<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of The Commission Only (as permitted by
Rule 14a-6(e)(2))
DEPARTMENT 56, 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] No fee required.
[ ] 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:
-------------------------------------------------------------------------
[ ] 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>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MONDAY, MAY 10, 1999
1:30 P.M., MINNEAPOLIS LOCAL TIME
PLAYHOUSE THEATER
MALL OF AMERICA
BLOOMINGTON, MINNESOTA
April 2, 1999
Dear fellow stockholder,
On behalf of the Board of Directors, I am pleased to invite you to attend the
1999 Department 56, Inc. Annual Meeting of Stockholders and to an exclusive
visit to our corporate-owned retail store that afternoon.
As we've previously announced, Department 56 will be launching our store in the
Mall of America this May. Stockholders who attend the upcoming Annual Meeting
will be entitled to receive a private pass to enter the store during the
afternoon following the Annual Meeting--the store will be closed to the public
at that time. Private passes for store entry will be available when you register
at the Annual Meeting.
The order of business at the Annual Meeting will be to:
- Elect directors
- Approve appointment of auditors for 1999
- Act on other business properly brought before the Meeting.
You must have an admission ticket to attend the Annual Meeting, and you will
also need a private pass distributed at the Annual Meeting in order to enter our
Mall of America store that afternoon. A roadmap of the Mall of America vicinity
with directions to the Annual Meeting and our retail store is on the reverse
side of this letter.
Attendance and voting is limited to stockholders of record at the close of
business on March 26, 1999. At the Annual Meeting registration desk you may be
asked to present valid picture identification, such as a driver's license or
passport. Stockholders holding stock in brokerage accounts ("street name"
holders) will need to bring a copy of a brokerage statement or letter evidencing
stock ownership as of the record date.
I look forward to seeing you at the Annual Meeting and during your visit at our
store.
Sincerely yours,
[SIGNATURE]
Susan E. Engel
Chairwoman and Chief Executive Officer
<PAGE>
DIRECTIONS TO THE DEPARTMENT 56, INC. ANNUAL MEETING
---------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FROM THE NORTH: FROM THE SOUTH: FROM THE WEST: FROM THE EAST: FROM MPLS./ST. PAUL
- - - 35W South to 494 East - 35W North to 494 East - 94 East to 494 South - 94 West to 494 West AIRPORT:
- - - 494 East to 77 South - 494 East to 77 South - 494 South to 494 East - 494 West to 77 South - 494 West to 77 South
- - - 77 South to 81 Street - 77 South to 81 Street - 494 East to 77 South - 77 South to 81 Street - 77 South to 81 Street
- - - Right at 1(st) - Right at 1(st) - 77 South to 81 Street - Right at 1(st) - Right at 1(st)
traffic light traffic light - Right at 1(st) traffic light traffic light
- - - Follow - Follow traffic light - Follow - Follow
"Parking/Dropoff" "Parking/Dropoff" - Follow "Parking/Dropoff" below "Parking/Dropoff"
below below "Parking/Dropoff" below
below
</TABLE>
PARKING/DROPOFF:
- If parking: Park in West Parking Deck between Macys and Nordstrom
- If drop-off: Ground Floor West Market Entrance between Macys and Nordstrom
- Enter Ground Floor West Market Entrance of Mall
- Follow hallway straight to Camp Snoopy portal ("Mighty Axe" ride)
- Enter Camp Snoopy portal; turn right and proceed to Playhouse Theater
[MAP]
DIRECTIONS TO THE D56 STORE FROM THE ANNUAL MEETING
------------------------------------------------------------------------
- Exit Playhouse Theater and return to Camp Snoopy's "Mighty Axe" portal
- Proceed into Mall and take nearest elevator/escalator to 3(rd) Floor
- Proceed toward Nordstrom entrance
- D56 Store is adjacent Nordstrom entrance on 3(rd) Floor
<PAGE>
DEPARTMENT 56, INC.
One Village Place, 6436 City West Parkway, Eden Prairie, Minnesota 55344
---------------------
PROXY STATEMENT
---------------------
This proxy statement is furnished to stockholders of Department 56, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board" or "Board of
Directors") for use at the Annual Meeting of Stockholders to be held at 1:30
p.m., local time, on Monday, May 10, 1999, at the Playhouse Theater, Mall of
America, Bloomington, Minnesota, and any adjournments thereof.
Stockholders of record as of the close of business on March 26, 1999 will be
entitled to vote at the meeting or any adjournments thereof. As of the record
date, March 26, 1999, the Company had outstanding 17,972,645 shares of Common
Stock, par value $.01 per share ("Common Stock"), each entitled to one vote on
all matters to be voted upon. This proxy statement, the accompanying form of
proxy and the Company's annual report to stockholders for the fiscal year ended
January 2, 1999 are being mailed on or about April 8, 1999 to each stockholder
entitled to vote at the meeting.
STOCKHOLDERS AS OF THE RECORD DATE ARE CORDIALLY INVITED TO ATTEND THE
MEETING. IF YOU ARE A REGISTERED STOCKHOLDER AS OF THE RECORD DATE AND PLAN TO
ATTEND, PLEASE MAIL IN YOUR PROXY INDICATING WITH AN "X" IN THE SPACE PROVIDED
THAT YOU PLAN TO ATTEND AND BRING THE ENCLOSED ADMISSION TICKET TO THE MEETING.
IF YOU ARE A STOCKHOLDER AS OF THE RECORD DATE WHOSE SHARES ARE NOT REGISTERED
IN YOUR OWN NAME AND YOU PLAN TO ATTEND, PLEASE REQUEST AN ADMISSION TICKET BY
WRITING TO THE OFFICE OF THE SECRETARY, DEPARTMENT 56, INC., ONE VILLAGE PLACE,
6436 CITY WEST PARKWAY, EDEN PRAIRIE, MINNESOTA 55344. EVIDENCE OF YOUR STOCK
OWNERSHIP, WHICH YOU CAN OBTAIN FROM YOUR STOCKBROKER, BANK OR OTHER FINANCIAL
INSTITUTION, MUST ACCOMPANY YOUR LETTER.
