Hahn Automotive Warehouse, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on March 15, 1999
To Our Shareholders:
The Annual Meeting of Shareholders of Hahn
Automotive Warehouse, Inc. ("Company"), a New York
corporation, will be held at the Hyatt Regency
Hotel, 125 East Main Street, Rochester, New York
14604 on Monday, March 15, 1999, at 10:00 a.m. (Local
Time), for the following purposes:
(1) To elect three directors of the Company,
each for a term of two years; and
(2) To transact such other business as
may properly come before the meeting or
any adjournment thereof.
The Board of Directors of the Company has fixed
the close of business on January 27, 1999, as
the record date for the determination of
shareholders entitled to notice of and to vote at
the Annual Meeting and at any continuation or
adjournment thereof. A Proxy Statement and proxy
are enclosed. It is important that all shares be
represented at the Annual Meeting.
The Board of Directors extends a cordial
invitation to all shareholders to attend the Annual
Meeting. If you are unable to attend the meeting
in person, you should sign, date and return the
enclosed proxy in the return envelope that has been
provided. You may revoke your proxy and vote in
person if you decide to attend the Annual Meeting.
<PAGE> 1
By Order of the Board of Directors,
DANIEL J. CHESSIN,
Director,
Executive Vice President
and Secretary
Rochester, New York
January 27, 1999
Hahn Automotive Warehouse, Inc.
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
MARCH 15, 1999
This Proxy Statement and the accompanying
proxy are furnished to the shareholders of Hahn
Automotive Warehouse, Inc. ("Company"), a New
York corporation, in connection with the
solicitation by and on behalf of the Board of
Directors of the Company, to be used at the Annual
Meeting of Shareholders of the Company ("Annual
Meeting"), which will be held on Monday, March 15,
1999, at 10:00 a.m. (Local Time) at the Hyatt Regency
Hotel, 125 East Main Street, Rochester, New York
14604, to act upon (1) the election of three
directors and (2) such other business as
mayproperly come before the Annual Meeting.
This Proxy Statement and the proxy are being first
mailed to shareholders on or about January 27, 1999.
If the enclosed proxy is properly executed
and returned prior to the Annual Meeting, the shares
represented thereby will be voted in accordance with
the directions contained therein. If the proxy is
signed and returned without choices having been
specified, the shares represented thereby will be
voted FOR the election of the three director
nominees. The proxy may be revoked by the person
giving it at any time prior to its use by filing
with the Company's Secretary a written revocation, a
duly signed later dated proxy or by requesting return
of the proxy at the Annual Meeting and voting in
person.
The Board of Directors has fixed the close of
business on January 27, 1999 as the record date for
determining the holders of the Company's Common
Stock, par value $.01 per share, ("Common Stock")
entitled to notice of and to vote at the Annual
Meeting and at any continuation or adjournment
thereof. At the close of business on January 27,
1999, the Company had outstanding 4,745,014
shares of Common Stock, each of which is entitled to
<PAGE> 2
one vote. The Common Stock is the Company's only
class of voting securities outstanding. A majority
of the outstanding shares of Common Stock
(2,372,508 shares) present in person or by proxy
will constitute a quorum, which is required to
transact business at the Annual Meeting.
Three directors are to be elected at the
Annual Meeting. Directors are elected by a plurality
of the shares present at the meeting, in person or
by proxy, at which a quorum of shares is
represented. This means that those nominees
receiving the largest number of votes cast are
elected, up to the maximum number of directors to
be elected at the Annual Meeting.
Boxes and a procedure of circling the name of a
nominee have been provided on the enclosed Proxy card
to withhold authority to vote for one or more of the
director nominees. Votes withheld in connection
with the election of one or more of the nominees for
director will not be counted as votes cast for
such persons. Abstentions and broker non-votes
are counted as present for purposes of determining
the presence or absence of a quorum, but have no
impact on the election of directors, except to the
extent that the failure to vote for a particular
nominee may result in another nominee receiving a
larger number of votes.
ELECTION OF DIRECTORS
(Proposal 1)
Pursuant to the Company's By-Laws, the Board
of Directors has fixed the size of the Board of
Directors at eight directors. The Board of Directors
consists of two classes. All members of one class
are elected at each annual shareholders meeting to
hold office for a full term of two years. On
December 21, 1998, Ira D. Jevotovsky, a director
since May, 1992 resigned as a director. The Board
of Directors has decided not to fill the vacancy
created by Mr. Jevotovsky's resignation at this time
since it has insufficient time to select a
replacement nominee. The Board of Directors
anticipates filling this vacancy some time
following the Annual Meeting.
The Board of Directors has nominated Daniel
J. Chessin, Stephen B. Ashley and E. Philip
Saunders for election to the Board at the
forthcoming Annual Meeting. If elected, each such
nominee will hold office until the annual
shareholders meeting to be held in 2001.
<PAGE> 3
The Board of Directors recommends the election
of all three nominees and it is intended that the
named proxies (unless otherwise directed) will vote
the enclosed proxy FOR the election of these
nominees. Although the Board of Directors believes
that all of the nominees will be available to serve,
the proxies may exercise discretionary authority to
vote for substitutes proposed by the Board of
Directors of the Company if any nominee becomes
unavailable for any reason. The proxies, however,
cannot vote for more than three nominees.
INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR
ELECTION
The name, principal occupation, business
experience and age of each director and nominee for
director and his term of office and period of
previous service as a director of the Company are
set forth below. No person set forth below was
selected as a director or nominee pursuant to any
arrangement or understanding with any other person.
Term Expires in 1999; Nominated for Election for Term
Expiring in 2001.
