<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
FOILMARK, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
FOILMARK, INC.
5 MALCOLM HOYT DRIVE
NEWBURYPORT, MASSACHUSETTS 01950
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, NOVEMBER 14, 2000
------------------------
To the Shareholders of
Foilmark, Inc.:
The Annual Meeting of Shareholders of Foilmark, Inc., a Delaware corporation
(the "Company"), will be held at the Boston Harbor Hotel, 70 Rowes Wharf,
Boston, Massachusetts on Tuesday, November 14, 2000, at 10:00 a.m. local time,
for the following purposes:
1. To elect three directors for a term of three years;
2. To approve the appointment of KPMG LLP as the Company's independent
auditors; and
3. To consider and act upon any other matter which may properly come before
the meeting and any postponements or adjournments thereof, including
matters which the Board of Directors did not know would be presented at
the Annual Meeting a reasonable time before this solicitation.
The Board of Directors of the Company has fixed the close of business on
September 29, 2000 as the record date for the determination of the shareholders
entitled to receive notice of and to vote at the Meeting or any adjournment
thereof. The stock transfer books will not be closed.
All shareholders are cordially invited and urged to attend the Meeting.
PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY EVEN IF YOU PLAN TO ATTEND
THE MEETING. Upon your arrival your proxy will be returned to you, if you desire
to revoke it or vote in person. Your attendance in person is encouraged, but
should anything prevent your attendance in person, your presence by proxy will
still allow your shares to be voted.
By Order of the Board of Directors,
[LOGO]
Carol J. Robie, Secretary
October 13, 2000
<PAGE>
FOILMARK, INC.
5 MALCOLM HOYT DRIVE
NEWBURYPORT, MASSACHUSETTS 01950
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of the
accompanying Proxy on behalf of the Board of Directors of Foilmark, Inc. (the
"Company"), to be used at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") and all adjournments thereof, to be held at the time and place
and for the purposes set forth in the foregoing Notice of Annual Meeting. A
shareholder giving a proxy may revoke it at any time before it is voted at the
Annual Meeting by (i) delivering to the Secretary of the Company, at the address
set forth in the Notice of Annual Meeting, a letter of revocation or properly
executed proxy of a later date; (ii) submitting a proxy bearing a later date; or
(iii) attending the Annual Meeting and voting in person. All proxies will be
voted in accordance with instructions thereon. ANY PROXY UPON WHICH NO
INSTRUCTION HAS BEEN INDICATED WILL BE VOTED "FOR" THE SPECIFIC MATTERS SET
FORTH IN THE FOREGOING NOTICE OF ANNUAL MEETING AND, AT THE DISCRETION OF THE
PERSONS NAMED IN THE PROXY, FOR SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING. The solicitation is being made by use of the mails and the
cost thereof will be borne by the Company. In addition to the solicitation by
the use of the mails, proxies may be solicited personally by telephone or
telegraph by regular employees of the Company or its subsidiaries without
additional remuneration therefor. The Company will reimburse banks, brokers,
custodians, nominees and fiduciaries for expenses incurred in forwarding proxies
and proxy soliciting materials to their principals.
This Proxy Statement and the related proxy form are first being mailed to
shareholders on or about October 13, 2000.
VOTING SECURITIES AND PRINCIPAL OWNERS THEREOF
As of the close of business on September 29, 2000, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, the Company had outstanding 8,072,546 shares of Common Stock held by
137 record holders and approximately 785 beneficial holders, of which 3,016,864
shares, or 37.4% were beneficially owned by directors and officers of the
Company. Each share entitles the holder of record to one vote.
The holders of one-third of the shares entitled to vote, present in person
or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. A majority of votes cast is required to elect
the directors and to approve every other proposal to be considered at the Annual
Meeting. Shares of Common Stock present but not voting at the Annual Meeting and
abstentions are treated as present and entitled to vote and therefore have the
effect of a vote against a matter. A broker non-vote on a matter is considered
not entitled to vote on the matter and thus is not counted in determining
whether a matter requiring approval of a majority of the shares present and
entitled to vote has been approved.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of September 29, 2000 as to (a) each person
known to the Company who beneficially owns 5% or more of the outstanding shares
of Common Stock, (b) directors and nominees, (c) each of the named executive
officers and (d) all directors and executive officers as a group. Each of such
shareholders has sole voting and investment power as to shares shown unless
otherwise noted. This information is based upon a review of statements filed
with the Securities and Exchange Commission pursuant to Sections 13(d), 13(f)
and 13(g) of the Securities Exchange Act of 1934 with respect to shares of
Common Stock, except for information about the Company's officers and directors.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNER(A) OF BENEFICIAL OWNERSHIP CLASS
--------------------------- ----------------------- ----------
<S> <C> <C>
Martin A. Olsen(b)(c)....................................... 480,121 5.98%
Frank J. Olsen, Jr.(b)(d)................................... 518,129 6.46%
Robert J. Simon(b)(e)(f)(g)................................. 1,699,076 21.17%
Wilhelm P. Kutsch(h)........................................ 122,796 1.53%
Philip Leibel(i)............................................ 72,972 *
Carol J. Robie(b)(j)........................................ 211,680 2.64%
Edward D. Sullivan(b)(k).................................... 165,847 2.07%
Michael J. Bertuch(b)(l).................................... 7,500 *
Michael Foster(b)(m)........................................ 12,500 *
Thomas R. Schwarz(b)(n)..................................... 7,500 *
Leonard A. Mintz(b)......................................... 234,696 2.92%
Kenneth R. Harris(b)........................................ 128,522 1.60%
Barbara M. Henagan(e)(g)(o)................................. 1,674,462 20.87%
James L. Rooney(b)(p)....................................... 111,501 1.39%
Michael S. Mathews(b)(q).................................... 27,346 *
Brian Kelly(b)(r)........................................... 16,380 *
Harvey S. Share(b)(s)....................................... 9,720 *
Marc O. Woontner(t)......................................... 33,917 *
Bradford Venture Partners, L.P.(b)(g)(u).................... 835,925 10.42%
Overseas Private Investor Partners(b)(g)(v)................. 835,925 10.42%
Parties to Voting Agreement(b).............................. 3,630,518 45.24%
All Directors and Executive Officers as a Group (14
persons)(c)(w)............................................ 3,016,864 37.59%
</TABLE>
------------------------
* Less than one percent
(a) If applicable, beneficially owned shares include shares owned by the spouse,
children and certain other relatives of the beneficial owner, director,
nominee or officers, as well as shares held by trusts of which the person is
a trustee or in which he has a beneficial interest. Any such beneficially
owned shares will be noted separately for each owner, except in the case of
shares beneficially owned by all directors and executive officers as a
group. All information with respect to beneficial ownership has been
furnished by the respective directors, officers and 5% owners. Except as set
forth above, management knows of no person who, as of September 29, 2000,
owned beneficially more than 5% of the Company's outstanding Common Stock.