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is executed and returned in time and not revoked, all
shares represented thereby will be voted; beneficial owners of shares held by or
on behalf of brokerages, banks or financial institutions may also have
facilities to vote by telephone and/or Internet means, as determined by the
applicable financial institution. Each proxy will be voted in accordance with
the stockholder's instructions. If no such instructions are specified, the
proxies will be voted FOR the election of each person nominated for election as
a director and FOR the ratification of the appointment by the Board of Directors
of Deloitte & Touche LLP as auditors for the Company for the fiscal year ending
January 1, 2000.
The holders of a majority of the shares of Common Stock entitled to vote at
the meeting, present in person or by proxy, constitutes a quorum. Assuming a
quorum is present, the affirmative vote by the holders of a plurality of the
votes cast at the meeting will be required for the election of directors; and
the affirmative vote of a majority of the shares present in person or by proxy
at the meeting and entitled to vote thereon will be required to act on all other
matters to come before the meeting, including the ratification of the
appointment by the Board of Directors of Deloitte & Touche LLP as auditors for
the Company. An automated system administered by the Company's transfer agent
tabulates the votes. For purposes of determining the number of votes cast with
respect to any voting matter, only those cast "for" or "against" are included;
abstentions and broker non-votes are excluded. Accordingly, with respect to the
election of directors, abstentions and broker non-votes will have no effect on
the outcome. For purposes of determining whether the affirmative vote of a
majority of the shares present at the meeting and entitled to vote has been
obtained, abstentions will be included in, and broker non-votes will be excluded
from, the number of shares present and entitled to vote. Accordingly, with
respect to any
<PAGE>
matter other than the election of directors, abstentions will have the effect of
a vote "against" the matter and broker non-votes will have the effect of
reducing the number of affirmative votes required to achieve the majority vote.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is voted by
delivery to the Company of a subsequently executed proxy or a written notice of
revocation. In addition, returning your completed proxy will not prevent you
from voting in person at the meeting should you be present and wish to do so.
ITEM 1 -- ELECTION OF DIRECTORS
The Board of Directors currently consists of seven individuals, each of whom
holds office for a one-year term and until his or her successor has been duly
elected and qualified. Each of the seven directors herein nominated will be
elected for a term which begins on the date of the Annual Meeting of
Stockholders at which such director is elected and ends on the date of the next
succeeding Annual Meeting of Stockholders.
Unless otherwise directed, proxies in the accompanying form will be voted
FOR the nominees listed below. It is the intention of the persons named in the
enclosed proxy to vote, unless otherwise indicated, for the election as
directors of the persons named as nominees below. If any one or more of the
nominees is unable to serve for any reason or withdraws from nomination, proxies
will be voted for the substitute nominee or nominees, if any, proposed by the
Board of Directors. The Board has no knowledge that any nominee will or may be
unable to serve or will or may withdraw from nomination. All of the following
nominees are current directors of the Company whose terms end at the 1999 Annual
Meeting. All of the current directors of the Company were elected to their
present terms at the Company's May 14, 1998 Annual Meeting of Stockholders.
NOMINEES FOR TERMS ENDING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
The principal occupations and positions for the past five years, and in
certain cases prior years, of each of the persons who is nominated for election
are as follows:
SUSAN E. ENGEL, age 52, has been Chairwoman of the Board of the Company and
of D 56, Inc. (the Company's principal operating subsidiary) since September 18,
1997 and a director of the Company since February 1996. Ms. Engel has been Chief
Executive Officer of the Company and of D 56, Inc. since November 13, 1996. She
was President of the Company and of D 56 Inc. from September 19, 1994 until
September 18, 1997, and Chief Operating Officer of the Company and of D 56, Inc.
from September 19, 1994 until November 13, 1996. Ms. Engel was a consultant to
retail and consumer goods companies from September 1993 to September 1994, and
Chief Executive Officer and President of Champion Products, Inc. (a manufacturer
of athletic and active sports apparel) from October 1991 to September 1993. Ms.
Engel is also a public company director of The Penn Traffic Company, Wells Fargo
& Co., and K2, Inc.
JAY CHIAT, age 67, has been a director of the Company since his election at
the 1998 Annual Meeting. Mr. Chiat has been a consultant with Omnicom
Management, Inc. (an advertising agency holding company) and a private investor
since November 1996. Prior to November 1996, Mr. Chiat was Chairman/CEO of
Chiat/Day, Inc., the worldwide advertising agency which he co-founded in 1968.
MAXINE CLARK, age 50, has been a director of the Company since September
1997. Ms. Clark has been founder and Chief Executive Office of Build-A-Bear
Workshop, a children's entertainment and interactive retailer, since July 1996.
Previously, Ms. Clark was President of Payless Shoe Source, Inc., a family shoe
store chain which was then a division of The May Department Stores Company. Ms.
Clark is
2
<PAGE>
also a public company director of The Earthgrains Company, Tandy Brands
Accessories, Inc. and Wave Technologies, Inc.
WM. BRIAN LITTLE, age 57, has been a director of the Company since October
1992. Mr. Little is a private investor. He was a General Partner of FLC
Partnership, L.P., the General Partner of Forstmann Little & Co. (the private
investment firm which he co-founded), from 1978 until January 1994. He is a
public company director of The Topps Company, Inc. and Aldila, Inc.