Daniel J. Chessin has been Executive Vice
President of the Company since March, 1995, and
Secretary and a Director of the Company since
May, 1992. Prior to that time, he held various
offices with the Company since beginning
employment with the Company in March, 1988. From
November, 1993, Mr. Chessin served
as Vice President and as Executive Vice
President of the Company's wholly-owned
subsidiary, AUTOWORKS, Inc., which filed for
protection under Chapter 11 of the Bankruptcy
Code("Bankruptcy Proceeding"). Prior to joining
the company, Mr. Chessin practiced law. Mr.
Chessin is a member of the Board of Governors of
the Car Care Council. Mr. Chessin is 37 years of
age.
Stephen B. Ashley has been a Director of the
Company since May, 1992. Mr. Ashley is Chairman and
Chief Executive Officer of the Ashley Group
(related companies focused on management,
brokerage, financing and investment in commercial
and multifamily real-estate). Mr. Ashley served as
Chairman and Chief Executive Officer of both Sibley
Mortgage Corporation and Sibley Real Estate
Services, Inc. from January, 1991 to March, 1996, at
which time he resigned as Chief Executive Officer
of Sibley Mortgage Corporation. Prior to 1991 he
served as President and Chief Executive Officer
of both corporations (or their predecessors-in-
interest) since 1975. He is also a director of The
Genesee Corporation (which engages in malt
beverage production, dry food processing,
equipment leasing and real estate investment),
the Federal National Mortgage Association, Inc.
(Fannie Mae) and Manning & Napier Fund, Inc. (an
advisory firm to a family of mutual funds). Mr.
Ashley is 58 years of age.
<PAGE> 4
E. Philip Saunders has been a director of the
Company since May, 1992. Mr. Saunders has been
Chairman and Chief Executive Officer of Sugar Creek
Corp. and its subsidiaries, W.W. Griffith Oil Co. (a
petroleum distributor) and Sugar Creek Stores, Inc.
(a convenience chain store operation) since
1977 and 1982, respectively. He has also been
Chairman and Chief Executive Officer of Travel
Ports of America, Inc. (a truck stop chain
operation) since November, 1987. Mr. Saunders
previously served as a director of Truckstops of
America, Inc. and of Ryder Systems, Inc. after
that corporation acquired Truckstops of America,
Inc. and as a director of Richardson Food Corporation
(a distributor of dessert toppings and condiments).
Mr. Saunders is 61 years of age.
Term Expires in 2000
Michael Futerman founded the Company in 1958.
He became Chairman of the Board in January, 1999.
Prior to that time he was Chief Executive Officer
of the Company since May, 1992. Mr. Futerman served
as President of the Company from the time it was
incorporated through May, 1992 and has been a
Director of the Company since it was incorporated
in 1958. From November, 1993 until November, 1995,
Mr. Futerman has also served as the Chief Executive
Officer of the Company's wholly-owned
subsidiary, AUTOWORKS, Inc., which is currently a
debtor in the pending Bankruptcy Proceeding. Mr.
Futerman has over 40 years experience in the
automotive aftermarket. Mr. Futerman is 71 years of
age.
Eli N. Futerman has been President of the
Company since May, 1992. In January, 1999 he
assumed the additional responsibility of Chief
Executive Officer. Prior to that time, he held
various offices with the Company, including Vice
President and Secretary, since beginning employment
with the Company in June, 1980. From November,
1993, and from November, 1995, Mr. Futerman has
also served as the President and as the Chief
Executive Officer, respectively, of the
Company's wholly-owned subsidiary, AUTOWORKS,
Inc., which is currently a debtor in the pending
Bankruptcy Proceeding. Mr. Futerman has been a
director of the Company since September, 1979. Mr.
Futerman is a member of the Board of Directors of
Auto Value Associates, Inc., the programmed
distribution group of which the Company is a
member. Mr.Futerman is 40 years of age.
William A. Buckingham has been a Director of
the Company since November, 1997 and is
currently a consultant in the private sector.
From 1990 to 1997 he held several positions in the
banking industry which included Executive Vice
President of First Empire State Corporation and
M&T Bank where he was responsible for that
Company's Retail Banking Division. From 1973 to 1990,
Mr. Buckingham held several positions with the
Manufacturers Hanover Trust Company where he was
Executive Vice President with responsibility for
branch operations and consumer
<PAGE> 5
and small business lending, and President and
Chief Executive Officer of Manufacturers Hanover,
N.A. Mr. Buckingham currently serves as Chairman
of the Board of Trustees at the Rochester
Institute of Technology and as a Director of its for-
profit RIT Research Corporation subsidiary. Mr.
Buckingham also serves as Vice Chairman of the
Directors Advisory Council of M&T Bank, a trustee
of St. Bernard's Institute and the Genesee Country
Museum and as a Director of The Genesee Corporation
(which engages in malt beverage production, dry
food processing, equipment leasing and real estate
investment). Mr. Buckingham is 56 years of age.
Robert I. Israel has been a Director of the
Company since May, 1992. Mr. Israel has been a
Managing Director of Schroder, Incorporated, (or
its predecessor-in-interest), an investment banking
firm, since May, 1991, with responsibility for
that firm's Energy Group. Prior to joining
Schroder, Incorporated, Mr. Israel was a Senior
Vice President at Dillon, Read & Co. Inc., which
he joined in April, 1984, where he was primarily
responsible for new business development in
corporate finance. From October, 1987 until July,
1991, Mr. Israel served as a Director of Hi-Lo
Automotive, Inc. (an automotive parts retailer).
Mr. Israel is currently a Director of Suelopetrol
C.A. and Randgold Resources. Mr. Israel is 49 years
of age.
Family Relationships
Eli N. Futerman is the son of Michael Futerman
and brotherin-law of Daniel J. Chessin. Daniel J.
Chessin is a son-in-law of Michael Futerman. There
are no other family relationships between any of
the other directors or executive officers of the
Company.
