<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
LAYNE CHRISTENSEN COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
LAYNE CHRISTENSEN COMPANY
April 17, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Layne Christensen Company, to be held at the Westin Crown Center hotel,
located at One Pershing Square, Kansas City, Missouri, on Thursday, May 21,
1998, commencing at 10:00 a.m., local time. The business to be conducted at the
meeting is described in the attached Notice of Annual Meeting and Proxy
Statement. In addition, there will be an opportunity to meet with members of
senior management and review the business and operations of the Company.
Your Board of Directors joins with me in urging you to attend the
meeting. Whether or not you plan to attend the meeting, however, please sign,
date and return the enclosed proxy card promptly. A prepaid return envelope is
provided for this purpose. You may revoke your proxy at any time before it is
exercised and it will not be used if you attend the meeting and prefer to vote
in person.
Sincerely yours,
/s/ A. B. Schmitt
A. B. Schmitt
President and Chief Executive Officer
<PAGE> 3
LAYNE CHRISTENSEN COMPANY
1900 SHAWNEE MISSION PARKWAY
MISSION WOODS, KANSAS 66205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Layne
Christensen Company, a Delaware corporation ("Layne Christensen"), will be held
at the Westin Crown Center hotel, located at One Pershing Square, Kansas City,
Missouri, on Thursday, May 21, 1998, commencing at 10:00 a.m., local time, and
thereafter as it may from time to time be adjourned, for the following purposes:
1. To elect two Class III directors to hold office for terms
expiring at the 2001 Annual Meeting of the Stockholders of
Layne Christensen and until their successors are duly elected
and qualified or until their earlier death, retirement,
resignation or removal;
2. To consider and act upon ratification and approval of the
selection of the accounting firm of Deloitte & Touche LLP as
the independent auditors of Layne Christensen for the fiscal
year ending January 31, 1999; and
3. To transact such other business as may properly come before
the meeting and any adjournment or adjournments thereof.
The Board of Directors of Layne Christensen has fixed the close of
business on April 2, 1998, as the record date for determination of the
stockholders entitled to notice of, and to vote at, the Annual Meeting and any
adjournment or adjournments thereof.
All stockholders are cordially invited to attend the meeting. Whether
or not you intend to be present at the meeting, the Board of Directors of Layne
Christensen solicits you to sign, date and return the enclosed proxy card
promptly. A prepaid return envelope is provided for this purpose. You may revoke
your proxy at any time before it is exercised and it will not be used if you
attend the meeting and prefer to vote in person. Your vote is important and all
stockholders are urged to be present in person or by proxy.
By Order of the Board of Directors
Kent B. Magill
Vice President--General Counsel
and Secretary
April 17, 1998
Mission Woods, Kansas
<PAGE> 4
LAYNE CHRISTENSEN COMPANY
1900 SHAWNEE MISSION PARKWAY
MISSION WOODS, KANSAS 66205
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
-------------------------
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of Layne
Christensen Company, a Delaware corporation ("Layne Christensen" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders to be
held on Thursday, May 21, 1998, and at any adjournment or adjournments thereof
(the "Annual Meeting"). The Annual Meeting will commence at 10:00 a.m., local
time, and will be held at the Westin Crown Center hotel, located at One Pershing
Square, Kansas City, Missouri 64108.
This Proxy Statement and the enclosed form of proxy were first mailed
to the Company's stockholders on or about April 17, 1998.
PROXIES
You are requested to complete, date and sign the enclosed form of proxy
and return it promptly to the Company in the enclosed postage prepaid envelope.
Shares represented by properly executed proxies will, unless such proxies
previously have been revoked, be voted in accordance with the stockholders'
instructions indicated in the proxies. If no instructions are indicated, such
shares will be voted in favor of the election of the nominees for directors
named in this Proxy Statement, in favor of ratifying the selection of the
accounting firm of Deloitte & Touche LLP as the Company's independent auditors
for the current fiscal year, and, as to any other matter that properly may be
brought before the Annual Meeting, in accordance with the discretion and
judgment of the appointed proxies. A stockholder who has given a proxy may
revoke it at any time before it is exercised at the Annual Meeting by filing
written notice of revocation with the Secretary of the Company, by executing and
delivering to the Secretary of the Company a proxy bearing a later date, or by
appearing at the Annual Meeting and voting in person.
VOTING AT THE MEETING
For purposes of voting on the proposals described herein, the presence
in person or by proxy of stockholders holding a majority of the total
outstanding shares of the Company's common stock, $0.01 par value, shall
constitute a quorum at the Annual Meeting. Only holders of record of shares of
the Company's common stock as of the close of business on April 2, 1998 (the
"Record Date"), are entitled to notice of, and to vote at, the Annual Meeting or
any adjournment or adjournments thereof. As of the Record Date, 11,631,556
shares of the Company's common stock were outstanding and entitled to be voted
at the Annual Meeting. Each share of common stock is entitled to one vote on
each matter properly to come before the Annual Meeting.
Directors are elected by a plurality (a number greater than those cast
for any other candidates) of the votes cast, in person or by proxy, of
stockholders entitled to vote at the Annual Meeting for that purpose. The
affirmative vote of the holders of a majority of the shares of the Company's
common stock, represented in person or by proxy and entitled to vote at the
Annual Meeting, is required for (i) the ratification of the selection of
Deloitte & Touche
<PAGE> 5
LLP as the Company's independent auditors and (ii) the approval of such other
matters as properly may come before the Annual Meeting or any adjournment
thereof.
In accordance with Delaware law, a stockholder entitled to vote in the
election of directors can withhold authority to vote for all nominees for
directors or can withhold authority to vote for certain nominees for directors.
Votes withheld in connection with the election of one or more nominees for
director will not be counted as votes cast for such nominees. Abstentions from
the proposal to approve the ratification of the selection of the Company's
independent auditors are treated as votes against the proposal. Broker non-votes
on a proposal are treated as shares of Layne Christensen common stock as to
which voting power has been withheld by the respective beneficial holders and,
therefore, as shares not entitled to vote on the proposal as to which there is
the broker non-vote. Accordingly, broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
SOLICITATION OF PROXIES
This solicitation of proxies for the Annual Meeting is being made by
the Company's Board of Directors. The Company will bear all costs of such
solicitation, including the cost of preparing and mailing this Proxy Statement
and the enclosed form of proxy. After the initial mailing of this Proxy
Statement, proxies may be solicited by mail, telephone, telegram, facsimile
transmission or personally by directors, officers, employees or agents of the
Company. Brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward soliciting materials to beneficial owners of shares held of
record by them, and their reasonable out-of-pocket expenses, together with those
of the Company's transfer agent, will be paid by Layne Christensen.
