SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Appliance Recycling Centers of America, Inc.
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(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
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offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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<PAGE>
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2000
------------------------
TO THE SHAREHOLDERS OF
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Appliance Recycling Centers of America, Inc., a Minnesota corporation, will be
held on Thursday, April 27, 2000, at 3:30 p.m. at the Appliance Recycling
Centers of America, Inc. corporate offices located at 7400 Excelsior Boulevard,
Minneapolis, Minnesota, 55426 for the following purposes:
o To elect five directors of the Company for the coming year.
o To ratify the appointment of McGladrey & Pullen, LLP as
independent auditors for fiscal year ending December 30, 2000.
o To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on March 17, 2000 are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
EACH OF YOU IS INVITED AND URGED TO ATTEND THE ANNUAL MEETING IN PERSON
IF POSSIBLE. WHETHER OR NOT YOU ARE ABLE TO ATTEND IN PERSON, YOU ARE REQUESTED
TO MARK, DATE AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENVELOPE
ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors
Denis E. Grande, Secretary
March 21, 2000
<PAGE>
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426
--------------------
PROXY STATEMENT
--------------------
SOLICITATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Appliance Recycling Centers of America, Inc. (the "Company") for
use at the Annual Meeting of Shareholders on April 27, 2000, and any adjournment
thereof. The approximate date on which this proxy statement and form of proxy
will first be sent or given to shareholders is March 24, 2000.
The expense of the solicitation of proxies for this Annual Meeting,
including the cost of mailing, has been or will be borne by the Company.
Arrangements will be made with brokerage houses and other custodian nominees and
fiduciaries to send proxies and proxy materials to their principals and the
Company will reimburse them for their expense in so doing. In addition to
solicitation by mail, proxies may be solicited by telephone, telegraph or
personally.
VOTING AND REVOCATION OF PROXY
Only holders of record of the Company's Common Stock at the close of
business on March 17, 2000, the record date for the Annual Meeting, are entitled
to notice of and to vote at the meeting. On March 17, 2000, there were 2,286,744
shares of Common Stock outstanding. Each share of Common Stock entitles the
holder to one vote upon each matter to be presented at the Annual Meeting. A
quorum, consisting of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting, must be present in person or represented
by proxy before action may be taken at the Annual Meeting.
Each proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated, the proxy will
be voted (i) FOR the election of all nominees for director named in this proxy
statement, and (ii) FOR ratification of the appointment of McGladrey & Pullen,
LLP as independent auditors for fiscal year ending December 30, 2000. While the
Board of Directors knows of no other matters to be presented at the Annual
Meeting, if any other matter properly comes before the meeting or any
adjournment thereof, all proxies returned to the Company will be voted on any
such matter in accordance with the judgment of the proxy holders.
Any proxy given pursuant to this solicitation may be revoked by the
person giving the proxy at any time before it is voted. Proxies may be revoked
by (i) giving written notice of such revocation to the Secretary of the Company,
(ii) giving another written proxy bearing a later date, or (iii) attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not in and of itself constitute a revocation of a proxy).
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Inspectors of Election appointed for the meeting and will
determine if a quorum is present. If an executed proxy card is returned and the
shareholder has abstained from voting on any matter, the shares represented by
such proxy will be considered present at the meeting for purposes of determining
a quorum and for purposes of calculating the vote, but will not be considered to
have been voted in favor of such matter. If an executed proxy is returned by a
broker holding shares in street name which indicates that the broker does not
have
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<PAGE>
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered present at the meeting for purposes of
determining a quorum, but will not be considered to be represented at the
meeting for purposes of calculating the vote with respect to such matter.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company at present consists of five
directors. Shareholders will be asked at the Annual Meeting to elect five
directors to serve until the next Annual Meeting of Shareholders and until their
respective successors are elected. Unless authority is withheld, all proxies
received in response to this solicitation will be voted for the election of all
nominees named below. Each of the nominees named below is now a director of the
Company, all have been elected by the shareholders, and each has served
continuously as a director of the Company since the year indicated. All nominees
have indicated a willingness to serve if elected. If any nominee becomes unable
to serve prior to the Annual Meeting, the proxies received in response to this
solicitation will be voted for a replacement nominee selected in accordance with
the best judgment of the proxy holders named therein. If a quorum is present and
voting, directors are elected by a majority of the votes cast for the election
of directors at the Annual Meeting.