DIRECTORS MEETINGS AND BOARD COMMITTEES
The Board of Directors of the Company met four
times during the fiscal year ended September 30,
1998. All directors except E. Philip Saunders
attended 75% or more of the aggregate of all
meetings of the Board of Directors and Board
committees on which they served during Fiscal 1998.
The standing committees of the Board of
Directors consist of the Executive, Compensation,
Audit and Retirement Committees. The Board of
Directors does not have a nominating committee.
The Executive Committee members are
Messrs. Michael Futerman, Eli N. Futerman and
Robert I. Israel. The Executive Committee may
exercise all the powers and authority of the Board
of Directors in the management of the business and
affairs of the Company except as limited by law.
The Executive Committee did not hold any formal
meetings during Fiscal 1998.
<PAGE> 6
The Compensation Committee is comprised of
Messrs. Michael Futerman, Eli N. Futerman, William
A. Buckingham and Robert I. Israel. Mr.
Buckingham was appointed by the Board of Directors
in Fiscal 1998. The function of the Compensation
Committee is to make recommendations to the Board
with respect to the salaries and other compensation
for the executive officers and certain key employees
of the Company and its subsidiaries. The
Compensation Committee held one meeting during Fiscal
1998.
The Audit Committee members include
Messrs. Ashley, Buckingham and Saunders. The Audit
Committee is responsible for evaluating and
approving annually the services performed by the
Company's accountants as well as reviewing the
Company's accounting practices and internal controls.
The Audit Committee recommends to the Board the
appointment of independent public accountants and
reviews with representatives of the independent
public accountants the scope of their examination,
their fees, the results of their examination and
any problems identified by the independent public
accountants regarding internal controls, together
with their recommendations. The Audit Committee met
on two occasions during Fiscal 1998.
On November 8, 1996, the Board of Directors
elected to assume responsibilities for the
administration of the 1992 Stock Option Plan. A
standing committee no longer exists for this
function.
The Retirement Committee consists of
Messrs. Michael Futerman and Eli N. Futerman.
The Retirement Committee is authorized to make
decisions relating to the Company's retirement plans.
The Retirement Committee did not meet in Fiscal 1998.
The Company's non-employee directors are paid
$1,000 for each Board meeting and $500 for each
committee meeting attended and reimbursed for
ordinary and necessary expenses incurred in
connection with such meetings. On December 1, 1997,
pursuant to the Company's 1993 Stock Option Plan
for non-employee directors, the Company granted to
Mr. Buckingham non-qualified options to purchase
3,000 shares of Common Stock at an exercise price
of $6.25 per share. The exercise price for these
options is basedon the closing price of the Common
Stock on the date the options were granted.
INFORMATION ABOUT EXECUTIVE OFFICERS
The following table sets forth certain
information about the Company's executive officers:
<PAGE> 7
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Michael Futerman 71 Director and Chairman 0f the Board
Eli N. Futerman 40 Director,
Chief Executive Officer
and President
Daniel J. Chessin 37 Director, Executive
Vice President
and Secretary
Peter J. Adamski 45 Vice President -
Finance and
Chief Financial Officer
David M. Appelbaum 46 Vice President -
Direct Distribution
Daniel R. McDonald 48 Vice President -
General Counsel
Albert J. Van Erp 61 Vice President -
Controller
Timothy Vergo 49 Vice President -
Wholesale Operations
</TABLE>
Peter J. Adamski has been Vice President -
Finance and Chief Financial Officer since August,
1998. Prior to joining the Company, Mr. Adamski
was employed by Bausch & Lomb from 1995 to
1998 as a Director in Corporate Business
Development and Strategic Global Sourcing. From
1979 to 1995 Mr. Adamski was employed by Johnson
& Johnson, (a health care products
manufacturer) in various finance and merger &
acquisition positions and during the last 10 years
served as a Controller of the McNeil Division which
manufactures Tylenol. Mr. Adamski has also worked
for Arthur Andersen & Co. as an auditor and is a
licensed Certified Public Accountant. Mr. Adamski is
45 years of age.
David M. Appelbaum became Vice President -
Direct Distribution in September, 1994. Prior
to joining the Company, Mr. Appelbaum served as
President of Meisenzahl Auto Parts, Inc. and Regional
Parts, Inc. since 1986 and 1979, respectively. Both
companies engaged in the direct distribution of
automotive aftermarket parts and were acquired by
the Company on September 30, 1994. Mr. Appelbaum is
46 years of age.
Daniel R. McDonald joined the Company as Vice
President and General Counsel in July, 1997. Prior
to joining the Company, Mr. McDonald was Associate
General Counsel of First Federal Savings and Loan
Association of Rochester, which was headquartered
in Rochester, New York. Before joining First
Federal in April, 1993, Mr. McDonald was engaged
in private law practice. Mr.McDonald has also
served as Vice-President and Deputy General Counsel
of Goldome FSB and was previously a partner in
the Buffalo law firm of Jaeckle, Fleischmann &
Mugel. Mr. McDonald is 48 years of age.
<PAGE 8>
Albert J. Van Erp has been Vice President -
Controller of the Company since August, 1998.
From May, 1992 until August, 1998 he served as
Vice President - Finance. From December, 1985 to
May, 1992, he served as Controller of the Company.
Since November, 1993, Mr. Van Erp has also served as
the Treasurer of the Company's wholly-owned
subsidiary, AUTOWORKS, Inc., which is currently a
debtor in the pending Bankruptcy Proceeding. Mr. Van
Erp has over 35 years experience in
corporate internal accounting.
Mr. Van Erp is 61 years of age.
Timothy Vergo has been Vice President -
Wholesale Operations of the Company since May, 1992.
From August, 1981 to May, 1992, he served as Director
of Operations of the Company. Mr. Vergo is 49 years
of age.
See Election of Directors above for
information concerning the Company's other executive
officers.
