<PAGE>
LIUSKI INTERNATIONAL, INC.
6585 Crescent Drive
Norcross, Georgia 30071
DEAR FELLOW STOCKHOLDER:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of Liuski International, Inc. (the "Company")
to be held on Friday, June 28, 1996, at 10:00 o'clock a.m. (Local Time) at the
Atlanta Marriott North Central Hotel, 2000 Century Blvd. N.E., Atlanta, Georgia
30345. This year, you are being asked to elect Class 2 directors and ratify the
appointment of independent auditors.
For the reasons set forth in the accompanying Proxy Statement, your
Board of Directors unanimously recommends that you vote for (i) Management's
nominees for directors and (ii) the ratification of the appointment of BDO
Seidman as the Company's independent auditors.
In order to ensure that your shares are represented at the meeting, I
urge you to promptly date, sign and mail the enclosed proxy using the enclosed
addressed envelope, which needs no postage if mailed in the United States. Your
proxy may be withdrawn or revoked by the person who executed it at any time
prior to the Annual Meeting.
Very truly yours,
Hsing Yen Liu
Chairman of the Board
Dated: May 24, 1996
<PAGE>
LIUSKI INTERNATIONAL, INC.
6585 Crescent Drive
Norcross, Georgia 30071
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 28, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Liuski International, Inc. (the "Company") will be held on Friday, June 28,
1996, at 10:00 o'clock a.m. (Local Time) at the Atlanta Marriott North Central
Hotel, 2000 Century Blvd., Atlanta, Georgia 30345 for the purpose of considering
and voting upon the following proposals:
1. To elect Class 2 directors.
2. To ratify the appointment of BDO Seidman as the Company's
independent auditors for the calendar year ending December 31,
1996.
3. Such other business as may properly come before the meeting.
The close of business on May 10, 1996, has been fixed as the record
date for determining the stockholders entitled to notice of and to vote at the
meeting and any adjournment thereof, and only stockholders of record on such
date shall be entitled to notice of and to vote at the meeting.
Please promptly date, sign and mail the enclosed proxy using the
enclosed addressed envelope, which needs no postage if mailed within the United
States.
By Order of the Board of Directors
Hsing Yen Liu
Chairman of the Board
Dated: May 24, 1996
<PAGE>
PROXY STATEMENT
LIUSKI INTERNATIONAL, INC.
6585 Crescent Drive
Norcross, Georgia 30071
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished to stockholders in connection with
the solicitation by the Board of Directors of Liuski International, Inc. (the
"Company") of proxies to be voted at the Annual Meeting of Stockholders of the
Company to be held on Friday, June 28, 1996, at 10:00 o'clock a.m. (Local Time)
at the Atlanta Marriott North Central Hotel, 2000 Century Blvd., Atlanta,
Georgia 30345, and at any adjournment thereof. This proxy statement and the
proxies solicited hereby are first being sent or delivered to stockholders on or
about May 24, 1996.
Voting Rights and Votes Required
The proxy may be revoked by the stockholder at any time prior to its
use by the Company by voting in person at the Annual Meeting, by executing a
later proxy, or by submitting a written notice of revocation to the Secretary of
the Company at the Company's office or at the Annual Meeting. If the proxy is
signed properly by the stockholder and is not revoked, it will be voted at the
meeting. If a stockholder specifies how the proxy is to be voted, the proxy will
be voted in accordance with such specification. Otherwise the proxy will be
voted FOR the election of the nominees for Director and FOR the other matters
listed in the accompanying Notice of Annual Meeting of Stockholders.
At the close of business on May 10, 1996, 4,380,525 shares of the
Company's common stock, $.01 par value ("Common Stock"), were outstanding and
eligible for voting at the meeting. Each stockholder of record is entitled to
one vote for each share held on all matters to come before the meeting. Only
stockholders of record at the close of business on May 10, 1996 are entitled to
notice of and to vote at the meeting.
Presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares as of the record date shall constitute a
quorum. Votes cast at the Annual Meeting will be tabulated by inspectors of
election appointed by the Company. Shares of stock represented by a properly
signed and returned proxy will be treated as present at the Annual Meeting for
purposes of determining a quorum, without regard as to whether the proxy is
marked as casting a vote or abstaining. Likewise, where the record holder has
indicated on the proxy card or has otherwise notified the Company that it does
not have power to vote shares represented by the proxy (a "broker non-vote"),
the shares will be treated as present at the Annual Meeting for purposes of
determining a quorum.