A list of stockholders entitled to vote at the Annual Meeting will be
available for examination at least ten days prior to the date of the Annual
Meeting during normal business hours at 1201 Walnut Street, Suite 2800, Kansas
City, Missouri. The list also will be available at the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of six directors.
The Certificate of Incorporation of Layne Christensen divides the Board of
Directors into three classes of directors, with the directors serving staggered
terms of three years and until their respective successors are duly elected and
qualified or until their respective earlier death, retirement, resignation or
removal. The present terms of Edward A. Gilhuly and Todd A. Fisher, Class III
directors, expire at this Annual Meeting. Directors in Class I (Andrew B.
Schmitt and Donald K. Miller) and Class II (Robert J. Dineen and Sheldon R.
Erikson) have been elected to terms expiring at the time of the annual meetings
of stockholders in 1999 and 2000, respectively.
One of the purposes of this Annual Meeting is to elect two directors in
Class III to serve for three-year terms expiring at the Annual Meeting of
Stockholders in 2001 and until their successors are duly elected and qualified
or until their earlier death, retirement, resignation or removal. The Board of
Directors has designated Edward A. Gilhuly and Todd A. Fisher as the nominees
proposed for election at the Annual Meeting. Unless authority to vote for the
nominees is withheld, it is intended that the shares represented by properly
executed proxies in the form enclosed will be voted for the election as
directors of the nominees. In the event that one or both of the nominees should
become unavailable for election, it is intended that the shares represented by
the proxies will be voted for the election of such substitute nominee as may be
designated by the Board of Directors, unless the authority to vote for the
nominee who has ceased to be a candidate has been withheld. The nominees have
indicated their willingness to serve as directors if elected, and the Board of
Directors has no reason to believe that the nominees will be unavailable for
election.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
EDWARD A. GILHULY AND TODD A. FISHER AS CLASS III DIRECTORS OF THE COMPANY.
2
<PAGE> 6
NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The following table sets forth certain information with respect to the
persons nominated by the Board of Directors for election as Class III directors
at the Annual Meeting and each director whose term of office will continue after
the Annual Meeting.
<TABLE>
<CAPTION>
PRESENT POSITION DIRECTOR
NAME AGE WITH THE COMPANY SINCE
---- --- ---------------- -----
NOMINEES
<S> <C> <C> <C> <C>
CLASS III: TERM TO EXPIRE IN 2001
Edward A. Gilhuly ..................... 38 Director 1992
Todd A. Fisher ........................ 32 Director 1997
DIRECTORS CONTINUING IN OFFICE
CLASS II: TERM TO EXPIRE IN 1999
Andrew B. Schmitt................... 49 President, Chief Executive 1993
Officer and Director
Donald K. Miller ................... 66 Director 1996
CLASS I: TERM TO EXPIRE IN 2000
Robert J. Dineen .................... 68 Chairman of the Board 1983
and Director
Sheldon R. Erikson .................. 56 Director 1997
</TABLE>
The business experience during the last five fiscal years of the
persons nominated by the Board of Directors for election as Class III directors
at the Annual Meeting and each director whose term of office will continue after
the Annual Meeting is as follows:
ROBERT J. DINEEN has served as Chairman of the Board of the Company
since August 1992. From May 1986 until his retirement in August 1993, Mr. Dineen
was President and Chief Executive Officer of The Marley Company, a manufacturer
and supplier of engineered equipment and services for heating, fluid handling,
control and treatment and heat exchange. Mr. Dineen is a director of Kansas City
Power & Light Company and Owens-Illinois, Inc.
SHELDON R. ERIKSON has been Chairman of the Board of Cooper Cameron
Corporation, a manufacturer of oil and gas pressure control equipment, gas
turbines, centrifugal gas and air compressors, integral and separable
reciprocating engines, compressors and turbochargers, since May 1996 and
President and Chief Executive Officer since January 1995. He was Chairman of the
Board from 1988 to April 1995 and President and Chief Executive Officer from
1987 to April 1995 of The Western Company of North America, an international
petroleum service company engaged in pressure pumping, well stimulating and
cementing. Mr. Erikson is a director of Triton Energy Corporation.
TODD A. FISHER has been an executive of Kohlberg Kravis Roberts & Co.,
L.P. ("KKR") since June 1993. From July 1992 to June 1993, Mr. Fisher was an
associate at Goldman, Sachs & Co. Prior to 1992, Mr. Fisher attended the Wharton
School of Business at the University of Pennsylvania. Mr. Fisher has served as a
director of Accuride Corporation since January 1998, and was a director of Merit
Behavioral Care Corporation from October 1995 to February 1998.
EDWARD A. GILHULY has been a member of KKR & Co. L.L.C., the general
partner of KKR, since 1996 and a general partner of KKR Associates, L.P. ("KKR
Associates") since 1995. During 1995, Mr. Gilhuly was a general partner of KKR.
Prior to 1995, he was an executive of KKR and a limited partner of KKR
Associates for more than five years. Mr. Gilhuly is a director of
Owens-Illinois, Inc., Owens-Illinois Group, Inc., and Union Texas Petroleum
Holdings, Inc.
3
<PAGE> 7
DONALD K. MILLER. Mr. Miller has been Chairman of the Board of Greylock
Financial, Inc., a corporation engaged in merchant banking, since 1987. In
addition, Mr. Miller has been since 1987 a special limited partner of Greylock
Investments Limited Partnership ("Greylock"), a limited partnership engaged in
making investments. From November 1990 to April 1993 Mr. Miller was Chairman and
Chief Executive Officer, and from April 1993 to November 1994 Mr. Miller was
Vice Chairman, of Thomson Advisory Group L.P., an asset management company. Mr.
Miller served as Chairman of the Board of Directors of Christensen Boyles
Corporation ("CBC") from 1986 to December 1995. Mr. Miller was involved in the
formation of Christensen Boyles and in the acquisition of Boyles Bros. Drilling
Company and Christensen Mining Products. He currently is on the Board of
Directors of Huffy Corporation and RPM, Inc. and has spent the majority of his
career in investment banking or as an investor focusing on a variety of
industries.
ANDREW B. SCHMITT has served as President and Chief Executive Officer
of the Company since October 1993. For approximately two years prior to joining
the Company, Mr. Schmitt managed two privately owned hydrostatic pump and motor
manufacturing companies and an oil and gas service company. He served as
President of the Tri-State Oil Tools Division of Baker Hughes Incorporated from
February 1988 to October 1991. Mr. Schmitt is a director of Unitog Company.
There is no arrangement or understanding between any director and any
other person pursuant to which such director was selected as a director of the
Company, except that KKR Associates, which owns approximately 17.8% of the
Company's common stock, and certain former stockholders of CBC, including
Greylock, have agreed to vote their respective shares to ensure the election as
a director of one person designated by Greylock and five persons designated by
KKR Associates. Mr. Miller is the designee of Greylock and Messrs. Dineen,
Schmitt, Gilhuly, Erikson and Fisher are the designees of KKR Associates.