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
- ------------------- ------------------------------------- --- --------
Edward R. Cameron Chairman of the Board, Director, 59 1976
President and Chief Executive Officer
George B. Bonniwell Director 60 1993
Duane S. Carlson Director 64 1990
Marvin Goldstein Director 56 1998
Harry W. Spell Director 76 1991
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES NAMED ABOVE.
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<PAGE>
INFORMATION CONCERNING DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
DIRECTORS AND NOMINEES
The following discussion sets forth certain information for at least
the last five years with respect to the directors and nominees of the Company.
The Company knows of no arrangements or understandings between a director or
nominee and any other person pursuant to which he has been selected as a
director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the Company.
EDWARD R. CAMERON is the founder and has been the President of the
Company since its inception in 1976. He has been a director and Chairman of the
Board of the Company since 1989 and prior to 1989 was a director of a
predecessor of the Company. Prior to founding the Company, Mr. Cameron served as
a district product manager and an account manager for Burroughs Corporation (a
predecessor of Unisys Corporation) and served in executive positions for several
small businesses. Mr. Cameron has a bachelor of science degree in business
administration from Montana State University.
GEORGE B. BONNIWELL has been a director of the Company since 1993. From
1969 to 1993 when he retired, Mr. Bonniwell was employed by Craig-Hallum, Inc.,
a regional investment banking and brokerage firm, most recently as senior vice
president/director of corporate finance. He was president and chief executive
officer of Craig-Hallum, Inc. from 1976 to 1985.
DUANE S. CARLSON has been a director of the Company since 1990. Mr.
Carlson is currently a self-employed business consultant, as he was from 1988 to
1991. From 1991 to 1997, Mr. Carlson was executive vice president and chief
financial officer of NetStar, Inc., a company engaged in the development,
manufacturing and marketing of high-speed computer communications equipment. He
was a founder of NetStar, Inc. and was a member of its board of directors.
NetStar, Inc. became a wholly-owned subsidiary of Ascend Communications, Inc. on
August 15, 1996 and is now operated as the High Performance Networking Division
of Lucent Technologies which recently acquired Ascend. He was a founder of Lee
Data Corporation and from 1979 to 1988 was employed by Lee Data Corporation
(which became Carleton Corporation, and is now part of Oracle, Inc.) in various
capacities, most recently as chief financial officer and executive vice
president, and was also a member of the board of directors. Mr. Carlson also
currently serves as a director of Astrocom Corporation (where he also serves on
the Audit Committee) and of several privately held companies.
MARVIN GOLDSTEIN has been a director of the Company since November
1998. From April 1997 to August 1997, Mr. Goldstein served as Executive Vice
President and COO of Regis; from August 1995 to April 1997 as Chairman, CEO and
President of Pet Food Warehouse; and from February 1988 to September 1994 was
employed by Dayton Hudson, Department Store Division, in several executive
positions. Prior to that time, Mr. Goldstein was associated with R.H. Macy
(California) and Carter Hawley Hale. Mr. Goldstein also serves as a member of
the board of directors for Buffet's Inc., Greenspring Company, KBGear
Interactive, Paper Warehouse, Inc., and Wilsons The Leather Experts, Inc.