The information includes, where applicable, shares issuable upon exercise of
stock options granted under the Company's 1995 Stock Option Plan, the
Non-Employee Directors Stock Option Plan and the HoloPak Technologies, Inc.
1993 Non-Qualified Stock Option Plan, which options are presently or will be
exercisable within 60 days of the date of this proxy statement. Unless
otherwise indicated, the address of the persons identified in above is c/o
Foilmark, Inc., 5 Malcolm Hoyt Drive, Newburyport, Massachusetts 01950.
2
<PAGE>
(b) Excludes shares held by other parties to a voting agreement described more
fully in "Certain Relationships and Related Transactions," which shares may
be deemed to be beneficially owned by these individuals. For the purposes of
disclosure of beneficial ownership under the Securities Exchange Act of
1934, the persons identified as parties to the voting agreement described in
"Certain Relationships and Related Transactions" holding in the aggregate
3,630,518 shares of Common Stock are deemed to be a single person and the
beneficial owners of the shares of Common Stock owned by all parties to the
voting agreement. For a discussion of Mr. Mintz's relationship with the
Company, see "Certain Relationships and Related Transactions".
(c) Includes 11,000 shares held by Mr. Olsen's wife as to which he disclaims
beneficial ownership. Mr. Olsen's address is 3299 Old Barn Road East, Ponte
Vedra Beach, Florida 32082.
(d) Includes 89,666 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days and 222,724 shares
deemed beneficially owned in his capacity as executor of the Estate of Frank
J. Olsen.
(e) Includes the shares of Common Stock owned of record by Bradford Venture
Partners, L.P. as to which each of Mr. Simon and Ms. Henagan may be deemed
to share beneficial ownership due to their having voting and dispositive
power over these shares of Common Stock. Bradford Associates, a general
partnership of which Mr. Simon and Ms. Henagan are the partners, is the sole
general partner of Bradford Venture Partners, L.P.
(f) Includes 20,820 shares issuable upon exercise of options, which are
presently or will be exercisable within 60 days. Mr. Simon's address is One
Rockefeller Plaza, New York, New York 10020.
(g) Includes the shares of Common Stock owned of record by Overseas Private
Investor Partners, as to which each of Mr. Simon and Ms. Henagan may be
deemed to share beneficial ownership due to having voting power over such
shares of Common Stock. Mr. Simon serves as Chairman of the Board of
Directors of the corporation that acts as the managing partner of Overseas
Private Investor Partners. Bradford Associates holds a 1% partnership
interest in Overseas Private Investor Partners, which may increase upon the
satisfaction of certain contingencies related to the overall performance of
Overseas Private Investor Partners' investment portfolio, and also acts as
an investment advisor for Overseas Private Investor Partners.
(h) Includes 79,966 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(i) Includes 55,034 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(j) Includes 14,900 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(k) Includes 12,000 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(l) Includes 7,500 shares issuable upon exercise of options, which are presently
or will become exercisable within 60 days. Mr. Bertuch's address is c/o
ViaTech Publishing Solutions, 1440 Fifth Avenue, Bayshore, New York 11706.
(m) Includes 7,500 shares issuable upon exercise of options, which are presently
or will become exercisable within 60 days. Mr. Foster's address is Post
Office Box 2877, Nantucket, Massachusetts 02584.
(n) Includes 7,500 shares issuable upon exercise of options, which are presently
or will become exercisable within 60 days.
(o) The amount shown for Ms. Henagan includes 2,611 shares of Common Stock that
she owns of record as trustee under two trusts for the benefit of two
relatives of Ms. Henagan. The address of the stockholder is 44 Nassau
Street, Princeton, New Jersey 08542.
3
<PAGE>
(p) Includes 101,501 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(q) Includes 20,820 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(r) Includes 16,380 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(s) Includes 9,720 shares issuable upon exercise of options, which are presently
or will become exercisable within 60 days.
(t) Includes 27,917 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
(u) The address of the stockholder is 44 Nassau Street, Princeton, New Jersey
08542.
(v) The address of the stockholder is Clarendon House, Church Street, Hamilton
5-31, Bermuda.
(w) Includes 471,224 shares issuable upon exercise of options, which are
presently or will become exercisable within 60 days.
NOMINATION AND ELECTION OF DIRECTORS
The Board has fixed the number of directors at ten (10). The ten (10) seats
are divided into three classes, the terms of which expire in 2000, 2001 and
2002, respectively. Currently there are three (3) directors serving terms
expiring in 2000, four (4) directors whose terms expire in 2001, and three
(3) directors whose terms expire in 2002. There are three (3) directors to be
elected at the 2000 Annual Meeting, to serve three year terms ending in 2003, in
each case until a successor has been elected and qualified or until the
director's earlier resignation or removal. Each nominee has consented to be
named in this Proxy Statement and to serve, if elected. If any nominee shall be
unable to serve, the proxy may be voted with discretionary authority for a
substitute by the persons named in the proxy as proxy appointees. The Board of
Directors has no reason to believe that any nominee will become unavailable to
serve. Any vacancies occurring in the Board of Directors, regardless of the
term, shall be filled by the Board of Directors to serve only until the next
annual or special meeting of the shareholders.
In voting for directors, each shareholder is entitled to one (1) vote for
each share of Common Stock held. The three (3) persons receiving a majority of
votes cast, in person or by proxy, shall be elected to the Board of Directors.
Abstentions from voting and broker non-votes for the election of directors will
have no effect since they will not represent votes cast at the Annual Meeting
for the purpose of electing directors.
Shareholders may withhold authority to vote for any individual nominee by
following the instructions on the proxy card. Any proxy which is not so marked
to withhold authority or struck through shall be deemed to be a vote for such
nominee and, unless otherwise indicated on the proxy, shares will be distributed
evenly among the nominees for whom authority to vote has not been withheld.
In connection with the merger of HoloPak into the Company and as of
April 23, 1999, certain stockholders of the Company, representing approximately
45% of the outstanding shares of Common Stock of the Company, entered into a
voting agreement pursuant to which, among other things, they agreed to vote
their shares of Common Stock for the election of each of the current directors.
