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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SHOPSMITH, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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:
_________________________________________________________________
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[ ] 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:
_________________________________________________________________
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PRELIMINARY COPY
SHOPSMITH, INC.
6530 Poe Avenue
Dayton, Ohio 45414
Notice of Annual and Special Meeting of Shareholders
to be held July 31, 1996
The Annual and Special Meeting of Shareholders of Shopsmith, Inc.
will be held at the offices of the Company, 6530 Poe Avenue, Dayton,
Ohio at 9:30 a.m. on Wednesday, July 31, 1996 for the following
purposes:
1. To elect three directors to serve for a term of two years.
2. To authorize the Chief Executive Officer of the Company to
acquire additional Common Shares of the Company.
3. To approve the appointment of independent public accountants for
the Company.
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on June 17,
1996 as the record date for the determination of shareholders entitled
to notice of and to vote at the Annual and Special Meeting and at any
adjournment thereof.
WE HOPE THAT YOU WILL BE ABLE TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors
J. Michael Herr
Secretary
Dayton, Ohio
June 24, 1996
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PRELIMINARY COPY
SHOPSMITH, INC.
PROXY STATEMENT
June 24, 1996
Mailing Date
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Shopsmith, Inc., an Ohio
corporation (the "Company"), of proxies to be used at the Annual and
Special Meeting of Shareholders to be held at the principal executive
offices of the Company, 6530 Poe Avenue, Dayton, Ohio at 9:30 a.m. on
Wednesday, July 31, 1996.
The close of business on June 17, 1996 has been fixed as the
record date for the determination of shareholders entitled to notice
of and to vote at the meeting. The Company has one class of shares
outstanding, namely Common Shares, of which ________ were outstanding
at the close of business on the record date. Each share entitles the
holder thereof to one vote.
All shares represented by properly executed proxies will be voted
in accordance with the shareholder's directions specified on the
proxy. Unless otherwise directed by the giver of the proxy, all
proxies will be voted for the election of Messrs. John R. Folkerth, J.
Michael Herr and Edward A. Nicholson as directors of the Company; to
authorize John R. Folkerth, Chairman, President and Chief Executive
Officer of the Company to acquire additional Common Shares of the
Company in accordance with the Ohio Control Share Acquisition Law; in
favor of the approval of the appointment of Crowe, Chizek and Company
as independent public accountants for the Company; and, at the
discretion of the persons acting under the proxy, in the transaction
of such other business as may properly come before the meeting and any
adjournment thereof. A shareholder signing and returning a proxy has
the power to revoke it at any time prior to its exercise by giving
<PAGE>
notice of revocation to the Company in writing or in open meeting, but
without affecting any vote previously taken.
Abstentions and broker non-votes will be included in the
determination of the number of shares represented at the meeting, but
will not count as votes in the election of directors or for the
proposal to approve the Company's independent public accountants.
Abstentions and broker non- votes will have the effect of votes
against the proposal to authorize Mr. Folkerth to acquire additional
Common Shares of the Company in accordance with the Ohio Control Share
Acquisition Law.
The meeting of shareholders will be considered a Special Meeting
for purposes of authorizing Mr. Folkerth to acquire additional Common
Shares of the Company, and the meeting shall be the Annual Meeting for
all other purposes.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into one class of
three directors and one class of four directors. The term of office
of each class is two years, and one class is elected at each Annual
Meeting. Of the seven Board positions, three make up the Class of
1996 (whose term of office expires at this Annual Meeting) and four
make up the Class of 1997.
At the 1996 Annual Meeting, three directors will be elected to the
Class of 1998 and will hold office until the 1998 Annual Meeting of
Shareholders. Should any of the nominees for election as members of
the Class of 1998 become unavailable for election, the proxies
solicited hereby will be voted for a substitute nominee designated by
the Board of Directors.
Set forth below is information with respect to each nominee for
election as a director and each director whose term of office
continues after the 1996 Annual Meeting.
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Class of 1998
Nominees to be Elected for a Term
Expiring in 1998:
JOHN R. FOLKERTH, 63, is the founder and the President of the Company
and has been a director and the Chief Executive Officer of the Company
since 1972. Mr. Folkerth has also been Chairman of the Board since
1986.