HARRY W. SPELL has been a director of the Company since 1991. Mr. Spell
has been retired since 1988. From 1949 to 1988, he was employed in various
capacities by Northern States Power Company, most recently as senior vice
president-finance and chief financial officer. Mr. Spell serves as chairman of
the board of directors and a member of the executive committee for Eagle Pacific
Industries, Inc. and Chairman of Spell Capital Partners, LLC, a private equity
and buyout firm.
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<PAGE>
ACTIONS AND COMMITTEES OF THE BOARD OF DIRECTORS
The property, affairs and business of the Company are managed by or
under the direction of the Board of Directors. In 1999, the Board of Directors
met seven times. The Board of Directors has two standing committees, the Audit
Committee and the Compensation and Benefits Committee. During 1999, the Audit
Committee met twice and the Compensation and Benefits Committee met twice. All
of the directors attended at least 75% of the total number of meetings of the
Board of Directors and of the committees on which the director served.
AUDIT COMMITTEE. The Audit Committee of the Board of Directors is
responsible for relations with the Company's independent auditors, for review of
internal auditing functions and controls and for review of financial reporting
policies to assure full disclosure of financial conditions. The Company's
nonemployee directors serve on the Audit Committee. For 1999, George B.
Bonniwell, Duane S. Carlson, Marvin Goldstein, and Harry W. Spell served as such
committee.
COMPENSATION AND BENEFITS COMMITTEE. The Compensation and Benefits
Committee of the Board of Directors is responsible for review and approval of
officer salaries and other compensation and benefits programs and determination
of officer bonuses. The Compensation and Benefits Committee also administers and
makes grants under the Company's 1997 Stock Option Plan. The Company's
nonemployee directors serve on the Compensation and Benefits Committee. For
1999, George B. Bonniwell, Duane S. Carlson, Marvin Goldstein, and Harry W.
Spell served as such committee.
The Board of Directors does not have a separate nominating committee
and the entire Board serves in such capacity.
COMPENSATION OF DIRECTORS
The Company will have five directors in 2000, one of whom (Mr. Cameron)
is an executive officer of the Company and does not receive any additional
compensation for serving as a director of the Company. Nonemployee directors of
the Company receive an annual fee of $5,000 for their service as directors.
STOCK OPTION PLANS
Pursuant to the November 1992 amendments to the Company's Restated 1989
Stock Option Plan (the "1989 Plan"), all nonemployee directors then holding
office were automatically granted nonqualified stock options to purchase 3,750
shares at an exercise price equal to the fair market value of the Common Stock
at the date of grant, subject to adjustment. Each nonemployee director
subsequently elected to the Board of Directors was automatically granted a
similar option on the date of his or her election. The 1989 Plan provided that
every third year after the initial grant, each nonemployee director would
automatically be granted an additional option to purchase 3,750 shares upon
reelection to the Board of Directors by the shareholders. Each such option vests
in monthly installments over a 36-month period and is exercisable for a period
of five years from the date of grant.
Upon approval in 1997 by the shareholders of the 1997 Stock Option
Plan, no additional grants under the 1989 Plan were made to nonemployee
directors. The Restated 1997 Stock Option Plan, as amended (the "1997 Plan"), is
administered by the Compensation and Benefits Committee of the Board of
Directors or the full Board of Directors acting as the Committee (the
"Committee"). Under the 1997 Plan, as amended, each nonemployee director will
receive, upon initial election to the Board, an automatic, nondiscretionary
award of options to purchase 5,000 shares of Common Stock pursuant to the 1997
Plan. In addition, on the date of each annual meeting of shareholders, beginning
with the Annual Meeting held in 1999, each nonemployee director will receive an
annual automatic, nondiscretionary
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<PAGE>
grant of options to purchase 5,000 shares of Common Stock pursuant to the 1997
Plan. Each option becomes exercisable six months after the date of grant,
provides for the forfeiture of any nonexercisable portion if an optionee ceases
to be a director for certain reasons, provides that the exercisable portion may
be exercised for a period of 10 years from the date of grant, and expires on the
tenth anniversary of the date of grant. The exercise price of an option shall be
equal to the fair market value of the Common Stock on the date the option is
granted.