For a more detailed description of the voting agreement, see "Certain
Relationships and Related Transactions."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
Certain information concerning each nominee for Director, all current
Directors, all executive officers and key employees of the Company is set forth
below. Except as otherwise indicated, each of the persons has been employed by
his or her current employer for the preceding five years. There are no family
relationships between any executive officers, directors or key employees of the
Company, except that Frank J. Olsen, Jr. and Carol J. Robie, are brother and
sister.
4
<PAGE>
A. NOMINEES FOR A THREE YEAR TERM ENDING IN 2003:
EDWARD D. SULLIVAN Director since 1994
Edward D. Sullivan, 67, served as a consultant to the Company until
December 31, 1999. Mr. Sullivan served as Vice President, West Coast Operations,
of the Company, from 1994 until his retirement on December 31, 1996, and Vice
President and General Manager of West Foils, Inc., a subsidiary of the Company,
from 1995 until December 31, 1996. He was President of West Foils, Inc., which
he founded in 1988, through 1994.
JAMES L. ROONEY Director since 1999
James L. Rooney, 63, served as a consultant to the Company until
December 31, 1999. He was the Chief Executive Officer and a director of HoloPak
from September 1997 to April 1999. He was the President of C&C Consulting from
January 1995 to September 1997. He was Senior Vice President at Rexam Inc.,
Coated Products Group, from 1993 to 1995. From 1991 to 1993, he was the
President of Release International, a Rexam Inc. company; and from 1984 to 1991
he was the President of H.P. Smith Inc., a division of Specialty Coatings
International, formerly James River Corp. He also serves as a director of Lexon
Technologies.
MICHAEL S. MATHEWS Director since 1999
Michael S. Mathews, 59, has been a managing director of Westgate Capital
Co., a private investment firm, since January 1993. Mr. Mathews was a director
of HoloPak from 1990 to 1999. From 1989 through January 1993, Mr. Mathews served
as a managing director of Bradford Ventures Ltd., a private investment firm and
prior to such time, he was the President of DnC Capital Corporation, a merchant
banking and investment firm, for more than five years. Mr. Mathews is also a
director of Petroleum Geo-Services A/S.
B. CURRENT DIRECTORS AND OFFICERS:
DIRECTORS WHOSE TERMS EXPIRE IN 2001:
FRANK J. OLSEN, JR. Director since 1992
Frank J. Olsen, Jr., 48, has served as President and Chief Executive Officer
of the Company since March 1992. He served as the Chairman of the Board from
October 1995 to April 1999. He is the Chief Executive Officer of the Company and
each of its subsidiaries. Prior to March 1992 he was employed as Vice President
Engineering, and in various other capacities with the Company and its
predecessors since 1976. Mr. Olsen is the brother of Carol J. Robie.
THOMAS R. SCHWARZ Director since 1997
Thomas R. Schwarz, 64, was Chairman of Grossman's Inc., a retailer of
building materials, from 1990 to 1994. From 1980 to 1990, he was President,
Chief Operating Officer and a director of Dunkin' Donuts Incorporated, a food
service company. Mr. Schwarz has been a director of Tridex Corporation since
1995 (and a member of the Compensation Committee) and Chairman of the Board of
Directors of TransAct Technologies Incorporated (and a member of the
Compensation Committee) since 1996.
ROBERT J. SIMON Chairman of the Board and Director since 1999
Robert J. Simon, 41, has been a Senior Managing Director of Bradford
Ventures Ltd., a private investment firm, since 1992 and a general partner of
Bradford Associates since 1989. Mr. Simon is Chairman of the Board or a director
of numerous public and private companies, including Ampco Metal Inc., Overseas
Private Investors Ltd., Overseas Equity Investors Ltd., Pamarco
Technologies, Inc., FoodServ Equipment & Supply, Inc., Overseas Callander Fund
and Tufco Technologies, Inc. Mr. Simon was the Chairman of the Board of
Directors of HoloPak Technologies, Inc. from May 1992, and a director from 1990
to April 1999.
5
<PAGE>
BRIAN KELLY Director since 1999
Brian Kelly, 57, has been the President of Waverly Partners, Inc., a private
investment company, since March 1994. Waverly's investment companies manufacture
metal components for the electronics, aerospace and medical industries. From
September 1989 to March 1994, Mr. Kelly was President of Fitchburg Coated
Products, a manufacturer of coated and laminated products. Mr. Kelly was a
director of HoloPak Technologies, Inc. from June 1995 to April 1999.
DIRECTORS WHOSE TERMS EXPIRE IN 2002:
MICHAEL J. BERTUCH Director since 1997
Michael J. Bertuch, 40, has been the President of ViaTech Publishing
Solutions, a manufacturer of vinyl loose-leaf books, since January 1992. Prior
to 1995, he was employed by DVC Industries in various executive capacities since
1986.
MICHAEL FOSTER Director since 1997
Michael Foster, 65, is a private investor and consultant. In 1994,
Mr. Foster retired as the founder, Chairman of the Board and Chief Executive
Officer of WPI Group, Inc. (NASDAQ: WPIC), a publicly-held manufacturer of
hardware, software and electronic products for commercial and industrial
markets.
HARVEY S. SHARE Director since 1999
Harvey S. Share, 68, is the former President and Chairman of Bobst
Group Inc., one of the world's largest manufacturers and suppliers of folding
carton, corrugated and flexible packaging converting and printing equipment.
Mr. Share retired from Bobst Group Inc. at the end of 1996. Mr. Share is a
consultant to the packaging and printing equipment industry. Mr. Share is a
member of a number of industry and professional associations. Mr. Share was a
director of HoloPak Technologies, Inc. from July 1998 to April 1999.
NON-DIRECTOR EXECUTIVE OFFICERS:
PHILIP LEIBEL Officer since 1992
Philip Leibel, 63, has been Vice President Finance since March 1992 and is
Treasurer, Assistant Secretary and Chief Financial Officer of the Company and
each of its subsidiaries. He has been Chief Financial Officer of the Company and
its predecessors since 1977.
WILHELM P. KUTSCH Officer since 1992
Wilhelm P. Kutsch, 57, has been Senior Vice President, Foil Operations,
since March 1992, and served as Vice President Foil Operations prior to
March 1992. Mr. Kutsch served on the Board of Directors from 1994 to 1999. He
has also served as Vice President and Operations Manager of Foilmark
Manufacturing Corporation since 1979. Mr. Kutsch has over 20 years experience in
the hot stamping industry.
CAROL J. ROBIE Officer since 1992
Carol J. Robie, 44, has been Vice President, Administration, since
March 1992. Ms. Robie served on the Board of Directors from 1992 to 1999. She
served as Administrative Manager of the Company in 1990 and 1991, and also has
been employed in various capacities by Foilmark Manufacturing Corporation since
1977. She also serves as Secretary of the Company. Ms. Robie is the sister of
Frank J. Olsen, Jr.