In the election of Directors, votes may be cast in favor or withheld.
Votes that are withheld will be excluded entirely from the vote count and will
have no effect. The required vote on the election of Directors will be the
plurality of the votes cast.
Other than with respect to the election of Directors, all other
matters voted on at the Annual Meeting require an approval of the majority of
the shares of stock present and entitled to vote thereon. Therefore, abstentions
as to particular proposals will have the same effect as votes against such
proposals. Broker non-votes will be treated as shares not entitled to vote and
will not be included in the calculation of the number of votes constituting a
majority.
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as of April 30,
1996 pertaining to the beneficial ownership of the Company's common stock (the
"Common Stock"), by (i) persons known to the Company to own 5% or more of the
outstanding Common Stock, (ii) each director and nominee for director of the
Company, (iii) each executive officer named in the Summary Compensation Table
below and (iv) directors and executive officers of the Company as a group. Each
such person has sole voting and investment powers with respect to his or her
shares. This information has been obtained from the Company's records, or from
information furnished directly by the individual or entity to the Company.
Number of Shares Percentage of
---------------- -------------
Name of Beneficial Owner Beneficially Owned Outstanding Shares
- ------------------------ ------------------ ------------------
Morries Liu 1,833,287(1)(2)(3)(4) 41.7%
Manuel C. Tan 99,803(3)(4) 2.3%
Shirley Lee 69,168(3)(4) 1.6%
Mark Rafuse 22,668(4) .5%
Edwin Feinberg 26,000(3)(4) .6%
Paul J. Konigsberg 10,000(3)(4) .2%
Kenny Liu 7,500(4) .2%
Eric Bashford 28,500(3)(4)(5) .6%
All directors and executive
officers as a group
(8 individuals) 2,049,926(1)(2)(3)(4)(5) 45.5%
--------- -----
- --------------------------
(1) Excludes an aggregate of 122,542 shares owned by Mr. Liu's three sisters
and brother-in-law as follows: Ms. Tina Peng, 34,267 shares; Ms. Shing-Gyy
Hu, 24,267 shares; and Ms. Li Shin Liu and Mr. Jin Yao Shen, 34,008 shares
jointly.
(2) Includes 80,000 shares of Common Stock that are subject to options granted
by Mr. Liu to current or prior employees of the Company on May 28, 1991,
which are exercisable until January 2, 1997, at $5.25 per share. These
include options granted to Ms. Peng, Ms. Hu and Ms. Lee to purchase 10,000
shares each and options granted to Mr. Tan and Mr. Feinberg to purchase
18,000 and 15,000 shares, respectively.
(3) Represents or includes shares subject to stock options referred to in
footnote (2) and options granted by the Company as follows: Mr. M. Liu,
16,667; Mr. Tan, 39,001 shares; Mr. Feinberg, 11,000 shares; Ms. Lee,
20,667 shares; Mr. Rafuse, 12,668; Mr. K. Liu, 7,500 shares; Mr. Bashford,
7,500; and Mr. Konigsberg, 10,000 shares.
-2-
<PAGE>
(4) Excludes shares of common stock that are subject to options which are not
currently exercisable as follows: Mr. Liu, 33,333 shares; Mr. Tan, 39,999;
Mr. Rafuse, 25,332; Ms. Lee, 19,330; Mr. Feinberg, 2,000; Mr. Bashford
7,500; Mr. Konigsberg, 5,000 shares; and Mr. K. Liu, 7,500.
(5) Represents shares subject to options referred to in footnote (3) and 8,500
shares of Common Stock that are subject to options granted to Mr. Bashford,
as an officer of Reich & Co., Inc., in connection with the Company's
initial public offering, which are exercisable until August 13, 1996,
initially at $11.55 per share, subject to adjustment and 12,500 shares that
are subject to options issued to Mr. Bashford, as an officer of Reich & Co.
Inc., in connection with the Company's secondary public offering in 1993,
which are exercisable until May 21, 1998, initially at $11.55 per share,
subject to adjustment.
ELECTION OF DIRECTORS
(Proposal 1)
The Company has a classified Board of Directors that is currently
comprised of seven directors. The directors are divided into three classes
consisting of two directors in Classes 1 and 2, and three directors in Class 3.