Employees of the Company are eligible to receive awards of options to
purchase Common Stock pursuant to the 1997 Plan. In addition, certain options
are still outstanding under the 1989 Plan. The Board of Directors or the
Committee has the discretion to select eligible employees to whom awards will be
granted and establish the type, price, amount, size and terms of awards, subject
in all cases to the provisions of the respective Plan and the applicable
provisions of the Internal Revenue Code.
The exercise price of an incentive stock option cannot be less than
100% of the fair market value of the Common Stock on the date the option is
granted, except that if the optionee owns 10% or more of the voting rights of
all of the Company's stock ("10% Holder"), the exercise price of an incentive
stock option cannot be less than 110% of the fair market value of the Common
Stock on the date the option is granted.
Options granted to employees cannot be exercised prior to a set period
after their date of grant, which cannot be less than one year during which time
the optionee must remain employed by the Company. Each option specifies the
expiration date, which may not exceed 10 years from the date the option is
granted, provided, however, that if the optionee is a 10% Holder, the exercise
period with respect to incentive stock options may not exceed five years.
Unless otherwise specifically provided in an optionee's agreement,
options cannot be exercised prior to the first anniversary of the date of grant
and provide for the forfeiture of any nonexercisable portion if an optionee
ceases to be an employee of the Company for any reason and that the exercisable
portion may be exercised for a period of three months after termination (or one
year in the case of death, disability or normal retirement).
OFFICERS AND KEY EMPLOYEES WHO ARE NOT DIRECTORS
The following discussion sets forth certain information for at least
the last five years with respect to current officers and key employees of the
Company.
LINDA KOENIG, 38, has been the Controller of the Company since
September 1999. During 1999 the Company eliminated the position of Chief
Financial Officer. The functions previously undertaken by that position are now
handled by the controller. Prior to her promotion to Controller, Ms. Koenig was
General Accounting Manager for the Company, a position she held for
approximately three and one half years, from February 1996 to September 1999.
From August 1994 to February 1996, Ms. Koenig was employed by WTC Industries as
Accounting Manager. As Controller, Ms. Koenig is responsible for all accounting
for the Company, including general ledger, accounts payable, accounts
receivable, inventory and systems.
JIM KIRWAN is the General Manager of the Company's California retail
and recycling operations, a position he has held since October 1996. From
October 1993 to September 1996, Mr. Kirwan served as the transportation manager
for the California facility.
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<PAGE>
THOMAS B. OWEN is the General Manager of the Ohio retail and recycling
operations, a position he has held since December 1997. Prior to that time Mr.
Owen worked for Jacobson Warehouse Company, from September 1995 to June 1997. At
Jacobson he was Regional Operations Manager for a third party warehousing
company.
MORGAN WOLF is the General Manager of the Minnesota retail and
recycling operations. Mr. Wolf served in this position during 1997 and again
since January 1, 1999. He served as Vice President of Operations during 1998.
Mr. Wolf joined the Company in 1995 as National Quality Control Manager.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
WARRANTS. In addition to stock options granted to nonemployee directors
under the Company's 1997 Plan, Marvin Goldstein, a member of the Board of
Directors, received warrants in March 1999 to purchase 5,000 shares of Common
Stock, subject to customary antidilution adjustments. Mr. Goldstein was awarded
such warrants in consideration for certain general business consulting services
provided to the Company since his initial election to the Board in November 1998
and which he has agreed to continue to provide during his tenure on the Board.
The warrants are exercisable, beginning September 6, 1999, for a period of ten
years, at an exercise price of $0.625 per share. If Mr. Goldstein ceases to be a
director of the Company, the warrants terminate if they have not become
exercisable, and otherwise remain exercisable for the full ten year term.