J. MICHAEL HERR, 52, has been a director of the Company since 1975 and
Secretary since 1985. Mr. Herr has been a member of the law firm of
Thompson Hine & Flory P.L.L., Dayton, Ohio since 1989. Thompson Hine
& Flory P.L.L. serves as counsel to the Company.
EDWARD A. NICHOLSON, 56, has been a director of the Company since
1984. Dr. Nicholson has been the President of Robert Morris College
in Coraopolis, Pennsylvania since 1989. From 1987 to 1989, Dr.
Nicholson was a Professor and Executive Vice President of Academic and
Student Affairs at Lamar University in Beaumont, Texas. From 1980 to
1987, he was Vice Chancellor and a Professor of Business
Administration and Public and Environmental Affairs at Indiana
University - Purdue University at Fort Wayne. Dr. Nicholson is also a
management consultant.
Class of 1997
Directors Continuing in Office
until 1997:
ROBERT L. FOLKERTH, 39, has been a director of the Company since
November 1994 and its Vice President Field Sales since April 1996.
Mr. Folkerth was a Corporate Vice President of Digitron, Inc. from
1991 until April 1996. Robert L. Folkerth is the son of John R.
Folkerth.
JOHN L. SCHAEFER, 61, has been a director of the Company since 1983.
From 1986 until his retirement in 1990, Mr. Schaefer was Vice
President of The James River Corporation, a forest products company.
Mr. Schaefer was Chairman of the Board and President of The Specialty
Papers Company, a manufacturer of flexible packaging material, from
1968 until 1986 when Specialty Papers was acquired by James River. Mr.
Schaefer is also a director of ESKCO, Inc.
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BRADY L. SKINNER, 45, has been a director of the Company since April
1995. Mr. Skinner has been, since October 1994, an Audit Partner with
the Dayton, Ohio based accounting firm of Flagel, Huber, Flagel & Co.
He was an Audit Partner in the accounting firm of Coopers and Lybrand
L.L.P. from 1983 to 1994. He is also President of Ken Anderson
Beverage Co.
RICHARD L. SNELL, 61, has been a director of the Company since 1974.
Since 1976, Mr. Snell has been the Chief Executive Officer of Tipp
Machine & Tool, Inc., a tool and die manufacturing company located in
Tipp City, Ohio. Mr. Snell is also a Vice President and Director of
Precision Tune of Dayton.
Directors are elected by a plurality of the votes cast. Under the
statutes of Ohio, if any shareholder gives notice in writing to the
President, a Vice President or the Secretary of the Company, not less
than 48 hours before the time fixed for holding the Annual Meeting,
that such shareholder desires the voting at the election of directors
to be cumulative, an announcement of the giving of such notice will be
made upon the convening of the meeting and thereupon each shareholder
will have the right to cumulate his voting power in the election of
directors. Under cumulative voting, each shareholder is entitled to
give one candidate as many votes as the number of directors to be
elected multiplied by the number of his shares, or to distribute his
votes on the same principle among two or more candidates, as he sees
fit. In the event that directors are elected by cumulative voting and
cumulated votes represented by proxies solicited hereby are
insufficient to elect all the nominees named herein, the holders of
the proxies will vote such proxies cumulatively for the election of as
many of such nominees as possible and in such order as the holders of
the proxies may determine.
Information Concerning the Board of Directors
There are two committees of the Board, an Audit Committee and a
Compensation Committee. Messrs. Schaefer, Skinner and Snell serve as
members of the Audit Committee, and Messrs. Herr, Nicholson and
Schaefer serve as members of the Compensation Committee. Mr. Skinner
is Chairman of the Audit Committee, and Mr. Schaefer is Chairman of
the Compensation Committee.
<PAGE>
The Audit Committee recommends annually to the Board the
engagement of independent public accountants and reviews the scope of
and the results of the annual audit. The Committee also reviews and
investigates such other matters relative to financial and accounting
matters as the Committee deems appropriate.
The Compensation Committee has the broad responsibility of
recommending to the Board a compensation program designed to
effectively compensate the officers and key management personnel of
the Company in a manner that is internally equitable and externally
competitive. The Committee also administers the Company's employee
stock option plans and consults with the Chief Executive Officer
concerning management succession planning.
