<PAGE> 1
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 [ ]
<TABLE>
Check the appropriate box:
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Conso International Corporation
- -------------------------------------------------------------------------------
(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)(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:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------
(3) Filing Party:
-------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 9, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Conso International Corporation (the "Company") will be held at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P., Bank of America Corporate Center,
100 North Tryon Street, Suite 4200, Charlotte, North Carolina 28202, on
Tuesday, November 9, 1999, at 9:00 a.m., local time, for the purpose of
considering and acting upon the following:
1. Election of six Directors.
2. Ratification of the selection of Deloitte & Touche
LLP as independent public accountants for the fiscal
year ending July 1, 2000.
3. Any and all other matters that may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September
15, 1999 as the record date for determining the shareholders entitled to notice
of and to vote at the meeting and any adjournment thereof, and only holders of
Common Stock of the Company of record at such date will be entitled to notice
of or to vote at the meeting.
THE BOARD OF DIRECTORS WILL APPRECIATE THE PROMPT RETURN OF THE ENCLOSED
PROXY, DATED AND SIGNED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT
IS EXERCISED AND WILL NOT BE EXERCISED IF YOU ATTEND THE MEETING AND VOTE IN
PERSON.
By Order of the Board of Directors
J. Cary Findlay
Chairman, President and
Chief Executive Officer
Union, South Carolina
September 22, 1999
<PAGE> 3
CONSO INTERNATIONAL CORPORATION
P. O. BOX 326
513 N. DUNCAN BYPASS
UNION, SOUTH CAROLINA 29379
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of proxies to be used at the Annual Meeting of
Shareholders of Conso International Corporation, a South Carolina corporation
(the "Company"), to be held at the offices of Kennedy Covington Lobdell &
Hickman, L.L.P., Bank of America Corporate Center, 100 North Tryon Street,
Suite 4200, Charlotte, North Carolina 28202, at 9:00 a.m., local time, on
Tuesday, November 9, 1999. This Proxy Statement and accompanying proxy are
first being sent to the shareholders of the Company on or about September 22,
1999.
Solicitation other than by mail may be made personally and by
telephone by regularly employed officers and employees of the Company who will
not be additionally compensated therefor. The Company will request brokers,
dealers, banks or voting trustees, or their nominees, who hold stock in their
names for others or hold stock for others who have the right to give voting
instructions to forward proxy materials to their principals and request
authority for the execution of the proxy and will reimburse such institutions
for their reasonable expenses in so doing. The total cost of soliciting proxies
will be borne by the Company.
Any proxy delivered in the accompanying form may be revoked by the
person executing the proxy at any time before the authority thereby granted is
exercised by written request addressed to Secretary, Conso International
Corporation, P.O. Box 326, Union, South Carolina 29379 or by attending the
meeting and electing to vote in person. Proxies received in such form will be
voted as therein set forth at the meeting or any adjournment thereof.
The only matters to be considered at the meeting, so far as known to
the Board of Directors, are the matters set forth in the Notice of Annual
Meeting of Shareholders, and routine matters incidental to the conduct of the
meeting. However, if any other matters should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy, or their substitutes, to vote the proxy in
accordance with their judgment on such matters.
Shareholders present or represented and entitled to vote on a matter
at the meeting or any adjournment thereof will be entitled to one vote on such
matter for each share of Common Stock of the Company held by them of record at
the close of business on September 15, 1999, which is the record date for
determining the shareholders entitled to notice of and to vote at the meeting
or any adjournment thereof. Voting on all matters, including the election of
Directors, will be by voice vote or by show of hands, unless the holders of at
least 25% of the shares represented at the meeting and entitled to vote on such
matter demand a vote by ballot prior to the vote. The number of shares of
Common Stock of the Company outstanding on September 15, 1999 was 7,334,177.
PRINCIPAL SHAREHOLDERS
At September 1, 1999, the only persons known to the Company to be the
beneficial owners of more than 5% of the Common Stock of the Company were as
follows:
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF SHARES AND
NAME AND ADDRESS OF BENEFICIAL NATURE OF BENEFICIAL PERCENTAGE OF COMMON
OWNER OWNERSHIP(1) STOCK OUTSTANDING
------------------------------ -------------------- --------------------
<S> <C> <C>
J. Cary Findlay 3,076,033(2) 41.9%
513 N. Duncan Bypass
Union, SC 29379
Royce & Associates, Inc. 791,475(3) 10.8%
1414 Avenue of the Americas
New York, NY 10019
FMR Corp. 748,050(4) 10.2%
82 Devonshire Street
Boston, MA 02109
IDS Diversified Equity Income Fund 407,250(5) 5.6%
IDS Tower 10
Minneapolis, MN 55440
</TABLE>
- ------------------
(1) Unless otherwise indicated, each shareholder has sole voting and sole
investment power with respect to all shares beneficially owned.