In connection with a private placement in July 1998 by the Company of
12% subordinated promissory notes and warrants, certain employees of the Company
invested. All notes were repaid in September 1998. The warrants are currently
exercisable to purchase 68,750 shares at $2.25 per share and expire July 20,
2001.
In connection with a loan in September 1998, Medallion Capital, Inc.
("Medallion Capital") received a warrant to purchase 700,000 shares of Common
Stock. The current exercise price is $0.60 per share.
PRIVATE PLACEMENT OF STOCK. In February 1999, the Company completed a
private placement of 1,030,000 shares of Common Stock at $.50 per share. The
sale was made through a placement agent, Aethlon Capital, LLC, which received
certain cash fees and warrants in connection with the issuance. The investors in
the offering, as well as the placement agent, were granted registration rights
with respect to all such shares. As part of this offering, Marvin Goldstein, a
member of the Board of Directors of the Company, purchased 100,000 shares; a
client of Perkins Capital Management, Inc. (which currently controls
approximately 28% of the Common Stock of the Company) purchased 400,000 shares;
and Medallion Capital, one of the Company's current lenders (which holds
non-voting attendance rights at board meetings) purchased 100,000 shares. In
addition, the February 1999 issuance of shares triggered an adjustment in the
exercise price under the warrant held by Medallion to $0.60 per share.
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<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE 1999 COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee of the Board of Directors (the
"Committee") is composed entirely of nonemployee directors. The Committee is
responsible for review and approval of officer salaries and other compensation
and benefit programs and determination of officer bonuses. The Committee also
administers the Company's 1989 Stock Option Plan and either the Committee or the
entire Board may administer and make grants under the Company's 1997 Stock
Option Plan.
Annual compensation for the Company's executive officers, other than
the President, is recommended by the President and approved by the Committee.
The individual salary recommendations may vary based on the President's
perception of the value of that position to the Company, the executive's
individual performance and the President's views as to comparative compensation
for like positions at other companies. The annual compensation for the President
is recommended by the Compensation and Benefits Committee and approved by the
Board of Directors.
The Company believes that compensation of the Company's key executives
should be sufficient to attract and retain highly-qualified personnel, and
should also provide meaningful incentives for superior performance. The Company
seeks to reward achievement of long-term and short-term performance goals
including the development of new customers, increasing sales volume, meeting or
exceeding financial targets and other factors.
Compensation of the Company's executives generally consists of a base
salary, a cash bonus and long-term incentive compensation in the form of stock
options. The Company does not utilize a formulaic approach to executive base
compensation. In principle, the Company's executive compensation approach is to
place each officer's salary compensation, excluding bonus, in the mid range of
executive compensation levels for companies of a similar size. The Company
currently provides no retirement benefits to its executive officers except for
the 401(k) Plan.
The amount of any bonus awarded under the Company's bonus plan for all
officers is based on the successful and timely achievement of Company goals,
including financial performance and positioning for future results.
Salaries for officers of the Company were not increased for 1999.
Bonuses of between 2.5% and 7% of annual base salary were granted to officers
for 1999, payable in March 2000. General managers receive a bonus based on a
formula which considers both profit at their center and individual merit.
Bonuses paid to general managers for 1999 ranged between approximately 11% and
20% of annual base salary.
Stock options are awarded to provide incentives to the officers to
promote improved long-term performance of the Company. Option grants for all
officers other than the President are recommended by the President. Options were
granted in 1999 to three executive officers to purchase an aggregate of 40,000
shares of Common Stock at exercise prices between $0.5938 and $0.625 per share.
As a result of termination of employment, 7,500 of these options were cancelled
in January 2000.
The compensation for Edward R. Cameron, the Company's President and
Chief Executive Officer, is determined by using a process and philosophy similar
to that used for all other officers. The Committee considers its members' views
as to comparative compensation for like positions at other companies together
with its own assessment of Mr. Cameron's performance and contributions to the
Company, recommending a salary, bonus and stock options for the Board of
Directors' approval. There is no specific formulaic tie between the Company's
goals and performance and the Committee's
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<PAGE>
recommendation; instead, the Committee's judgment and discretion is used in its
recommendations to the Board of Directors.