During the fiscal year ended March 30, 1996, there were four
meetings of the Board of Directors and three meetings of the Audit
Committee. The Compensation Committee met once separately and took
action at one meeting of the Board of Directors. Each director
attended at least 75% of the meetings of the Board and of the
committees, if any, on which he served. Non- employee directors
receive a fee of $700 per month for services as a director.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth in the table below is information as of May 30, 1996
with respect to the number of Common Shares of the Company
beneficially owned by each director of the Company and by all
directors and executive officers as a group.
For purposes of this table, an individual is considered to
"beneficially own" any Common Shares (i) over which he exercises sole
or shared voting or investment power, or (ii) of which he has the
right to acquire beneficial ownership at any time within 60 days after
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May 30, 1996. Unless otherwise indicated, voting power and investment
power is exercised solely by the named individual or individuals in
the group or is shared by such individual and his spouse or children.
Number of Shares Total as a
Individual or Beneficially Owned Percentage of the
Group as of May 30, 1996 Class (a)
John R. Folkerth 556,895 (b)(c) 20.5%
Robert L. Folkerth 136,097 5.1%
J. Michael Herr 1,200 (d)
Edward A. Nicholson 100 (d)
John L. Schaefer 25,257 (e) (d)
Brady L. Skinner 5,000 (d)
Richard L. Snell 30,507 (e) 1.1%
Directors and
Executive Officers
as a Group
(8 persons) 810,850 (b)(c) 29.1%
________________________
(a) The percentages are calculated on the basis of the number of
Common Shares outstanding as of May 30, 1996 plus the number of Common
Shares subject to outstanding options exercisable within 60 days
thereafter that are held by the individual or group.
(b) Information with respect to shares held in the Company's
Savings Plan is as of September 30, 1995. The table includes 12,510
and 18,470 shares held in the Company's Savings Plan for the benefit
of John R. Folkerth and all directors and executive officers as a
<PAGE>
group, respectively. The Savings Plan's participants have the right to
vote shares held for their accounts, but disposition of the shares is
restricted and may be made only in accordance with the terms of the
Plan.
(c) Includes 54,166 and 130,264 shares that may be acquired at any
time within 60 days after May 30, 1996 by John R. Folkerth and by all
directors and executive officers as a group, respectively, upon the
exercise of options granted under the Company's Stock Option Plans.
(d) Less than 1.0%.
(e) Includes 23,757 shares that may be acquired at any time within
60 days after May 30, 1996 by each of Messrs. Schaefer and Snell under
the Company's 1988 Director Option Plan.
Federal securities laws require the Company's directors and
officers and persons who own more than 10% of the outstanding Common
Shares of the Company to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and to furnish
the Company with copies of all such reports. Based solely upon the
Company's review of the copies of these reports received by it and
written representations that no other reports were required to be
filed, the Company believes that, during the fiscal year ended March
30, 1996, all filing requirements applicable to its directors,
officers and greater than 10% shareholders were met.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth in the table below is information as of May 30, 1996
with respect to persons other than directors and executive officers of
the Company (for whom information is disclosed under "Security
Ownership of Directors and Officers" above) known by the Company to be
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the beneficial owner of more than 5% of the Common Shares of the
Company:
Number of Shares Total as a Percentage
Name and Address Beneficially Owned of the Class
John R. Folkerth, Jr. 137,467(a) 5.2%
131 Forrer Blvd.
Dayton, Ohio 45419
(a) Mr. Folkerth has advised the Company that he has the sole power
to vote and to dispose of 107,990 Common Shares of the Company. Mr.
Folkerth shares voting and investment power with respect to 29,477
Common Shares of the Company with his spouse and children. Mr.
Folkerth has represented that the Common Shares that he beneficially
owns were not acquired for the purpose of and do not have the effect
of changing or influencing the control of the Company, and were not
acquired in connection with or in any transaction having such purpose
or effect.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain summary information
concerning the compensation of John R. Folkerth, Chairman, President
and Chief Executive Officer, and William C. Becker, Vice President of
Finance, during the last three fiscal years. Messrs. Folkerth and
Becker are the only executive officers of the Company whose salary and
bonus exceeded $100,000 for the fiscal year ended March 30, 1996.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation All Other
Awards Compensation
Name and Principal Position Year Salary($) Bonus($) Options(#) ($)(1)(2)
John R. Folkerth, Chairman, 1996 $150,000 $49,469 -0- $ 6,537
President and 1995 126,000 49,094 40,000 5,933
Chief Executive Officer 1994 172,000 -0- 20,000 11,320
William C. Becker, Vice 1996 87,342 16,809 -0- 1,404
President of Finance 1995 85,956 -0- 32,000 298
1994 86,415 -0- -0- 1,296
(1) Includes, for 1996, 1995 and 1994, respectively, $1,037, $433
and $2,100, representing the Company's 401(k) plan contributions made
on behalf of Mr. Folkerth to match his deferral contributions
(included under Salary) made to such plan, and $5,500, $5,500 and
$9,220 for 1996, 1995 and 1994, respectively, representing the whole
life insurance premiums paid by the Company for insurance benefitting
Mr. Folkerth.
