 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 1994
Soichiro Fukutake
Edward G. Nelson
Aritoshi Soejima
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above, during 1994 and at June 30, 1995, 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 1994.
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 in 1993, 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 Benesse. He resigned
such position prior to his appointment as a Disinterested Director and a member
of the Compensation Committee.
PERFORMANCE GRAPHS
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 five-year period, beginning December 31, 1989, and ending December 31,
1994. 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 $100 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 are 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.
14
<PAGE>
COMPARISON OF STOCK PRICES
BERLITZ INTERNATIONAL, INC., THE S&P 400 INDUSTRIAL INDEX
AND SELECTED EDUCATION COMPANIES
[Insert Graph according to plot points below]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Berlitz............................................ $100 $81 $119 $132 $ 83(1) $ 78
S & P 400 Index.................................... $100 $96 $122 $126 $134 $135
Education Companies................................ $100 $81 $116 $ 94 $ 81 $ 72
</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 June 30, 1995,
10,033,013 shares of New Common were outstanding. Prior to the Merger,
19,075,584 shares of Old Common were outstanding.
15
<PAGE>
COMPARISON OF STOCK PRICES
BERLITZ INTERNATIONAL, INC., THE S & P 400 INDUSTRIAL INDEX,
AND SELECTED EDUCATIONAL PUBLISHING COMPANIES
[Insert Graph according to plot points below]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Berlitz............................................ $100 $81 $119 $132 $ 83(1) $ 78
S & P 400 Index.................................... $100 $96 $122 $126 $134 $135
Educational Publishing Companies................... $100 $76 $ 85 $111 $137 $144
</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 June 30, 1995,
10,033,013 shares of New Common were outstanding. Prior to the Merger,
19,075,584 shares of Old Common were outstanding.
16
<PAGE>
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
Benesse's acquisition of a 20% interest in The Berlitz Schools of Languages
(Japan), Inc. ("Berlitz-Japan"), a subsidiary of the Company, for an aggregated
consideration of $27.1 million. Pursuant to an agreement between Benesse and the
Company entered into in connection with such acquisition, Benesse 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 should decide not to apply for public registration of its
subsidiary in Japan. Pursuant to the Merger, Benesse relinquished the above-
mentioned option. Mr. Saburo Nagai currently serves as the Benesse nominee on
the Board of Directors of the Company pursuant to the acquisition by Benesse in
January 1991 of a 20% interest in Berlitz-Japan.
On December 9, 1992, the Company and Benesse entered into the Merger
Agreement pursuant to which Benesse agreed to acquire, through the Merger of the
Company with an indirect wholly owned U.S. subsidiary of Benesse, 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 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. 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. Public shareholders of
the Company hold the remaining approximately 33% of New Common.
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 Maxwell
Communication and Macmillan (the "Disengagement Agreements") to disengage
certain relationships. Pursuant to these agreements, among other things: (i) the
Company redeemed from Macmillan all of the outstanding Preferred Stock of the
Company; (ii) Maxwell Communication waived all claims that payments to the
Company should be considered preferential and other claims of Maxwell
Communication and its affiliates against the Company and its subsidiaries the
Maxwell Communication may have as a result of Maxwell Communication'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 Maxwell Communication as subrogee of Midland Bank plc in the
Chapter 11 case (and any superseding Chapter 7 case) and in the Maxwell
Communication 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 $64.6 million and (b)
reduced by
17
<PAGE>
$58 million the amount of their claims against Maxwell Communication 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 Maxwell Communication and Macmillan as of December 31, 1991. Certain
distribution agreements with Macmillan and its affiliates were terminated in
1994.
The Company was formerly included in the consolidated tax returns of the
affiliated group of which Macmillan was the parent (the "Macmillan Group") and
consequently is severally liable for any Federal income tax liabilities for the
Macmillan Group arising prior to December 1989. Pursuant to certain agreements,
Macmillan agreed to pay all such Federal tax liabilities and Maxwell
Communication placed and agreed to maintain cash and other assets (currently
including 627,000 shares of New Common owned by Maxwell Communication) valued at
$39.5 million in escrow to secure Macmillan's obligation, including any such tax
liability assessed against the Company. Management believes that such liability,
if any, will not result in a material effect on the financial condition of the
Company.
As part of the Merger, Benesse 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 was obligated to
pay fees as may be charged in connection with such letter of credit and to
reimburse Benesse for amounts paid by Benesse to the issuer of the letter of
credit to the extent that it is drawn upon. This letter of credit was terminated
in 1994.