The Committee has reviewed the provisions of Internal Revenue Code
Section 162(m) relating to the deductibility of annual executive compensation in
excess of $1,000,000. The Committee currently does not have a policy with
respect to Section 162(m) because it is unlikely that such limit will apply to
compensation paid by the Company to any of the Company's executive officers in
the near future.
March 10, 2000
The 1999 Compensation and Benefits Committee
George B. Bonniwell
Duane S. Carlson
Marvin Goldstein
Harry W. Spell
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<PAGE>
PERFORMANCE GRAPH
The following graph compares cumulative total shareholder returns on
the Company's Common Stock over the last five fiscal years with the Nasdaq Stock
Market (U.S. Companies) Index and the Dow Jones Index for Industrial &
Commercial Services - Pollution Control and Waste Management Companies, assuming
an initial investment of $100 at the beginning of the period and the
reinvestment of all dividends. The following graph has been revised for all
periods to give effect to the Company's one-for-four reverse stock split,
effective February 21, 1997.
[graph appears here with the following plot points]
<TABLE>
<CAPTION>
-------------------------------------------
YEAR ENDING
-------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
- -------------------------------------------- ------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Appliance Recycling Centers of America, Inc. $100.00 $114.76 $15.51 $13.96 $4.65 $6.98
- -------------------------------------------- ------- ------- ------ ------ ------ ------
NASDAQ Stock Market (U.S. Companies) 100.00 141.44 173.93 213.38 299.96 546.35
- -------------------------------------------- ------- ------- ------ ------ ------ ------
DOW Jones Industrial Average 100.00 112.31 120.70 130.08 141.16 142.63
- -------------------------------------------- ------- ------- ------ ------ ------ ------
</TABLE>
Effective September 8, 1998, the Company was delisted from the Nasdaq
SmallCap Market for failure to meet continued listing requirements, specifically
the net worth requirement. The Company's Common Stock is currently traded on the
OTC Bulletin Board under the symbol ARCI. The Common Stock was traded on the
Nasdaq SmallCap Market from February 26, 1997 to September 7, 1998, and the
Nasdaq National Market System from January 8, 1993 to February 25, 1997, and the
Nasdaq SmallCap Market from November 7, 1991 until January 7, 1993. Prior to
November 7, 1991, the Common Stock traded on the local over-the-counter market
in the Minneapolis - St. Paul, Minnesota area.
The closing price on March 17, 2000 was $1.75 per share.
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<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation earned
by the Chief Executive Officer for each of the last three fiscal years. No other
officer of the Company received salary and bonus with respect to 1999 in excess
of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(1)
------------------- ---------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(2) OPTIONS (#)(2) ($)
--------------------------- ---- ---------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Edward R. Cameron 1999 $150,000 $10,000 25,000 $ 0
Chairman of the Board, President 1998 155,817 --- --- 0
and Chief Executive Officer 1997 150,046 --- --- 0
</TABLE>
- --------------------
(1) The Company has no Long-Term Incentive Plan as defined by Item
402(a)(7)(iii) of SEC Regulation S-K.
(2) No bonuses or stock options were granted in 1998 or 1997 to Mr.
Cameron.
STOCK OPTIONS
The following table provides certain information with respect to stock
options exercised under the Company's stock option Plans in fiscal 1999 by the
named executive officer and the value of such officer's unexercised options at
January 1, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FY-END(#) AT FY-END($)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. Cameron --- --- --- 25,000 --- $13,280
</TABLE>
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of March 17, 2000 (unless a different
date is specified) the number of shares of Common Stock beneficially owned by
each person who is the beneficial owner of more than five percent of the
outstanding shares of the Company's Common Stock, by each current executive
officer of the Company named in the Summary Compensation Table herein, by each
director and by all current executive officers and directors as a group.
