<PAGE>
3201 Temple Avenue
Pomona, California 91768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 15, 1999
To the shareholders of
Auto-Graphics, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Auto-Graphics, Inc., a California corporation (the "Company"), will be
held at the Company's corporate offices located at 3201 Temple Avenue,
Pomona, California on Tuesday, June 15, 1999, at 2:00 PM PDT,
for the following purposes:
1. To elect two directors to serve during the ensuing year and until
their respective successors shall have been duly elected and qualified;
and
2. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
In accordance with the Company's Bylaws, May 3, 1999 has been
fixed as the record date for the determination of shareholders entitled
to notice of and to vote at the Annual Meeting and at any adjournment
thereof.
All shareholders are cordially invited to attend the Annual
Meeting in person. Shareholders who do not expect to be able to attend
the meeting are urged to complete, sign and date the enclosed Proxy and
mail it in the envelope provided. If a shareholder receives more than
one Proxy because such person owns shares registered in different names
or addresses, each Proxy should be completed and returned. Your Proxy
will not be used if you are present at the meeting and desire to
personally vote your shares.
By Order of the Board of Directors
Daniel E. Luebben
Secretary
Pomona, California
April 30, 1999
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3201 Temple Avenue
Pomona, California 91768
_______________
PROXY STATEMENT
_______________
INTRODUCTION
This Proxy Statement is furnished to shareholders in connection
with the Annual Meeting of Shareholders of Auto-Graphics, Inc., a
California corporation (the "Company"), to be held at 2:00 PM PDT on
Tuesday, June 15, 1999 at the Company's corporate offices located at
3201 Temple Avenue, Pomona, California, and at any adjournments thereof
(the "Annual Meeting"). The accompanying Proxy is solicited on behalf
of the Board of Directors of the Company for use at such Annual Meeting.
The Proxy should be completed, signed, dated and returned in the enclosed
envelope as soon as possible. All properly executed proxies will be
voted at the meeting in accordance with the shareholder's instructions
as set forth on the enclosed Proxy. Your executed Proxy will not affect
your right to vote in person should you find it convenient to attend
the meeting and desire to vote in person. Any shareholder executing and
returning a Proxy as provided for herein may revoke such Proxy by providing
written notice of such revocation to the Secretary of the Company at any time
prior to the commencement of the Annual Meeting.
The Proxy Statement and the accompanying Proxy together with the
Company's Annual Report for the fiscal year ended December 31, 1998
were mailed to all shareholders on or about May 7, 1999.
The Company intends to solicit proxies principally by use of the
mails. The Company will also request banks, brokerage houses and other
custodians, nominees and fiduciaries to forward copies of the Notice,
Proxy Statement, Proxy and Annual Report to persons for whom they hold
shares of the Company and request authority for the execution of proxies.
The cost of soliciting proxies will be borne by the Company, including
the reimbursement of any expenses incurred by banks, brokerage houses,
custodians, nominees and fiduciaries in connection with such solicitation.
VOTING AT THE MEETING
The presence in person or by Proxy of persons entitled to vote a
majority of the Company's outstanding Common Stock is necessary to
constitute a quorum for the transaction of business at the Annual
Meeting. The Board of Directors has fixed May 3, 1999 as the record
date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting of Shareholders. All voting rights are
vested exclusively in the holders of the Company's Common Stock, $0.10
par value. As of the close of business on the record date, there were
1,064,228 shares of the Company's Common Stock outstanding.
Each share of Common Stock is entitled to one vote on any matter
which may come before the Annual Meeting, including the election of
directors; however, any shareholder eligible to vote for the election
of directors is entitled to cumulate votes and give one candidate a
number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shareholder's shares are
entitled, or to distribute the shareholder's votes on the same
principle among as many candidates as the shareholder thinks fit.
To be entitled to exercise cumulative voting rights for the
election of directors, a shareholder must give notice at the Annual
Meeting of such person's desire to cumulate votes for one or more
candidates whose name(s) have been placed in nomination prior to the
commencement of voting for the election of directors. If any
shareholder exercises the right to cumulate votes for the election of
directors, then all shareholders are entitled to cumulative voting
rights for the election of directors. The enclosed form of Proxy being
solicited on behalf of the Board of Directors of the Company vests in
the proxy's cumulative voting rights.