The terms of office of the directors expire as follows: Class 2, on the date of
the 1996 annual meeting of stockholders; Class 3, on the date of the 1997 annual
meeting of stockholders; and Class 1, on the date of the 1998 annual meeting of
stockholders. The term of office of each director will expire on the date of the
third annual meeting of stockholders following his or her election.
The proxy will be voted as specified thereon and, in the absence of
contrary instructions, will be voted for the re-election of Manuel C. Tan and
Kenny Liu to serve as the Class 2 directors until the 1999 annual meeting of
stockholders and until their respective successors shall have been elected and
shall have qualified. If any nominee is unable or unwilling to serve, which the
Board of Directors does not anticipate, the person named in the proxy will vote
for another person in accordance with his or her judgment. To be elected, a
nominee must receive the affirmative vote of a plurality of the votes cast by
the shares present and entitled to vote, in person or by proxy, at the Annual
Meeting. Accordingly, abstentions or broker non-votes as to the election of
Directors will not affect the election of the candidates receiving the plurality
of the votes.
Information with respect to the Class 2 nominees and the Class 1 and 2
directors is set forth below and is based upon the records of the company and
information furnished to it by the nominees and such directors.
-3-
<PAGE>
Other Positions with
the Company and Has served as a
Name Age Principal Occupation Director since
- ---- --- -------------------- ---------------
NOMINEES FOR A THREE-YEAR TERM
Manuel C. Tan 40 President and Chief Operating June, 1991
Officer
Kenny Liu 42 Chief Executive Officer of May, 1994
IGS, Inc.
INCUMBENT DIRECTORS - ONE-YEAR REMAINING TERM
Edwin J. Feinberg 64 Consultant June, 1991
Mark Rafuse 32 Senior Vice President - June, 1996
Finance and Chief Financial
Officer
Eric R. Bashford 36 Senior Vice President and June, 1994
Director of Corporate Finance
of RAS Securities
INCUMBENT DIRECTORS - TWO-YEAR REMAINING TERM
Hsing Yen Liu 47 Chairman of the Board of June, 1991
Directors and Chief Executive
Officer
Paul J. Konigsberg 60 Partner of Konigsberg Wolf November, 1991
& Co., P.C., an accounting
firm
NOMINEES
Manuel C. Tan has been with the Company and its predecessor since 1984
and was the Company's Executive Vice President, Chief Operating Officer, and
Secretary from 1988 until April 1993, when he was elected President of the
Company. Prior to joining the Company, he was the general manager for two years
of a wholesale and retail lumber company located in the Philippines. He
graduated from De Lasalle University, Philippines in 1979 with a B.A. degree in
General Studies.
Kenny Liu (who is not related to Morries Liu) has served as the
President and Chief Executive Officer of IGS, Inc., a privately held multimedia
company since March, 1994. Prior thereto Mr. K. Liu served as the Chief
Executive Officer of Opti, Inc. from January 1989 to March 1994, served as its
President from January 1989 to February 1993, and from February 1993 to July
1994 he served as the Chairman of the Board.
-4-
<PAGE>
From September 1986 to January 1989, Mr. K. Liu was employed by Chips and
Technologies, Inc., a chipset design company, serving most recently as a design
manager. Mr. Liu became a director of the Company in June 1994. Mr. K. Liu holds
a B.S. degree in Electrical Engineering from National Cheng-Kung University and
a M.S. in Electrical Engineering from Ohio State University.
INCUMBENTS
Hsing Yen (Morries) Liu has been the Chairman of the Board of
Directors and Chief Executive Officer of the Company and its predecessor since
founding the predecessor in 1984. He also served as President from 1984 until
the election of Mr. Tan as president in April 1993. Prior thereto, he worked for
Northern Telecom, Inc. as a systems engineer for more than two years. He
graduated from the Chinese Cultural University, Taiwan, in 1972 with a B.A.
degree in Journalism.
Paul J. Konigsberg has been a partner of Konigsberg Wolf & Co., P.C.,
an accounting firm, since 1972. Mr. Konigsberg received a B.B.A. degree in
Business Administration in 1965 and a Master of Laws in taxation in 1968 from
New York University. He has been a director of the Company since November 1991.
In addition to the Company, Mr. Konigsberg is a member of the board of directors
of Sandata, Inc.