COMPENSATION OF DIRECTORS
Each director of the Company who is not also an employee of the Company
receives an annual fee of $17,500, payable in quarterly installments except that
the director may elect to defer receipt of the compensation in accordance with
the terms of the Company's Deferred Compensation Plan for Directors. Directors
of the Company who are also employees of the Company receive no compensation for
service to Layne Christensen as directors.
MEETINGS OF THE BOARD AND COMMITTEES
During the fiscal year ended January 31, 1998, the Board of Directors
of Layne Christensen held seven meetings. With the exception of Mr. Fisher, all
directors attended at least 75% of the meetings of the Board of Directors and
the committees of the Board of Directors on which they served which were held
during such fiscal year. It should be noted that the Company's directors
discharge their responsibilities throughout the year, not only at such Board of
Directors and committee meetings, but through personal meetings and other
communications with members of management and others regarding matters of
interest and concern to the Company.
Pursuant to the Company's Bylaws, the Board of Directors has
established Audit and Compensation Committees of the Board of Directors. There
currently is no Nominating Committee or committee performing similar functions
of the Board of Directors.
The Audit Committee assists the Board of Directors in fulfilling its
responsibilities with respect to the Company's accounting and financial
reporting practices and in addressing the scope and expense of audit and related
services provided by the Company's independent auditors. The Audit Committee is
responsible for recommending the appointment of the Company's independent
auditors and reviewing the terms of their engagement, reviewing the Company's
policies and procedures with respect to internal auditing, accounting and
financial controls and reviewing the scope and results of audits and any auditor
recommendations. The current members of the Audit Committee are Robert J.
Dineen, Edward A. Gilhuly and Todd A. Fisher. The Audit Committee met once
during the fiscal year ended January 31, 1998.
4
<PAGE> 8
The Compensation Committee reviews management compensation, evaluates
the performance of management, considers management succession and makes
recommendations to the Board of Directors regarding the compensation and
benefits of the Company's executive officers and the members of the Board of
Directors. The Compensation Committee also administers certain of the Company's
incentive plans, including the Company's Executive Incentive Compensation Plan.
The current members of the Compensation Committee are Robert J. Dineen, Edward
A. Gilhuly and Todd A. Fisher. The Compensation Committee met twice during the
fiscal year ended January 31, 1998, in addition to personal meetings and other
communications conducted throughout the year with members of management and each
other regarding compensation issues within the committee's area of
responsibility.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended January 31,
1998, January 31, 1997, and January 31, 1996, respectively, the compensation of
the Company's chief executive officer and of each of the Company's four other
most highly compensated executive officers whose remuneration for the fiscal
year ended January 31, 1998, exceeded $100,000 (collectively, the "Named
Executive Officers") for services to the Company and its subsidiaries in all
capacities:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------------- ------------------- -------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS(1) COMPENSATION(2)(3) AWARDS SARS PAYOUTS COMPENSATION(4)
POSITION YEAR ($) ($) ($) ($) # ($) ($)
- -------------------------- ---- ------- ------- ----------------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Andrew B. Schmitt 1998 294,071 123,000 0 0 0 0 12,402
President, Chief Executive 1997 275,000 144,779 0 0 50,000 0 14,858
Officer and Director 1996 256,250 105,903 0 0 0 0 7,608
H. Edward Coleman 1998 167,820 55,000 1,398 0 0 0 14,786
Senior Vice President 1997 158,333 59,228 1,706 0 23,000 0 16,910
1996 150,000 47,656 2,038 0 0 0 16,750
Norman E. Mehlhorn 1998 167,820 55,000 0 0 0 0 11,937
Senior Vice President 1997 161,833 61,597 1,138 0 23,000 0 15,517
1996 156,000 49,563 2,831 0 0 0 16,971
Kent B. Magill 1998 138,205 48,000 1,199 0 0 0 10,792
Vice President--General 1997 134,167 51,331 1,468 0 23,000 0 13,011
Counsel and Secretary 1996 130,000 41,302 1,756 0 0 0 13,039
Jerry W. Fanska 1998 133,494 47,000 1,208 0 0 0 10,587
Vice President--Finance 1997 116,250 43,434 1,493 0 23,000 0 12,263
and Treasurer 1996 110,000 34,948 1,771 0 0 0 12,279
<FN>
(1) Reflects bonus earned for the fiscal year ended January 31, 1998, the
fiscal year ended January 31, 1997, and the fiscal year ended January 31,
1996, respectively.
(2) Excludes perquisites and other benefits, unless the aggregate amount of
such compensation exceeds the lesser of either $50,000 or 10% of the total
of annual salary and bonus reported for the Named Executive Officer.
</TABLE>
5
<PAGE> 9
(3) Reflects additional compensation paid to the Named Executive Officer for
taxes incurred on the imputed income resulting from interest-free loans
from the Company.
(4) All Other Compensation for the fiscal year ended January 31, 1998, includes
Layne Christensen contributions in the amounts of $10,836, $9,280, $9,327,
$8,296 and $7,761, which accrued during such fiscal year for the accounts
of Messrs. Schmitt, Coleman, Mehlhorn, Magill and Fanska, respectively,
under the Company's Capital Accumulation Plan; the cost of term life
insurance paid by the Company for the benefit of Messrs. Schmitt, Coleman,
Mehlhorn, Magill and Fanska, in the amounts of $1,566, $2,488, $2,610, $503
and $696, respectively; and imputed income from interest-free loans from
the Company for the benefit of Messrs. Coleman, Magill and Fanska, pursuant
to the Company's 1992 Stock Option Plan in the amounts of $3,018, $1,993
and $2,130, respectively.
All Other Compensation for the fiscal year ended January 31, 1997, includes
Layne Christensen contributions in the amounts of $13,292, $10,930,
$11,092, $9,978 and $9,034, which accrued during such fiscal year for the
accounts of Messrs. Schmitt, Coleman, Mehlhorn, Magill and Fanska,
respectively, under the Company's Capital Accumulation Plan; the cost of
term life insurance paid by the Company for the benefit of Messrs. Schmitt,
Coleman, Mehlhorn, Magill and Fanska, in the amounts of $1,566, $2,262,
$2,442, $473 and $626, respectively; and imputed income from interest-free
loans from the Company for the benefit of Messrs. Coleman, Mehlhorn, Magill
and Fanska, pursuant to the Company's 1992 Stock Option Plan in the amounts
of $3,718, $1,983, $2,560 and $2,603, respectively.