MARC O. WOONTNER Officer since 1999
Marc O. Woontner, 54, has been Vice President, Sales and
Marketing/Holography, since July 1, 1999. Mr. Woontner served as Vice President,
Sales and Marketing/ Holography, for HoloPak Technologies, Inc.
6
<PAGE>
from 1988 to 1999. He joined HoloPak as Market Development Manager in 1986.
Mr. Woontner was Regional Sales Manager for Dri-Print Foils, a division of
Beatrice Foods, from 1975 to 1986.
GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
There were four (4) regular and two (2) special meetings of the Board of
Directors during fiscal 2000. During this period, each director attended at
least 75% of the aggregate of (a) the total number of meetings of the Board held
during the period from which such incumbent was a director and (b) the total
number of meetings held by all committees of the Board on which such incumbent
served.
Directors of the Company who are not full time employees of the Company or
its operating subsidiaries receive a retainer of $2,000 per calendar quarter, as
well as a fee of $750 per Board Meeting attended and $350 per committee meeting
attended in person or telephonically.
The Board of Directors has four standing committees: the Executive
Committee, the Compensation Committee, the Audit Committee and the Stock Option
Committee. The Executive Committee consists of Frank J. Olsen, Jr., Robert J.
Simon, Michael Foster and Edward D. Sullivan. In addition, Philip Leibel attends
Executive Committee Meetings in a non-voting capacity. The Executive Committee
conducts the affairs and business of the Company between meetings of the Board
of Directors, subject to certain limitations set forth in the Company's
Certificate of Incorporation. The Executive Committee met two (2) times during
fiscal 2000.
The Compensation Committee consists of Edward D. Sullivan, Michael S.
Mathews, Thomas R. Schwarz and Robert J. Simon. The Compensation Committee
determines the compensation to be paid by the Company to its officers. The
Compensation Committee met three (3) times during fiscal 2000.
The Audit Committee consists of Michael J. Bertuch, Michael Foster, Brian
Kelly and Harvey S. Share. The Audit Committee reviews the financial reporting
process, the system of internal control, the audit process and the process of
monitoring compliance with laws and regulations. All of the Audit Committee
members satisfy the definition of an independent director as established in the
National Association of Securities Dealers Listing Standards. The Board of
Directors adopted a written charter for the Audit Committee on May 18, 2000. A
copy of the written charter is filed herewith.
The Audit Committee reviewed the financial statements with the Board of
Directors and discussed during fiscal year 2000 with KPMG LLP, the Company's
independent auditors, the matters required to be discussed by Statement of
Auditing Standards No. 61. The Audit Committee met five (5) times during fiscal
year 2000.
The Stock Option Committee consists of Edward D. Sullivan, Michael S.
Mathews, Thomas R. Schwarz and Robert J. Simon. The Stock Option Committee
administers the 1995 Stock Option Plan and the Non-Employee Directors' Stock
Plan and determines to whom such options will be granted and the number of
shares of Common Stock to be included in such options. The Stock Option
Committee met two (2) times during fiscal 2000.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who beneficially own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission and furnish the Company with reports
of securities ownership and changes in such ownership
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, or written representations that no other
reports were required for those persons, the Company believes that during the
fiscal year ended June 30, 2000, its officers, directors, and greater than ten
percent (10%) beneficial owners complied with all Section 16(a) filing
requirements.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation of the chief executive
officer and the other three most highly compensated executive officers (the
"Named Executive Officers") of the Company for services in all capacities to the
Company or its subsidiaries for the fiscal year ended June 30, 2000 and the
total compensation earned by such individuals for the Company's three previous
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(A) COMPENSATION AWARDS
---------------------------------- ----------------------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(B)
--------------------------- -------- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Frank J. Olsen, Jr.................... 2000 282,000 75,000 30,000 4,000
President and Chief Executive
Officer 1999(d) 135,131 -- 15,000 3,000
1998 233,295 -- 34,666 3,000
1997 202,413 -- -- 4,160
Wilhelm P. Kutsch..................... 2000 200,400 38,400 30,000 4,000
Senior Vice President, Foil
Operations 1999(d) 120,399 -- 12,000 3,000
1998 184,235 -- 29,466 3,000
1997 172,272 -- -- 4,160
Philip Leibel......................... 2000 173,381 33,400 15,000 4,000
Vice President--Finance and Chief 1999(d) 97,080 -- 8,000 3,000
Financial Officer 1998 173,785 -- 24,534 3,000
1997 160,789 -- -- 4,160
Marc O. Woontner(c)................... 2000 149,076 36,000 -- 3,727
Vice President--Sales and Marketing/
Holographic Security
</TABLE>
------------------------
(a) Any perquisites or other personal benefits received from the Company by any
of the Named Executive Officers were substantially less than reporting
thresholds established by the Securities and Exchange Commission (the lesser
of $50,000 or 10% of the individual's salary and bonus).
(b) Amounts in the "All Other Compensation" column represent contributions to
the Company's Profit Sharing Plan.
(c) Mr. Woontner became the Vice President of Sales and Marketing/Holographic
Security on July 1, 1999.
(d) Fiscal 1999 is a six-month period.
8
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grants of stock
options pursuant to the Company's Stock Option Plan during fiscal year ended
June 30, 2000 to the Named Executive Officers identified in the Summary
Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------- ANNUAL RATES OF
% OF TOTAL STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SHARES GRANTED FOR
UNDERLYING TO EXERCISE OPTION TERM(A)
OPTIONS EMPLOYEES PRICE PER EXPIRATION ---------------------
NAME GRANTED IN 2000 SHARE DATE 5% 10%
---- ---------- ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Olsen, Jr........................ 30,000 35% $3.00 11/04/09 $56,700 $143,400
President and Chief Executive Officer
Wilhelm P. Kutsch......................... 30,000 35% $3.00 11/04/09 $56,700 $143,400
Senior Vice President, Foil Operations
Philip Leibel............................. 15,000 17% $3.00 11/04/09 $28,350 $ 71,700
Vice President--Finance and Chief
Financial Officer
Marc O. Woontner.......................... -- -- -- -- -- --
Vice President, Sales and Marketing/
Holographic Security
</TABLE>
------------------------
(a) The 5% and 10%, assumed compounded annual rates of stock price appreciation
are in accordance with the potential gains and are net of exercise price but
before taxes associated with the exercise rules of the Securities and
Exchange Commission. These amounts and assumed rates of appreciation do not
represent our estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on future performance of the Common Stock
and overall market conditions, as well as the option holder's continued
employment throughout the vesting period. There can be no assurance that the
actual stock price appreciation over the ten-year option term will be at the
assumed 5% and 10% levels or at any other defined level.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTIONS/SAR VALUES
The following table sets forth information regarding stock options exercised
during fiscal 2000 and unexercised options held by the Named Executive Officers
as of the end of fiscal 2000.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS/SAR IN-THE-MONEY-OPTIONS/
ON VALUE EXERCISEABLE/ SAR($)(B)
NAME EXERCISE REALIZED($)(A) UNEXERCISEABLE EXERCISEABLE/UNEXERCISEABLE
---- -------- -------------- ---------------------- ---------------------------
<S> <C> <C> <C> <C>
Frank J. Olsen, Jr........... -- -- 89,660/0 70,272/0
Wilhelm P. Kutsch............ -- -- 79,966/0 60,997/0
Philip Leibel................ -- -- 55,034/0 40,444/0
Marc O. Woontner............. 6,000 9,375 27,917/55,837 51,563/105,667
</TABLE>
------------------------
(a) Based on closing price of the Common Stock on date of exercise less than
exercise price.