GARY S. MATTHEWS, age 41, has been a director of the Company since September
1997. Mr. Matthews has been President and Chief Executive Officer of Derby Cycle
Corporation, a leading bicycle designer, manufacturer and marketer, since
January 1999. Prior to January 1999, Mr. Matthews was Managing Director of
Guinness Great Britain, the U.K. beer and ale marketing subsidiary of Diageo
PLC. From January 1996 to April 1998, he was President and Chief Executive
Officer of Guinness Import Company, the U.S. subsidiary of Diageo PLC which
imports beers and ales. Prior to January 1996, Mr. Matthews was Vice President
of PepsiCo.
STEVEN G. ROTHMEIER, age 52, has been a director of the Company since
December 1992. Mr. Rothmeier is Chairman and Chief Executive Officer of Great
Northern Capital, a private investment management firm which he founded in March
1993. He is a public company director of Honeywell, Inc., E.W. Blanch Holdings,
Inc., Precision Castparts Corp. and Waste Management, Inc.
VIN WEBER, age 46, has been a director of the Company since February 1993.
Mr. Weber is a Partner of Clark & Weinstock, Inc., strategic communications
advisers, and he is also Vice Chairman of Empower America, a non-profit
organization which he co-founded in January 1993. From January 1993 through
February 1995, Mr. Weber was President of The Weber Group, Inc. He is a public
company director of ITT Educational Services, Inc. and OneLink, Inc.
FURTHER INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the business
and affairs of the Company, as provided by Delaware law, and conducts its
business through meetings of the Board and five standing committees: Executive,
Audit, Compensation, Stock Incentive and Nominating. In addition, from time to
time, special committees may be established under the direction of the Board
when necessary to address specific issues.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors of the Company held six meetings in 1998. Each
director attended 75% or more of the aggregate of (i) meetings of the Board held
during the period for which he or she served as a director, and (ii) meetings of
all committees held during the period for which he or she served on those
committees. Average attendance at all such meetings of the Board and committees
was approximately 98%.
The EXECUTIVE COMMITTEE of the Board has the authority to exercise all
powers and authority of the Board in the management of the business and affairs
of the Company that may be lawfully delegated to it under Delaware law. The
Committee consists of Susan E. Engel (Chair); Wm. Brian Little and Steven G.
Rothmeier. The Executive Committee held no formal meetings in 1998.
The AUDIT COMMITTEE's principal functions are to review the scope of the
annual audit of the Company by its independent public accountants, review the
annual financial statements of the Company and the related audit report of the
Company as prepared by the independent public accountants, review management's
selection of an independent public accounting firm each year and review audit
and any non-audit fees paid to the Company's independent public accountants. The
Company's Chief Financial Officer, Principal Accounting Officer and General
Counsel generally attend Audit Committee
3
<PAGE>
meetings and give reports to and answer inquiries from the Audit Committee. The
Audit Committee reports its findings and recommendations to the Board. The Audit
Committee is composed of three non-employee directors: Steven G. Rothmeier
(Chair); Maxine Clark; and Gary S. Matthews. The Audit Committee held three
meetings in 1998.
The COMPENSATION COMMITTEE is authorized by the Board to oversee the
Company's compensation policies, review salaries and cash bonuses, approve
significant changes in salaried employee benefits, and recommend to the Board
such other forms of remuneration as it deems appropriate. The Compensation
Committee is composed of non-employee directors, each of whom is a
"disinterested person" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Committee consists of Vin Weber (Chair); Maxine Clark; Wm. Brian Little; and Jay
Chiat. The Compensation Committee held three meetings in 1998.
The STOCK INCENTIVE COMMITTEE, is authorized by the Board to grant awards
under, and otherwise to administer, the Department 56, Inc. 1992 Stock Option
Plan and the Department 56, Inc. 1993, 1995 and 1997 Stock Incentive Plans. The
Stock Incentive Committee consists of Steven G. Rothmeier (Chair) and Vin Weber,
who are "Non-Employee Directors" within the meaning of Rule 16b-3 under the
Exchange Act and "Outside Directors" within the meaning of Section 162(m) of the
Internal Revenue Code. The Stock Incentive Committee held no formal meetings in
1998.
The NOMINATING COMMITTEE's principal functions are to identify, interview
and recommend for Board approval candidates for directorships of the Company.
The Nominating Committee consists of Wm. Brian Little (Chair); Susan E. Engel
and Vin Weber. The Nominating Committee held no formal meetings in 1998.
Two other Board committees, the Director Option Grant Committee and the
Non-Officer Grant Committee, are authorized to grant awards to non-employee
directors and to non-officer employees (subject to certain limitations),
respectively. These committees consist of the Company's Chief Executive Officer
as the sole committee member, and have acted by written consent in lieu of
meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On April 22, 1993, the Board of Directors established a Compensation
Committee comprised solely of non-employee directors to administer the Company's
executive compensation. Wm. Brian Little (who currently is a member of the
Compensation Committee) served in various executive officer capacities at the
Company and its subsidiaries prior to April 22, 1993, but did not receive
compensation from the Company or any of its subsidiaries for services rendered
in any such capacity.
DIRECTOR COMPENSATION
Non-employee directors receive an annual cash fee of $15,000, paid ratably
at each regular meeting of the Board of Directors, as well as a fee of $1,000
($500 if telephone conference participation) for attendance at any Board
meeting. Non-employee members of Board committees receive a fee of $750 ($500 if
telephone conference participation) for attendance at any committee meeting, and
any non-employee chair of a Board committee receives an additional annual fee of
$1,500. Directors are reimbursed for their out-of-pocket expenses arising from
attendance at meetings of the Company's Board of Directors or committees
thereof.