Edwin J. Feinberg was the Vice-President-Finance and Chief Financial
Officer of the Company and its predecessor from 1988 to November 1994, since
which time he has served as a consultant to the Company. Prior thereto, he was
Controller and Chief Financial Officer of BWP Holding Corp., a distributor of
automotive replacement parts, for more than three years. Mr. Feinberg has
approximately 34 years of accounting experience, including three years as
corporate controller, from 1974 to 1977, of Lafayette Radio Electronics Corp.,
which was then an American Stock Exchange listed company engaged in the
wholesale and retail sale of consumer electronic products and components, and
four years as corporate controller, between 1977 and 1981, of Diplomat
Electronics Corp., which was then traded over-the-counter and engaged in the
distribution of electronic components. Mr. Feinberg graduated from New York
University (School of Commerce) in 1955 with a B.S. degree in Accounting.
Mark Rafuse has been the Company's Senior Vice President--Finance and
Chief Financial Officer since April 1996 having served as
Vice-President--Finance and Chief Financial Officer of the Company since
February 1995. He was elected by the Board of Directors of the Company as a
director in February 1996, to fill the vacancy created by the resignation of
Mike Hong. Prior to joining the Company, from October 1993 to February 1994, he
was the Vice President and Chief Financial Officer of BMH Wood Technology, Inc.,
a firm engaged in the engineering and manufacturing of materials handling
equipment for the pulp and paper industry. Prior thereto, from August 1988 to
October 1993, he was the Vice President and Controller of Pratt Industries
(USA), Inc., a company engaged in the paper and packaging business with thirteen
hundred employees and over three hundred million dollars in assets. From June
1985 to August 1988, Mr. Rafuse was a senior auditor with Arthur Andersen & Co.
Mr. Rafuse graduated from Loma Linda University in 1985 with a B.S. degree in
business administration.
Eric R. Bashford serves as Senior Vice President and Director of
Corporate Finance at RAS Securities Corp. where he has been employed since
January 1994. From July 1990 to January 1994 he was Senior Vice President of
Reich & Co., Inc. (the underwriter of the Company's initial public offering in
1991 and secondary public offering in 1993). From February to July 1990, he was
a Senior Vice President of Hopper Soliday & Co., Inc. From 1988 to January 1990,
he was a Senior Vice President of J.T. Moran & Co., Inc. Mr. Bashford is a
Chartered Financial Analyst. He received a B.A. in Economics and Management
-5-
<PAGE>
from Beloit College in 1981 and an M.B.A. from the Wharton School of the
University of Pennsylvania in 1988.
* * *
Other Executive Officers
Shirley Lee, who is 33 years old, has been with the Company since 1985
and was the Company's Senior Vice President--Sales and Marketing from April 1992
until April 1993, when she was elected Executive Vice President--Sales and
Marketing. From 1985 to April 1992, she was the Company's Vice President--Sales
and Marketing. Prior thereto, Ms. Lee graduated from the National Taiwan
University in 1984 with a B.A. degree in Business Administration and took
courses toward an M.B.A. at New York University.
The following individuals, who are not executive officers or Directors
of the Company, make significant contributions to the business of the Company.
Tina Peng has served as Senior Vice-President of the Company's
Magitronic Technology Division since April 1996. Prior thereto, from January
1992 to April 1996, she served as Vice-President of Product Management for
Magitronic. From January 1990 to January 1992, she served as Vice-President of
Purchasing for the Company's domestic operations. Ms. Peng, who has been with
the Company since 1984, has also previously served as Vice-President of
Purchasing for the Company's Taiwan Sales Division.
Chuck Marsh has served as the Company's Senior Vice-President of Sales
and Marketing since April 1996. From April 1995 to April 1996, he served the
Company as Vice-President--Distribution-Product Management and Marketing. Prior
to joining the Company, from May 1993 to April 1995, he served as Senior
Executive Vice-President of Purchasing and Marketing for Southern Electronics
Distributors, Inc. From June 1989 to May 1993, he served as Vice-President of
Purchasing and Marketing for Southern Electronics Distributors, Inc.
* * *
In furtherance of the Company's compensation policy for independent
members of the Board of Directors, Messrs. Bashford, K. Liu, and Konigsberg each
receive an annual Director's fee of $12,000 and, with the exception of Mr.