All Other Compensation for the fiscal year ended January 31, 1996, includes
Layne Christensen contributions in the amounts of $6,042, $10,166, $10,527,
$9,522 and $8,599, which accrued during such fiscal year for the accounts
of Messrs. Schmitt, Coleman, Mehlhorn, Magill and Fanska, respectively,
under the Company's Capital Accumulation Plan; the cost of term life
insurance paid by the Company for the benefit of Messrs. Schmitt, Coleman,
Mehlhorn, Magill and Fanska, in the amounts of $1,566, $2,142, $1,509, $456
and $592, respectively; and imputed income from interest-free loans from
the Company for the benefit of Messrs. Coleman, Mehlhorn, Magill and
Fanska, pursuant to the Company's 1992 Stock Option Plan in the amounts of
$4,442, $4,935, $3,061 and $3,088, respectively.
OPTION GRANTS DURING FISCAL 1998
No option grants or stock appreciation rights ("SARs") were granted to
any of the Named Executive Officers by the Company during the fiscal year ended
January 31, 1998.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to each Named
Executive Officer concerning the exercise of options and SARs during the fiscal
year ended January 31, 1998, and unexercised options and SARs held as of January
31, 1998.
6
<PAGE> 10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND JANUARY 31, 1998
OPTION/SAR VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
SHARES UNEXERCISED UNEXERCISED
ACQUIRED SHARES OPTIONS/ IN-THE-MONEY
ON VALUE SARS AT OPTIONS/SARS AT
EXERCISE REALIZED JANUARY 31, 1998 JANUARY 31, 1998 (2)
NAME # ($) # ($)
- ------------------ -------- -------- ---------------------------- ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew B. Schmitt 0 0 220,000 30,000 1,620,000 105,000
H. Edward Coleman 0 0 55,996 25,321 359,772 128,947
Norman E. Mehlhorn 0 0 67,517 13,800 440,419 48,300
Kent B. Magill 0 0 48,317 13,800 306,019 48,300
Jerry W. Fanska 0 0 32,600 29,400 210,625 167,250
- -------------------------------
<FN>
(1) No stock appreciation rights have ever been granted by the Company.
(2) As of January 31, 1998, the last reported sale price of the Company's
Common Stock, which was reported on the NASDAQ National Market System on
January 31, 1998, was $14.00 per share. Value is calculated by determining
the difference between the option exercise price and $14.00, multiplied by
the number of shares of Common Stock underlying the options.
</TABLE>
INCENTIVE COMPENSATION PLAN
The Company adopted an Executive Incentive Compensation Plan (the "IC
Plan") in fiscal 1993. Each of the Company's executive officers, including the
Named Executive Officers, is eligible to participate in the IC Plan. Under the
IC Plan, each participant will be eligible for an annual cash bonus in a target
amount (the "Target Bonus") equal to a percentage (approximately 50% in the case
of Mr. Schmitt and approximately 37.5% in the case of Messrs. Coleman, Mehlhorn,
Magill and Fanska) of such participant's base compensation. The Target Bonus
will be adjusted (up or down) based upon the performance of the Company as
compared to certain financial goals included in the business plan adopted and
approved by the Board of Directors. In no event, however, can a participant's
annual cash bonus under the IC Plan exceed 100% of such participant's base
compensation for the relevant year. No bonus will be payable should performance
be equal to or below 80% of the relevant goals established by the business plan.
In addition, the formula bonus derived as described in the preceding sentences
can be further adjusted (up or down) at the discretion of the Board of Directors
by one-third of the Target Bonus. All or part of an employee's incentive
compensation under the IC Plan may, at the discretion of the Board of Directors,
be paid in the form of shares of the Company's common stock which may consist of
authorized but unissued shares of common stock or shares of common stock
reacquired by the Company on the open market. Messrs. Schmitt, Coleman,
Mehlhorn, Magill and Fanska received payments under the IC Plan for services
rendered to the Company in the fiscal year ended January 31, 1998, in the
amounts of $123,000, $55,000, $55,000, $48,000 and $47,000, respectively. See
"Executive Compensation and Other Information--Executive Compensation."
CAPITAL ACCUMULATION PLANS
The Company has adopted two capital accumulation plans (the "Capital
Accumulation Plans"). Each of the Company's executive officers, including the
Named Executive Officers, and substantially all other salaried employees of the
Company are eligible to participate in one of the Capital Accumulation Plans.
The Capital Accumulation Plans are defined contribution plans qualified under
Section 401, including Section 401(k), of the Internal Revenue Code of 1986, as
amended (the "Code"). The Capital
7
<PAGE> 11
Accumulation Plans provide for two methods of Company contributions, a Company
matching contribution tied to and contingent upon participant deferrals and a
Company profit sharing contribution which is not contingent upon participant
deferrals. The amount, if any, of Company paid contributions, both matching and
profit sharing, for each fiscal year under the Capital Accumulation Plans are
determined by the Board of Directors in its discretion. Each eligible employee
meeting certain service requirements participates in Company profit sharing
contributions to the Capital Accumulation Plans in the proportion his or her
compensation bears to the aggregate compensation of the group participating in
the Capital Accumulation Plans. In addition, each eligible employee meeting
certain service requirements and electing to defer a portion of his or her
compensation under the Capital Accumulation Plans participates in the Company's
matching contribution program pursuant to a formula as designated by the Board
of Directors. At the option of the Board of Directors of the Company, all or any
portion of such Company contributions may be made in the Company's common stock.
In addition, each participant can voluntarily contribute, on a pre-tax basis, a
portion of his or her compensation (which in no event can exceed $10,000 for the
calendar year 1998) under the Capital Accumulation Plans. A participant's
account will be placed in a trust and invested at the participant's direction in
any one or more of a number of available investment options. Each participant
may receive the funds in his or her Capital Accumulation Plan account upon
termination of employment. For services rendered in fiscal 1998, total Company
contributions under the Capital Accumulation Plans of $10,836, $9,280, $9,327,
$8,296 and $7,761 accrued for the accounts of Messrs. Schmitt, Coleman,
Mehlhorn, Magill and Fanska, respectively.