(2) The amounts shown for Mr. Becker are the respective amounts of
the Company's 401(k) plan contributions made on behalf of Mr. Becker
in each of the last three fiscal years to match his deferral
contributions (included under Salary) made to such plan.
<PAGE>
Stock Options
The following table sets forth information concerning unexercised
options held by Messrs. Folkerth and Becker as of March 30, 1996. No
options were exercised by Mr. Folkerth or Mr. Becker during the year
ended March 30, 1996, and none of their options were in-the-money at
year-end.
FISCAL YEAR-END OPTION TABLE
Number of Unexercised
Options at March 30, 1996
Name Exercisable Unexercisable
John R. Folkerth 34,167 33,333
William C. Becker 17,917 21,333
REPORT OF COMPENSATION COMMITTEE
CONCERNING EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised
of John L. Schaefer, Chairman, J. Michael Herr and Edward A.
Nicholson. The duties of the Compensation Committee include fixing
(or making recommendations to the full Board with respect to) the
salaries of executive officers, administering the Company's option
plans, and making recommendations to the full Board with respect to
annual incentive compensation programs.
The approach of the Compensation Committee to executive
compensation during the last several years has been generally to keep
base salary levels relatively steady with cumulative adjustments at or
below inflation rates, and to provide performance related incentives
through cash incentive compensation plans and/or stock options. The
cash incentive compensation plans have been designed so that incentive
awards are tied directly to pre-tax earnings. Stock options are also
performance related in that the value of the options is tied to
increases in shareholder value which is in turn reflective of
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performance. Furthermore, as more fully discussed below, the stock
options granted in February 1995 condition exercisability upon
achievement of certain earnings thresholds.
Salaries of executive officers are reviewed approximately
annually. In June 1993, the salaries of Mr. Folkerth and one other
executive officer were continued at their previously established
levels, and the salaries of two other executive officers were
increased 3.0%. In April 1994, Mr. Folkerth's salary was, on his own
initiative, reduced to $125,000. Effective as of April 1995, Mr.
Folkerth's salary was increased to $150,000, and the salaries of two
other executive officers were increased 2.5% in July 1995. Although,
except as noted below, there has been no specific relationship between
the salaries of executive officers and the Company's performance, the
Compensation Committee and the Board of Directors do consider that
performance in setting executive salaries.
With specific reference to Mr. Folkerth's salary, the primary
factor in fixing his salary as of June 1993 was his historical salary
level. The April 1994 reduction in Mr. Folkerth's salary was related
to the performance and financial condition of the Company, and the
April 1995 increase in his salary was related to the Company's
improved performance during the preceding fiscal year.
For each of the fiscal years April 1, 1995 and March 30, 1996, the
Board adopted incentive compensation plans under which cash bonuses
could be earned by executive officers and other key employees. No
cash incentive compensation plan was in effect for the year ended
April 2, 1994. With regard to the plans in effect for fiscal 1995 and
fiscal 1996, the thresholds for payment of bonuses were pre-tax
earnings of $500,000 and $_________, respectively. Under the terms of
the plans, bonuses increase as earnings increase although the
relationship is not directly proportional. The Company's earnings
performance during fiscal 1995 resulted in bonus payments to Mr.
Folkerth in the amount of $49,094, of which $24,094 was the amount
awarded under the incentive plan and $25,000 was a separate award by
the Compensation Committee.
Mr. Folkerth was not a participant in the incentive compensation
plan during fiscal 1996, the Compensation Committee having determined
to exercise discretionary authority over any bonus payable to Mr.
Folkerth for that year. After the end of fiscal 1996, the
Compensation Committee awarded to Mr. Folkerth a bonus of $49,469 for
that year.