Each non-employee director receives an annual grant of an option to purchase
5,000 shares of Common Stock at fair market value on the date of grant vesting
over two years. Non-employee directors may elect to receive shares of Common
Stock in lieu of all or a portion of their cash fees, in which case shares of
Common Stock are issued having a fair market value on the date of issuance of
110% of the cash fees which would otherwise then be payable.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Company's Common Stock, as of March
19, 1999, by each beneficial owner of more than five percent of the outstanding
Common Stock, by each of the Company's directors and nominees for Board
election, by each of the executives named in the Summary Compensation Table, and
by all current directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED (1) OF CLASS (1)
- - ------------------------------------------------------- ---------------------- ------------
<S> <C> <C>
Yacktman (2)........................................... 2,586,515 14.4%
Ariel Capital (3)...................................... 1,137,420 6.3%
Barclays Global (4).................................... 1,082,899 6.0%
Clover Capital Affiliates (5).......................... 1,047,655 5.8%
Jay Chiat (6).......................................... 3,194 *
Maxine Clark (7)....................................... 6,949 *
David W. Dewey (8)..................................... 231,094 1.3%
Susan E. Engel (9)..................................... 441,995 2.4%
Mark R. Kennedy (10)................................... 163,666 *
Wm. Brian Little (11).................................. 81,550 *
Gary S. Matthews (12).................................. 8,447 *
Arete Passas........................................... -- *
Steven G. Rothmeier (13)............................... 40,500 *
Vin Weber (14)......................................... 23,487 *
David H. Weiser (15)................................... 62,666 *
All current directors and officers of the Company as a
group (16 persons) (16).............................. 1,265,597 6.7%
</TABLE>
- - ------------------------
* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days following March 19, 1999. For purposes
of computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any shares which such person or
persons has or have the right to acquire within 60 days following March 19,
1999, is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
(2) This information is obtained from a Schedule 13G, dated February 5, 1999,
filed with the Securities and Exchange Commission by Donald A. Yacktman
("DAY"), The Yacktman Funds, Inc. ("YFI") and Yacktman Asset Management Co.
("YAM"). DAY beneficially owns 2,586,515 shares of Common Stock, of which he
has sole voting power with respect to 70,000 shares, shared voting power
with respect to 564,754 shares, sole dispositive power with respect to
70,000 shares, and shared dispositive power with respect to 2,516,515
shares. YFI beneficially owns 1,030,000 shares of Common Stock, of which it
has sole voting power with respect to 1,030,000 shares, shared voting power
with respect to 0 shares, sole dispositive power with respect to 0 shares,
and shared dispositive power with respect to 0 shares. YAM reports
beneficial ownership of 2,516,515 shares of Common Stock, of which it has
sole voting power with respect to 564,754 shares, shared voting power with
respect to 0 shares, sole dispositive power with respect to 2,516,515
shares, and shared dispositive power with respect to 0 shares. DAY holds
100% of the outstanding shares of capital stock of YAM. The address of the
principal business office of each of DAY, YFI and YAM is 303 West Madison
Street, Suite 1925, Chicago, Illinois 60606.
5
<PAGE>
(3) This information is obtained from a Schedule 13G, dated January 8, 1999,
filed with the Securities and Exchange Commission by Ariel Capital
Management, Inc., ("Ariel") and John W. Rogers, Jr. ("Rogers"). Ariel
beneficially owns 1,137,420 shares of Common Stock, of which it has sole
voting power with respect to 1,137,420 shares, shared voting power with
respect to 0 shares, sole dispositive power with respect to 1,137,420
shares, and shared dispositive power with respect to 0 shares. Rogers is the
President and principal shareholder of Ariel and may be deemed to have
beneficial ownership of Company shares held by Ariel; Rogers disclaims such
beneficial ownership. The address of the principal business office of each
of Ariel and Rogers is 307 North Michigan Avenue, Suite 500, Chicago,
Illinois 60601.
(4) This information is obtained from a Schedule 13G, dated February 12, 1999,
filed with the Securities and Exchange Commission by Barclays Global
Investors, N.A. ("BGI") and Barclays Global Fund Advisors ("BGFA"). BGI
beneficially owns 1,058,599 shares of Common Stock, of which it has sole
voting power with respect to 998,539 shares, shared voting power with
respect to 0 shares, sole dispositive power with respect to 1,058,599
shares, and shared dispositive power with respect to 0 shares. BGFA
beneficially owns 24,300 shares of Common Stock, of which it has sole voting
power with respect to 24,300 shares, shared dispositive power with respect
to 0 shares, sole dispositive power with respect to 24,300 shares, and
shared dispositive power with respect to 0 shares. The address of the
principal business office of each of BGI and BGFA is 45 Fremont Street, San
Francisco, California 94105.
(5) This information is obtained from a Schedule 13G, dated February 5, 1999,
filed with the Securities and Exchange Commission by Clover Capital
Management, Inc. ("Clover"), Michael E. Jones ("Jones"), Geoffrey H.
Rosenberger ("Rosenberger"), Charles W. Ruff ("Ruff") and James G. Gould
("Gould"). Clover beneficially owns 1,045,120 shares of Common Stock, of
which it has sole voting power with respect to 0 shares, shared voting power
with respect to 1,045,120 shares, sole dispositive power with respect to 0
shares, and shared dispositive power with respect to 1,045,120 shares. As
directors of Clover, Jones, Rosenberger, Ruff and Gould share with Clover
and each other dispositive power with respect to the shares beneficially
owned by Clover. In addition, Ruff holds shared voting and dispositive power
with respect to 1,000 shares beneficially owned by him (other than
indirectly through Clover), and Gould holds sole voting and dispositive
power with respect to 1,535 shares beneficially owned by him (other than
indirectly through Clover). The address of the principal business office of
each of Clover, Jones, Rosenberger, Ruff and Gould is 11 Tobey Village
Office Park, Pittsford, New York 14534.
(6) Includes 2,500 shares subject to purchase options exercisable by Mr. Chiat
currently or within 60 days of March 19, 1999.
(7) Includes 6,250 shares subject to purchase options exercisable by Ms. Clark
currently or within 60 days of March 19, 1999.