(2) Includes 68,500 shares held by the Findlay Charitable Foundation, of
which Mr. Findlay is a director and officer, and 63,020 shares held by
the Findlay-Conso Education Foundation, of which Mr. Findlay is a
director and officer. Also includes 78,788 shares that Mr. Findlay
holds jointly with his wife, Konstance J. K. Findlay who is Senior
Vice President-Business Development of the Company. Excludes 1,940
shares and options to purchase 10,200 shares (all of which are
presently exercisable or exercisable within 60 days) held by Mr.
Findlay's wife individually, as to which shares Mr. Findlay disclaims
beneficial ownership.
(3) The information concerning beneficial ownership set forth above and in
this note is derived from an Amendment No. 2 to Schedule 13G dated
March 11, 1999. Royce & Associates, Inc. ("RAI"), Royce Management
Company ("RMC") and Charles M. Royce, as a group, are the beneficial
owners of 791,475 shares of the Company's Common Stock. Mr. Royce may
be deemed to be a controlling person of RMC and RAI and to have sole
voting and dispositive power with respect to all shares owned by them.
Mr. Royce does not own any shares other than through RAI and RMC, and
disclaims beneficial ownership of the shares held by RAI and RMC.
(4) The information concerning beneficial ownership set forth above and in
this note is derived from an Amendment No. 3 to Schedule 13G dated
February 1, 1999. FMR Corp. ("FMR") may be deemed to have sole
dispositive power with respect to all of such shares because its
wholly-owned subsidiary, Fidelity Management & Research Company
("Fidelity"), acts as investment adviser to the Fidelity Low-Priced
Stock Fund (the "Fund"). The Schedule 13G reported that (a) the Fund
owned all of such shares, (b) Edward C. Johnson III, FMR Corp.,
through its control of Fidelity, and the Fund each has sole
dispositive power with respect to such shares, (c) the Board of
Trustees of the Fund has sole voting power with respect to such
shares, (d) neither Mr. Johnson, FMR nor Fidelity has voting power
with respect to such shares and (e) through ownership of FMR and a
shareholders' agreement, members of Mr. Johnson's family and trusts
for their benefit may be deemed to form a controlling group with
respect to FMR.
(5) The information concerning beneficial ownership set forth above and in
this note is derived from an Amendment No. 1 to Schedule 13G dated
August 31, 1995. American Express Financial Corporation, a registered
investment adviser, has reported that such shares are held by IDS
Diversified Equity Income Fund, an investment company advised by it.
American Express Financial Corporation is a subsidiary of American
Express Company, which disclaims beneficial ownership of all such
shares.
The following table sets forth, as of September 1, 1999, information
as to the beneficial ownership of the Common Stock by all Directors and
executive officers of the Company as a group and by S. Duane Southerland, Jr.,
2
<PAGE> 5
Judith Raymond Hadjandreas, Frank J. Rizzo, Louis S. Oltman and William M.
Stewart. Messrs. Southerland, Rizzo, Oltman and Stewart and Ms. Hadjandreas are
those persons named in the Summary Compensation Table who are not also nominees
as Directors. Information with respect to the beneficial ownership of the
Common Stock by J. Cary Findlay and the other Directors (and nominees) is
contained in the table under "Election of Directors."
<TABLE>
<CAPTION>
NUMBER OF SHARES AND
NAME OF NATURE OF BENEFICIAL PERCENTAGE OF COMMON
BENEFICIAL OWNER OWNERSHIP(1) STOCK OUTSTANDING
---------------- ------------ -----------------
<S> <C> <C>
Directors and executive 3,266,628(2) 44.7%
Officers as a group
(13 persons)
S. Duane Southerland, Jr. 0 (3)
Judith Raymond Hadjandreas 1,000(4) (3)
Frank J. Rizzo 1,000(4) (3)
Louis S. Oltman 2,300(4) (3)
William M. Stewart 12,150(5) (3)
</TABLE>
- ----------------------------
(1) Except as otherwise indicated in this Proxy Statement, all shares are
currently issued and outstanding and each Director and executive
officer has sole voting and investment power with respect to all
shares beneficially owned. Share amounts are rounded to the nearest
whole share.
(2) Includes an aggregate of 41,108 shares subject to options that are
presently exercisable or exercisable within 60 days. Includes 27,000
shares held by the wife of C.V. Balakrishnan, an executive officer of
the Company, as to which shares Mr. Balakrishnan disclaims beneficial
ownership. Also includes and excludes certain shares as reflected in
the notes to the table under "Election of Directors."
(3) Less than 1%.
(4) Includes an aggregate of 1,000 shares subject to options that are
presently exercisable or exercisable within 60 days.
(5) Includes an aggregate of 11,925 shares subject to options that are
presently exercisable or exercisable within 60 days.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of Directors shall
not be less than one nor more than nine, as determined from time to time by
resolution of the shareholders or the Board of Directors. The Board of
Directors has fixed the number of Directors to be elected at the meeting at
six.