The Compensation Committee has made use of stock options as an
element of executive compensation. The purchase price under stock
<PAGE>
options granted by the Committee has been not less than the fair
market value of a Common Share of the Company on the date of grant.
In February 1995, the Compensation Committee awarded options
covering a total of 230,000 shares to eight employees, including an
award of 40,000 shares to Mr. Folkerth. The grant of the options was
specifically subject to shareholder approval of the 1995 Stock Option
Plan, which approval was granted at the 1995 Annual Meeting of
Shareholders. The options are exercisable in three equal annual
installments beginning June 1995, 1996 and 1997. With the exception
of one 10,000 share award, exercisability of each installment of the
options is dependent upon the Company meeting certain pre-tax earnings
performance thresholds in the fiscal year last preceding the date upon
which the installment first becomes exercisable. The Company met the
performance standards (for fiscal 1995 and fiscal 1996) applicable to
exercise of the first two installments of the options.
No options were awarded to executive officers during the fiscal
year ended March 30, 1996.
John L. Schaefer, Chairman
J. Michael Herr
Edward A. Nicholson
<PAGE>
COMPANY STOCK PERFORMANCE GRAPH
The graph that follows compares the Company's cumulative total
return to shareholders for the five-year period ended March 31, 1996
with the Total Return Index for The Nasdaq Stock Market (US Companies)
and the Total Return Index for Nasdaq Retail Trade Stocks for such
five-year period. The graph assumes that $100 was invested on March
31, 1991 in the Company's Common Shares and in each of the two indexes
and that dividends were reinvested.
3/91 3/92 3/93 3/94 3/95 3/96
Shopsmith 100 107 68 50 32 48
NASDAQ U.S. 100 127 146 159 176 239
NASDAQ Retail 100 136 121 125 122 154
PROPOSAL TO AUTHORIZE ACQUISITION OF SHARES
BY CHIEF EXECUTIVE OFFICER
At the Special Meeting, shareholders will vote on the
authorization of a proposed acquisition of Common Shares of the
Company by John R. Folkerth ("Mr. Folkerth"), the Company's Chairman,
President and Chief Executive Officer. Mr. Folkerth desires to
acquire additional Common Shares of the Company in an amount that,
<PAGE>
when added to the Common Shares currently owned by Mr. Folkerth and
his wife, will equal 20% or more (but less than 33_%) of the issued
and outstanding Common Shares of the Company. The proposed acquisition
of Common Shares may occur through the exercise of stock options
currently owned by Mr. Folkerth or by the purchase of Common Shares in
the open market. Mr. Folkerth and his wife currently own approximately
18.__% of the total issued and outstanding Common Shares of the
Company.
Under the Ohio Control Share Acquisition Law (Section 1701.831 of
the Ohio Revised Code), any person who proposes to make a "control
share acquisition" of shares of certain Ohio corporations, including
the Company, must first obtain shareholder approval. For this purpose,
a "control share acquisition" means the acquisition of shares that
entitles a person, alone or with others, to exercise voting power in
any of the following ranges: (i) 20% or more but less than 33_%, (ii)
33_% or more but less than 50%, and (iii) 50% or more. For the
proposed acquisition of Common Shares by Mr. Folkerth to be
authorized, two separately determined majorities of the Common Shares
voted at the Special Meeting must authorize the proposed acquisition,
and a separately determined quorum must be present at the Special
Meeting for each such authorization. The first majority authorization
is that of a majority of the voting power of all of the Common Shares
present or represented at the Special Meeting (the "First Majority");
all of the outstanding Common Shares of the Company as of the record
date are eligible to vote in determining the approval of this First
Majority. The quorum required for this authorization is a majority of
the voting power of all of the outstanding Common Shares.
The second majority authorization required (the "Second Majority")
is that of a majority of the Common Shares present or represented at
the Special Meeting, excluding Common Shares that are "interested
shares" as defined below ("Interested Shares"). Interested Shares are
ineligible to vote in determining the authorization by this Second
Majority. The quorum required for the Second Majority authorization
is a majority of the outstanding Common Shares, excluding the
Interested Shares. The term "Interested Shares" means shares held,
directly or indirectly, by Mr. Folkerth, by the officers of the
Company and by the employee directors of the Company. And the term
"Interested Shares" includes shares acquired by any person (and those
acting in concert with him) during the period from June 24, 1996
through July 31, 1996, if the aggregate consideration for the shares
acquired by such person exceeds $250,000 or if the number of shares
acquired by such person exceeds one-half of one percent of the
outstanding shares (approximately _______ Common Shares of the
Company).