Feinberg who was granted stock options in his capacity as an employee of the
Company, have been granted options to purchase 15,000 shares of the Company's
Common Stock, at fair market value on the date of grant in consideration for
their services as members of the Company's Board of Directors. 7,500 of these
options were granted to each of these directors on his initial election to the
Board of Directors (the "Initial Election Options") and options to purchase
7,500 shares of Common Stock were granted to each of them on April 17, 1995. All
of these options are exercisable as to 331/3% of the shares on each of the first
three anniversaries of the date of grant. All stock options granted by the
Company which had exercise prices in excess of $4.75 per share were repriced by
the Company to $4.75 per share, which was in excess of the fair market value of
the Company's common stock on December 22, 1994, the date the repricing was
effected. The purchase prices of Common Stock subject to the Initial Election
Options granted to Messrs. Konigsberg, K. Liu and the options held by Mr.
Feinberg were reduced accordingly. The Initial Election Options awarded to Mr.
Bashford were not effected by the repricing since the purchase price for the
Common Stock subject to his options is $4.625, the fair market value of the
Company's Common Stock on the date the options were granted. Executive officers
hold office until their successors are chosen and qualify, subject to earlier
removal by the Board of Directors.
-6-
<PAGE>
Audit Committee and Meetings of the Board of Directors
The Board of Directors has a standing Audit Committee comprised of
Messrs. Konigsberg and K. Liu. The Audit Committee reviews the Company's
internal controls and the objectivity of its financial reporting and the scope
and results of the auditing engagement. The audit committee also reviews and
approves relationships, transactions and credit terms with certain affiliates of
the Company. It meets with appropriate Company financial personnel and
independent public accountants in connection with these reviews. The auditors
have access to such committee at any time. The Audit Committee held two meetings
during 1995. Mr. K. Liu, who was overseas on business, was absent from one of
these meetings. See "Certain Relationships and Related Transactions."
The Board of Directors does not have a nominating or compensation
committee. See "Executive Compensation: Compensation Report."
During 1995, there were two meetings of the Board of Directors. Mr. K.
Liu, who was overseas on business, was absent from one of these meetings.
-7-
<PAGE>
EXECUTIVE COMPENSATION
----------------------
The table below discloses all cash compensation awarded to, earned by
or paid to each executive officer of the Company who earned $100,000 or more for
services rendered in all capacities to the Company during the fiscal year ended
December 31, 1995. In addition it provides information with respect to the
compensation of the named executive officers for 1994 and 1993.
Summary Compensation Table
--------------------------
Long-Term
Annual Compensation Compensation
---------------------------------------- ------------
Name and Principal Other Annual
Position Year Salary Bonus(1) Compensation Options
- ------------------ ---- ------ -------- ------------ -------
Morries Liu 1995 $169,077 $ 3,382 -- 50,000
Chairman of the 1994 $206,846 $ 3,875 -- --
Board of Directors, 1993 $161,838 $ 84,675 -- --
and Chief Executive
Officer
Manuel C. Tan 1995 $172,500 $ 3,450 -- 50,000
President and Chief 1994 $155,260 $ 3,105 -- 29,000(2)
Operating Officer 1993 $129,541 $ 27,237 $ 36,750(3) --
Mike Hong(4) 1995 $129,375 -- -- --
Senior Vice 1994 $131,837 -- -- 19,000(2)
President - 1993 $ 61,064 -- -- --
Sales and Marketing
- ------------------------
(1) Includes the Company's contribution to its 401-K plan in the
following amounts for 1995, 1994 and 1993, respectively: Mr.
Liu, $3,382, $3,875 and $2,675; and Mr. Tan, $3,450, $3,105
and $2,237.
(2) Includes 8,000 and 10,000 stock options originally granted to Mr.
Tan and Mr. Hong in 1992 and 1993, respectively, that were
repriced in December 1994, with no change in their vesting or
expiration dates. The new exercise price was $4.75 per share and
the closing market price per share on the date the options were
repriced was $4.625 per share.
(3) Consists of the dollar value of the difference between the fair
market value and the purchase price of shares of common stock
purchased on exercise of employee stock options. See "Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values."
(4) Mr. Hong joined the Company in July 1993 and resigned effective
July 1995.
-8-
<PAGE>
Employment Agreements
Mr. Morries Liu has an employment agreement with the Company expiring
August 1996 providing for an annual salary of $230,000. During 1995, Mr. Liu
voluntarily reduced his compensation for the period of June through December.