(b) Based on closing price of the Common Stock on June 30, 2000 ($3.625) minus
the exercise price.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting and administering the
policies that govern both annual compensation and incentive programs for key
managerial executives. The Committee usually meets twice annually for the
purpose of granting salary increases and bonus awards. It evaluates corporate
and individual performance, current compensation and share ownership of the
managerial group. The employees of the Company who participate in the bonus and
stock option plans are those who, in the estimation of the Compensation
Committee, have a substantial opportunity to enhance shareholder value over
time.
The Committee's purpose is to ensure that the Company's management
compensation plan will support the Company's efforts to attract and retain
well-qualified employees who are capable of managing for the benefit of
shareholders and contributing to the Company's success. To accomplish this goal,
compensation is intended to be competitive both within the industry as a whole
and when compared to like-sized companies in the geographical areas served by
the Company. Inflation, the cost of living and business conditions are taken
into consideration. Additionally, the Company surveys other manufacturing
companies and obtains compensation information from approximately ten industry
participants.
The final determination of the base salary adjustments and incentive bonus
awards is made solely by the Compensation Committee after consultation with the
Chief Executive Officer. Stock option grants are made by the Stock Option
Committee. In setting an executive's base salary and bonus and in granting stock
options, consideration is given to maintenance of the executive's level of
responsibility and the performance of the executive's area of responsibility.
Stock options are granted considering the nature of the industry and the
desirability of long-term incentives. Bonus awards are paid following fiscal
year end and represent awards for the preceding year.
With respect to compensation of the Chief Executive Officer ("CEO"), the
Compensation Committee meets without him being present to evaluate his
performance and reports on that evaluation to the independent directors of the
Board. On April 23, 1999, Mr. Olsen entered into an employment agreement with
the Company, which agreement and compensation thereunder were approved by the
Compensation Committee. For a more detailed description of the terms of
Mr. Olsen's employment agreement, see "Employment Agreements." The Compensation
Committee exercises greater discretion with respect to CEO compensation than
with other key executives and considers the performance of the Company relative
to the Company's profit goals. The Compensation Committee also considers the
short- and long-term performance of the Company relative to industry peers and
to similar industries. Major weight is given to operating earnings, as with
other managers. Finally, the Compensation Committee considers particular
accomplishments of the CEO, which are judged to contribute to long-term
shareholder value. Other factors which influence the CEO's compensation include
his establishment of clear and sound objectives and the achievement of those
objectives, his ability to create overall management strength, his performance
in communicating and in causing top managers to communicate effectively with the
Board and his use of the Board as a resource to aid effective management. The
Committee does not evaluate these factors by a predetermined formula or
weighting, but reaches its conclusions based on the judgments of its members.
There were bonuses paid to executive officers of the Company in fiscal 2000 as
part of the Company's management incentive compensation plan for meeting certain
criteria. The compensation plan was approved by the Compensation Committee and
Board of Directors on August 19, 1999.
EMPLOYMENT AGREEMENTS
As of April 23, 1999, the Company entered into an employment agreement with
Frank J. Olsen, Jr. Mr. Olsen's employment agreement is for a term of five
years. During the employment period, Mr. Olsen will serve as Chief Executive
Officer and President of Foilmark. During the employment period, Mr. Olsen will
receive an annual salary of $260,000 plus bonus. Under Mr. Olsen's employment
agreement, upon the termination of his employment other than for cause or for
reason of death or disability, he will be entitled
10
<PAGE>
to receive for a period equal to the greater of the remainder of the initial
employment period or any renewal period or three years after the date of
termination, monthly payments in an amount equal to one-twelfth of his then
current annual base salary, together with pro-rated annual target bonus and
continuation of all benefits. In addition, upon a termination as a result of a
terminating event, all of Mr. Olsen's stock options will vest immediately. The
employment agreement prohibits Mr. Olsen from disclosing confidential
information and competing with Foilmark during his employment period and for
specified periods thereafter.
As of July 1, 1999, the Company entered into an employment agreement with
each of Wilhelm P. Kutsch, Philip Leibel and Carol J. Robie. The terms of the
employment agreements are substantially the same, except for the base salary and
duties to be performed. Ms. Robie's employment agreement expires on June 30,
2002, with successive one-year renewal terms unless terminated by either party.
Mr. Kutsch's agreement expires on June 30, 2002, with successive two-year
renewal terms unless terminated by either party, and Mr. Leibel's agreement
expires on June 30, 2001, with successive one-year renewal terms unless
terminated by either party. If an employee's employment is terminated with cause
or as a result of his death or disability, the Company's obligation to
compensate the employee under his employment agreement also terminates. If the
Company terminates an employee's employment without cause, the Company is
obligated to pay severance of the employee's salary for the longer of (a) any
remaining part of the initial term or (b) twelve months.
Each employment agreement prohibits the employee from competing with the
Company during the term of the agreement and for a period equal to the longer of
(a) the period in which any compensation is paid to the employee under the
employment agreement or (b) one year following the date of termination. Each
employee is eligible under the agreements to a fiscal year-end bonus at the
Board's discretion. Employees' benefits include group medical insurance coverage
(partially contributory), holidays, life insurance, long-term disability
insurance (contributory), short-term disability insurance (partially
contributory), travel accident insurance and profit sharing plan. The agreements
prohibit employees from using or disclosing any proprietary information to any
other party at any time during the period of employment by the Company or
thereafter, except information that the employee is authorized to disclose.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Thomas R. Schwarz, Edward D.