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FOR THE PURPOSE OF ASSISTING THE COMPANY IN IDENTIFYING INTERESTED
SHARES, SHAREHOLDERS WHO HOLD OR ACQUIRE INTERESTED SHARES ARE
REQUESTED TO NOTIFY THE COMPANY (AT OR PRIOR TO THE SPECIAL MEETING)
OF THE NUMBER OF SUCH SHARES SO HELD OR ACQUIRED.
As required by the Ohio Control Share Acquisition Law, Mr.
Folkerth delivered an Acquiring Person Statement to the Company on
June 5, 1996 that describes Mr. Folkerth's proposed acquisition of
Common Shares of the Company. A copy of Mr. Folkerth's Acquiring
Person Statement is attached as Exhibit A to this Proxy Statement and
the foregoing discussion is qualified in its entirety by reference to
such Statement.
The Board of Directors of the Company believes that the increased
share ownership in the Company by its Chairman, President and Chief
Executive Officer is in the best interests of the Company. THE BOARD
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS AUTHORIZE THE PROPOSED
ACQUISITION OF COMMON SHARES BY MR. FOLKERTH.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
At the recommendation of the Audit Committee of the Board of
Directors, the full Board has appointed Crowe, Chizek and Company as
independent public accountants for the Company for the fiscal year
ending April 5, 1997. It is intended that the persons acting under
the accompanying proxy will vote the shares represented thereby in
favor of the approval of such appointment.
On February 21, 1995, the Company effectuated a change in its
independent public accountants. The change involved the engagement of
Crowe, Chizek and Company to replace Coopers and Lybrand L.L.P. as the
Company's independent public accountants. This change was approved by
both the Audit Committee of the Company's Board of Directors and the
full Board of Directors.
The change was motivated by cost considerations and was not the
result of any dissatisfaction with Coopers and Lybrand. There were no
reportable events or disagreements with Coopers and Lybrand regarding
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. Crowe, Chizek's reports on the Company's
financial statements for the fiscal years ended April 1, 1995 and
March 30, 1996 do not contain any adverse opinion or disclaimer of
opinion and are not qualified as to uncertainty, audit scope or
accounting principles.
<PAGE>
It is anticipated that representatives of Crowe, Chizek will be
present at the Annual Meeting of Shareholders to respond to
appropriate questions and to make a statement if such representatives
so desire.
OTHER MATTERS
The Board of Directors does not know of any other matters or
business that may be brought before the meeting. If any such other
matter or business should properly come before the meeting and any
adjournment thereof, it is intended that the persons acting under the
accompanying proxy will vote the shares represented thereby at their
discretion.
The cost of preparing, assembling and mailing this Proxy Statement
and the accompanying Proxy is to be borne by the Company. The Company
may, upon request, reimburse banks, brokerage houses and other
institutions for their expenses in forwarding proxy materials to their
principals. The Company has engaged Corporate Investor
Communications, Inc. to assist in the solicitation of proxies from
shareholders at a fee of approximately $2,750, plus reimbursement of
reasonable out-of-pocket expenses. In addition, proxies may be
solicited personally or by telephone by directors, officers and
employees of the Company, none of whom will receive additional
compensation therefor.
SHAREHOLDERS' PROPOSALS
A proposal by a shareholder that is intended for inclusion in the
Company's Proxy Statement and form of Proxy for the 1997 Annual
Meeting of Shareholders must be received by the Company at 6530 Poe
Avenue, Dayton, Ohio 45414, Attention: Secretary, on or before
February 25, 1997 in order to be eligible for inclusion.
Dayton, Ohio
June 24, 1996
<PAGE>
Exhibit A
ACQUIRING PERSON STATEMENT
Delivered To
SHOPSMITH, INC.
(Name of Issuing Public Corporation)
6530 Poe Avenue
Dayton, Ohio 45414
(Address of Principal Executive Offices)
ITEM 1. IDENTITY OF ACQUIRING PERSON.
