SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
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[ ] Preliminary Proxy Statement
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14a-6(e)(2))
[ ] Definitive Proxy Statement
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[X] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE YACKTMAN FUNDS, INC.
(Name of Registrant as Specified in its Charter)
YACKTMAN ASSET MANAGEMENT CO.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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CONTACTS:
Peter C. Harkins
Mary Ellen Goodall
D. F. King & Co., Inc.
(212) 269-5550
FOR IMMEDIATE RELEASE
YACKTMAN ASSET MANAGEMENT BEGINS MAILING PROXY MATERIALS
Lawsuit Requests Court Ratify Meeting Date
CHICAGO, ILLINOIS, October 6, 1998 . . . Yacktman Asset Management Co.
("Yacktman"), the investment adviser to The Yacktman Funds, Inc. (the "Funds"),
including The Yacktman Fund and The Yacktman Focused Fund, announced today that
it has commenced mailing of proxy soliciting materials to stockholders of the
Funds. As previously announced, Yacktman is soliciting proxies to remove four of
the Funds' six directors, to reduce the size of the Funds' board of directors by
one seat and to elect three new directors to serve with the Funds' two
management directors - - Ronald W. Ball and Donald A. Yacktman - - at a special
meeting of stockholders of the Funds called for November 24th, 1998 (the
"Special Meeting").
As disclosed, Mr. Yacktman called the Special Meeting in his capacity
as President of the Funds and pursuant to the Funds' bylaws. Yacktman maintains
that removal of the four directors - - Jon D. Carlson, Stanislaw Maliszewski,
Thomas R. Hanson and Stephen E. Upton (collectively, the "Carlson/Maliszewski
Directors"), is necessitated by, among other things, a basic disagreement over
investment style.
At a board meeting on September 22 - - eight days after the call for
the Special Meeting - - the Carlson/Maliszewski Directors voted to remove Mr.
Yacktman as President and Mr. Ball as Secretary of the Funds, appointing one of
their own members - - Jon Carlson - - President, Secretary and Treasurer of the
Funds.
(M O R E . . .)
<PAGE>
Yacktman Asset Management
October 6, 1998
Page 2
At the same board meeting, the Carlson/Maliszewski Directors voted to
rescind the call for the special meeting. If successful, the Carlson/Maliszewski
Directors would preclude stockholder action on the Yacktman proposals at the
Special Meeting.
Lawsuit Filed In Maryland Court
Yacktman also announced today that it has filed a complaint with the
Circuit Court for Baltimore City in Maryland, the Funds' state of incorporation.
The lawsuit requests, among other things, that the Court order the Funds to hold
the Special Meeting on its originally scheduled date.
In its complaint, Yacktman cites supporting Maryland law and a New York
precedent, Republic Corp. vs. Carter, where the Court concluded that an issuer's
board of directors could not directly cancel a special meeting of stockholders
called by the issuer's president pursuant to the issuer's by-laws merely by
replacing the president. In that case, the court ruled that, "[i]f the by-law
gave the president the right to call a special meeting - a call immune to
assault by the board of directors - it must follow that the board could not, by
discharging the president and electing a new one, do indirectly what it could
not do directly."
Yacktman Responds to Carlson/Maliszewski Allegations
Commenting on allegations of wrongdoing recently publicized by the
Carlson/Maliszewski Directors, Mr. Yacktman, who remains a director of the Funds
and who continues to manage both the Yacktman Fund and the Yacktman Focused
Fund, said, "Rather than allow the Funds' stockholders an opportunity to decide
their fate, the Carlson/Maliszewski Directors instead have embarked on their own
"scorched-earth" strategy by attempting to cancel the Special Meeting and
publicizing a series of misleading allegations raised in the form of mere
"questions" regarding, among other things, Yacktman's investment technique, use
of derivatives, adherence to the Funds' Code of Ethics and management of the
Funds' portfolios by persons other than those named in the prospectus for the
Funds. I believe the Carlson/Maliszewski Directors have no basis for implying
improprieties by Yacktman. I also believe they have publicized their "questions"
in an ill-conceived attempt to deflect attention from their own continuing
misconduct.
(M O R E . . . )
<PAGE>
Yacktman Asset Management
October 6, 1998
Page 3
"I can only conclude that they are hoping to scare investors out of the
Funds. If that is their objective, it won't work because our investors and their
financial advisors aren't so easily fooled.