COMPLIANCE WITH SECTION 16(a) OF SECURITIES EXCHANGE
ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934,
as amended, requires directors, officers and
beneficial owners of more than 10% of the Company's
Common Stock to file with the Securities and Exchange
Commission (the "Commission") and Nasdaq reports
of transactions in its Common Stock. Directors,
Officers and greater than 10% stockholders are
required by the Commission to furnish the Company
with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms
furnished to the Company and written
representations that no further forms were
required, the Company believes that during Fiscal
1998, Section 16(a)filing requirements applicable to
its executive officers, directors and greater than
10% beneficial owners were complied with by all such
persons.
EXECUTIVE COMPENSATION
The summary compensation table below sets
forth the compensation paid or accrued for
services rendered in all capacities to the Company
during the last three fiscal years to the
Company's Chief Executive Officer and each of the
Company's four other most highly compensated
executive officers during Fiscal 1998.
<PAGE> 9
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Name and Principal Fiscal Salary Bonus
Position Year ($)<F1> ($)
<S> <C> <C> <C>
Michael Futerman 1998 362,468 -----
Chairman of the 1997 353,824 -----
Board of Directors 1996 336,921 60,000
Eli N. Futerman, Chief 1998 315,189 -----
Executive Officer and 1997 307,693 -----
President 1996 292,847 40,000
Daniel J. Chessin, 1998 171,490 -----
Executive Vice 1997 128,197 -----
President 1996 117,377 25,000
David M. Appelbaum, 1998 138,081 -----
Vice President - 1997 134,873 43,768
Direct Distribution 1996 128,561 61,907
Timothy Vergo, 1998 139,131 -----
Vice President - 1997 135,899 36,000
Wholesale Operations 1996 129,453 40,000
<FN>
<F1> Includes portion of salary deferred under
the Company's 401(k) Profit Sharing and Savings
Plan.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Securities
Underlying All Other
Name and Principal Options/ Compensations
Position SARs (#)<F2> ($)<F3> <F4>
<S> <C> <C>
Michael Futerman ----- 53,500 <F5>
Chairman of the ----- 53,425 <F5>
Board of Directors ----- 53,283 <F5>
<PAGE> 10
Eli N. Futerman, ----- 32,745 <F6>
Chief Executive ----- 32,665 <F6>
Officer and ----- 32,551 <F6>
President
Daniel J. Chessin, ----- 3,006
Executive Vice 12,480 2,890
President 6,490 2,777
David M. Appelbaum, 10,000 1,700
Vice President - 10,400 1,671
Direct 5,408 1,999
Distribution
Timothy Vergo, 10,000 2,336
Vice President - 10,400 2,306
Wholesale 5,408 2,094
Operations
<FN>
<F2> Options granted during Fiscal 1996 and Fiscal
1997 have been restated to reflect a 4% stock
dividend approved by the Board of Directors
on March 15, 1996 and 1997 to holders of record
on April 10, 1996 and 1997 and distributed on
May 1, 1996 and 1997 respectively.
<F3> Includes the aggregate value of the
Company's matching contribution during Fiscal
1998 to the Company's 401(k) Profit Sharing
and Savings Plan. During the 1998 fiscal
year, the Company made matching
contributions in the following amounts to the
accounts of the following executive officers:
Michael Futerman, $1,500; Eli N. Futerman,
$1,446; David M. Appelbaum, $500; Daniel J.
Chessin, $1,481; and Timothy Vergo, $1,253.
<F4> Includes premiums paid by the Company during
Fiscal 1998 on insurance policies on the lives
of the executive officers named in the table.
The Company is the owner and beneficiary of such
insurance policies that were purchased in
connection with the non-qualified selective
incentive plan provided by the Company which
provides for certain retirement or death
benefits to the officers or their designated
beneficiaries. During Fiscal 1998, the Company
made premium payments in the following amounts
for such insurance policies on the lives of the
following executive officers: Eli N. Futerman,
$2,206; David M. Appelbaum, $1,200; Daniel J.
Chessin, $1,525; and Timothy Vergo, $1,083.
<F5> Includes $52,000 that the Company accrued under
a deferred compensation agreement entered into
by the Company with Mr. Futerman in November,
1992 which provides for the payment to Mr.
Futerman or his designees of 60 quarterly
payments of $12,500 each after his retirement
from the Company.
<PAGE> 11
<F6> Includes $29,093 of premiums paid by the
Company during Fiscal 1998 on four insurance
policies owned by, and on the life of, Mr.
Futerman, which have a total death benefit of
approximately $2,525,000 and under which Mr.
Futerman has the discretion to designate
the beneficiary or beneficiaries.
</FN>
</TABLE>
OPTIONS GRANTS IN FISCAL 1998
The following table sets forth stock options
granted during Fiscal 1998 to the Company's Chief
Executive Officer and the Company's four other
most highly compensated executive officers during
such fiscal year.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
Number of
Securities % of Total Exercise
Underlying Options/SARs or Base
Options/SARs Granted to Price
Granted (#) Employees in ($/sh)
Name <F1> Fiscal Year <F2>
<S> <C> <C> <C>
Michael Futerman, ----- ----- -----
Chairman of the Board
of Directors
Eli N. Futerman, Chief ----- ----- -----
Executive Officer and
President
Daniel J. Chessin, ----- ----- -----
Executive Vice
President
David M. Appelbaum, 10,000 19.05% 6.00
Vice President -
Direct Distribution
Timothy Vergo, Vice 10,000 19.05% 6.00
President - Wholesale
Operations
<PAGE 12>
<FN>
<F1> Each option shown in the table was granted
under the Company's 1992 Plan. Each option
becomes exercisable in
equal ratable installments over three years,
commencing one year after the grant date. The
options permit the exercise
price to be paid, in whole or in part, by cash,
surrender to the Company of already-owned Common
Stock or "in-the-money" exercisable options for
the Common Stock. Under the option
grants, the Company will grant a reload option
for the amount of shares of Common Stock so surrendered,
subject to sufficient shares being available
under the 1992 Plan.