RETIREMENT, DISABILITY AND DEATH PLANS
The Company has agreed to pay Mr. Schmitt an annual retirement benefit
beginning at age 65 equal to 40% of the average of his total compensation (as
defined in the agreement) received during the highest five consecutive years out
of his last ten years of employment, less 60% of his annual primary Social
Security benefit (the "Annual Benefit"). The Annual Benefit is to be reduced,
however, by the annual annuity equivalent of the value of all funds, including
earnings, in the Company funded portion of Mr. Schmitt's Capital Accumulation
Plan account as of the date of his retirement (the "Annuity Equivalent"). As of
January 31, 1998, the Company funded balance in Mr. Schmitt's account under the
Capital Accumulation Plan was $31,824. To the extent the Annual Benefit is not
satisfied by the Annuity Equivalent, payments will be made out of the general
funds of the Company. The agreement includes certain provisions, exercisable at
Mr. Schmitt's election, for early retirement and joint and survivor benefits if
he is married at the time payment commences. Upon termination of Mr. Schmitt's
service for any reason other than disability or death, and subject to special
provisions in the event of a "change in control" as discussed below, his Annual
Benefit will vest in the percentage determined under the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE VESTING PERCENTAGE
---------------- ------------------
<S> <C>
6 20%
7 40%
8 60%
9 80%
10 100%
</TABLE>
Mr. Schmitt currently has four years of service credited towards his annual
retirement benefit.
Mr. Schmitt is entitled to a disability benefit determined in the same
manner as the Annual Benefit as of the date of termination of his service
resulting from total and permanent disability (the "Disability Benefit"). The
Disability Benefit will also be reduced by the Annuity Equivalent. Disability is
to be determined by an administrative committee of the Board of Directors to be
appointed at the time of any claim of disability.
Mr. Schmitt's surviving spouse, if any, will be entitled to receive a
death benefit (the "Death Benefit") upon Mr. Schmitt's death which will be equal
to the Annual Benefit his surviving spouse would have received if (i) he had
retired at the date of his death and had received an Annual Benefit in the form
of a monthly joint and survivor benefit and (ii) he subsequently died. The Death
Benefit will be reduced by the Annuity Equivalent.
In the event of Mr. Schmitt's death or involuntary termination within
two years following a "change in control" (as defined in the agreement), Mr.
Schmitt's benefits under his retirement plan become fully vested effective upon
such death or involuntary termination. A "change in control" is deemed to occur
if (i) during any 24-month period, individuals who at the beginning of such
period constituted the Company's Board of Directors or
8
<PAGE> 12
whose nomination for election by the Company's stockholders was approved by a
vote of a majority of the directors who either were directors at the beginning
of such period or whose election or nomination was previously so approved cease
for any reason to constitute a majority of the Board of Directors of the
Company, or (ii) the beneficial ownership of the Company's common stock changes
resulting in KKR having less beneficial ownership than any person or group of
persons if that person or group of persons holds 20% or more of the outstanding
common stock of the Company.
CERTAIN CHANGE-IN-CONTROL AGREEMENTS
The benefits which Mr. Schmitt will receive under his annual retirement
benefit program may be adjusted and, in addition, he will be entitled to a
lump-sum payment equal to 24 month's salary in the event of a "change in
control." In addition, all of the executive officers who have been granted stock
options have a "change in control" provision in their respective Incentive Stock
Option Agreements ("ISO Agreements") issued in accordance with the terms of the
Company's 1992 Stock Option Plan. See "Executive Compensation and Other
Information--Report of Board of Directors and Compensation Committee on
Executive Compensation." Under the terms of the ISO Agreements, the options vest
at the rate of 20% per year beginning on the first day following the first
anniversary of the option grant date. In the event of a change in control,
however, the options become 100% vested.
Under Mr. Schmitt's ISO Agreements and those of the executive officers
executed in fiscal 1997, a "change in control" is deemed to occur if, during any
24-month period, individuals who at the beginning of such period constituted the
Company's Board of Directors or whose nomination for election by the Company's
stockholders was approved by a vote of a majority of the directors who either
were directors at the beginning of such period or whose election or nomination
was previously so approved cease for any reason to constitute a majority of the
Board of Directors of the Company. A "change in control" will not be deemed to
have occurred, however, if such a change in the composition of the Board of
Directors occurs in connection with any public offering by the Company, KKR or
their affiliates. The ISO Agreements for the executive officers other than Mr.
Schmitt with respect to stock options granted prior to fiscal 1998 define
"change in control" to include both: (i) a change in the composition of the
Board of Directors of the Company, or (ii) a change in the beneficial ownership
of the Company's common stock resulting in KKR having less beneficial ownership
than any person or group of persons if that person or group of persons holds 20%
or more of the outstanding common stock of the Company.
REPORT OF BOARD OF DIRECTORS AND COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
The Company's executive compensation program currently is administered
by the Compensation Committee of the Board of Directors which is comprised of
Messrs. Dineen, Gilhuly and Fisher. It is the Compensation Committee's duty to
review the compensation levels of management, evaluate performance of management
and consider management succession and related matters. The Company's incentive
plans, including the Company's 1992 Stock Option Plan ("Option Plan") and the
Company's Executive Incentive Compensation Plan ("Incentive Plan"), are
administered by the Board of Directors.
Compensation Policy. The Company's overall compensation policy is
designed to attract and retain qualified individuals who are expected to
contribute to the Company's long-term growth and success. The Company has
adopted an annual incentive compensation program which is designed to reinforce
its strategic long and short term goals and to provide executive officers with
the opportunity to receive greater compensation in those years in which the
Company achieves its financial goals than in those years in which it does not.
In addition, the Company's Option Plan is designed to promote a mutuality of
interest between executive officers and stockholders through stock purchases and
options allowing the executive officers and stockholders to share in the risks
and rewards associated with stock ownership.
Compensation Components. The Company's executive compensation program
is reviewed periodically to ensure that pay levels and incentive opportunities
are competitive and reflect the performance of the Company and the individual
executive officer. The principal components of the Company's executive
compensation package are salary, annual incentive compensation and stock
options.
9
<PAGE> 13
Base Salary. Base pay levels largely are determined through a
subjective analysis of the executive officer's performance during the relevant
period and, to a lesser extent, through an informal comparison with similarly
sized public companies engaged primarily in service oriented businesses. The
Company does not know of any direct competitors which are public companies.
Accordingly, the Compensation Committee has had to look at companies outside of
its industry to identify companies for which a comparison of pay levels would be
deemed by the committee to be relevant. These companies are not necessarily the
same companies which comprise the index of companies with similar market
capitalizations utilized for purposes of Company shareholder returns in the
performance graph included elsewhere in the Proxy Statement. Actual salaries are
based upon subjective assessments of individual factors such as the
responsibilities of the position and the skill, knowledge and experience of each
individual executive officer. Each executive officer's individual performance is
considered from the previous year and takes into account an assessment of the
executive officer's growth and effectiveness in the performance of his duties.
Incentive Compensation. Under the Company's Incentive Plan, bonuses are
paid based on the officer's performance and the performance of the entire
Company. The Incentive Plan is administered by the Board of Directors. The
target bonus is 50% of base salary in the case of Mr. Schmitt and, in the case
of the remaining executive officers, 37.5% of base salary, subject to adjustment
up or down by one-third in the case of extraordinary circumstances. The
Company's performance for purposes of incentive compensation decisions is
measured against goals established at the beginning of the fiscal year by the
Board of Directors for the Incentive Plan. The maximum bonus payable is 100% of
salary, and no bonus is payable if the Company does not attain at least 80% of
established goals. In fiscal 1998, the only target established under the
Incentive Plan was related to the Company's earnings per share for the year.