Pursuant to his employment agreement, Mr. Liu is entitled to such increases in
salary as the Board of Directors may determine.
Options Grants in Last Fiscal Year
----------------------------------
The following table provides information on option grants in 1995 to
the Company's named executive officers.
Percent of
Total
Options Potential Realized
Granted To Value at Assumed
Employees Exercise Annual Rates of
Options in Fiscal Price Stock Price
Granted Year ($/Share) Expiration Appreciation for Option
Name (#)(1) (2) --------- Date Term
---- ------- ---------- ----------
5% 10%
-----------------------
Morries Liu 50,000 9.4% $4.75(3) June 2001 $80,773 $183,246
Manuel C. Tan 50,000 9.4% $4.75(3) June 2001 $80,773 $183,246
- -------------------------------------
(1) The options become exercisable as to 331/3% of the shares on each of the
first three anniversaries of the date of grant.
(2) In 1995, the Company granted options to purchase 534,100 shares to
employees. Not included in these totals are options to purchase an
aggregate 22,500 shares granted to outside directors of the Company who are
not employees.
(3) The exercise price was equal to the market value of the Company's common
stock on the date of grant and may be paid by delivery of already-owned
shares.
-9-
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
-----------------------------------------------
The following table provides information on the value of the Company's
named executive officers' unexercised options at December 31, 1995.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at December 31, 1995 In-the-Money Options at
(#) December 31, 1995 ($)(1)
---------------------------- ------------------------
Shares
Acquired on Value
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Morries Liu 0 $0 0 50,000 $0 $0
Manuel C. Tan 0 $0 33,667 63,333 $0 $0
</TABLE>
- --------------------------
(1) Fiscal year ended December 31, 1995. The last sale price of the
Company's Common Stock on that day, as reported by NASDAQ-NMS, was
$3.31.
Compensation Report
It is the Board of Directors' responsibility to review compensation
levels of members of management, evaluate the performance of management,
consider management succession and other related matters and administer the
Company's various incentive plans. The Board determines what it considers
appropriate compensation based on the individual's performance and contribution,
the financial status of the Company, competitive national compensation levels
prevailing in the computer industry, competitive pressure for key personnel and
Company objectives. In order to accommodate its rapid growth in sales, the
Company has monitored its costs very carefully over the years, including the
compensation paid to all of the Company's employees. As a consequence of this
policy, the Board believes that salary of the Company's executive officers has
been modest compared to executives employed by the Company's competitors.
Incentive Plans
1991 and 1994 Stock Option Plans: In 1991, the Company adopted its
1991 Stock Option Plan. As at December 31, 1994 options to purchase 318,475
shares of the Company's Common Stock had been granted and had been exercised or
were outstanding out of the total number of options authorized under the plan of
450,000. In July 1994, the Board of Directors adopted the Company's 1994 Stock
Option Plan. As at December 31, 1995 options to purchase 553,100 shares of the
Company's Common Stock had been issued out of the total number of options
authorized under the plan of 650,000. The purpose of the Company's stock option
plans is to provide a means for the Company, by granting options to purchase
Common Stock to employees, executive officers, and directors of the Company, to
attract and retain persons of ability and motivate them to advance the interest
of the Company. Stock options are awarded by the Board of Directors subject to
the terms of the plans. The Board of Directors considers the contribution made
-10-
<PAGE>
to the Company's business and the amount of Company's stock option grants
previously awarded to employees, including executive officers, when awarding new
stock options. The Board of Directors may amend outstanding stock option and
grant agreements, subject to plan limitations. Because the Company believes that
the level of compensation paid to all employees is modest as compared to that
paid by its competitors, grants of options to purchase the Company's Common
Stock has been an important feature of the compensation program for all
employees. The Board of Directors issued options to purchase an aggregate
556,600 shares of the Company's Common Stock under the Company's Stock Option
Plans in 1995.
With respect to compensation for officers including Mr. Liu, the Chief
Executive Officer, the Board of Directors' policy is to review compensation
proposals from management, which are based upon a performance evaluation
measuring past performance as well as expected future contributions. Mr. Liu's
compensation is based on his experience in the industry, his responsibilities as
the Company's Chief Executive Officer and the dominant role he has played in the
Company's growth.