NOMINATION AND ELECTION OF DIRECTORS
Election of Directors
The Company's Articles of Incorporation and Bylaws, as amended,
provide that the authorized number of directors shall not be less than
three members or more than five members as determined by the Board of
Directors from time to time. The number of persons constituting and
comprising the Company's Board of Directors is currently three.
However, due to the recent resignation of Douglas K. Bisch from the
Company's Board of Directors, following his earlier retirement from
day-to-day operations of the Company, the Board has not yet selected a
proposed replacement director and, accordingly, the Board is proposing
only two nominees as candidates for election to the Company's Board of
Directors at the 1999 Annual Meeting of Shareholders with the view that
such third director's position would remain vacant until the Board can
select and appoint someone to become the Company's third director.
Proxies received by the Board of Directors will only be voted for the
two nominees recommended by the Board of Directors in this Proxy
Statement and within proxy solicitation. Each of the two nominees
named below will be elected to serve until the next annual meeting
and/or until their respective successors shall have been duly elected
and qualified. The persons named in the accompanying Proxy will vote
shares covered by proxies received by them in favor of election of the
two nominees proposed by the Board of Directors. Should any of the two
proposed nominees subsequently become unavailable for election, then
the Board of Directors may propose the election of a substitute
nominee; and the persons named in the Proxy will vote shares covered by
proxies received by them in favor of any such substitute nominee(s).
In the event that any person(s) other than nominees proposed by the
Board of Directors is nominated for election as a director, the persons
named in the Proxy may vote cumulatively for less than all of the
nominees but, in no event, will such persons vote any of the proxies
received by them for the election of any person to fill a Board
position for which the Board of Directors has not nominated a person
for election to such Board position. The individuals named in the
Proxy, however, reserve their rights to vote their individual shares
for the election of any person(s) to fill a Board position for which
the Board of Directors did not designate a nominee in the event that
any such additional new nominee is proposed for election at the Annual
Meeting.
Nominees for Election as Directors
Set forth below is certain information pertaining to the persons
who are proposed as nominees for election to the Company's Board of
Directors.
Shares of the
Company's
Common
Name and Principal Year First Stock Owned Percent
Occupation or Employment Became Beneficially as of
Relationship of Nominees Age a Director of Record Date Class
Robert S. Cope 63 1960 721,675 68%
CEO, President
and Treasurer
Auto-Graphics, Inc.
Robert H. Bretz 55 1988 2,000 --
520 Washington Boulevard
Suite 428
Marina del Rey, CA 90292
Attorney
Robert S. Cope has been employed by the Company in the capacities
indicated above for more than the past five years.
On December 31, 1994, Douglas K. Bisch resigned and retired from
day to day operations as an officer of the Company. On December 31,
1998, Mr. Bisch resigned his position as a Director of the Company. As
indicated herein under "Certain Relationships and Related
Transactions", the Company has entered into an agreement to purchase
substantially all of the Company's stock owned by Mr. Bisch.
Robert H. Bretz is an attorney who has acted as the Company's
outside legal counsel for more than the past five years and who also
serves as the Assistant Secretary of the Company.
Robert S. Cope, who is the President and Chief Executive Officer
of the Company and Chairman of the Company's Board of Directors, is the
beneficial owner of 721,675 shares or 68% of the Company's total
outstanding shares of Common Stock. As a result of his positions with
and ownership of shares in the Company, Robert S. Cope may be deemed to
be in a control relationship with the Company. Mr. Cope's beneficial
ownership includes 523,391 (49%) shares of Common Stock owned by him
personally and 198,284 shares (19%) owned by members of his family,
including Paul R. Cope who is employed by the Company and owns 125,534
shares (12%). No other single family member owns more than 5% of the
Company's Common Stock. Robert S. Cope has sole investment and voting
power over the shares of Common Stock owned by him personally, and is
presumed to share investment and voting power over the shares owned by
members of his family.
Other Business
So far as the Company is aware, there are no other matters to be
brought before the Annual Meeting. In the event that any other matter
properly comes before the Annual Meeting, the persons named in the
accompanying Proxy will vote all proxies in accordance with their best
judgment in such matters.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1998 the Company's Board of Directors held two formal
meetings, and also authorized and approved certain actions by unanimous
written consent as authorized by the California Corporations Code and
the Company's Bylaws.