Stock Option Plan. Under the Company's Option Plan, each Named
Executive Officer and certain other key employees are eligible to receive
options to purchase shares of the Company's common stock. The Option Plan is
administered by the Board of Directors. Under the Option Plan, the Board is
authorized from time to time to grant to executive officers and other employees
of the Company options to purchase up to an aggregate of 1,250,000 shares (as
amended) of the common stock at a price fixed by the Board. Such options may be
either incentive stock options or non-qualified stock options. The price for
incentive stock options cannot be less than the fair market value of the
Company's common stock on the date of grant while the price for non-qualified
options may be set at any price. Individual grant sizes are determined after
considering the Company's performance and the competitiveness of the Named
Executive Officer's long-term compensation package. The Board also takes into
account the number of shares of the Company's common stock and stock options
held by or previously granted to each Named Executive Officer. The grant of
stock options is intended to strengthen the linkage between executive
compensation and stockholder return.
No option granted under the Option Plan is exercisable more than ten
years after the date of grant. All options granted under the Option Plan are
evidenced by and subject to option agreements entered into by the Company and
the individual receiving the options.
Discussion of 1998 Compensation for the Chief Executive Officer. Mr.
Schmitt's compensation is established using the same methodology and criteria as
the other Named Executive Officers. Mr. Schmitt's base compensation was
increased to $300,000 in March 1997 from his previous base compensation of
$275,000 per year. As previously discussed, none of the Company's domestic
competitors are listed on the U.S. stock exchanges nor are any of these
competitors comparable to the Company in terms of size and scope of services
offered. Accordingly, the Compensation Committee, in making a determination
concerning Mr. Schmitt's compensation, undertook a subjective analysis of his
performance since his last increase in November 1995 considering such factors as
the scope of his responsibilities, his personal performance and the overall
performance of the Company in light of worldwide market conditions. Based upon
this analysis, the Compensation Committee concluded that Mr. Schmitt had
performed in a manner which was deserving of recognition and reward in the form
of an increase in compensation.
Mr. Schmitt is a participant under the Incentive Plan. The Company met
the performance criteria established under the incentive plan for fiscal 1998,
and, accordingly, Mr. Schmitt received an incentive
10
<PAGE> 14
compensation award in the amount of $123,000, which was a decrease of $21,779
from his prior year's bonus of $144,779.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE
BOARD OF DIRECTORS OF THE BOARD OF DIRECTORS
<S> <C> <C>
Robert J. Dineen Donald K. Miller Robert J. Dineen
Edward A. Gilhuly Sheldon R. Erikson Edward A. Gilhuly
Todd A. Fisher Andrew B. Schmitt Todd A. Fisher
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 31, 1998, the members of the Compensation
Committee were Messrs. Dineen, Gilhuly and Fisher. As discussed above under
"Report of Board of Directors and Compensation Committee on Executive
Compensation," all decisions relating to the compensation of executive officers
for fiscal 1998 were made by the Board or the Compensation Committee. Among the
members of the Compensation Committee, Mr. Dineen is the only employee or
current or former officer of the Company or any of its subsidiaries. KKR has
agreed to render management consulting and financial services to the Company for
an annual fee. The amount of the annual fee for fiscal 1999 is $125,000, which
is equal to the annual fee for the fiscal year ended January 31, 1998. Such
services include, but are not necessarily limited to, advice and assistance
concerning any and all aspects of the operations, planning and financing of the
Company, as required from time to time by the Company. KKR Associates, the
general partners of which are the general partners of KKR, owns approximately
17.8% of the Company's common stock.
COMPANY PERFORMANCE
The following performance graph shows a comparison of cumulative total
returns for the Company, the NASDAQ Market Value index and an index of companies
selected by the Company having market capitalizations similar to that of the
Company (the "SMC Group") for the period from January 29, 1993 through January
31, 1998.
COMPARISON OF CUMULATIVE TOTAL RETURNS
(Layne Christensen, NASDAQ Market Value, SMC Group)
[Graph]
<TABLE>
<CAPTION>
LAYNE NASDAQ SMC GROUP
DATES INDEX INDEX INDEX
-------- ------ ------ ------
<S> <C> <C> <C>
01/29/93 100.00 100.00 100.00
01/31/94 93.10 114.95 104.00
01/31/95 91.38 108.45 101.00
01/31/96 155.17 152.20 146.00
01/31/97 206.90 198.16 153.00
01/31/98 193.10 232.55 90.00
</TABLE>
11
<PAGE> 15
The cumulative total return on investment for the Company, the NASDAQ
Market Value index and an index of the SMC Group are based on the stock price or
index at January 29, 1993. The performance graph assumes that the value of an
investment in the Company's common stock and each index was $100 at January 29,
1993 and that all dividends were reinvested. The information presented in the
performance graph is historical in nature and is not necessarily indicative of
future performance.
The comparison of cumulative total returns presented in the above graph
was plotted using the following index values and common stock price value:
<TABLE>
<CAPTION>
1/29/93 1/31/94 1/31/95 1/31/96 1/31/97 1/31/98
<S> <C> <C> <C> <C> <C> <C>
Layne Christensen Company $100.00 $ 93.00 $ 91.00 $155.00 $207.00 $193.00
NASDAQ Market Value $100.00 $115.00 $108.00 $152.00 $198.00 $233.00
SMC Group $100.00 $104.00 $101.00 $146.00 $153.00 $ 90.00
</TABLE>
The performance graph compares the performance of the Company with that
of the NASDAQ Market Value index and an index of the SMC Group. The Company is
not aware of any published industry or line-of-business index in which its
common stock is included and was not able to reasonably identify a peer group of
issuers on an industry, line-of-business or other basis. The Company believes
that it is the largest water well drilling, well repair and maintenance and
environmental drilling company in the United States. The Company's competitors
primarily are local and regional firms and the Company is not aware of any other
publicly held company principally engaged in the Company's line-of-business.
Accordingly, in order to provide a more meaningful comparison of cumulative
total returns for the Company in the above performance graph, the Company used
an index of the SMC Group; companies having market capitalizations similar to
that of the Company. Companies in the index of the SMC Group are Granite
Construction, Inc., Insituform Technol, Inc., Fluor Daniel/GTI, Inc. and Dames &
Moore, Inc.