At the meeting, six Directors will be elected to serve, subject to the
provisions of the Bylaws, until the 2000 Annual Meeting of Shareholders and
until their successors are duly elected and qualified. Directors are elected by
a plurality of the votes cast by the holders of the shares entitled to vote in
the election of Directors at a meeting at which a quorum is present. Provided a
quorum is present, abstentions and shares not voted are not taken into account
in determining a plurality. A quorum consists of a majority of votes entitled
to be cast. It is the intention of the persons named in the accompanying proxy
to vote all proxies solicited by the Board of Directors FOR the six nominees
listed below unless authority to vote for the nominees or any individual
nominee is withheld by a shareholder in such shareholder's proxy. If for any
reason any nominee shall not become a candidate for election as a Director at
the meeting, an event not now anticipated, the proxies will be voted for up to
six nominees including any substitutes that may be designated by the Board of
Directors.
The nominees for the Board of Directors are: J. Cary Findlay, Antony
W. Laughton, John H. Maxheim, James H. Shaw, Konstance J.K. Findlay and Sara H.
Bissell. Set forth below is information about the nominees.
3
<PAGE> 6
Each of the nominees is currently a member of the Board of Directors. Mr.
Findlay has been a Director of the Company since 1986. Messrs. Laughton,
Maxheim and Shaw were first elected Directors on January 6, 1994. Ms. Findlay
was elected Director on May 15, 1995 and Ms. Bissell was elected Director on
November 9, 1998. Mr. Findlay and Ms. Findlay are husband and wife.
<TABLE>
<CAPTION>
NUMBER OF
SHARES AND
NATURE OF PERCENTAGE OF
NAME OF INFORMATION ABOUT BENEFICIAL COMMON STOCK
DIRECTOR OR NOMINEE (1) AGE DIRECTOR OR NOMINEE OWNERSHIP(2) OUTSTANDING
----------------------- --- ------------------- ------------ -----------
<S> <C> <C> <C>
J. Cary Findlay 61 Chairman of the Board since 1986; 3,076,033(3) 41.9%
President and Chief Executive Officer
of the Company from December 1987
to May 1995 and since August 1998
Antony W. Laughton 66 Consultant to British Trimmings 54,525(4) (5)
Limited, a wholly-owned subsidiary
of the Company ("British
Trimmings"), since October 1997;
Managing Director of British
Trimmings from 1974 to September
1997
John H. Maxheim 64 Chairman, Chief Executive Officer and 11,494 (5)
a Director of Piedmont Natural
Gas Company (a utility company)
since 1984
James H. Shaw 70 Retired; Chairman of Consolidated 2,500 (5)
Ivey's (department store chain) from
1986 to 1989; Chief Executive Officer
of Consolidated Ivey's from 1986 to
1988; Director of The Cato
Corporation (apparel retailer)
Konstance J. K. Findlay 52 Senior Vice President-Business 222,448(6) 3.0%
Development of the Company since May
1995; Vice President-International
Sales of the Company from January
1993 to May 1995; Vice
President-Production of the Company
from January 1992 to January 1993;
Production Manager of the Company
from November 1988 to January 1992
Sara H. Bissell 61 President of Treasures Unlimited, 2,078 (5)
Inc. (retail shop selling custom
linens, antiques and gifts) since 1983
</TABLE>
- ------------------
(1) The information about the Directors was furnished by them to the
Company.
(2) Except as otherwise indicated, all shares are currently issued and
outstanding and each shareholder has sole voting and investment power
with respect to all shares beneficially owned. Common Stock ownership
information is as of September 1, 1999.
(3) Includes 68,500 shares held by the Findlay Charitable Foundation, of
which Mr. Findlay is a
4
<PAGE> 7
director and officer, and 63,020 shares held by the Findlay-Conso
Education Foundation, of which Mr. Findlay is a director and officer.
Also includes 78,788 shares that Mr. Findlay holds jointly with his
wife, Konstance J. K. Findlay. Excludes 1,940 shares and options to
purchase 10,200 shares (all of which are presently exercisable or
exercisable within 60 days) held by Mr. Findlay's wife individually,
as to which shares Mr. Findlay disclaims beneficial ownership.
(4) Includes 42,750 shares held in trusts for the benefit of Mr.
Laughton's children, of which Mr. Laughton and his wife are trustees,
and 5,250 shares subject to options that are presently exercisable.
(5) Less than 1%.
(6) Includes 10,200 shares subject to options that are presently
exercisable or exercisable within 60 days, 68,500 shares held by the
Findlay Charitable Foundation, of which Ms. Findlay is a director and
officer, and 63,020 shares held by the Findlay-Conso Education
Foundation, of which Ms. Findlay is a director and officer. Also
includes 78,788 shares that Ms. Findlay holds jointly with her
husband, J. Cary Findlay. Excludes 2,865,725 shares held by Ms.