(8) Includes 11,666 shares subject to purchase options exercisable by Mr. Dewey
currently or within 60 days of March 19, 1999.
(9) Includes 439,995 shares subject to purchase options exercisable by Ms. Engel
currently or within 60 days of March 19, 1999.
(10) Includes 161,666 shares subject to purchase options exercisable by Mr.
Kennedy currently or within 60 days of March 19, 1999.
(11) Includes 5,000 shares subject to purchase options exercisable by Mr. Little
currently or within 60 days of March 19, 1999.
(12) Includes 6,250 shares subject to purchase options exercisable by Mr.
Matthews currently or within 60 days of March 19, 1999. Includes 300 shares
owned by Mr. Matthews' spouse, ownership of which shares is disclaimed by
Mr. Matthews.
(13) Includes 27,500 shares subject to purchase options exercisable by Mr.
Rothmeier currently or within 60 days of March 19, 1999.
6
<PAGE>
(14) Includes 22,500 shares subject to purchase options exercisable by Mr. Weber
currently or within 60 days of March 19, 1999.
(15) Includes 62,666 shares subject to purchase options exercisable by Mr.
Weiser currently or within 60 days of March 19, 1999.
(16) Includes 900,153 shares subject to purchase options exercisable currently
or within 60 days of March 19, 1999.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and holders of more than 10% of the Company's Common Stock to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership of Common Stock and other equity securities of the Company
on Forms 3, 4, and 5. Based on written representations of reporting persons and
a review of those reports, the Company believes that during the fiscal year
ended January 2, 1999, all its officers and directors and holders of more than
10% of the Company's Common Stock complied with all applicable Section 16(a)
filing requirements other than Mr. Matthews, who reported on a Form 5 filed
February 1999 having acquired a total 600 shares in three purchase transactions.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
Department 56, Inc. is a holding company, all of the business activities of
which are conducted by D 56, Inc. and other subsidiaries.
The Summary Compensation Table sets forth individual compensation
information for the Chief Executive Officer and the four most highly compensated
executive officers (other than the Chief Executive Officer) who were serving as
executive officers at January 2, 1999. The following table sets forth
compensation information for each of those individuals for the fiscal years
ended January 2, 1999, January 3, 1998 and December 28, 1996 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION(a) SECURITIES
NAME AND ------------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- - --------------------------------- ---- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Susan E. Engel, 1998 $494,231 $209,750 -- $73,479(c)
Chairwoman of the Board and 1997 441,923 155,385 150,000(b) 27,429
Chief Executive Officer 1996 376,769 100,000 130,000(b) 21,855
David W. Dewey, 1998 307,962 129,626 -- 46,840(c)
Executive Vice President 1997 261,343 103,590 100,000(b) 27,429
-- Overseas Operations 1996 219,344 44,000 5,000(b) 22,744
Mark R. Kennedy, 1998 255,589 108,357 -- 39,476(c)
Senior Vice President and 1997 233,507 81,076 35,000(b) 27,429
Chief Financial Officer 1996 219,135 44,000 50,000(b) 26,944
Arete Passas, 1998 67,308(d) 75,000 35,000(b) 13,902(c)
Executive Vice President
-- Marketing
David H. Weiser, 1998 197,515 83,313 -- 31,164(c)
Senior Vice President 1997 187,966 65,331 35,000(b) 27,429
-- Legal/Human Resources, 1996 177,585 36,000 6,000(b) 22,744
General Counsel and Secretary
</TABLE>
- - ------------------------
(a) With respect to each Named Executive Officer, the aggregate amount of
perquisites and other personal benefits, securities or property was less
than either $50,000 or 10% of the total of annual salary and bonus reported
for such Named Executive Officer in each of 1998, 1997 and 1996.
(b) Reflects the number of shares of Common Stock underlying options granted.
(c) Reflects long-term disability insurance premiums in the amounts of $528,
$528, $528, $176 and $528, respectively, and matching contributions by D 56,
Inc. under the D 56, Inc. 401(k) Retirement Savings Plan in the amounts of
$2,500, $2,500, $2,500, $0 and $2,500, respectively, and retirement profit
sharing in the amounts of $70,451, $43,812, $36,448, $0 and $28,136,
respectively, for Ms. Engel, Mr. Dewey, Mr. Kennedy, Ms. Passas and Mr.
Weiser. The amount for Arete Passas reflects cost and tax reimbursement for
moving and other relocation expenses incurred by Ms. Passas.
(d) Reflects the salary of Ms. Passas from September 14, 1998, when she became
an employee of the Company, through January 2, 1999.
8
<PAGE>
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR. The following table sets forth
information concerning individual grants of stock options made by the Company
during the fiscal year ended January 2, 1999 to each of the Named Executive
Officers.
OPTION GRANTS
IN THE FISCAL YEAR ENDED JANUARY 2, 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL RATES
------------------------------------------------------------------
PERCENT OF OF STOCK PRICE APPRECIATION
TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO EXERCISE FOR OPTION TERM
UNDERLYING OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL YEAR(2) (PER SHARE) DATE(3) 5%(4) 10%(4)
- - ---------------------- --------------------- --------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Susan E. Engel........ -- -- -- -- -- --
David W. Dewey........ -- -- -- -- -- --
Mark R. Kennedy....... -- -- -- -- -- --
Arete Passas.......... 35,000 52.2% $29.97 9/1/08 $ 660,839 $1,667,831
David H. Weiser....... -- -- -- -- -- --
</TABLE>
- - ------------------------
(1) One-third of the total number of options granted will be exercisable on the
first anniversary of the option grant date and, thereafter, an additional
one-third of the total number of options granted will be exercisable on each
of the second and third anniversaries of the option grant. Vesting may be
accelerated in certain circumstances, including in the case of a "change in
control" of the Company.
(2) The Company granted a total of 67,000 options to employees in the fiscal
year ended January 2, 1999.