12
<PAGE> 16
OWNERSHIP OF LAYNE CHRISTENSEN COMMON STOCK
The following table sets forth certain information as of March 31,
1998, except as otherwise provided, regarding the beneficial ownership of Layne
Christensen common stock by each person known to the Board of Directors to own
beneficially 5% or more of the Company's common stock, by each director of the
Company, by each Named Executive Officer and by all directors and executive
officers of the Company as a group. All information with respect to beneficial
ownership has been furnished by the respective directors, officers or 5% or more
stockholders, as the case may be.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENTAGE OF
BENEFICIAL SHARES
NAME OWNERSHIP(1) OUTSTANDING(1)
- ---- ------------ --------------
<S> <C> <C>
KKR Associates, L.P. (2) (3)...................................... 2,067,000 17.8%
Marley G.P., Inc. (3) ............................................ 53,436 *
Shapiro Capital Management Co., Inc. (4).......................... 1,168,150 10.0%
T. Rowe Price Associates, Inc. (5) ............................... 1,022,300 8.8%
State of Wisconsin Investment Board (6) .......................... 925,000 8.0%
Robert J. Dineen ................................................. 152,683(7) 1.3%
Andrew B. Schmitt ................................................ 290,000(7) 2.5%
Donald K. Miller ................................................. 95,831(8) *
Edward A. Gilhuly (2) (3) ........................................ -- --
Todd A. Fisher (2) ............................................... -- --
Sheldon R. Erikson ............................................... -- --
H. Edward Coleman ................................................ 110,042(7) *
Norman E. Mehlhorn ............................................... 90,558(7) *
Kent B. Magill ................................................... 65,678(7) *
Jerry W. Fanska .................................................. 56,000(7) *
All directors and officers as a group (11 persons) ............... 929,285(9) 8.0.%
- -------------------------------
<FN>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities and includes
shares of common stock issuable pursuant to the exercise of immediately
exercisable stock options. Unless otherwise indicated, the persons or
entities identified in this table have sole voting and investment power
with respect to all shares shown as beneficially owned by them. Percentage
ownership calculations are based on 11,631,556 shares of common stock
outstanding.
(2) Mr. Gilhuly, Henry R. Kravis, George R. Roberts, Paul E. Raether, Robert I.
MacDonnell, Michael W. Michelson, James H. Greene, Jr., Michael T. Tokarz,
Perry Golkin, Clifton S. Robbins and Scott Stuart are the general partners
of KKR Associates, Mr. Fisher is a limited partner, and Messrs. Kravis and
Roberts are also the members of the Executive Committee of KKR Associates,
and in such capacity may be deemed to share beneficial ownership of the
shares of Common Stock that KKR Associates may beneficially own or be
deemed to beneficially own. Messrs. Gilhuly and Fisher are directors of the
Company. The foregoing persons disclaim beneficial ownership of the shares
owned by KKR Associates. The business address of KKR Associates is 9 West
57th Street, New York, New York 10019.
(3) Marley G.P., Inc. is a corporation the stockholders of which are (i)
certain past and present general and limited partners of KKR Associates,
(ii) certain past and present employees of KKR and (iii) partnerships and
trusts for the benefit of the families of such partners and employees.
Messrs. Roberts and Gilhuly are the directors and are officers of Marley
G.P., Inc. Marley G.P., Inc. and KKR Associates may be deemed
</TABLE>
13
<PAGE> 17
to be a group in relation to their respective investment in the Company,
but do not affirm the existence of a group.
(4) According to its Schedule 13G filing with the Securities and Exchange
Commission, Shapiro Capital Management Co., Inc. ("Shapiro") is an
investment adviser under the Investment Advisers Act of 1940. One or more
of Shapiro's advisory clients is the legal owner of the securities reported
herein. Pursuant to the investment advisory agreements with its clients,
Shapiro has the authority to direct the investments of its advisory
clients, and subsequently to authorize the disposition of the Company's
shares. Samuel R. Shapiro is the president, a director and majority
shareholder of Shapiro, in which capacity he exercises dispositive power
over the securities reported herein by Shapiro. Mr. Shapiro, therefore, may
be deemed to have indirect beneficial ownership over such securities.
Unless otherwise indicated herein, Mr. Shapiro has no interest in dividends
or proceeds from the sale of such securities, owns no such securities for
his own account and disclaims beneficial ownership of all the securities
reported herein by Shapiro. As of December 31, 1997, Mr. Shapiro owned no
shares of the Company for his own account. He may be deemed to be the
beneficial owner of 2,500 shares owned by his wife and the remaining
619,100 shares of the Company reported herein. The business address of
Shapiro is 3060 Peachtree Road, N.W., Atlanta, Georgia 30305.
(5) According to its Schedule 13G filing with the Securities and Exchange
Commission, these securities are owned by various individual and
institutional investors including T. Rowe Price Small Cap Value Fund, Inc.
(which owns 600,000 shares, representing 5.1% of the shares outstanding),
which T. Rowe Price Associates, Inc. (Price Associates) serves as
investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities. The
business address of Price Associates is 100 East Pratt Street, Baltimore,
Maryland 21202.
(6) The ownership reported is based upon the Schedule 13G of the State of
Wisconsin Investment Board as filed with the Securities and Exchange
Commission. The business address for the State of Wisconsin Investment
Board is Post Office Box 7842, Madison, Wisconsin 53707.
(7) Includes options for the purchase of 72,164 shares, 220,000 shares, 55,996
shares, 67,517 shares, 48,317 and 40,400 shares of the Company's common
stock exercisable within 60 days granted to Messrs. Dineen, Schmitt,
Coleman, Mehlhorn, Magill and Fanska, respectively.
(8) Includes 2,626 shares owned by Mr. Miller's two sons. Of the 95,831 shares
reported, 48,313 shares (including 1,324 shares owned by Mr. Miller's sons)
are subject to the provisions of an escrow agreement, pursuant to which
some or all of such 48,313 shares are subject to forfeiture. Mr. Miller has
sole voting power with respect to 93,205 shares and sole investment power
with respect to 46,194 shares. Mr. Miller has shared voting power with
respect to 2,626 shares and shared investment power with respect to 49,637
shares.
(9) Includes options for the purchase of 504,394 shares of the Company's common
stock exercisable within 60 days granted to all directors and officers of
the Company as a group.
CERTAIN TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT
The Company, through a wholly owned subsidiary, leases a facility in
Phoenix, Arizona for its parts and material supply business from Air Park
Holdings, an Arizona general partnership. The general partners of Air Park
Holdings are Mr. Mehlhorn and two of his brothers. The lease term is for three
years through October 31, 2000. Total payments to the lessor under the lease in
fiscal 1998 were $66,584.
14
<PAGE> 18
MANAGEMENT INDEBTEDNESS IN CONNECTION WITH COMPANY STOCK PURCHASES
In connection with certain stock purchases from the Company, Mr.