In September 1994, the Company borrowed $20.0 million from a U.S. subsidiary
of Benesse, as evidenced by a subordinated promissory note (the "U.S. Note")
bearing interest at a rate of 6.93% per annum. Berlitz-Japan also borrowed Y1.0
billion (approximately $10.1 million) from Benesse as evidenced by an
interest-free subordinated promissory note (the "Japan Note"). A portion of the
proceeds of these notes (collectively the "Benesse Notes") were used to settle
certain obligations under a bank term loan, senior notes and a bank revolving
facility established in connection with the Merger (the "Acquisition Debt
Facilities").
The Benesse Notes mature on the earlier of June 30, 2003 or twelve months
from the date that all payment obligations under the Acquisition Debt Facilities
have been satisfied. To the extent that interest payments on the U.S. Note are
not permitted while any amounts remain outstanding under the Acquisition Debt
Facilities, such accrued interest will roll over semiannually into the note
principal.
The Benesse Notes are subordinate in rights of payment to debt under the
Acquisition Debt Facilities, including the financial hedging instruments.
Payment obligations under the U.S. Note are guaranteed by the Company and its
significant U.S. subsidiaries, subject to senior guarantees of the Acquisition
Debt Facilities. The Company and its significant U.S. subsidiaries have also
executed a guarantee of payment obligations under the Japan Note, effective as
of the day following the date upon which all payment obligations under the
Acquisition Debt Facilities are satisfied.
The Benesse Notes contain certain covenants, including prohibitions on the
incurrence of other debt, liens, loans, mergers or consolidations and amendments
to the Acquisition Debt Facilities without consent.
18
<PAGE>
Berlitz-Japan had a contract (the "Development Agreement") with Benesse,
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. The programs consist of printed study materials, video cassettes and
audio cassettes, which are used as the basis of a correspondence course. Under
this contract, Benesse agreed to reimburse Berlitz-Japan for project-related
production costs incurred, including employee salaries and outside production
fees, and to pay to Berlitz-Japan a one-time development fee and a coordination
fee of 10% of project-related employee salaries. Development activities under
the Development Agreement were completed during 1994.
Pursuant to the Development Agreement, the Company received reimbursement
for production costs of approximately $2.3 million, $1.8 million and $296,000
during 1994, 1993 and 1992, respectively. In addition, the Company received the
coordination fee and other project-related reimbursements of approximately
$250,000 in 1994, and the development fee of approximately $420,000 in 1993. The
Company had no receivables from Benesse pursuant to the Development Agreement as
of December 31, 1994.
Benesse and Berlitz-Japan also entered into an agreement, dated as of
October 1, 1993, pursuant to which Berlitz-Japan would assist Benesse in the
development of an English correspondence course and related audio visual
materials. Development was completed in March 1994, at which time Berlitz-Japan
received a minimum guaranty usage fee of Y6,990,336 (approximately $68,000 based
on the Yen/Dollar exchange rate at the close of business on March 30, 1994).
Under the terms of the agreement, Benesse will also pay Berlitz-Japan an
additional royalty for all courses sold beyond the first 1,200 units.
The Company and Benesse maintain a joint Directors and Officers ("D&O")
insurance policy covering acts by directors and officers of both Benesse and the
Company. Consequently, the premium on the D&O policy is allocated 60% to Benesse
and 40% to the Company. Commencing in May 1995, the Company has maintained a
stand-alone Employment Practices Liability ("EPL") insurance policy covering the
Company, its officers and directors (including the Benesse directors who are
also directors of the Company). Consequently, the premium on the EPL policy is
allocated 30% to Benesse and 70% to the Company.
The Company and Benesse participated in certain other joint business
arrangements during 1994, in the ordinary course of business, as follows: i)
pursuant to a June 1, 1993 sublease agreement, the Company subleased space in
Benesse's New York offices at an annual base rent of $79,000 plus operating
expenses (which sublease expired in January 1995); ii) pursuant to an extended
industrial block contract entered into in 1993 for a prepayment of Y10.0
million, Berlitz-Japan provided lessons to Benesse at an industrial lesson rate
which was approximately 20% below the rate charged for individual instruction;
and iii) the Company and Benesse entered into a services agreement whereby
Benesse would offer its customers language and homestay programs arranged and
operated by the Company's specialty instruction program, Berlitz Study AbroadTM.