The Company's Board of Directors does not maintain standing
audit, nominating or compensation committees. These matters are
considered and acted upon by the entire Board of Directors.
Directors receive no fees for serving on the Board of Directors
or attending meetings, with the exception of Robert H. Bretz, who
receives customary fees and expenses for services provided to the
Company.
</PAGE>
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ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes the aggregate annual cash
compensation and long-term incentive compensation of the Company's
Chief Executive Officer and each of the named executive officers whose
total cash compensation for the fiscal year ended December 31, 1998 for
services rendered in all capacities exceeded $100,000 and cash
compensation received by each named executive officer for the Company's
two previous fiscal years:
Summary Compensation Table
Long-Term Compensation Number of
Principal Annual Compensation Securities
Name Position Year Salary($) Underlying Options
Robert S. Cope CEO, President 1998 $ 73,000 None
and Treasurer 1997 165,000
1996 140,000
William J. Kliss COO 1998 $138,000 20,000
1997 150,000
1996 138,000
Daniel E. Luebben CFO and 1998 $100,000 10,000
Secretary 1997 109,000
1996 99,000
There have been no restricted stock awards and there are no
restricted stock holdings as of the fiscal year ended December 31,
1998. In 1998, at Mr. Cope's request, the Company deferred
approximately $60,000 in annual compensation to 1999.
1997 Non-Qualified Stock Option Plan
The Company adopted and implemented a 1997 Non-Qualified Stock
Option Plan effective December 31, 1997. The Plan is a non-qualified
Plan covering only senior executives and related persons. The Plan
consists of 100,000 shares of the Company's authorized but unissued
Common Stock. At the inception of the Plan, the Company granted
options to four persons whereby they may purchase up to a total of
47,500 shares over the next five years at a price per share of $1.65.
The recipient's right to exercise such options and acquire the stock is
conditioned upon further employment with the Company and on the market
trading price of the Company's stock rising to a minimum of $6.50 per
share. Shares actually sold and issued pursuant to the Plan will be
restricted stock requiring that such stock be held by the recipients
for a minimum period of one year following purchase before they are
eligible to sell such stock in the public market. Following such
initial option grant, 52,500 shares remain eligible for future grants
under the Plan. Under certain circumstances, in the event of a change
in control as defined in the Plan, recipients of options under the Plan
are entitled to require the Company to liquidate their outstanding
options at a price deemed equivalent to the then current fair market
value of the underlying shares. The Plan was filed as an exhibit
(10.25) to the Company's Annual Report to the SEC on Form 10-K for the
year ended December 31, 1997, and is incorporated herein by reference.
The following table summarizes information concerning stock
option grants to named executive officers during the fiscal year ended
December 31, 1998. There were no grants of any options under the
Company's 1997 Non-Qualified Stock Option Plan during 1998. Under SEC
Regulation S-K, the Company is required to disclose the hypothetical
gains, which the named executive officers would realize at the end of
the option term. The gain assumes a compound annual stock price
appreciation of 5% and 10% from the date the option was originally
granted to the end of the option term. These rates of stock price
appreciation are not necessarily the Company's estimate nor do they
represent any projection of the future price of the Company's stock.
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Individual Grants Potential Realizable
Number of Pct of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation Grant Date
Options Employees in Price Exp. For Option Term Present
Name Granted Fiscal Year ($/Share) Date 5%($)10%($) Value($)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert S.
Cope None -- N/A N/A 0 0 N/A
William J.
Kliss None -- $1.65 12/31/02 0 0 $0.56
Daniel E.