At the present time, the Company's officers receive compensation in
the form of base salary and long-term incentive compensation through stock
options, pursuant to the Company's stock options plans. In addition, the Company
provides health insurance as long as the officer is actively employed. The
officers, as well as substantially all full-time employees, are eligible to
participate in the Company's Deferred Profit Sharing Plan under Section 401(k)
of the Internal Revenue Code of 1986, as amended (the "Code"). The Board
believes the Company should increase executive compensation to levels more
in-line with industry standards. In order to narrow the compensation gap, the
Board has authorized increased cash compensation and has awarded incentive stock
awards to certain of the Company's executive officers.
Four current or past executive officers of the Company, Messrs. M.
Liu, Tan, Feinberg and Rafuse, are Members of the Company's Board of Directors
and have participated in deliberations concerning executive officer compensation
but none of them voted on their individual compensation.
BOARD OF DIRECTORS
Morries Liu
Manuel C. Tan
Edwin J. Feinberg
Paul J. Konigsberg
Kenny Liu
Mark Rafuse
Eric Bashford
-11-
<PAGE>
Stock Price Performance Graph
The following graph presents a comparison of the cumulative total
stockholder return on the Common Stock with the NASDAQ Stock Market (U.S.) Index
and the average performance of a group consisting of the Company's peer
corporations on a line-of-business basis. The peer corporations in the group are
Arrow Electronics, Inc., Intelligence Electronics, Inc., Merisel, Inc., Southern
Electronics Corporation and Tech Data Corp. This graph assumes that $100 was
invested on August 13, 1991 (or such later date the applicable company
registered its common stock under Section 12 of the Securities Exchange Act of
1934) in the Common Stock and in the other indices, and that all dividends were
reinvested and are weighted on a market capitalization basis at the time of each
reported data point. The stock price performance shown below is not necessarily
indicative of future price performance.
[Original document contained performance graph expressed as table below.]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
FISCAL YEAR ENDING
COMPANY 1991 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Liuski International 100 82.76 120.69 151.72 56.90 45.69
Inc.
Peer Group 100 151.07 182.34 314.55 171.54 155.87
Broad Market 100 108.23 109.29 131.09 137.64 178.53
-12-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Taiwan Affiliates
Since 1984, the Company has been purchasing products in the Far East
through one or more trading companies substantially all of whose activities have
been dedicated to providing purchasing services for the Company. The majority of
the stock of the trading companies, Marie-Claude Co., Ltd. and Liuski
International, Inc. (Taiwan) (collectively, the "Trading Affiliates" ) is owned
by Mr. Liu's mother and the remainder is owned by certain members of Mr. Liu's
immediate family. The Company has an agreement with each of the Trading
Affiliates pursuant to which the Company may, but is not required to, purchase
products from the Trading Affiliates, at a price of 2% above the amount of the
manufacturer's charge to the Trading Affiliates plus reimbursement of
out-of-pocket costs. Pursuant to the agreements, the Trading Affiliates handle a
variety of purchasing logistics for the Company. The total purchases through the
Trading Affiliates were approximately $72,190,000 during 1995, for which the
Company paid contract consideration to the Trading Affiliates of approximately
$1,444,000. The agreements with each of the Trading Affiliates expire on
December 31 of each year with annual renewals. The Company's purchases of
products from the Trading Affiliates are denominated in U.S. dollars.
The Company has undertaken not to materially broaden the scope of its
relationships with the Trading Affiliates. All relationships and transactions
with the Trading Affiliates, including the approval of renewals and amendments
to existing agreements, are subject to review and approval by the Company's
Audit Committee, which consists of independent directors, with the assistance of
the Company's independent auditors.
Computer Directions
The Company sold microcomputer peripherals, components and accessories
to Computer Directions, a chain of four retail stores located primarily in North
Carolina, owned approximately 36.3% by Mr. M. Liu, 10.7% by Mr. Tan, 6.6% by Ms.