(3) The options generally expire on the earliest of (a) the tenth anniversary of
the date of grant, (b) 30 days following termination of the optionee's
employment or (c) the exercise in full of the option.
(4) The assumed 5% and 10% annual rates of appreciation over the term of the
options are set forth in accordance with rules and regulations adopted by
the Securities and Exchange Commission and do not represent the Company's
estimate of stock price appreciation.
AGGREGATED OPTION EXERCISES. The following table sets forth information (on
an aggregated basis) concerning exercises of options during the fiscal year
ended January 2, 1999 by each of the Named Executive Officers and the fiscal
year-end value of unexercised options.
9
<PAGE>
AGGREGATED OPTION EXERCISES
IN THE FISCAL YEAR ENDED JANUARY 2, 1999 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY" OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON VALUE ---------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ----------------------------- ------------ ----------- ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Susan E. Engel............... -- -- 396,666 143,334 $ 2,337,510 $ 2,308,140
David W. Dewey............... -- -- 46,664 68,337 613,716 1,090,684
Mark R. Kennedy.............. -- -- 145,000 40,000 840,793 648,557
Arete Passas................. -- -- -- 35,000 -- 255,885
David H. Weiser.............. 11,000 $ 336,533 60,666 25,334 1,403,705 402,475
</TABLE>
- - --------------------------
(1) Options are "in-the-money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise or base price
of the option. The amounts set forth represent the difference between the
fair market value of the securities underlying the options on January 2,
1999 ($37.28 per share) and the exercise price of the options, multiplied by
the applicable number of options.
EMPLOYMENT AGREEMENTS
The Company has an employment arrangement with Ms. Passas, which provides
for an annual salary of $250,000 for each of the Company's 1998 and 1999 fiscal
years, a $75,000 cash bonus for the 1998 fiscal year in recognition of a bonus
she forfeited when leaving her prior employer to join the Company, and a cash
bonus of at least $50,000 for the 1999 fiscal year. In the event that her
employment is terminated without cause other than for death or disability, Ms.
Passas will be entitled to receive cash severance of twelve-months' salary.
In October 1992 Mr. Dewey agreed (for the duration of his employment by the
Company and for two years thereafter) not to engage anywhere in the world in any
activity competitive with the Company's business, subject to certain limited
exceptions.
The Compensation Committee and the Board of Directors have adopted a program
providing for the payment to certain employees of cash incentives based upon the
Company's attainment of defined financial performance goals. The program
provides that, upon the occurence of certain events specified as a "change of
control" of the Company, the defined financial measures are deemed to have been
fully (100%) achieved and the employee participants in the program vest in a
specified cash incentive (prorated over the fiscal year in which the change of
control occurs from the first day of the fiscal year through the date of the
change of control).
The Company's 1992 Stock Option Plan, its 1993, 1995 and 1997 Stock
Incentive Plans, and related stock option agreements, contain vesting
acceleration provisions that are triggered upon a change-in-control of the
Company.
The Company is in the process of implementing change-in-control arrangements
with each of the Named Executive Officers, as well as certain other executives
of the Company. If, within 24 months following a "change-in-control," the
employment of a covered executive is terminated without "cause" or the covered
executive terminates her/his employment for "good reason" (as defined in the
agreements) the agreements provide for payment to the executive of a cash lump
sum equal to (i) the executive's target pro rata bonus for the year of
termination, plus (ii) 2.99 times (for Ms. Engel), or up to 2 times (for other
executives), his/her base salary on the date of termination and her/his highest
cash bonus during the past 3 years. In addition, each covered executive's
unvested stock options, restricted or deferred stock awards and non-qualified
retirement benefits shall vest and all restrictions relating to any restricted
or deferred stock shall lapse. The covered executive shall also have the right
to continued
10
<PAGE>
participation in all of the Company's welfare benefit plans for the shorter of
36 months (for Ms. Engel), or 24 months (for other covered executives) or until
substantially equivalent benefits are received from a subsequent employer.
Except for the welfare benefits, the change-in-control payments are not subject
to mitigation or offset. In the event that, after the imposition of any "golden
parachute" excise tax, a covered executive were to retain less than 100% (for
Ms. Engel) or 80% (for other executives) of the total payments due her or him
under the change-in-control agreements, the Company shall be obligated to pay a
"gross up" amount to the executive
COMPENSATION COMMITTEE AND STOCK INCENTIVE COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors evaluates the general
compensation policies of the Company and the specific compensation of executive
officers to assure that compensation is both competitive and related to
individual and Company performance. The Stock Incentive Committee awards grants
under the Company's stock option and incentive plans and administers those
plans, sometimes seeking the advice of the Compensation Committee and/or
management as the Stock Incentive Committee believes appropriate. Each of the
Compensation Committee and the Stock Incentive Committee is comprised entirely
of non-employee directors.
The Compensation Committee believes that the compensation of the executive
officers, including that of the Chief Executive Officer, must reflect an
appropriate relationship between compensation and the Company's performance,
while at the same time motivating and retaining key employees. Accordingly, this
goal has been accomplished by considering each employee's responsibilities and
experience in his or her specific area and his or her performance over a
sustained period of time (with respect to existing employees) or a subjective
evaluation of the appropriate overall compensation to induce the employee to
join the Company (with respect to new personnel), as well as the Company's
financial performance during the year. Competitive compensation data, where
available, has also been considered in determining executive salaries and
eligibility for incentive compensation. No specific weights were assigned to
these factors (although job position and subjective evaluation of appropriate
overall compensation to attract or retain the employee were considered most
important).
Cash incentive compensation for 1998 was determined under a defined
pay-for-performance program, with certain threshold and target levels for
operating income established at the beginning of the year. The defined program
calibrates a portion of incentive compensation against achievement of budgeted
operating income, and the remainder against growth in operating income. The
defined pay-for-performance system was not used in setting the 1998 bonus of one
Named Executive Officer because the recency of hire (including, the individual's
relinquishment of bonus from her prior employer) was deemed to make the defined
program inapplicable.