Findlay's husband, as to which shares Ms. Findlay disclaims beneficial
ownership.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met five times during the past fiscal year
ended July 3, 1999. Each Director, except Ms. Bissell, attended at least 75% of
the meetings of the Board of Directors and any Committees on which such
Director served during the period that he or she was a Director in the last
fiscal year. The Board of Directors of the Company has Executive, Compensation,
Audit and Nominating Committees.
The Executive Committee is composed of Messrs. Findlay and Maxheim and
is authorized to exercise all the powers and authority of the Board of
Directors that can be delegated to a committee under the South Carolina
Business Corporation Act. The Executive Committee met one time during the past
fiscal year.
The Compensation Committee is composed of Mr. Maxheim, Mr. Shaw and
Ms. Bissell and is responsible for making recommendations with respect to
compensation of executive officers and for other compensation matters (other
than the administration of the Company's 1993 Stock Option Plan). The
Compensation Committee met four times during the past fiscal year.
The Audit Committee is composed of Mr. Maxheim, Mr. Shaw and Ms.
Bissell and is responsible for reviewing the Company's financial statements,
audit reports, internal financial controls, internal audit procedures and the
services performed by the Company's independent public accountants, and for
making recommendations with respect to those matters to the Board of Directors.
The Audit Committee met four times during the past fiscal year.
The Nominating Committee is composed of Mr. Findlay, Mr. Maxheim and
Mr. Shaw. The function of the Nominating Committee is to search for and
recommend qualified, experienced candidates to be nominated for election as
Directors at annual shareholder meetings and to fill any vacancies on the Board
of Directors. The Nominating Committee will consider shareholder
recommendations for nominees with the potential nominee's consent. However, the
final determination of whether a candidate will be nominated to become a
Director is reserved for the Nominating Committee. Any shareholder
recommendations should be mailed to Nominating Committee, Attention: J. Cary
Findlay, Conso International Corporation, P.O. Box 326, Union, South Carolina
29379. The Nominating Committee did not meet during the past fiscal year.
5
<PAGE> 8
EXECUTIVE OFFICERS
Mr. Findlay, Chairman, President and Chief Executive Officer of the
Company, and Ms. Findlay, Senior Vice President-Business Development of the
Company, are each nominees for election as Directors. Information about the
Company's executive officers who are not also nominees for election as
Directors follows:
C. V. Balakrishnan, age 60, became Managing Director of British
Trimmings in August 1998. Mr. Balakrishnan, who joined British Trimmings in
1973, was Financial Director from 1981 to 1983 and served as Chief Operating
Officer from 1983 until September 1997 and as Co-Managing Director from October
1997 until August 1998.
John M. Davis, age 38, became Chief Accounting Officer of the Company
in August 1999. He joined the Company in October 1998 as the Corporate
Controller. Mr. Davis was the Corporate Account Manager for Salant Corporation,
a men's apparel company, from July 1993 to October 1998.
Judith Raymond Hadjandreas, age 52, became Senior Vice
President-Pattern Products of the Company in August 1998. In addition, Ms.
Hadjandreas has been Senior Vice President-Products of Simplicity Capital
Corporation since 1985. Simplicity Capital Corporation ("Simplicity") was
acquired by the Company in June 1998.
Louis S. Oltman, age 52, became Senior Vice President-Sales and
Marketing of the Company in August 1998. In addition, Mr. Oltman has been
Senior Vice President-Sales of Simplicity since 1991.
Frank J. Rizzo, age 43, became Senior Vice President of the Company
and Chief Operating Officer of Simplicity in August 1998. Mr. Rizzo was Senior
Vice President and Chief Financial Officer of Simplicity from 1991 until August
1998.
William M. Stewart, age 50, became Senior Vice President and Chief
Operating Officer-Conso Products in August 1998. Mr. Stewart previously served
as Vice President-Manufacturing of the Company from July 1988 to September 1997
and Co-Managing Director of British Trimmings from October 1997 to August 1998.
Richard A. Zonin, age 41, became Senior Vice President and Chief
Financial Officer of the Company in January 1999. Mr. Zonin was Vice President
of Finance of Simplicity from 1991 until January 1999.
Officers are appointed by the Board of Directors and serve at its
pleasure.
CERTAIN TRANSACTIONS
On July 1, 1998, the Company purchased real property owned jointly by
Mr. and Ms. Findlay in exchange for shares of the Company's Common Stock. The
Company issued 78,788 shares of Common Stock to Mr. and Ms. Findlay jointly as
consideration for the acquisition of the real property. Such consideration was
based upon a closing price of the Common Stock of $8.25 on July 1, 1998 and a
value of $650,000 (the Findlays' cost basis) for the real property, which was
less than its value based on an independent appraisal.