"For the record, the Funds are managed only by me, and Yacktman's
investment objective, strategy and style remain unchanged. The Yacktman Fund
does not trade in derivatives and The Yacktman Focused Fund's derivative
trading, which is limited to exchange-listed put options on specific stocks, was
approved unanimously by the Funds' board of directors, including the
Carlson/Maliszewski Directors.
"An alleged breach of the Funds' Code of Ethics occurred when a
relatively small private company of which I was a director became a public
company, thereby triggering an implied prohibition against the Funds' employees
serving as directors on public company boards. We resolved our disagreement with
the Carlson/Maliszewski Directors regarding this matter long before I announced
my intention to solicit votes for the removal of the Carlson/Maliszewski
Directors, and the Funds never invested in the company in question."
Yacktman concluded, "Unlike the Carlson/Maliszewski Directors, I have
added a significant sum of my own money to the substantial investment I've
already made in the Funds. Under the circumstances, to imply that I would do
anything to undermine the value of the Funds is, in my opinion, absurd.
"As indicated in our proxy soliciting materials, for some time, I've
been troubled by actions of the Carlson/Maliszewski Directors. Their response to
our solicitation has only increased my resolve to ensure that the Funds'
stockholders be allowed an opportunity to elect new directors. For this reason,
among others, we are looking forward to the Special Meeting."
The entire cost of Yacktman's solicitation, including litigation
expenses, is being paid by Yacktman and not by the Funds.
# # #
<PAGE>
Yacktman Asset Management
October 6, 1998
Page 4
In addition to Yacktman, the following persons are participants in the
solicitation of proxies by Yacktman: Ronald W. Ball, Bruce B. Bingham, Albert J.
Malwitz, George J. Stevenson, III and Donald Yacktman. Yacktman and Donald
Yacktman, as Yacktman's sole stockholder, have a financial interest in the
outcome of the proposals to be voted on at the Special Meeting because Yacktman
has advisory agreements with the Funds pursuant to which it provides investment
advisory services to the Funds and receives fees as compensation for such
services. Because each advisory agreement may be terminated at any time without
payment of any penalty by Yacktman's Board of Directors, there can be no
assurance the Board of Directors will not terminate the advisory agreements if
the proposals to be voted on at the Special Meeting are not approved. Other than
directorships contemplated by Yacktman's proposals for the three nominees, none
of the participants in the solicitation of proxies has any arrangement or
understanding with any person with respect to any future employment by the Funds
or with respect to any future transactions to which the Funds will or may be a
party.
The following table shows, as of August 1, 1998 (except as otherwise
noted), the shares of The Yacktman Fund and The Yacktman Focused Fund
beneficially owned by the participants in the solicitation of proxies by
Yacktman.
Amount and Nature of Beneficial Ownership
Name of Beneficial Owner The Yacktman Fund The Yacktman Focused Fund
- ------------------------ ----------------- -------------------------
Ronald W. Ball ................... 7,061.00 10,835.00
Bruce B. Bingham ................. 6,141.47(1) 0.00
Albert J. Malwitz ................ 69,025.69(2) 505.19
George J. Stevenson, III ......... 1,136.00(3) 1,401.00(3)
Donald A. Yacktman ............... 121,990.31(4) 199,348.42(4)
Yacktman Asset Management Co. .... 15,539.53 0.00
- -----------------
(1) Reflects shares of The Yacktman Fund owned by Bruce Bingham's spouse.
(2) Consists of shares of The Yacktman Fund held by Albert Malwitz as custodian
for his child.
(3) Includes 1,136.00 shares of The Yacktman Fund and 1,401.00 shares of The
Yacktman Focused Fund held by the Stevenson & Company Profit Sharing Trust,
of which George Stevenson is a trustee and participant.
(4) Includes 2,588.79 shares of The Yacktman Fund and 103,181.46 shares of The
Yacktman Focused Fund owned by Donald Yacktman's spouse and 10,489.08
shares of The Yacktman Fund held by Donald Yacktman's spouse as custodian
for their children. Includes 94,161.96 shares of The Yacktman Focused Fund
purchased on August 27, 1998.
This press release does not constitute a solicitation of proxies for
any meeting of the Funds' stockholders. Such solicitation is being made only
pursuant to proxy materials complying with the requirements of Section 14(a) of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