The cash compensation for executive officers for the fiscal year ended
January 2, 1999 was comprised of base salary and bonus as described earlier in
this report. Ms. Engel, the Chief Executive Officer, received $494,231 in base
salary and $209,750 in bonus for the 1998 fiscal year. The Compensation
Committee's determinations with respect to Ms. Engel's compensation were based
on individual performance and responsibilities as well as the Company's
financial performance in fiscal 1998, focussing specifically on operating income
with respect to Ms. Engel's bonus under the pay-for-performance incentive plan
described above.
The Compensation Committee and the Stock Incentive Committee believe that
executive officers and other key employees, who are in a position to make a
substantial contribution to the long-term success of the Company and to increase
stockholder value, should focus their attention on managing the Company as
owners with equity positions in the business. In order to align these employees'
long-term interests with those of stockholders, the Compensation Committee and
the Stock Incentive Committee believe that an effective method is through
encouraging significant stock ownership in the Company.
11
<PAGE>
Accordingly, in 1998 the Stock Incentive Committee and the Non-Officer Grant
Committee awarded, pursuant to the Company's stock option and stock incentive
plans, options to purchase an aggregate of 67,000 shares of Common Stock to
employees of the Company, including one Named Executive Officer. The number of
options granted to the Named Executive Officer and other employees was based on
subjective assessment of the responsibilities and nature of the position of the
grantee, whether the grant was part of a compensation offer in connection with
the individual being hired by the Company during the year, and the
recommendations of the Chief Executive Officer. Each grant was made without
assigning specific weights to these factors or applying a mathematical formula.
The exercise price of the options granted was, in each case, at the fair market
value per share as determined by reported consolidated trading in Common Stock
on the date of grant. To encourage employees to remain in the employ of the
Company, options granted under the Company's existing stock option and stock
incentive plans vest over a three-year period, beginning one year after the date
of grant. It is expected that future awards will be made periodically and will
contain terms substantially similar to those of stock options currently
outstanding.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code, as amended, generally disallows a tax deduction to public
companies for individual compensation over $1 million paid to a company's Chief
Executive Officer and four other most highly compensated executive officers
unless the compensation qualifies as "performance-based compensation" under the
statute. Options granted pursuant to the Company's current stock option and
stock incentive plans qualify as "performance-based compensation"; because the
other compensation for each of the Company's executive officers reported and
discussed above for the fiscal year ended January 2, 1999 did not exceed $1
million, Section 162(m) did not affect the deductibility of any executive
officer's compensation in 1998. The Compensation Committee accordingly does not
have a policy on qualifying executive officer compensation for deductibility
under that Section, although it does consider cost to the Company, including the
deductibility of compensation, in making all compensation decisions.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF DEPARTMENT 56, INC.
Vin Weber, Chair
Jay Chiat
Maxine Clark
Wm. Brian Little
THE STOCK INCENTIVE COMMITTEE OF THE BOARD OF DIRECTORS
OF DEPARTMENT 56, INC.
Steven G. Rothmeier, Chair
Vin Weber
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100 invested on
January 1, 1994, in each of the Common Stock of the Company, Standard & Poor's
MidCap 400 Index, and a peer line-of-business index. The peer line-of-business
index is composed of all issuers within the Standard & Poor's Consumer Goods
(Jewelry, Novelties & Gifts) Industry Sector which also are contained among the
issuers in the Standard & Poor's 500 or MidCap 400 stock indices. The issuers
currently within this index are American Greetings Corporation; Jostens, Inc.;
Lancaster Colony Corp.; and Enesco Group, Inc. Each of these issuers is weighted
in calculation of the index to recognize its stock market capitalization. The
returns of the Standard & Poor's indices and the peer line-of-business index are
calculated assuming reinvestment of dividends. The Company has not paid any
dividends.
The graph specifies data values for the preceding trading day nearest to
each of the Company's fiscal year-ends during such period.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance. Data points below provided by Research
Data Group, Inc., a licensee of Standard & Poor's.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
DEPARTMENT 56, INC., S&P MIDCAP 400 INDEX
AND PEERS WITHIN S&P JEWELRY, NOVELTIES & GIFTS SECTOR
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DEPARTMENT 56, INC. S&P MIDCAP 400 PEER GROUP
<S> <C> <C> <C>
Jan 1 1994 $100 $100 $100
Dec 31 1994 147 96 88
Dec 30 1995 142 126 100
Dec 28 1996 91 150 105
Jan 3 1998 106 199 135
Jan 2 1999 139 228 137
</TABLE>
13
<PAGE>
ITEM 2 -- APPOINTMENT OF AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP, independent public accountants, to audit and
report on the consolidated financial statements of the Company for the fiscal
year ending January 1, 2000 and to perform such other services as may be
required of them. Deloitte & Touche LLP has served as auditors for the Company
since October 1992. The Board of Directors has directed that management submit
the appointment of auditors for ratification by the stockholders at the Annual
Meeting. Representatives of Deloitte & Touche LLP are expected to be present at
the meeting, will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate stockholder questions.
PROXIES WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JANUARY 1,
2000. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS AUDITORS.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, some of the officers,
directors, and regular employees of the Company and its subsidiaries, none of
whom will receive additional compensation therefor, may solicit proxies in
person or by telephone, telegraph or other means. Solicitation will also be made
by employees of Chase Mellon Shareholder Services, which firm will be paid a fee
estimated not to exceed $3,500, plus expenses. As is customary, the Company
will, upon request, reimburse brokerage firms, banks, trustees, nominees and
other persons for their out-of-pocket expenses in forwarding proxy materials to
their principals.