Lee, 2.4% by Ms. Peng and 44.0% by unaffiliated individuals. Computer Directions
has made no payments to Mr. M. Liu, Mr. Tan, Ms. Lee or Ms. Peng except to
reimburse them for tax liabilities incurred by them as a result of Computer
Directions' status as an S corporation for Federal income tax purposes. Computer
Directors ceased operations as of April 30, 1994. At December 31, 1995, Computer
Directions owed the Company approximately $135,798 or approximately .4% of the
Company's total accounts receivable. The Company has security interests in
Computer Directions assets and the amount realized will be applied toward the
outstanding receivables. Mr. M. Liu has guaranteed $118,000 of Computer
Directions outstanding receivables. The Company believes that Mr. M. Liu's
guarantee provides sufficient allowances against any uncollected account
receivable balance of Computer Directions.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal 2)
BDO Seidman, LLP have been the principal accountants of the Company
during 1995 and have been selected as the Company's principal accountants for
the current calendar year. A representative of BDO Seidman will be present at
the Annual Meeting, with an opportunity to make a statement if he desires to do
so, and will be available to respond to appropriate questions.
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<PAGE>
If, prior to the next annual meeting of stockholders, such firm shall decline to
act or otherwise becomes incapable of acting, or if its engagement shall be
otherwise discontinued by the Board of Directors, the Board of Directors will
appoint other independent auditors whose appointment for any period subsequent
to the next annual meeting will be subject to stockholder approval at such
meeting.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the next
annual meeting of stockholders which the stockholder desires to be presented in
the Company's Proxy Statement with respect to such meeting should submit such
proposal to the Company at its principal place of business no later than January
23, 1997.
OTHER MATTERS
The Board of Directors did not know, within a reasonable time before
the commencement of this solicitation, of any other business to be presented at
the Annual Meeting, constituting a proper subject for action by the
stockholders, other than as set forth in this Proxy Statement. However, if any
such matter should properly come before the meeting, the persons named in the
enclosed proxy intend to vote such proxy in accordance with their best judgment.
The proxies named in the enclosed form of proxy and their substitutes,
if any, will vote the shares represented by the enclosed form of proxy, if the
proxy appears to be valid on its face and, where a choice is specified on the
form of proxy, the shares will be voted in accordance with each specification so
made.
A list of stockholders of record of the Company as of May 10, 1996
will be available for inspection by stockholders prior to the Annual meeting
during normal business hours at the offices of the Company at 6585 Crescent
Drive, Norcross, Georgia 30071 and at the Annual Meeting.
In addition to soliciting proxies by mail, the Company may make
requests for proxies by telephone, telegraph or messenger or by personal
solicitation by officers, directors, or employees of the Company, or by any one
or more of the foregoing means. The Company will also reimburse brokerage firms
and other nominees for their actual out-of-pocket expenses in forwarding proxy
material to beneficial owners of the Company's shares. All expenses in
connection with such solicitation are to be paid by the Company.
THE COMPANY'S 1995 FORM 10-K ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION, EXCLUSIVE OF EXHIBITS, WILL BE MAILED WITHOUT CHARGE TO ANY
STOCKHOLDER ENTITLED TO VOTE AT THE MEETING, UPON WRITTEN REQUEST TO: LIUSKI
INTERNATIONAL, INC., 6585 CRESCENT DRIVE, NORCROSS, GEORGIA 30071, ATTENTION:
SECRETARY.
By Order of the Board of Directors
Hsing Yen Liu
Chairman of the Board
Dated: May 24, 1996
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<PAGE>
LIUSKI INTERNATIONAL, INC.
PROXY
Annual Meeting of Stockholders
June 28, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND UNLESS OTHERWISE
PROPERLY MARKED AND EXECUTED BY THE UNDERSIGNED STOCKHOLDER, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 AS RECOMMENDED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints each of Hsing Yen Liu and Manuel C.
Tan, each with full power to act without the other, and with full power of
substitution, as the attorneys and proxies of the undersigned and hereby
authorizes them to represent and vote all the shares of Common Stock of Liuski
International, Inc. that the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders, to be held on Friday, June 28,
1996 at 10:00 a.m. local time, or at any adjournment thereof, upon such business
as may properly come before the meeting, including the items set forth below.
1. ELECTION OF CLASS 2 DIRECTORS.
For all nominees below
(except as marked to the contrary below) |_|
WITHHOLD AUTHORITY to vote for all nominees below |_|
NOMINEES: Manuel C. Tan and Kenny Liu
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
provided below.
2. TO RATIFY SELECTION OF BDO SEIDMAN AS CERTIFIED INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE 1996 CALENDAR YEAR.
|_| For |_| Against |_| Abstain
Please sign exactly as name appears on this card. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: ------------------, 1996 -----------------------------
Signature
-----------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