On August 17, 1999, Simplicity Limited, a subsidiary of the Company,
sold its wide fabric distribution business and various related assets to
Kaleidoscope Fabrics International Limited ("Kaleidoscope"), of which Gordon B.
Robinson, a former executive officer of the Company, is a principal. The
goodwill, plant, machinery and contracts of the business were sold for
approximately $10,000, while the inventory of the business will be sold over a
two year period for a price of between approximately $284,000 and $505,000,
depending on the date on which Kaleidoscope resells such inventory. In
connection with the transaction, Kaleidoscope also entered into a sublease for
space from Simplicity Limited for an annual rent of $19,068.
6
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended July 3, 1999, the following Directors
served on the Compensation Committee of the Board of Directors of the Company:
James H. Shaw, John H. Maxheim and Sara H. Bissell. During the fiscal year, no
executive officer of the Company served as a director or member of the
compensation committee (or committee performing similar functions) of any other
entity of which an executive officer served on the Board of Directors or
Compensation Committee of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company,
whose members are named below, provides overall guidance to the Company's
executive compensation process. The Committee's recommendations regarding the
compensation of the Chief Executive Officer and the other executive officers of
the Company are subject to approval by the Board. The Company's 1993 Stock
Option Plan is administered by a Stock Option Committee composed of Messrs.
Maxheim and Shaw, both of whom are members of the Compensation Committee. The
Stock Option Committee makes decisions with respect to grants under the
Company's 1993 Stock Option Plan.
The Committee's compensation policies are designed to fairly
compensate the executive officers of the Company for the effective exercise of
their responsibilities, their management of the business functions for which
they are responsible, the motivation of those officers and employees reporting
to them, their extended period of service to the Company and their dedication
and diligence in carrying out their responsibilities. In determining the
compensation of executive officers other than the Chief Executive Officer, the
Compensation Committee primarily considers the recommendations of the Chief
Executive Officer in connection with the annual reviews of the compensation and
bonuses of all management personnel, except that the compensation of Messrs.
Rizzo and Oltman is governed by certain employment agreements in place at or
prior to the Company's acquisition of Simplicity (see "Employment Agreements"
below) and the compensation of Mr. Balakrishnan is determined by his employment
agreement that was entered into at the time British Trimmings was acquired by
the Company. In granting stock options, the Stock Option Committee also
primarily considers the recommendations of the Chief Executive Officer. Such
compensation recommendations by the Chief Executive Officer are not
specifically related to corporate performance, but are based primarily upon the
Chief Executive Officer's subjective assessment of the individual performance
and contributions of the respective employees in light of the factors described
above, which are discussed with the Compensation Committee.
The compensation of Mr. Findlay, the Company's Chairman, Chief
Executive Officer and President, is currently $325,000 per year. Mr. Findlay's
salary had been $275,000 per year from the beginning of 1994 (shortly after the
Company's initial public offering) until August 1998, at which time it was
increased to $300,000. Mr. Findlay's compensation is not specifically related
to corporate performance.
The above report is presented by the following members of the
Compensation Committee: James H. Shaw, John H. Maxheim and Sara H. Bissell.
7
<PAGE> 10
SHAREHOLDER RETURN PERFORMANCE GRAPH
Presented below is a line graph comparing the percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return on Standard & Poor's Textile - Home Furnishings Index
(the "S&P Textile - Home Furnishings Index") and the Total Return Index for The
Nasdaq Stock Market (U.S. Companies) (the "Nasdaq Composite Index") for the
period commencing July 2, 1994 and ending July 3, 1999.
<TABLE>
<CAPTION>
July 2, 1994 July 2, 1995 June 29, 1996 June 28, 1997 June 27, 1998 July 3, 1999
<S> <C> <C> <C> <C> <C> <C>
CONSO INTERNATIONAL 100 101.82 177.27 200.46 135.00 94.09
CORPORATION
S&P TEXTILE - HOME 100 124.70 169.06 181.72 163.04 160.03
FURNISHINGS
NASDAQ COMPOSITE INDEX 100 133.48 171.36 208.39 275.07 392.16
</TABLE>
This graph assumes that $100 was invested in the Company's Common
Stock, on the S&P Textile - Home Furnishings Index and on the Nasdaq Composite
Index on July 2, 1994, and that dividends were reinvested.