STOCKHOLDER PROPOSALS FOR THE 2000
ANNUAL MEETING OF STOCKHOLDERS
Stockholders may present proposals which may be proper subjects for
inclusion in the proxy statement and for consideration at an Annual Meeting. To
be considered, proposals must be submitted on a timely basis. Proposals for the
2000 Annual Meeting must be received by the Company no later than December 3,
1999. Proposals, as well as any questions related thereto, should be submitted
in writing to the Secretary of the Company. Proposals may be included in the
proxy statement for the 2000 Annual Meeting if they comply with certain rules
and regulations promulgated by the Securities and Exchange Commission.
OTHER MATTERS
The Company knows of no other matter to be brought before the 1999 Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the meeting, it is the intention of the persons named in the proxy to
vote in accordance with their best judgment.
The Company will furnish, without charge, to each person whose proxy is
being solicited upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended January 2, 1999, as filed with the Securities and
Exchange Commission (excluding exhibits). Copies of any exhibits also will be
furnished upon the payment of a reasonable duplicating charge. Requests in
writing for copies of any such materials should be directed to Mr. David H.
Weiser, Secretary, Department 56, Inc., One Village Place, 6436 City West
Parkway, Eden Prairie, Minnesota 55344.
By order of the Board of Directors,
DAVID H. WEISER
Secretary
Eden Prairie, Minnesota
April 2, 1999
14
<PAGE>
P DEPARTMENT 56, INC.
R
O PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
X
Y MAY 10, 1999
THIS PROXY IS SOLICITED ON BEHALF OF DEPARTMENT 56, INC.'S
BOARD OF DIRECTORS.
The undersigned hereby appoints Mark R. Kennedy, Timothy J. Schugel and
David H. Weiser, and each of them, Proxies for the undersigned, with full
power of substitution, to represent and to vote all shares of Department 56,
Inc. Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of Department 56, Inc. to be held in Bloomington,
Minnesota on Monday, May 10, 1999 at 1:30 p.m., or at any adjournment
thereof, upon the matters set forth on the reverse side and described in the
accompanying Proxy Statement and upon such other business as may properly
come before the meeting or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR ITEMS 1 AND 2. IN
THEIR DISCRETION, THE APPOINTED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
- - --------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK
COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed
and dated on other side)
- - -----------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<TABLE>
<S> <C> <C>
FROM THE NORTH FROM THE WEST: FROM MPLS/ST. PAUL AIRPORT:
- - -35W North to 494 West -94 East to 494 South -494 West to 77 South
- - -494 East to 77 South -494 South to 494 East -77 South to 81 Street
- - -77 South to 81 Street -494 East to 77 South -Right at 1st traffic light
- - -Right at 1st traffic light -77 South to 81 Street -Follow "Parking/Dropoff" on this card
- - -Following "Parking/Dropoff" on this card -Right at 1st traffic light
-Follow "Parking/Dropoff" on this card
FROM THE SOUTH: FROM THE EAST: PARKING/DROPOFF:
35W South to 494 East -94 West to 494 West -If parking: Park in West Parking Deck
494 East to 77 South -494 West to 77 South between Macys and Nordstrom
77 South to 81 Street -77 South to 81 Street -If drop-off: Ground Floor West Entrance
Right at 1st traffic light -Right at 1st traffic light between Macys and Nordstrom
Following "Parking/Dropoff" on this card -Follow "Parking/Dropoff" on this card -Enter Ground Floor West Entrance of Mall
-Follow hallway straight to Camp Snoopy
portal ("Mighty Axe" ride)
-Enter Camp Snoopy portal: turn right and
proceed to Playhouse Theater
</TABLE>
- - -----------------------------------------------------------------------------
- FOLD AND DETACH HERE -
Playhouse Theater
Mall of America
Bloomington, Minnesota
[MAP]
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2 Please mark /X/
your votes as
indicated in
this example
<TABLE>
<S> <C>
FOR ALL WITHHELD FROM
NOMINEES ALL NOMINEES FOR AGAINST ABSTAIN
Item 1. ELECTION OF DIRECTORS / / / / Item 2. APPROVAL OF AUDITORS / / / / / /
Nominees: Wm. Brian Little, I PLAN TO ATTEND THE MEETING / /
Susan E. Engle, Gary S. Matthews,
Jay Chiat, Steven G. Rothmeier, COMMENTS/ADDRESS CHANGE / /
Maxine Clark, Vin Weber PLEASE MARK THIS BOX IF YOU HAVE
WRITTEN COMMENTS/ADDRESS CHANGES
WITHHELD FOR: To withholding authority for any individual ON THE REVERSE SIDE.
nominee(s), write the nominee(s) name(s) on the line
provided below: RECEIPT IS HEREBY ACKNOWLEDGED OF THE DEPARTMENT 56, INC.
NOTICE OF MEETING AND PROXY STATEMENT.
- - ------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
</TABLE>
SIGNATURE SIGNATURE DATE
--------------------- ------------------- ----------
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. Corporate and partnership proxies should be
signed by an authorized person indicating the person's title.
- - -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
Department 56, Inc.
For more information about Department 56 products or a dealer near you,
contact 1-800-LIT-TOWN
or
www.department56.com
- - -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
DEPARTMENT 56, INC.
1999 Annual Meeting
Admission Ticket - Non-Transferable
Playhouse Theater
Mall of America
Bloomington, Minnesota
(see reverse side for map)
May 10, 1999
1:30 p.m.
**NOTE: This ticket is not a "private pass" for admission to the Department
56 Store during the afternoon after the 1999 Annual Meeting. Store passes
will be distributed only at the 1999 Annual Meeting.**
- - ----------------------------------- --------------------------------
SIGNATURE OF SHAREHOLDER(S) SIGNATURE OF SHAREHOLDER(S)
Detach and retain this portion, sign and present for admittance to meeting.