Coleman was permitted to borrow from the Company a portion of the amounts
required for such purchases. This borrowing is evidenced by a recourse
promissory note secured by the common stock purchased. During fiscal 1998, the
largest aggregate amount of indebtedness outstanding for Mr. Coleman was
$63,243. No interest is charged unless an individual desired to borrow and the
Company agreed to lend in excess of 50% of the aggregate consideration payable
for his purchase, in which event the Company charges interest on the amount of
the loan in excess of the aforementioned 50% at the rate it pays under the
Company's credit agreement with various financial institutions. The promissory
notes require principal payments equal to 14% of the individual's cash payment
under the Incentive Compensation Plan. The promissory notes will be immediately
due and payable upon termination of employment. As of March 31, 1998, Mr.
Coleman had a balance outstanding of $58,325.
ITEM 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the independent certified public
accounting firm of Deloitte & Touche LLP as the Company's independent auditors
to audit the books, records and accounts of the Company for the year ending
January 31, 1999. Stockholders will have an opportunity to vote at the Annual
Meeting on whether to ratify the Board's decision in this regard.
Deloitte & Touche LLP has served as the Company's independent auditors
since fiscal 1990. A representative of Deloitte & Touche LLP is expected to be
present at the Annual Meeting. Such representative will have an opportunity to
make a statement if he or she desires to do so and will be available to respond
to appropriate questions.
Submission of the selection of the independent auditors to the
stockholders for ratification will not limit the authority of the Board of
Directors to appoint another independent certified public accounting firm to
serve as independent auditors if the present auditors resign or their engagement
otherwise is terminated. If the stockholders do not ratify the selection of
Deloitte & Touche LLP at the Annual Meeting, the Company intends to call a
special meeting of stockholders to be held as soon as practicable after the
Annual Meeting to ratify the selection of another independent certified public
accounting firm as independent auditors for the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
SELECTION OF DELOITTE & TOUCHE LLP.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than 10% of the Company's outstanding common stock, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership in Layne Christensen common stock and other
equity securities. SEC regulations require directors, executive officers and
greater than 10% stockholders to furnish Layne Christensen with copies of all
Section 16(a) reports they file.
Except as provided hereafter, to the Company's knowledge, based solely
on review of the copies of such reports furnished to Layne Christensen and
written representations that no other reports were required, during the fiscal
year ended January 31, 1998, all Section 16(a) filing requirements applicable to
its directors, executive officers and greater than 10% stockholders were met. An
acquisition of stock by Robert J. Dineen reportable for the month of August 1997
on Form 4 was reported in a year-end report on Form 5 filed by Mr. Dineen with
the SEC; an
15
<PAGE> 19
acquisition of stock by H. Edward Coleman reportable for the month of August
1997 on Form 4 was reported in a year-end report on Form 5 filed by Mr. Coleman
with the SEC; and an initial statement of beneficial ownership of the Company's
securities by Sheldon R. Erikson reportable on Form 3 upon his election as a
director in October 1997 was reported in a year-end report on Form 5 filed by
Mr. Erikson with the SEC.
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of, and does not intend to present,
any matter for action at the Annual Meeting other than those referred to in this
Proxy Statement. If, however, any other matter properly comes before the Annual
Meeting or any adjournment, it is intended that the holders of the proxies
solicited by the Board of Directors will vote on such matters in their
discretion in accordance with their best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders, containing
financial statements for the fiscal year ended January 31, 1998, is being mailed
with this Proxy Statement to all stockholders entitled to vote at the Annual
Meeting. Such Annual Report is not to be regarded as proxy solicitation
material.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 31, 1998 (THE "FORM 10-K"), EXCLUDING EXHIBITS, WILL BE FURNISHED
WITHOUT CHARGE TO ANY STOCKHOLDER OF RECORD AS OF APRIL 2, 1998, AS SOON AS IT
IS AVAILABLE, UPON WRITTEN REQUEST ADDRESSED TO THE ATTENTION OF THE SECRETARY
OF LAYNE CHRISTENSEN AT 1900 SHAWNEE MISSION PARKWAY, MISSION WOODS, KANSAS
66205. Layne Christensen will provide a copy of any exhibit to the Form 10-K to
any such person upon written request and the payment of the Company's reasonable
expenses in furnishing such exhibits.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
It is presently anticipated that the 1999 Annual Meeting of
Stockholders will be held on May 20, 1999. Stockholder proposals intended for
inclusion in the proxy statement for the 1998 Annual Meeting of Stockholders
must be received at the Company's offices, located at 1900 Shawnee Mission
Parkway, Mission Woods, Kansas 66205, within a reasonable time before the
solicitation with respect to the meeting is made, but in no event later than
December 18, 1998. Such proposals must also comply with the other requirements
of the proxy solicitation rules of the Securities and Exchange Commission.
Stockholder proposals should be addressed to the attention of the Secretary of
Layne Christensen.
By Order of the Board of Directors.
Kent B. Magill
Vice President--General Counsel and Secretary
April 17, 1998
Mission Woods, Kansas
16
<PAGE> 20
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
1998 ANNUAL MEETING OF STOCKHOLDERS OF LAYNE CHRISTENSEN COMPANY
The undersigned hereby appoints Robert J. Dineen, Andrew B. Schmitt and
Kent B. Magill, and each of them, each with the power to act alone and with
full power of substitution and revocation, as attorneys and proxies of the
undersigned to attend the 1998 Annual Meeting of Stockholders of Layne
Christensen Company ("Layne Christensen") to be held at the Westin Crown
Center hotel, located at One Pershing Square, Kansas City, Missouri, on
Thursday, May 21, 1998, commencing at 10:00 a.m., local time, and at all
adjournments thereof, and to vote all shares of capital stock of Layne
Christensen which the undersigned is entitled to vote with respect to the
following matters, all as set forth in the Notice of Annual Meeting of
Stockholders and Proxy Statement, dated April 17, 1998:
THE BOARD OF DIRECTORS OF LAYNE CHRISTENSEN RECOMMENDS A VOTE "FOR" EACH
ITEM.
Item 1: Election of two Class III directors to hold office for terms
expiring at the 2001 annual meeting of stockholders.
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to
vote for the nominees listed
below
NOMINEES: Todd A. Fisher
Edward A. Gilhuly
Item 2: Proposal to ratify the selection of the accounting firm of Deloitte
& Touche LLP as Layne Christensen's independent auditors for the
fiscal year ending January 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued, and to be signed, on other side)
(CONTINUED FROM OTHER SIDE)
In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Annual Meeting.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
Dated: _________________ , 1998
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Signature
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Signature (if held jointly)
Please sign exactly as
name appears hereon.
When shares are held by
joint tenants, both
should sign. When
signing as an 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.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