8
<PAGE> 11
EXECUTIVE COMPENSATION
The table below shows the compensation paid or accrued by the Company
for the three fiscal years ended July 3, 1999 to or for the account of the
Company's Chief Executive Officer, its former Chief Executive Officer and its
four other most highly compensated executive officers at July 3, 1999
(collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
-------------------------------------------- -----------
OTHER SECURITIES
NAME AND PRINCIPAL FISCAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
------------ ------ --------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Cary Findlay(1)(2) 1999 $ 300,000 $ 75,000 (3) -- $ 4,500(4)
Chairman, President and 1998 $ 275,000 -- (3) -- $ 4,500(4)
Chief Executive Officer 1997 $ 275,000 -- (3) -- $ 4,500(4)
S. DuaneSoutherland, Jr 1999 $ 26,827 -- (3) -- $ 216,519(5)
President and Chief 1998 $ 221,250 $ 15,000 $ 38,765(6) -- $ 4,500(4)
Executive Officer - 1997 $ 212,500 $ 20,000 $ 31,867(6) 4,500 $ 4,500(4)
Conso US (until
August 1998)(2)
Judith Raymond Hadjandreas 1999 $ 187,000 $ 63,000 (3) 3,000 $ 6,400(4)
Senior Vice President - 1998 (7) (7) (7) -- (7)
Pattern Products 1997 (7) (7) (7) -- (7)
Frank J. Rizzo 1999 $ 184,140 $ 63,000 (3) 3,000 $ 6,400(4)
Senior Vice President and 1998 (7) (7) (7) -- (7)
Chief Operating Officer - 1997 (7) (7) (7) -- (7)
Simplicity
Louis S. Oltman 1999 $ 184,140 $ 63,000 (3) 3,000 $ 6,400(4)
Senior Vice President - 1998 (7) (7) (7) -- (7)
Sales & Marketing 1997 (7) (7) (7) -- (7)
William M. Stewart 1999 $ 160,000 $ 40,000 (3) -- $ 4,500(4)
Chief Operating Officer - 1998 $ 141,000 $ 10,000 (3) -- $ 4,500(4)
Conso US 1997 $ 114,500 $ 10,000 (3) 4,500 $ 3,857(4)
</TABLE>
(1) Excludes all compensation paid or awarded to Mr. Findlay's wife,
Konstance J. K. Findlay.
(2) Mr. Southerland resigned as President and Chief Executive Officer
effective August 10, 1998, at which time Mr. Findlay assumed such
offices.
(3) The Named Executive Officer did not receive personal benefits during
such year (valued at the aggregate incremental cost to the Company and
its subsidiaries) in excess of 10% of salary and bonus.
(4) Represents a contribution to the Named Executive Officer's 401(k)
Plan.
(5) Includes $202,500 of severance payments paid or accrued, a $12,981
payment for unused vacation and a 401(k) contribution of $1,038.
(6) Includes (a) $32,296 in relocation expenses for fiscal 1998 and (b)
$16,728 in relocation expenses and $9,132 in country club membership
expenses for fiscal 1997.
(7) No information is provided for amounts paid to the Named Executive
Officers by Simplicity prior to its acquisition by the Company in June
1998.
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<PAGE> 12
The table below sets forth information relating to the grant of stock
options during the fiscal year ended July 3, 1999 to each Named Executive
Officer and the potential realizable value at assumed annual rates of return.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SHARES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ----- ----------- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
J. Cary Findlay -- -- -- -- -- --
S. Duane Southerland, Jr -- -- -- -- -- --
Frank J. Rizzo 3,000(1) 23.8% $ 7.00 8/21/03 $5,802 $12,821
Judith Raymond Hadjandreas 3,000(1) 23.8% $ 7.00 8/21/03 $5,802 $12,821
Louis S. Oltman 3,000(1) 23.8% $ 7.00 8/21/03 $5,802 $12,821
William M. Stewart -- -- -- -- -- --
</TABLE>
- ------------------
(1) These options become exercisable, subject to continued employment, in
three equal annual installments commencing August 21, 1999.
The table below sets forth information relating to the exercise of
stock options during the fiscal year ended July 3, 1999 by each Named Executive
Officer and the fiscal year-end number and value of unexercised stock options.
AGGREGATED OPTION EXERCISES IN
FISCAL 1999 AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
J. Cary Findlay -- -- 0/0 0/0
S. Duane Southerland, Jr -- -- 0/0 0/0
Judith Raymond Hadjandreas -- -- 0/3,000 0/0
Frank J. Rizzo -- -- 0/3,000 0/0
Louis S. Oltman -- -- 0/3,000 0/0
William M. Stewart -- -- 9,450/2,475 0/0
</TABLE>
DIRECTOR COMPENSATION
Directors who are officers or employees of the Company receive no
additional compensation for serving as Directors. Directors who are not
compensated as officers or employees of the Company are paid a quarterly
retainer fee of $2,000, a fee of $1,400 for each meeting of the Board of
Directors attended and a fee of $300 for each meeting of any Committee thereof
attended. All Directors are also reimbursed for out-of-pocket expenses incurred
in attending meetings of the Board of Directors and any of its Committees.