<F2> The exercise price for grants to Messrs.
Appelbaum and Vergo were at the closing price of
the Common Stock on the date of the option grants.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
Potential Realizable
Value at
Assumed Annual Rates of
Stock Price Appreciation
for
Expiration Option Terms($)<F4>
Name Date 5%($) 10%($)
<C> <S> <S>
<S>
Michael Futerman, ----- ----- -----
Chairman of the Board
of Directors
Eli N. Futerman, ----- ----- -----
Chief Executive
Officer and President
Daniel J. Chessin, ----- ----- -----
Executive Vice
President
David M. Appelbaum, 10/07/07<F3> 37,734 95,624
Vice President -
Direct Distribution
Timothy Vergo, Vice 10/07/07<F3> 37,734 95,624
President - Wholesale
Operations
<PAGE 13>
<FN>
<F3> These options were granted for a term of no
greater than 10 years, subject to earlier
termination upon the occurrence of
certain events related to termination of
employment.
<F4> Under the Securities and Exchange
Commission's rules and regulations, companies
are required to show hypothetical
"option spreads" that would result from assumed
appreciation of the underlying securities of
awarded options during their
respective terms. The "option spread" shown is
based on assumed annual compound stock appreciation rates
of 5% and 10%, respectively, during the entire
term of the options. The ultimate option spread,
however, will depend on the market value of the
Common Stock at a future date, which may or may not
correspond to such hypothetical appreciation.
</FN>
</TABLE>
OPTION EXERCISES IN FISCAL 1998
The following table sets forth stock options
exercised by the Company's Chief Executive Officer
and the Company's four other most highly
compensated executive officers during Fiscal 1998,
and the number and value of all unexercised options
at September 30, 1998.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in the Last Fiscal Year and
Fiscal Year-End Option/SAR Value
Shares
Acquired Number of Securities
on Value Underlying Unexcercised
Exercise Realized Options/SARs at
Name (#) ($) Fiscal Year End 1998
Exercisable Unexercisable
<S> <C> <C> <C> <C>
Michael ----- ----- ----- -----
Futerman
Chairman of
the Board of
Directors
<PAGE 14>
Eli N. ----- ----- 187,291 -----
Futerman
Chief
Executive
Officer and
President
Daniel J. ----- ----- 50,669 10,483
Chessin
Executive
Vice
President
David M. ----- ----- 18,841 15,403
Appelbaum
Vice
President -
Direct
Distribution
Timothy ----- ----- 35,714 15,403
Vergo
Vice
President -
Wholesale
Operations
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in the Last
Fiscal Year and Fiscal Year-End
Option/SAR Value
Value of Unexcercised
In-The-Money Options/SARs
Fiscal Year End 1998
Name Exercisable Unexercisable <F1>
<S> <C> <C>
Michael Futerman ----- -----
Chairman of the Board
of Directors
Eli N. Futerman Chief ----- -----
Executive Officer and
President
Daniel J. Chessin ----- -----
Executive Vice
President
<PAGE 15>
David M. Appelbaum Vice ----- -----
President - Direct
Distribution
Timothy Vergo ----- -----
Vice President -
Wholesale Operations
<FN>
<F1> An "in-the-money" stock option is an option for
which the market price on September 30, 1998,
of the Company's Common Stock underlying the
option exceeds the option's exercise price.
As of September 30, 1998, the market price of
the Company's Common Stock was $5.25. The
exercise price of the options disclosed in the
above table exceeded the market price of the
Company's Common Stock on that date.
</FN>
</TABLE>
REPORT ON EXECUTIVE MANAGEMENT COMPENSATION
The Company's goals for the compensation of
its executive management are to compensate fairly
for a job well done and to retain key employees
while providing them with proper motivation to maximize
shareholder value. The Company's executive
compensation program consists of three principal
elements: (1) base salary, (2) annual bonuses, which
reward for overall Company performance and
individual performance, and (3) options awarded
under the Company's 1992 Stock Option Plan, which
also reward and provide long-term incentives that
are intended to align the interests of option
recipients with those of shareholders.
The Compensation Committee annually recommends
to the Board of Directors the salary and bonuses to
be paid to the Company's Chief Executive Officer
and other members of executive management. In
Fiscal 1998, the Company engaged an outside
consulting firm to develop a performance based plan.
Under the plan, executives are entitled to earn
bonuses providing certain financial criteria are
met. None of these criteria were achieved in Fiscal
1998 and no bonuses were paid for that fiscal year.
The Board members vote on the Committee's
recommendations (except with respect to salary and
bonuses proposed for them) in light of their own
experiences and familiarities with compensation
practices. In Fiscal 1998, all recommendations
of the Compensation Committee were approved by the Board.
The Board of Directors is responsible for
awarding options under and otherwise administering
the Company's 1992 Plan. During Fiscal 1998, the
Board of Directors awarded options under <PAGE 16>
the 1992 Plan to executive management members and
certain key employees for the purchase of up to
55,770 shares of Common Stock. The Board of
Directors based the amount of such awards on the
subjective determination of the members as to
the past contribution and potential contribution of the option
recipients to the Company's overall success, without
particular emphasis on either such component. In
determining the award of options during Fiscal
1998, the Board of Directors did not take into
account options already held by option recipients.
Section 162(m) of the Internal Revenue Code
generally limits the tax deductibility of annual
compensation paid to certain executive officers
to $1 million, unless specified requirements are
met. The Compensation Committee has carefully
considered the impact of this provision in the Tax
Law. At this time, it is the Committee's intention
to continue to compensate all officers based on
overall performance.