Luebben None -- $1.65 12/31/02 0 0 $0.56
</TABLE>
The grant date market value of the Common Stock underlying all of
the options available under the Company's 1997 Non-Qualified Stock
Option Plan was approximately $3.00 as of December 31, 1997. The
Potential Realizable Value at Assumed Annual Rates of Stock Price
Appreciation for the Option Term of 5% and 10% is zero because the fair
market value of the underlying stock must rise above $6.50 per share
before the corresponding options may be exercised. Under the terms of
the Plan, the underlying stock price must therefore rise a minimum of
31.5% per annum over the five year term for the option to be
exercisable by the recipients. At 5% and 10% assumed annual rates
of stock price appreciation for the option term, the equivalent fair
market value of the underlying stock would be $3.83 and $4.83,
respectively, at the end of the five year term. The Grant Date Present
Value was established using the Black-Scholes option pricing model
based on a current market price of $3.00 per share on the grant date
and applying a discount of 45% due to the restricted nature of the
stock yielding an exercise price of $1.65, a five year expected term,
an estimated volatility factor of 25%, no dividends and a risk-free
interest rate of 5.7%.
The following table summarizes information concerning the value
received on options exercised during the fiscal year ended December 31,
1998 and the value as of December 31, 1998:
Aggregated Option Exercises in the Last Fiscal Year
and Fiscal Year-End Option Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Number of Options Options
Securities at Fiscal at Fiscal
Underlying Year-End Year-End
Options Value($) Exercisable/ Exercisable/
Name Exercised Realized Unexercisable Unexercisable
Robert S. Cope None None None/None None/None
William J. Kliss None None 0/20,000 None/None
Daniel E. Luebben None None 0/10,000 None/None
All stock options granted under the 1997 Non-Qualified Stock
Option Plan are currently not exercisable as of December 31, 1998,
because the fair market value of the underlying Common Stock must rise
from a market price of approximately $3.00 per share as of December 31,
1997 to a minimum of $6.50 per share for the stock option to be
exercisable by the recipients.
The following table summarizes information on the stock price-
based option plan awards made during the fiscal year ended December 31,
1998:
Long-Term Incentive Plans
Awards in Last Fiscal Year
Performance
or Other
Period Until
Number of Maturation
Name Shares or Payout
Robert S. Cope None None
William J. Kliss None 5 Years
Daniel E. Luebben None 5 Years
</PAGE>
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table below reflects information pertaining to certain
beneficial owners of the Company's Common Stock known to own more than
5% of the Company's securities and all officers and directors of the
Company as a group as of May 3, 1999:
Shares of the
Company's
Common
Stock Owned Percent
Beneficially as of
Name of Beneficial Owner of Record Date Class
Robert S. Cope 721,675 68%
CEO, President
and Treasurer
Auto-Graphics, Inc.
Douglas K. Bisch 98,256 9%
Retired Officer/Director
of Auto-Graphics, Inc.
Robert L. Lovett, Trustee 62,500 6%
Robert L. Lovett Trust
All Officers and Directors 726,175 68%
as a group (4 persons).
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and 10% shareholders to file
forms with the SEC to report their ownership of the Company's shares
and any changes in said ownership. Anyone required to file forms with
the SEC must also send copies of the forms to the Company. Based on
information provided to the Company by such persons, the Company is not
aware of any delinquencies in the filing of such reports.
</PAGE>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company occupies approximately 29,000 sq. ft. of office and
production space in an office building owned by a partnership comprised
of Robert S. Cope and Douglas K. Bisch. The facility is currently
leased to the Company through June 2001 under the second of two five-
year renewal options. The original five-year lease, which was entered
into in June of 1986, was approved and authorized by the independent
members of the Company's Board of Directors. Rental payments paid in
1998 by the Company under the lease totaled approximately $351,000.
Robert H. Bretz is a director of the Company and also serves as
the Company's outside legal counsel. In 1998, Mr. Bretz firm's
billings to the Company for legal services and expenses totaled
approximately $331,000.
The Company previously entered into an agreement to purchase
substantially all of the shares of the Company's Common Stock owned by
Douglas K. Bisch. Mr. Bisch retired from day to day operations as an
officer of the Company on December 31, 1994 and as a Director on
December 29, 1998. Mr. Bisch had previously served as the Company's
Executive Vice President for Sales and Marketing and Secretary for 25
years. In accordance with the agreement, the Company will purchase and
retire a total of 156,000 shares of the Company's Common Stock over a
seven year period ending 2001. The total transaction cost will be
$825,000 including stock, non-competition and consulting fees. In
January of 1995, 1996, and 1997, the Company purchased and retired
15,600 shares each year and in January 1998, the Company purchased and
retired 26,000 shares of the Company's Common Stock in accordance with
the agreement. In addition, the Company has also received an option to
purchase Mr. Bisch's one-third interest in the partnership which owns
the building and land which the Company leases as its corporate office
facility in Pomona, California for a purchase price based on a formula
requiring a minimum payment of $100,000 and a maximum payment of
$150,000. The agreement was unanimously approved by the Company's
Board of Directors with Mr. Bisch abstaining. A copy of the agreement,
the terms of which are summarized herein, was filed as an exhibit
(10.9) to the Company's Annual Report to the SEC on Form 10-K as
of December 31, 1994.