Under the Company's Stock Election Plan for Non-Employee Directors
(the "Director Stock Plan"), Directors of the Company who are not regular
employees of the Company or its subsidiaries may elect to receive all or a
portion of the cash compensation to which they would otherwise be entitled in
the form of shares of the
10
<PAGE> 13
Company's Common Stock. The number of shares of Common Stock to be issued to a
Director upon such an election is determined based upon 90% of the fair market
value of the Common Stock on the date of issuance (which is five business days
after the date of each quarterly meeting). The Director Stock Plan was adopted
and approved by the Board of Directors on January 28, 1997. During the fiscal
year ended July 3, 1999, Mr. Maxheim was issued 3,123 shares of Common Stock
and Ms. Bissell was issued 1,078 shares of Common Stock pursuant to the
Director Stock Plan.
EMPLOYMENT AGREEMENTS
The Company is party to an employment agreement with Mr. Southerland,
who resigned as President and Chief Executive Officer of the Company effective
August 10, 1998. Pursuant to this agreement, Mr. Southerland is entitled to
severance payments for a period of up to 15 months after termination of his
employment (or, if earlier, until Mr. Southerland obtains other full-time
employment) at the same rate as Mr. Southerland's $225,000 annual base salary
immediately prior to the termination of his employment with the Company.
The Company is party to an employment agreement with Mr. Rizzo. The
agreement provides for a base salary equal to Mr. Rizzo's salary at Simplicity
prior to the Company's acquisition of Simplicity and certain other benefits.
The agreement also provides for Mr. Rizzo to receive, upon his resignation, a
payment equal to (i) 12 months of his base salary plus (ii) any unused vacation
time (up to 20 days) (the "Vacation Payment") plus (iii) an amount equal to the
present value of his accrued benefits under Simplicity's supplemental executive
retirement plan (the "SERP Payment") plus (iv) a pro-rata portion of any bonus
earned by Mr. Rizzo under the Company's management bonus plan (the "Bonus
Payment"). Furthermore, if Mr. Rizzo is terminated without cause, he will be
entitled to (i) severance payments for a period of up to 5 months (or, if
earlier, until Mr. Rizzo obtains other full-time employment) as provided in
Simplicity's severance pay plan, (ii) a lump sum retention payment equal to 7
months of Mr. Rizzo's base salary, (iii) an additional retention payment equal
to the amount of any severance payments forfeited due to Mr. Rizzo's obtainment
of other full-time employment payable on the date the last severance payment
would have been made if not forfeited, (iv) the Vacation Payment, (v) the SERP
Payment and (vi) the Bonus Payment.
Simplicity Pattern Co., Inc., a wholly-owned subsidiary of the
Company, is party to an employment agreement with Mr. Oltman. The agreement
provides for Mr. Oltman's employment until February 14, 2001 at a base salary
of $184,140 per year (subject to annual review) and certain other benefits. If
Mr. Oltman is terminated without cause (or because of death or disability) or
Mr. Oltman resigns with cause, he is entitled the sum of (i) his base salary
for the term of the agreement, (ii) his bonus for the year of termination (or
for the term of the agreement, if termination is by death or disability) and
(iii) his benefits for the term of the agreement. The agreement subjects Mr.
Oltman to restrictions on competition with the Company for the greater of (a)
12 months after termination of his employment or (b) the term of the agreement.
The Company has a severance policy in place for all full-time,
non-union salaried employees (including Messrs. Findlay, Rizzo, Oltman and
Stewart and Ms. Hadjandreas). In the event covered employees lose their jobs
for reasons over which they have no control, they are entitled to severance
payments in an amount up to five months' base pay, depending upon years of
service.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers and certain persons who own more
than 10% of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the Common Stock and other equity securities. Directors, executive officers and
such greater than 10% shareholders are required to furnish the Company copies
of all such reports they file. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended July 3, 1999, all Section 16(a) filing requirements applicable to
Directors, executive officers and greater than 10% shareholders were complied
with on a timely basis, except that Mr. and Ms. Findlay each failed to file a
Form 4 for July 1998 reporting the sale of 85 shares by Ms. Findlay and a Form
4 for August 1998 reporting the sale of 135 shares by Ms. Findlay. These
transactions were reported on each of Mr. and Ms. Findlay's most recent Form 5.
11
<PAGE> 14
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP as
independent public accountants to audit the financial statements of the Company
for the fiscal year ending July 1, 2000. This selection is being presented to
the shareholders for their ratification at the Annual Meeting of Shareholders.
Deloitte & Touche LLP audited the Company's financial statements for the fiscal
year ended July 3, 1999 and prior years and is considered well qualified.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting of Shareholders with an opportunity to make a statement if
they desire to do so, and they are expected to be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR ratification of the
selection of Deloitte & Touche LLP as independent public accountants to audit
the financial statements of the Company for the fiscal year ending July 1,
2000, and proxies solicited by the Board of Directors will be so voted unless
shareholders specify a different choice.