<TABLE>
<CAPTION>
POSITION NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER WITH COMPANY BENEFICIALLY OWNED (1) OUTSTANDING (2)
- ---------------- ------------ ---------------------- ---------------
<S> <C> <C> <C>
Edward R. Cameron Chairman of the Board,
7400 Excelsior Boulevard President and Chief
Minneapolis, MN 55426 Executive Officer ....... 302,689 (3) 13.24%
George B. Bonniwell Director .................. 11,725 (4) *
Duane S. Carlson Director .................. 13,125 (4) *
Marvin Goldstein Director .................. 115,000 (4) 5.00%
Harry W. Spell Director .................. 12,500 (4) *
All officers
and directors as a
group (6 persons) ..................................... 457,539 (4) 19.63%
Perkins Capital Mgmt., Inc. .............................. 639,350 (5) 28.00%
</TABLE>
- -----------------------
* Represents less than 1%
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to such shares.
(2) Applicable percentage of ownership is based on 2,286,744 shares of
Common Stock outstanding as of March 17, 2000, together with applicable
options for such shareholder.
(3) Excludes options to purchase 25,000 shares which are not currently
exercisable. These options were granted to Mr. Cameron in July 1999
under the Company's stock option plan in consideration of his
outstanding guaranty of the Company's current line of credit.
(4) Includes shares which could be purchased within 60 days upon the
exercise of existing stock options or warrants, as follows: Mr.
Bonniwell, 8,750 shares; Mr. Carlson, 8,750 shares; Mr. Goldstein,
15,000 shares; Mr. Spell, 8,750 shares; and all directors and current
officers as a group, 43,750 shares.
(5) According to a Schedule 13G received February 2, 2000, Perkins Capital
Management, Inc. ("Perkins Capital") beneficially owned 639,350 shares
of Common Stock as a result of serving as investment advisor to various
clients. Perkins Capital has sole dispositive power as to all 639,350
shares and sole voting power as to 625,200 shares.
-12-
<PAGE>
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors, its executive officers and any persons holding
more than 10% of outstanding Common Stock are required to file reports
concerning their initial ownership of Common Stock and any subsequent changes in
that ownership. Except as follows, the Company believes that the filing
requirements for the last fiscal year were satisfied. Medallion Capital, Inc.,
holder of 100,000 shares of Common Stock and of currently exercisable warrants
to purchase 700,000 shares at a current exercise price of $0.60 per share
(approximately 23% of the outstanding stock if exercised), has not made filings
with the SEC to the Company's knowledge. In making this disclosure, the Company
has relied solely on written representations of its directors, executive
officers and beneficial owners of more than 10% of Common Stock and copies of
the reports that they have filed with the Securities and Exchange Commission.
PROPOSAL TWO
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of McGladrey & Pullen, LLP
as independent auditors to audit the books, records and accounts of the Company
for the fiscal year ending December 30, 2000. If the shareholders do not ratify
the appointment of McGladrey & Pullen, LLP or for other appropriate reasons, the
appointment will be reconsidered by the Board of Directors. A representative of
McGladrey & Pullen, LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if he desires to do so and will be available to
respond to appropriate questions by shareholders.
All proxies received in response to this solicitation will be voted in
favor of the ratification of the appointment of the independent auditors, unless
other instructions are indicated thereon. Ratification of the appointment of the
independent auditors requires the affirmative vote of a majority of the shares
represented in person or by proxy at the Annual Meeting and voting on the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF MCGLADREY & PULLEN, LLP AS INDEPENDENT AUDITORS.