Sullivan, Michael S. Mathews and Robert J. Simon.
In connection with the merger of HoloPak into the Company, the Company
agreed to guarantee the payment obligation of HoloPak under a consulting
agreement among HoloPak and Transfer Print Foils, Inc., a subsidiary of HoloPak,
and Bradford Associates, which was entered into in February 1990 and restated in
October 1991. On November 17, 1998, HoloPak, Transfer Print Foils and Bradford
Associates amended the consulting agreement in order to extend its term to
March 1, 2004 with automatic renewals for successive one-year terms unless
notice of termination is given by either party to the other at least 120 days
prior to the close of the then current one-year period. Under this agreement,
Bradford Associates provides various financial consulting services to HoloPak
and Transfer Print Foils. Mr. Simon is a partner of Bradford Associates, which
is a general partner of Bradford Venture Partners, L.P., which holds 10.4% of
the outstanding Common Stock of the Company. HoloPak is obligated to pay
Bradford Associates a monthly fee of $16,667.67 (or $200,000 per year) under the
agreement, plus reasonable out-of-pocket expenses. During fiscal 2000, HoloPak
paid Bradford Associates $200,000.00.
Bradford Venture Partners, L.P., the beneficial owner of approximately 10.4%
of the outstanding shares of Common Stock, Overseas Private Investor Partners,
the beneficial owner of approximately 10.4% of the outstanding shares of Common
Stock, James L. Rooney, Robert J. Simon, Michael S. Mathews, Brian Kelly and
Harvey S. Share have been granted demand and piggyback registration rights by
the Company pursuant to a registration rights agreement dated as of the merger
date. Robert J. Simon,
11
<PAGE>
Chairman of the Board, is a partner of Bradford Associates, which is a general
partner of Bradford Venture Partners, L.P. Mr. Simon is also the Chairman of the
Board of Directors of Overseas Private Investors, Ltd., the managing partner of
Overseas Private Investor Partners.
Under the registration rights agreement, all expenses associated with the
registration of common stock will be paid by the Company, except for
underwriting discounts and commissions. In addition, the Company has agreed to
indemnify the stockholders holding registration rights for liability arising out
of information contained in a registration statement, except for information
provided by these stockholders. Similarly, the stockholders holding registration
rights have agreed to indemnify the Company for information furnished by them to
the Company for use in a registration statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the merger of HoloPak into the Company, as of April 23, 1999,
the Company entered into a number of agreements, including the registration
rights agreement and the guarantee of payment obligations under the Bradford
consulting agreement. In addition, on the merger date, a voting agreement was
entered into by the following stockholders representing approximately 46% of the
outstanding shares of Common Stock: Robert J. Simon, Chairman of the Board,
Bradford Venture Partners, L.P., Overseas Private Investor Partners; James L.
Rooney; Harvey S. Share; Brian Kelly; Michael S. Mathews; Frank J. Olsen, Jr.,
President and Chief Executive Officer; Carol J. Robie, Vice
President-Administration; Michael Foster; Martin A. Olsen; Leonard A. Mintz;
Edward D. Sullivan; Thomas R. Schwarz; Kenneth Harris, Vice President, Pad
Printing Operations; and Michael Bertuch. Under the voting agreement, the above-
listed stockholders agreed to vote all of their shares of common stock to:
- elect each of Mr. Olsen, Mr. Bertuch, Mr. Schwarz, Mr. Sullivan,
Mr. Foster, Mr. Simon, Mr. Rooney, Mr. Share, Mr. Kelly and Mr. Mathews to
the Board of Directors of the Company. In the event of a vacancy due to
the resignation or removal of any of Mr. Bertuch, Mr. Schwarz, Mr. Foster
or Mr. Sullivan, Mr. Olsen shall designate a replacement director. In the
event of a vacancy due to the resignation or removal of any of
Mr. Rooney, Mr. Share, Mr. Kelly or Mr. Mathews, Bradford Associates shall
designate a replacement director. The voting agreement shall terminate on
the earlier of the fifth anniversary of the merger date or when either of
the Foilmark parties or the HoloPak parties as a group own less than 5% of
the outstanding shares of Common Stock;
- elect Mr. Simon as the Chairman of the Board of the Company;
- elect Mr. Simon, Mr. Mathews, Mr. Olsen and Mr. Foster to the Executive
Committee, of which Mr. Simon will be the Chairman;
- elect Mr. Schwarz, Mr. Sullivan, Mr. Mathews and Mr. Simon to the
Compensation Committee, of which Mr. Schwarz will be the Chairman; and
- elect Mr. Foster, Mr. Kelly, Mr. Share and Mr. Bertuch to the Audit
Committee, of which Mr. Bertuch will be the Chairman.
The Company also entered into a replacement registration rights agreement,
dated as of April 23, 1999, pursuant to which certain registration rights
previously granted by the Company to Martin A. Olsen, Leonard A. Mintz, Kenneth
R. Harris, Steven Meredith and Edward D. Sullivan were terminated, and
replacement registration rights were granted.
In connection with the acquisition of the assets of Imtran
Industries, Inc., in 1995, Foilmark Manufacturing Corporation, the successor
entity to Imtran Foilmark, Inc., the wholly owned subsidiary of the Company to
which Imtran's assets were transferred, entered into a five-year lease of the
premises where Imtran operated its business. Mr. Harris is a trustee of the
trust that owns the premises and served as a director of the Company until the
merger date. Mr. Harris is a party to the voting agreement. The
12
<PAGE>
terms of the lease provide for annual rent of $137,500 during the initial
five-year term and payment of "Market Rent" for the duration of a single
extension term of two years. In July 1996, in consideration of the use by the
Company of additional space, the Company increased its rental payments by $5,000
per month to $197,500 per year. In April 2000, the Company exercised its option
to renew for two additional years commencing August 1, 2000 at an annual rent of
$203,250.
On December 21, 1998, Leonard Mintz resigned as a director and Senior Vice
President of the Company. At that time, Mr. Mintz agreed to the termination of
his 1992 employment agreement with the Company and entered into a
non-competition agreement with the Company that expires on December 1, 2003.
Under the non-competition agreement, the Company has agreed to pay Mr. Mintz:
(1) $14,886.50 per month for 18 months which commenced on January 1, 1999 and
ended June 30, 2000; (2) $5,762.52 on July 1, 2000; (3) $4,167 per month which
commenced on January 1, 1999 and ends on December 1, 2003; and (4) other
incidental health and related benefits. During the term of the non-competition
agreement, Mr. Mintz has agreed not to compete with the Company or its
affiliates or solicit sales, customers or employees of the Company or its
affiliates.