AUDITORS
The Board of Directors selected BDO Seidman, LLP to audit and
report on the Company's financial statements as of December 31, 1998
and for the year then ended. BDO Seidman was selected by the Company
following the resignation of Ernst & Young, LLP as the Company's
independent certified public accountant. The Company's financial
statements as of December 31, 1997 and for the two years in the period
ending December 31, 1997 were audited and reported on by Ernst & Young,
LLP. Ernst & Young's decision to resign was not the result of any
disagreement with the Company over any matter of accounting principles,
or practices, financial statement disclosure or auditing scope or
procedure which (if not resolved to the satisfaction of Ernst & Young)
would have caused Ernst & Young to make reference to the subject matter
of the disagreement in connection with its report.
ADDITIONAL INFORMATION
Upon request of any shareholder, the Company will furnish without
charge a copy of the Company's latest Annual Report to the Securities
and Exchange Commission on Form 10-K, as amended, which contains
certain additional information about the Company which is not included
in either this Proxy Statement or the Company's accompanying Annual
Report to Shareholders. All such requests should be directed to the
Chief Financial Officer at the above corporate headquarters' address.
</PAGE>
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SHAREHOLDER PROPOSALS
Any shareholder of the Company desiring to have a proposal
considered for inclusion in the Company's 2000 proxy solicitation
material must, in addition to other applicable requirements, set forth
such proposal in writing and file it with the Secretary of the Company
on or before January 1, 2000. The Board of Directors of the
Company will review any such proposals from shareholders received by
that date and will determine whether any such proposals are to be
included in the Company's 2000 proxy solicitation materials.
Daniel E. Luebben
Secretary
April 30, 1999
PLEASE SIGN, DATE AND MAIL YOUR PROXY NOW
THANK YOU
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<PAGE>
PROXY
AUTO-GRAPHICS, INC.
ANNUAL MEETING OF SHAREHOLDERS June 15, 1999
The undersigned shareholder of Auto-Graphics, Inc. (the "Company")
acknowledges receipt of the Notice of Annual Meeting of Shareholders
and Proxy Statement each dated April 30, 1999 together with the
Company's 1998 Annual Report to Shareholders and the undersigned
revokes all prior proxies and appoints Robert S. Cope and Daniel E.
Luebben or each of them as proxies for the undersigned to represent
the undersigned and vote all the shares of Common Stock of the Company
which the undersigned would be entitled to vote at the Annual Meeting
of Shareholders to be held at 3201 Temple Avenue, Pomona, California on
Tuesday, June 15, 1999 at 2:00 P.M. PDT, and any adjournment(s) thereof,
and instructs said proxies to vote as follows:
____ FOR the election of the following two nominees to the Company's
Board of Directors: Robert S. Cope, and Robert H. Bretz;
or
___ WITHHOLD authority to vote for all of the foregoing nominees. To
withhold authority to vote for any individual nominee(s), enter the
name of any such nominee(s) in the space provided below.
________________________________________________________
________________________________________________________
In their discretion to transact such other business as may properly come
before the meeting.
PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY
</PAGE>
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THE PROXY IS BEING SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
Dated this_____ of _______________, 1999
________________________
Signature of Shareholder
________________________
Signature of Shareholder
This Proxy should be dated, signed by the shareholder(s) exactly as the
name is printed at the left, and returned promptly in the enclosed
envelope. A person signing as a fiduciary or on behalf of a corporation
should so indicate.
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. UNLESS OTHERWISE SPECIFIED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES PROPOSED BY THE
BOARD OF DIRECTORS.
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