PROPOSALS OF SHAREHOLDERS
Pursuant to Rule 14a-8 of the Securities and Exchange Commission
("SEC"), any shareholder wishing to have a proposal considered for inclusion in
the Company's proxy solicitation material for the 2001 Annual Meeting of
Shareholders must set forth such proposal in writing and file it with the
Secretary of the Company no later than November 21, 2000. Any shareholder
wishing to have a proposal considered at the 2001 Annual Meeting of
Shareholders, but not submitted for inclusion in the Company proxy solicitation
material, must set forth such proposal in writing and file it with the Secretary
of the Company no later than February 7, 2001 and, pursuant to SEC Rule
14a-4(c)(1), failure to notify the Company by such date would allow the
Company's proxies to use their discretionary voting authority (to vote for or
against the proposal) when the proposal is raised at the Annual Meeting without
prior discussion of the matter in the proxy materials.
-13-
<PAGE>
OTHER BUSINESS
At the date of this proxy statement, management knows of no other
business that may properly come before the Annual Meeting. However, if any other
matters properly come before the meeting, the persons named in the enclosed form
of proxy will vote proxies received in response to this solicitation in
accordance with their best judgment on such matters.
FINANCIAL INFORMATION;
ANNUAL REPORT ON FORM 10-K
The Company's 1999 Annual Report to Shareholders, including but not
limited to the consolidated balance sheets as of January 1, 2000 and January 2,
1999, and the related consolidated statements of operations, shareholders'
equity and cash flows for the three years ended January 1, 2000, accompanies
these materials. A copy of the 1999 Annual Report to Shareholders may be
obtained without charge upon request. In addition, the Company will provide
without charge to any shareholder solicited hereby, upon written request of such
shareholder, a copy of its 1999 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. Requests should be directed to Investor
Relations, Appliance Recycling Centers of America, Inc., 7400 Excelsior
Boulevard, Minneapolis, MN 55426.
By Order of the Board of Directors
Denis E. Grande, Secretary
March 21 ,2000
-14-
<PAGE>
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
For Annual Meeting of Shareholders
April 27, 2000
3:30 p.m.
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 Excelsior Blvd.
Minneapolis, MN 55426
- --------------------------------------------------------------------------------
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 EXCELSIOR BLVD., MINNEAPOLIS, MN 55426 PROXY
- --------------------------------------------------------------------------------
The undersigned, revoking all prior proxies, hereby appoints Edward R.
Cameron and Denis E. Grande, or either of them, as Proxy or Proxies, with full
power of substitution and revocation, to vote all shares of stock of Appliance
Recycling Centers of America, Inc. standing of record in the name of the
undersigned at the close of business on March 17, 2000 at the Annual Meeting of
Shareholders to be held on April 27, 2000, or at any adjournment thereof.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders of Appliance Recycling Centers of America, Inc. and the
proxy statement furnished therewith dated March 21, 2000.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to Appliance Recycling Centers of America,
Inc., c/o Shareowner Services(TM), P.O. Box 64873, St. Paul, MN 55164-0873.
<TABLE>
<CAPTION>
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<S> <C> <C> <C> <C>
1. Election of the 01 Edward R. Cameron 04 Marvin Goldstein |_| Vote FOR |_| Vote WITHHELD
following nominees as 02 George B. Bonniwell 05 Harry W. Spell all nominees from all nominees
directors: 03 Duane S. Carlson (except as
marked)
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(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED
NOMINEE, WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX
PROVIDED TO THE RIGHT.)
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2. Ratification of appointment of McGladrey & Pullen, LLP as
independent auditors for fiscal year ending December 30,
2000. |_| For |_| Against |_| Abstain
In their discretion the Proxies are to vote upon such other matters as may properly come before the or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR PROPOSAL
2. Address Change? Mark Box |_| Indicate changes below:
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Signature(s) in Box
Please sign your name exactly as it appears at
left. In the case of shares owned in joint
tenancy or as tenants in common, all should
sign. Fiduciaries should indicate their title
and authority.
- ------ ------
</TABLE>