The Committee expects that most, if not all,
compensation paid to officers will qualify as a
tax deductible expense. However, it is possible
that at some point in the future circumstances
may cause the Committee to authorize compensation
that is not deductible.
Respectfully submitted,
January 27, 1999
Michael Futerman* Eli N. Futerman*
Daniel J. Chessin William A. Buckingham*
Stephen B. Ashley E. Philip Saunders
Robert I. Israel*
* Compensation Committee Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1998, the Compensation Committee
was comprised of Messrs. Michael Futerman, Eli
N. Futerman, William A. Buckingham and Mr. Robert I. Israel.
Mr. Michael Futerman is the Company's Chairman of the Board of
Directors and Mr. Eli N. Futerman is the
Company's Chief Executive Officer and President. Mr.
Robert I. Israel is a Managing Director of the
Investment Banking firm which follows the
Company's progress and periodically provides investment
banking services to the Company.
PERFORMANCE GRAPH
The Performance Graph shown below compares the
cumulative total shareholder return on the
Company's Common Stock, based on the market price
of the Common Stock, with the total return on the
CRSP Total Return Index for the NASDAQ Stock
Market (U.S. Companies) and the Motor Vehicle New
Parts Supply and Wholesale <PAGE 17>
Industry peer group constructed by the Company. The
comparison of total return assumes that a fixed
investment of $100 was invested on September 30,
1993, in the Company's Common Stock and in the
foregoing index and peer group and further assumes
the reinvestment of dividends. The stock price
performance shown on the graph is not
necessarily indicative of future price
performance.
<TABLE>
<CAPTION>
Comparison of Cumulative Total Return <F1>
TOTAL SHAREHOLDERS RETURN
Base Period Return Return Return Return Return
9/93 9/94 9/95 9/96 9/97 9/98
<S> <C> <C> <C> <C> <C> <C>
Hahn 100.00 140.00 66.00 79.00 61.00 54.00
Automotive
Warehouse,
Inc.
NASDAQ 100.00 101.00 139.00 165.00 277.00 232.00
Peer Group 100.00 97.00 113.00 127.00 138.00 138.00
<FN>
<F1> The component issuers of the Motor Vehicle New
Parts Supply and Wholesale Industry Group
shown above include: Coast Distributor
Systems, Inc., Genuine Auto Parts Company, Hahn
Automotive Warehouse, Inc. and Oakhurst Co.
Inc. (f/k/a Oakhurst Capital Inc.). The
following Companies have been deleted from the
Peer Group in Fiscal 1998: ICIS Management
Group (f/k/a/ Altier Sales Co., Inc.)
(insufficient available information),
Amalgamated Automotive Industries
(bankruptcy), APS Holding Corp.
(bankruptcy), Capital Industries, Inc.
(dissolved), and Custom Chrome, Inc.
(sold). The returns of the component issuers
have been weighted according to their
respective market capitalizations as of the
beginning of each period for which a return is
indicated.
</FN>
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain
information concerning each group or person
known to the Company who beneficially owned in
excess of 5% of the Company's outstanding Common
Stock at December 31, 1998
<PAGE 18>
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership Class<F1>
<S> <C> <C>
Michael and Sara
Futerman
415 West Main Street
Rochester, NY 14608 2,220,667<F2> 46.8%
Eli N. Futerman
415 West Main Street
Rochester, NY 14608 450,905<F3> 9.1%
JSC, Inc.
200 C Baynard Bldg.
3411 Silverside Pool
Wilmington, DE 19810 292,464<F4> 6.2%
David M. Appelbaum
415 West Main Street
Rochester, NY 14608 263,130<F5> 5.5%
<FN>
<F1> The percentages in this column have been
calculated on the basis of the 4,745,014
shares outstanding on December 31,
1998, plus the number of shares of Common
Stock deemed outstanding pursuant to
Securities and Exchange Commission Rule 13d-
3(d)(1).
<F2> Michael Futerman is the record owner of
2,040,707 shares and Sara Futerman is the
record owner of 179,960 shares. Mr. and Mrs.
Futerman disclaim beneficial ownership over
all shares not held of record by them in their
respective names.
<F3> Includes 16,482 shares owned by Mr.
Futerman's immediate family and 187,291
shares which may be purchased by Mr. Futerman
pursuant to stock options that are
currently exercisable or become exercisable
within 60 days from December 31, 1998.
Mr. Futerman disclaims beneficial ownership
of shares not held of record by him.
<F4> This information is based solely on a Schedule
13D dated November 27, 1996, relating to the
Common Stock filed by JSC, Inc. with the
Securities and Exchange Commission plus a 4%
stock dividend distributed on May 1, 1997.
<F5> Includes 18,841 shares which may be
purchased by Mr. Appelbaum pursuant to
stock options that are currently exercisable
or become exercisable within 60 days from
December 31, 1998.
<PAGE 19>
</FN>
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares
of Common Stock beneficially owned at December 31,
1998 by each director, each nominee for director,
each executive officer named in the summary
Compensation Table and by all directors and officers
of the Company as a group.
Director, Nominee Amount and Nature of Percent of
or Group Beneficial Ownership<F1> Class<F7>
Michael Futerman,
Chairman of the
Board of Directors 2,220,667<F2> 46.8
Eli N. Futerman,
Chief Executive
Officer, President
and Director 450,905<F3> 9.1
Daniel J. Chessin,
Executive Vice
President, Secretary
and Director 142,634<F4> 3.0
Stephen B. Ashley,
Director 8,294<F5> *
William A. Buckingham,
Director 3,000<F5> *
Robert I. Israel,
Director 21,186<F5> *
E. Philip Saunders,
Director 6,693<F5> *
David M. Appelbaum,
Vice President -
Direct Distribution 263,130<F5> 5.5
Timothy Vergo,
Vice President -
Wholesale Operations 40,983<F5> *
All Directors and
Executive Officers
of the Company as a
Group (12 persons) 3,195,909<F6> 64.3
<PAGE 20>
*Indicates the number of shares constitutes less than
1% of the outstanding Common Stock.