If the shareholders do not ratify the selection of Deloitte & Touche
LLP, the selection of independent public accountants will be reconsidered by
the Board of Directors.
CHANGE IN ACCOUNTANTS FOR SUBSIDIARY
On December 5, 1997, the Company's Audit Committee and its Board of
Directors approved expanding the engagement of Deloitte & Touche LLP, the
Company's principal accountant, to include the audit of the financial
statements of British Trimmings Limited, a significant subsidiary of the
Company, for the fiscal year ending June 27, 1998. For more than the previous
two fiscal years, the financial statements of British Trimmings Limited had
been audited by Grant Thornton and, in its audit reports as principal
accountant for the Company, Deloitte & Touche LLP had expressed reliance on the
reports of Grant Thornton as to British Trimmings Limited. As a result of the
expansion of the engagement of Deloitte & Touche LLP, Grant Thornton was no
longer engaged to audit the financial statements of British Trimmings Limited,
but may be engaged to provide or continue to provide other accounting services
for the Company and its subsidiaries.
Neither the principal accountant's reports on the financial statements
of the Company nor Grant Thornton's reports on the financial statements of
British Trimmings Limited for the two most recent fiscal years ended June 28,
1997 contained an adverse opinion or a disclaimer of opinion or was qualified
or modified as to uncertainty, audit scope or accounting principles.
During the Company's two most recent fiscal years ended June 28, 1997
and subsequent periods, (1) there were no disagreements with Grant Thornton on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which disagreement(s), if not
resolved to the satisfaction of Grant Thornton, would have caused it to make
reference to the subject matter of the disagreement(s) in its report, and (2)
no "reportable event" (as defined in Item 304(a)(1)(v) of Regulation S-K)
occurred.
As the Company's principal accountant, Deloitte & Touche LLP was
regularly consulted by the Company as to various accounting, auditing and
financial reporting matters during the two most recent fiscal years and
subsequent interim periods prior to the expansion of its engagement to include
the audit of British Trimmings Limited; however, none of the matters as to
which the Company consulted Deloitte & Touche LLP during such periods were with
regard to the application of accounting principles to specified transactions or
the type of audit opinions that might be rendered on the Company's financial
statements, in either case as related only to British Trimmings Limited.
SHAREHOLDER PROPOSALS
Any proposal that a shareholder intends to present for action at the
2000 Annual Meeting of Shareholders, currently scheduled for November 14, 2000,
must be received by the Company no later than May 28, 2000, in order for the
proposal to be included in the proxy statement and form of proxy for the 2000
Annual Meeting of Shareholders. In addition, if the Company receives notice of
shareholder proposals after August 11, 2000, then the persons named as proxies
in such proxy statement and form of proxy will have discretionary authority to
vote on such shareholder proposals, without discussion of the matters in the
proxy statement and without such proposals
12
<PAGE> 15
appearing as separate items on the proxy card. Shareholders proposals should be
sent to Secretary, Conso International Corporation, P.O. Box 326, Union, South
Carolina 29379.
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
UPON WRITTEN REQUEST OF A SHAREHOLDER, THE COMPANY WILL FURNISH
WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JULY 3, 1999 TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
OR BEFORE OCTOBER 1, 1999. SUCH REQUEST SHOULD BE SUBMITTED TO INVESTOR
RELATIONS, CONSO INTERNATIONAL CORPORATION, P. O. BOX 326, UNION, SOUTH
CAROLINA 29379.
13
<PAGE> 16
CONSO INTERNATIONAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 9, 1999
(CONSO INTERNATIONAL CORPORATION LOGO)
The undersigned hereby appoints J. Cary Findlay and Richard A. Zonin, and
each or either of them, proxies, with full power of substitution, with the
powers the undersigned would possess if personally present, to vote, as
designated below, all shares of Common Stock of the undersigned in Conso
International Corporation at the Annual Meeting of Shareholders to be held on
November 9, 1999, and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED (I) FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS, AND (II) FOR
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS. The Board of Directors recommends voting FOR each item.
1. ELECTION OF DIRECTORS: Nominees are J. Cary Findlay, Antony W. Laughton,
John H. Maxheim, James H. Shaw, Konstance J. K. Findlay and Sara H. Bissell.
<TABLE>
<S> <C> <C>
[ ] FOR all listed nominees (except do not vote for [ ] WITHHOLD AUTHORITY to vote for the listed
the nominee(s) whose name(s) I have written below) nominees
____________________________________________________________________________________________________________
</TABLE>
2. RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Continued and to be signed on the reverse)
(Continued from other side)
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy
Statement is hereby acknowledged.
PLEASE DATE AND SIGN EXACTLY AS PRINTED BELOW AND RETURN PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
Dated: , 1999
------------------------
-------------------------------------
-------------------------------------
(When signing as attorney, executor,
administrator, trustee, guardian,
etc., give title as such. If joint
account, each joint owner should
sign.)