APPROVAL OF SELECTION OF AUDITORS
Upon recommendation of the Audit Committee, the Foilmark Board has selected
KPMG LLP, certified public accountants, as independent auditors for the Company
for the fiscal year ending June 30, 2001. That firm has acted as independent
auditors for the Company for more than 8 years, and the Board considers it
highly qualified. Although it is not required to do so, the Board of Directors
wishes to submit the selection of KPMG LLP for shareholders' approval at the
Annual Meeting. If the shareholders do not give approval, the Board will
reconsider its selection.
Representatives of KPMG LLP will be present at the Annual Meeting, will have
the opportunity to make a statement if they desire and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS APPOINTMENT.
13
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock with the cumulative total shareholder return of (i) the Standard
and Poor's 500 Index (the "S & P 500 Index"), (ii) a peer group of companies
consisting of Advanced Deposition Technologies, CFC International Inc., Outlook
Group Corp. and Viskase Corporation (the "Old Peer Group"), and (iii) a peer
group of companies consisting of Advanced Deposition Technologies, American Bank
Note Holographis, Applied Extrusion Technologies and CFC International, Inc.
(the "New Peer Group") assuming an investment of $100 on December 31, 1995, in
each of the Common Stock of the Company, the S & P 500 Index, the Old Peer Group
stocks and the New Peer Group stocks. The graph assumes dividend reinvestment
with respect to companies in the Peer Group, and the returns of each such
company have been weighted at each measurement point to reflect relative stock
market capitalization. The graph commences as of December 31, 1995. HoloPak
Technologies, Inc. was a part of the Old Peer Group until its merger with the
Company on April 23, 1999.
COMPARISON OF 54 MONTH CUMULATIVE TOTAL RETURN*
AMONG FOILMARK, INC., THE S & P 500 INDEX,
A NEW PEER GROUP AND AN OLD PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DEC-95 DEC-96 DEC-97 DEC-98 JUN-99 JUN-00
<S> <C> <C> <C> <C> <C> <C>
Foilmark Inc 100 39.58 51.56 28.65 40.63 60.42
S&P 500 100 122.96 163.98 210.84 236.95 254.13
New Peer Group 100 98.35 78.75 71.1 33.07 24.64
Old Peer Group 100 130.89 158.4 94.59 98.4 80.25
</TABLE>
* $100 INVESTED ON 12/31/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
14
<PAGE>
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of any matters to come before the
meeting other than those stated in the Proxy Statement. In the event that other
matters properly come before the meeting or any adjournment thereof, it is
intended that the persons named in the accompanying proxy and acting thereunder
will vote in accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Company intends to hold its Annual Meeting approximately the same date
next year. Any shareholder proposals for consideration by the Company for
inclusion in the Company's proxy statement and form of proxy must be made in
writing and received by the Company on or before June 10, 2001. All proposals
must comply with the terms of Rule 14(a)-8 of the Securities and Exchange Act of
1934.
INDEPENDENT PUBLIC ACCOUNTANTS
At the Annual Meeting, representatives from the Company's independent public
accountants, KPMG LLP, are expected to be present and available to respond to
questions.
ANNUAL REPORT
The Annual Report to Shareholders, including financial statements for the
Company's fiscal year ended June 30, 2000, has been mailed to all shareholders.
The Annual Report is not a part of the proxy soliciting material. Additional
copies of the Annual Report are available upon written request to the Company.
FORM 10-K
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2000, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, UPON WRITTEN REQUEST TO PHILIP LEIBEL, VICE PRESIDENT,
FINANCE, FOILMARK, INC., 5 MALCOLM HOYT DRIVE, NEWBURYPORT, MASSACHUSETTS 01950.
15
<PAGE>
ANNEX A
October 9, 2000
TO OUR SHAREHOLDERS:
Fiscal 2000 was certainly the most successful and important twelve months in
Foilmark's history. During this milestone year, we achieved the goals set in
connection with our April 1999 acquisition of HoloPak Technologies and reported
strong financial results for the first full year as a merged entity. With these
accomplishments under our belt, we are now uniquely positioned to take advantage
of the growth opportunities in our markets. A major expansion program is
underway, with $5 million being invested for additional capital equipment and
human resources to provide the capacity to grow our high-margin holography unit.
We look back with pride on the significant developments of the past year and
look forward with confidence to continued growth in the upcoming year.
FISCAL 2000 ACCOMPLISHMENTS
SIGNIFICANTLY INCREASED THE SIZE AND SCOPE OF FOILMARK'S BUSINESS.
As a result of the integration of HoloPak, Foilmark now offers a full range
of products to a broadened customer base through an effective distribution
network. This has made us more valuable to our customers because we can now
service the majority of their foil needs.
BECAME ONE OF THE ONLY COMPANIES THAT IS FULLY VERTICALLY INTEGRATED IN ALL
ASPECTS OF HOLOGRAPHIC PRODUCTION.
Vertical integration allows us to stay ahead of the curve for new product
development. It also positions Foilmark as a low-cost producer, therefore
enabling us to drive volume through competitive pricing while maintaining our
margins.
SET OUR FOCUS ON HIGHER MARGIN HOLOGRAPHY PRODUCTS.
As a result, our overall gross margin rose to 31.0% in fiscal 2000 from
29.2% in the twelve months ended June 30, 1999. We also gained holography market
share--pro forma fiscal 2000 volume rose 36%, compared to the industry's 25%
annual growth.
REALIZED SIGNIFICANT POST-MERGER COST SAVINGS.
Fiscal 2000 SG&A (selling, general and administrative) expenses decreased to
21.4% of sales from 25.2% in the twelve months ended June 30, 1999. We believe
we can achieve additional cost savings in the new fiscal year.
STRONG FINANCIAL PERFORMANCE
Our financial results for the first full year after the HoloPak acquisition
exceeded our internal projections. For the fiscal year ended June 30, 2000, net
sales increased 75% to $66.7 million from $38.2 million in the twelve months
ended June 30, 1999. EBITDA (earnings before interest, taxes, depreciation and
amortization) was up 213% to $9.6 million from $3.1 million. Net income grew to
$3.5 million from $177,666, and diluted EPS (earnings per share) rose to $.43
from $.04, despite the increase in shares outstanding compared to the prior
period.