[FN]
<F1> Each director, nominee and executive officer in
the above table possesses sole voting and sole
investment power with respect to the shares
owned by him except for such shares as to which
beneficial ownership is disclaimed in a
footnote.
<F2> Includes 179,960 shares owned of record by Mr.
Futerman's spouse. Mr. Futerman disclaims
beneficial ownership over the shares held by
his spouse.
<F3> Includes 16,482 shares owned of record by
members of Mr. Futerman's immediate family and
187,291 shares which may be purchased by Mr.
Futerman pursuant to stock options that are
currently exercisable or become exercisable
within 60 days from December 31, 1998.
Mr. Futerman disclaims beneficial ownership
over all shares owned by his immediate family
members.
<F4> Includes 77,899 shares owned of record by
members of Mr. Chessin's immediate family and
56,992 shares which may be purchased by Mr.
Chessin pursuant to stock options that are
currently exercisable or become exercisable
within 60 days of December 31, 1998. Mr.
Chessin disclaims beneficial ownership over
all shares owned by his immediate family
members.
<F5> Includes shares issuable upon exercise of
stock options presently exercisable or which
become exercisable within 60 days from
December 31, 1998 as follows: Stephen B.
Ashley, 6,693 shares; William A. Buckingham,
1,000 shares; Robert I. Israel, 6,693 shares;
E. Philip Saunders, 6,693 shares; David M.
Appelbaum, 18,841 shares; Timothy Vergo,
40,983 shares.
<F6> Includes 363,603 shares issuable upon
exercise of stock options presently
exercisable or which become exercisable within
60 days of December 31, 1998.
<F7> The percentages in this column have been
calculated on the basis of the 4,745,014
shares outstanding on December 31, 1998, plus
the number of shares of Common Stock deemed
outstanding pursuant to Securities and Exchange
Commission Rule 13d-3(d)(1).
</FN>
<PAGE 21>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of September 30, 1998, the Company leased
from Michael Futerman, Eli N. Futerman, Daniel
J. Chessin and Ira D. Jevotovsky, a former
director, and their wives or partnerships,
corporations or trusts in which such persons have
interest, 12 of its 23 distribution center sites and
35 of its 82 Advantage Auto Stores sites. (Michael
Futerman is the Company's Chairman of the Board of
Directors and a greater than 5% beneficial owner
of Common Stock; Eli N. Futerman is the Company's
Chief Executive Officer and President, a
director and a greater than 5% beneficial
owner of Common Stock; Daniel J. Chessin is the
Company's Executive Vice President, Secretary and a
director.) The approximate total gross distribution
center space under such leases was 345,300 square
feet. The approximate aggregate store space under
such leases was 174,878 square feet. All such leases
provide for security deposits equal to one month's
rent, annual base rental increases equal to the
annual increase in a specified Consumer Price Index
("CPI") applied to the preceding year's base rent,
and for the Company to pay insurance, real property
taxes, utilities and to perform all maintenance and
repairs. In Fiscal 1998, the Company paid
approximately $1,731,000 as base rental for all
distribution centers and store properties under
such related party leases. As of September 30,
1998, the total base rentals payable under all
such distribution center and store leases through
the end of their respective terms was approximately
$4.3 million, subject to CPI-based increases
described above. Some of the aforementioned leases
have been capitalized. These rental figures are
total rents for all such leases, including
amounts representing interest under those leases
which have been capitalized.
Effective September 30, 1998, the Company's
wholly-owned subsidiary Meisenzahl Auto Parts, Inc.
("Meisenzahl"), merged into the Company and now
operates as a division. The Company leases two
locations from David M. Appelbaum. (Mr. Appelbaum
is the Company's Vice President-Direct
Distribution.) The totalgross space under such
leases is approximately 45,000 square feet.
Both leases require the Company to pay insurance,
real property taxes, utilities and to perform all
maintenance and repairs. As of September 30, 1998,
the total base rentals payable under both leases
through the end of their respective terms was
approximately $1.5 million or approximately $250,000 annually.
As a result of the Meisenzahl merger, the
Company is liable under guarantees in favor of
the holder of first priority mortgages covering
the property leased from Mr. Appelbaum pursuant
to which approximately $1.66 million in the
aggregate was outstanding as of September 30, 1998.
Mr. Appelbaum agreed to indemnify, defend and
hold harmless the Company from any losses which
arise from or are related to such guarantees.
<PAGE 22>
By an Agreement dated August 14, 1995, the
Company entered into a split-dollar arrangement with
a Trust established by Eli N. Futerman of which
Manufacturers and Traders Trust Company is the
Trustee. Pursuant to the Agreement, the Company
pays a portion of the annual premium on an insurance
policy held in the Trust. The policy is a single
life policy payable upon the death of Mr. Futerman.
The face value of the policy is $1 million.
Pursuant to the terms of the Trust, Mr. Futerman's
wife will receive the proceeds of the policy (less
reimbursement to the Company for premiums) if she
survives her husband. The amount of all premiums
paid by the Company constitutes indebtedness from
the Trust to the Company. Upon termination of the
Agreement, the Company is entitled to receive from
the Trust the amount equal to the premiums it has
paid. The Company paid $14,008 of premiums
during the 1998 fiscal year in connection with this
arrangement. Mr. Futerman acquired this policy during
fiscal year 1994.
By an Agreement dated January 18, 1996, the
Company entered into a split-dollar arrangement
with a Trust established by Daniel J. Chessin of which
Fleet Trust Company is the Trustee.