During 1994, Benesse also periodically offered its customers language study and
homestay programs arranged and operated by L.I.F.E.(R), another of the Company's
specialty instruction programs.
As of May 31, 1995, the Company entered into a Stock Purchase Agreement with
Maxwell Communication whereby the Company agreed to purchase from Maxwell
Communication, and Maxwell Communication agreed to sell to the Company, at a
purchase price of $9 per share, the 627,000
19
<PAGE>
shares of New Common currently owned by Maxwell Communication (the "Berlitz
Shares") on the earlier of September 16, 1996 or ten days after the Company
notifies Maxwell Communication of its intention to purchase all or a portion of
the Berlitz Shares (the "Purchase Date"). The Company's obligation to buy the
Berlitz Shares is subject to the satisfaction of certain conditions.
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
Benesse entered into after the Merger was approved by the Disinterested
Directors Committee.
Benesse changed its name to "Benesse Corporation" from "Fukutake Publishing
Company, Ltd." on April 1, 1995. Subject to receipt of all required Japanese
approvals and prevailing market conditions, Benesse plans to make an initial
public offering of Benesse 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 May 2, 1995, the Board of
Directors selected Deloitte & Touche LLP to serve as independent accountants of
the Company for 1995. The Board of Directors proposes and recommends that the
shareholders ratify the selection of the firm of Deloitte & Touche LLP to serve
as independent accounts of the Company for 1995. Deloitte & Touche LLP served as
the Company's independent accountants for 1994 and 1993; prior thereto, Coopers
& Lybrand LLP served as the Company's independent accountants from 1989 to 1992.
Coopers & Lybrand LLP was dismissed, in connection with the Merger, in April
1993, and Deloitte & Touche LLP was selected as successor independent
accountants by the Board of Directors upon recommendation of the Audit
Committee.
During the Company's two most recent fiscal years and any subsequent interim
period preceding the selection of Deloitte & Touche LLP, there were no
disagreements with Coopers & Lybrand LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope of procedure,
which disagreements, if not resolved to Coopers & Lybrand LLP'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 LLP, 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 LLP to audit the Company's
consolidated financial statements for the current year. A representative of
Deloitte & Touche LLP 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 LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
1995.
20
<PAGE>
VOTE REQUIRED
Under the NYBCL, approval of 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.
SHAREHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING OF SHAREHOLDERS
Appropriate proposals from shareholders intending to be present at the 1996
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 March 23, 1996.
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 of 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, 1994, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENT 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.
21
<PAGE>
BERLITZ INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF BERLITZ INTERNATIONAL, INC.
IN CONNECTION WITH ITS 1995 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 8, 1995
The undersigned shareholders 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 1995 annual
meeting of shareholders of the Company to be held on August 8, 1995, 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)
BERLITZ INTERNATIONAL, INC.
ANNUAL MEETING
OF
SHAREHOLDERS
TUESDAY - AUGUST 8, 1995
10:00 A.M.
THE RIHGA ROYAL HOTEL
151 WEST 54TH STREET
NEW YORK, NEW YORK
<PAGE>
BERLITZ INTERNATIONAL, INC. RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
NOMINEES AND PROPOSALS LISTED BELOW
1. ELECTION OF NOMINEES - To elect each of Soichiro Fukutake, Susumu KoJima,
Robert Minsky, Manuel Fernandez and Aritoshi Soajima as a director of the
Company to serve until the Company's 1997 annual meeting of shareholders
and until their successors are elected and qualified or their earlier
death, resignation or removal.
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<S> <C> <C>
FOR all WITHHOLD (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's
nominees AUTHORITY name in the space provided below.)
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/ / / /
</TABLE>
<TABLE>
<S> <C>
2. RATIFICATION OF THE SELECTION OF INDEPENDENT 3. OTHER - In their discretion upon such other matters,
ACCOUNTANTS - To ratify the selection of the including withholding a quorum if necessary, as may
firm of Deloitte & Touche LLP to serve as properly come before the Meeting:
independent accountants of the Company for 1995.
FOR AGAINST ABSTAIN
This Proxy will be voted as directed or, if no direction
/ / / / / / given, will be voted FOR the election of the nominees
and the approval of the proposal described above.
Dated: , 1995
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(Signature)
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(Signature)
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(Title or Capacity)
(Please sign your name or names exactly as it appears on
your stock certificate(s). When signing as attorney,
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA executor, administrator, trustee, guardian or corporate
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" executor, please give your full title as such. For joint
accounts, all co-owners should sign.)
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