A-1
<PAGE>
HOLOGRAPHIC BUSINESS
Foilmark has become a fully integrated, technologically sophisticated
low-cost provider of high-margin holography products. In fiscal 2000, our
holographic unit generated 37% of total sales, up from 23% of Foilmark's fiscal
1999 sales. The segment profit for this unit was 21% of their sales in fiscal
2000.
SECURITY SOLUTIONS
Foilmark currently provides holography security solutions for over 1,200
government and private organizations worldwide. Our images authenticate transit
passes in Europe, the U.S. and Canada; health cards in eleven countries;
driver's licenses in twelve states; national ID cards in seven countries;
immigration documents in seven countries; and governmental high-level security
identification in ten federal and state bureaus, as well as twenty military and
police organizations throughout the world. Most recently, our "Authenticket"
holograms have been used to authenticate tickets and passes for the Democratic
National Convention and will be used on the tickets for the upcoming Orange
Bowl, Cotton Bowl and Talladega 500 NASCAR event. During the past fiscal year,
our holographic security group also provided holographic production services for
the manufacture of postage stamps for one of the world's major postal services.
PACKAGING PRODUCTS
Our holographic packaging products are also experiencing strong demand due
to the dynamic effect holography adds when incorporated into packaging media.
Foilmark's holographic packaging products enhance product packaging used by a
number of Fortune 500 companies. Several examples of our recent unique
applications include one billion authentification holograms for cigarette
packaging, sophisticated holographic labels and high-end, holographically
enhanced folding cartons.
The holography industry generates approximately $600 million in annual sales
and is growing at an estimated 25% per year. We expect our $5 million investment
in capital equipment, new product offerings and key personnel to be the catalyst
for the Company to absorb a larger share of this market and for this unit to
represent an increasing portion of our total sales.
THERMAL TRANSFER FILMS (HOT STAMPING FOIL) BUSINESS
Primarily as a result of the HoloPak acquisition, volume in our thermal
transfer films unit was up significantly in fiscal 2000, compared to the twelve
months ended June 30, 1999. We have broadened the product line we offer to this
$1 billion industry, allowing us to compete in both the high-value segment of
the market and the high-volume lower-priced portion of the market, as well as
increase sales by selling more products to existing customers. Additionally,
margins in this area continue to improve due to manufacturing efficiencies we
have put in place, as well as our focus on higher margin niches.
FINANCIAL POSITION AND SHAREHOLDER VALUE
Foilmark concluded fiscal 2000 in a strong position. As of June 30, 2000, we
have $11 million available under our line of credit, working capital of $19.8
million and shareholders' equity of $26.9 million. Additionally, Foilmark's
market capitalization has more than doubled since the beginning of fiscal 2000;
it was approximately $40 million as of October 3, 2000.
STRATEGY
With the HoloPak integration primarily complete, we are now focused on
leveraging the Company's infrastructure, product offering and talented personnel
toward holography, while also growing our share in the thermal transfer films
marketplace. We continue to cross-fertilize our expanded customer base and are
increasing capacity through the $5 million expansion of the holographic segment.
A-2
<PAGE>
We intend to maintain our diverse customer base, with more than 3,500 active
clients worldwide, ranging from small companies to government entities and
Fortune 500 corporations. In fiscal 2000, no single customer accounted for more
than 5% of total sales, and of our largest fifteen customers, thirteen have
purchased from the Company for five or more years.
Another key aspect of our strategy is to sustain our focus on research and
development. Our twenty-six chemists, engineers and technicians are devoted to
developing new products and applications, as well as improving our processing
techniques and quality systems. They often work closely with customers to create
unique products that can be exclusively marketed by that customer.
POSITIVE OUTLOOK
Looking forward to fiscal 2001 and beyond, we expect continued growth and
achievement for our Company, as a result of the investments we are making in our
infrastructure and organization. We believe Foilmark has the financial strength,
strategy, experienced management, workforce and resources to realize the
opportunities that lie ahead. We will continue to leverage our position as a
low-cost vertically integrated producer, with our broad product offerings and
talented personnel, to take advantage of the growth opportunities in the
holographic and thermal transfer films markets.
On behalf of the Board of Directors, management and employees, we thank you
for your support and look forward to keeping you updated on our progress.
Sincerely,
FOILMARK, INC.
F. Joseph Olsen, Jr.
President and CEO
A-3
<PAGE>
Please Detach and Mail in the Envelope Provided
------------------------------------------------------------------------------
FOILMARK, INC. PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, NOVEMBER 14, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes and appoints Frank J. Olsen, Jr. and Robert
J. Simon, and each of them, as proxies with full power of substitution, to
vote all shares of Common Stock of FOILMARK, INC. held of record on September
29, 2000 by the undersigned at the Annual Meeting of Shareholders to be held
at 10:00 a.m. local time on Tuesday, November 14, 2000, at the Boston Harbor
Hotel, 70 Rowes Wharf, Boston, Massachusetts and any adjournment or
postponement thereof.
This proxy when properly executed will be voted (i) as directed below, or, in
the absence of such direction, this proxy will be voted (i) FOR the specified
nominees in Proposal 1, FOR Proposal 2 and (iii) in accordance with the
judgment of the proxies upon other matters that may properly come before said
meeting or any adjournments or postponements thereof.
THE DIRECTORS RECOMMEND A VOTE FOR EACH PROPOSAL.
(Continued and to be signed on reverse side)
<PAGE>
Please Detach and Mail in the Envelope Provided
------------------------------------------------------------------------------
/X/ PLEASE MARK YOUR VOTES
AS INDICATED IN THIS EXAMPLE
<TABLE>
<S> <C> <C> <C>
FOR WITHHOLD
all nominees AUTHORITY FOR all
listed to vote for all except
1. TO CONSIDER AND VOTE UPON A PROPOSAL
TO ELECT EACH OF EDWARD D. SULLIVAN, / / / / / /
JAMES L. ROONEY AND MICHAEL S. MATHEWS
AS DIRECTORS OF FOILMARK, INC.
NOMINEES:
(INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE(S), MARK EDWARD D. SULLIVAN
"FOR ALL EXCEPT" AND WRITE THE NAME(S) OF JAMES L. ROONEY
SUCH NOMINEE(S) ON THE LINE(S) BELOW.) MICHAEL S. MATHEWS
--------------------------------------
--------------------------------------
FOR ABSTAIN AGAINST
2. To consider and vote upon a proposal
to approve KPMG LLP as Foilmark's / / / / / /
independent auditors for the fiscal
year ended June 30, 2001.
</TABLE>
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
Date: , 2000
---------------------------- ----------------------------- -------
Signature (title, if any) Signature, if held jointly
This Proxy must be signed exactly as the name of the Shareholder(s) appears
on this card.