Pursuant to the Agreement, the Company pays a
portion of the annual premium on an insurance policy held in the
Trust. The policy is a single life policy payable upon the
death of Mr. Chessin. The face value of the policy is $1
million. Pursuant to the terms of the Trust, Mr. Chessin's wife will
receive the proceeds of the policy (less reimbursement to the Company for
premiums) if she survives her husband. The amount of all
premiums paid by the Company constitutes indebtedness from the
Trust to the Company. Upon termination of the Agreement, the
Company is entitled to receive from the Trust the
amount equal to the premiums it has paid. The
Company paid $11,851 of premiums during the 1998
fiscal year in connection with this agreement. Mr.
Chessin acquired this policy during fiscal year 1994.
In February, 1996, Michael Futerman and Eli N. Futerman
advanced $2.5 million to the Company. The Company repaid
$350,000 of this debt and exchanged five-year subordinated notes for
the demand notes representing the $2,150,000 principal
balance of this debt. The Futermans' subordinated
notes bear interest at the rate of 12% per annum. Interest is payable
monthly. The notes are redeemable at the option of
the Company, in whole or part, at any time, subject to a
subordination agreement with the Company's lender, Fleet Capital
Corporation. The notes are payable in 50 equal monthly
principal payments which commenced in January, 1997, and continue
through and including February 1, 2001. In the
event that the Company's net income is $4,141,000 or
greater in any fiscal year, then the
Company must make a principal prepayment on the
notes equal to 19.186% of its net income in excess
of such amount, provided the Company is not in
default under the credit facility with Fleet Capital
Corporation. The Futermans' notes are unsecured
and subordinate to all of the Company's indebtedness
to Fleet Capital Corporation.
<PAGE 23>
On or about December 3, 1998, FCA Associates, a
partnership consisting of Eli N. Futerman, Daniel J. Chessin
and David M. Appelbaum, entered into a purchase and sale
agreement with a third party for the purchase of three (3) properties
located in Rochester, New York and the Towns of Gates, New York and
Farmington, New York. The Company is a tenant
with direct distribution facilities at all three
(3) locations. Upon the closing of the transaction,
the Company leases will
be assigned from the third party to FCA Associates.
The total gross space under such leases is approximately 24,500 square
feet. The leases require the Company to pay for liability
insurance, real property taxes, utilities and to
perform all interior maintenance and repairs. As
of February 1, 1999, the total base rentals
payable under the leases until the end of their
terms, which will end October 31, 2001, will be
approximately $426,656.00 or $142,218.67 annually.
Robert I. Israel, a Director of the Company,
is a Managing Director of Schroder, Incorporated,
which periodically provides investment banking services to the Company.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has not, as of the
date hereof, selected independent auditors for the fiscal
year ending September 30, 1999. PricewaterhouseCoopers LLP
audited the Company's financial statements for the 1998 fiscal
year and has performed such services since
1988. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the Annual
Meeting, and will have an opportunity to make a
statement if they so desire and will be available to
respond to appropriate questions.
OTHER BUSINESS
As of the date of this Proxy Statement,
the Company's management does not intend to present,
and has not been informed that any other person
intends to present, any matter for action at the
Annual Meeting other than those described above. If
any other matters properly come before the meeting,
it is intended that the persons named in the
enclosed proxy will vote the proxy on such matters in
accordance with their best judgment.
The cost of solicitation of proxies in
connection with the Annual Meeting will be paid
by the Company. In addition to solicitation by
use of mails, some of the officers and regular
employees of the Company, without extra remuneration,
may solicit Proxies personally or by telephone,
telegraph or cable. The Company will reimburse
any banks, brokers and other custodians, nominees
and fiduciaries for their expenses in forwarding
proxy and solicitation material to the beneficial
owners of the Common Stock held by them.
<PAGE 24>
PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Shareholder proposals for inclusion in the
proxy statement and form of proxy for the next
Annual Meeting of Shareholders must be received by
the Company at its executive offices on or before
November 15, 1999.
Daniel J. Chessin,
Director, Executive
Vice President and
Secretary
Rochester, New York
January 27, 1999
HAHN AUTOMOTIVE WAREHOUSE, INC.
THE PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S
BOARD OF DIRECTORS
The undersigned hereby appoints MICHAEL FUTERMAN and
ELI N. FUTERMAN, or any one of them, with full power
of substitution, attorneys and proxies to represent
the undersigned at the Annual Meeting of
Stockholders of the Company to be held on March 15,
1999, and at any continuation or adjournment
thereof, with all the power which the undersigned
would possess if personally present to vote all
shares of Common Stock of Hahn Automotive Warehouse,
Inc. ("Company") held of record by the undersigned
on January 27, 1999 and which the undersigned may be
entitled to vote at said meeting.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY (to vote for all nominees,
listed below)
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, CIRCLE SUCH NOMINEE'S
NAME. YOUR PROXY WILL BE VOTED FOR
REMAINDER.)
Nominees:
Daniel J. Chessin Stephen B. Ashley E. Philip Saunders
<PAGE 25>
2. In their discretion upon such matters incident to
the conduct of the Annual Meeting and upon such
other business as may properly come before the
Annual Meeting and any adjournment
or continuation thereof which the Company's Board of
Directors does not know, a reasonable time prior
to the solicitation, will be presented at the
Annual Meeting.
PLEASE DATE, SIGN AND RETURN IT IN THE ENCLOSED
ENVELOPE. IF NOT OTHERWISE MARKED, THE SHARES
REPRESENTED BY THIS PROXY SHALL BE VOTED "FOR" THE
THREE NOMINEES.
SIGNATURE DATE
SIGNATURE DATE
IF HELD JOINTLY
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your
full title as such. If a corporation, please sign in
full corporate name by the president or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.
<PAGE 26>