This Acquiring Person Statement is being delivered to Shopsmith,
Inc., an Ohio corporation (the "Corporation"), by John R. Folkerth,
the President, Chief Executive Officer and Chairman of the Board of
the Corporation ("Mr. Folkerth").
ITEM 2. DELIVERY OF ACQUIRING PERSON STATEMENT.
This Acquiring Person Statement is being delivered pursuant to
Section 1701.831 of the Ohio Revised Code. Mr. Folkerth hereby waives
the statutory requirement that a special meeting of shareholders be
held within 50 days of the Corporation's receipt of this Statement to
act upon the proposed control share acquisition described in this
Statement. Mr. Folkerth hereby consents that such action may be taken
at the Annual and Special Meeting of Shareholders of the Corporation
to be held on July 31, 1996.
ITEM 3. OWNERSHIP OF SHARES BY ACQUIRING PERSON.
Mr. Folkerth currently owns (i) 261,712 Common Shares of the
Corporation directly and (ii) 12,510 Common Shares in his account in
the Corporation's Savings Plan (as of the last available Plan
Statement). Mr. Folkerth's wife owns 228,507 Common Shares of the
Corporation. The foregoing shares, in the aggregate, represent
approximately 18.9% of the total issued and outstanding Common Shares
of the Corporation as of May 30, 1996.
ITEM 4. RANGE OF VOTING POWER.
Mr. Folkerth proposes to acquire a number of Common Shares of the
Corporation, that when added to his and his wife's current share
ownership, would equal 20% or more (but less than 33_%) of the issued
and outstanding Common Shares of the Corporation.
<PAGE>
ITEM 5. TERMS OF PROPOSED CONTROL SHARE ACQUISITION.
Mr. Folkerth proposes to acquire the Common Shares of the
Corporation in one or more transactions to occur during the 360-day
period following the date the shareholders authorize the proposed
acquisition. Such transaction(s) may take the form of the exercise of
stock options currently owned by Mr. Folkerth or the purchase by Mr.
Folkerth of Common Shares in the open market.
ITEM 6. REPRESENTATIONS OF LEGALITY; FINANCIAL CAPACITY.
Mr. Folkerth hereby represents that the proposed control share
acquisition, if consummated, will not be contrary to law, and that Mr.
Folkerth has the financial capacity to make the proposed control share
acquisition. These representations are based on the facts that Mr.
Folkerth is delivering this Acquiring Person Statement in accordance
with Section 1701.831 of the Ohio Revised Code, and he intends to make
the proposed acquisition only if it is duly authorized by the
shareholders of the Corporation at the Annual and Special Meeting.
Mr. Folkerth has the personal resources available to him to purchase
the additional Common Shares of the Corporation contemplated by this
Acquiring Person Statement.
IN WITNESS WHEREOF, the undersigned has executed this Acquiring
Person Statement as of the 5th day of June, 1996.
/s/ John R. Folkerth
JOHN R. FOLKERTH
<PAGE>
SHOPSMITH, INC.
PROXY FOR ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS - JULY 31, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY
The undersigned hereby appoints John R. Folkerth and Richard L.
Snell, and each or either of them, attorneys and proxies, with power
of substitution and with all the powers the undersigned would possess
if personally present, to vote all of the Common Shares of Shopsmith,
Inc. that the undersigned is entitled to vote at the Annual and
Special Meeting of Shareholders to be held at 9:30 a.m. on Wednesday,
July 31, 1996, at the offices of the Company, 6530 Poe Avenue, Dayton,
Ohio, and at any adjournment thereof, as follows:
1. Election of directors.
_ FOR all nominees listed below _ WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below
contrary below)
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S
NAME BELOW:
JOHN R. FOLKERTH J. MICHAEL HERR EDWARD A. NICHOLSON
2. Approval of the appointment of Crowe, Chizek and Company as
independent public accountants for the Company.
_ FOR _ AGAINST _ ABSTAIN
3. Authorize John R. Folkerth to acquire additional Common Shares of
the Company in accordance with the Ohio Control Share Acquisition
Law.
_ FOR _ AGAINST _ ABSTAIN
4. The proxies are authorized to vote at their discretion upon such
other business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S).
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
Date____________________________, 1996
______________________________________
______________________________________
Signature(s) of Shareholder(s)
Please sign as name(s) appear at left.
Executors, administrators, trustees, etc.,
should indicate the capacity in which they
sign.
PCN2902.SKC
