SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934 (Amendment No. )
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Interiors, Inc.
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
INTERIORS
December 4, 2000
Dear Fellow Stockholders:
You may have received the November 22, 2000 letter from the so-called
"Broderick Committee" that attempts to frighten you into concerns about the
future of our Company, and makes what we believe to be libelous statements about
myself and our management.
The Broderick Committee consists of three employees of one of our
subsidiaries and Mr. Broderick, a former shareholder of that subsidiary, none of
whom have invested any of their own funds to buy any stock in Interiors.
While the Broderick letter is false in the many ways detailed in the
attached notice, the basic point I want to make with you is that Interiors is
on-track and making substantial progress, and will continue to do so. Recent
milestones include:
o Completion of the rapid growth phase as well as the
consolidation phase.
o Addition of Robert Conologue as Executive Vice President and
Chief Financial Officer. Formerly Robert served as Senior Vice
President, Finance for Warnaco, Inc., a 2 billion dollar
revenue New York Stock exchange listed company. In addition
Robert served as Chief Operating Officer of Calvin Klein
Jeanswear, a division of Warnaco.
o Assistance of Jim Bloise, an executive with very substantial
operating experience including serving as a Senior Vice
President for Operations for Federated Department Stores, a
customer of ours.
o Income from operations for the quarter ended September 30,
2000 was $1.6 million, compared to a loss of $.7 million in
the same quarter last year.
Our efforts to consolidate the rapid expansion Interiors has undergone in
the last two years are now starting to bear fruit. Remember, our sales have
exploded from $4.8 million for FYE 1997 to approximately $200 million today. We
have faith in our course of action, and that is why I have staked my future on
our business plan. None of the members of the so-called Broderick Committee have
the experience or the personal stake necessary to get Interiors through this
transition.
INTERIORS, INC.
320 Washington Street Mount Vernon, NY 10553
telephone 914 665 5400 facsimile 914 665 5469
<PAGE>
We ask for your support in allowing us to complete the business plan that
we began and have pursued diligently on your behalf. Don't let the Broderick
Committee grab control of your Company's Board of Directors. There is no doubt
in our minds that the members of the Broderick Committee cannot carry out our
business plan and offer no plan of their own. Under these circumstances, we urge
you to support your management.
Please sign, date and mail your proxy card TODAY. Remember, the annual
meeting will be held on Friday, December 15, 2000.
We appreciate your prompt attention to voting your shares.
Very truly yours,
Max Munn
Chairman, President & CEO
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If you have any questions, require assistance in voting your shares, or need
additional copies of Interiors' proxy materials, please call our proxy
solicitor:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
[email protected]
(212) 929-5500 (call collect)
or
TOLL-FREE (800) 322-2885
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<PAGE>
Important Notice Concerning the Broderick Letter
The Broderick letter contains numerous misstatements of fact and fails to
include information that is necessary for you to make a sound decision. These
include:
(a) "Continuing Losses"
The Broderick letter states that Interiors has incurred "approximately
$26.6 million" of losses "during the past two years".
In fact, during the last two years the Company continued to aggressively
grow its revenues from $13.4 million in 1998 to $170.3 million in 2000 through
acquisition. The fact is that the $26 million of "losses" in the last two years
were actually the result of an aggressive consolidation and integration program,
write offs of assets, including goodwill and losses related to the integration
of the Company's West Coast decorative accessory businesses (a consolidation of
six small manufacturers), some of which the Company is in the process of
selling. Most importantly, these write-offs and losses are not expected to recur
in the future.
For example, income from operations for the quarter ended September 30,
2000 was $1.6 million compared to the loss from operations of $.7 million in the
same quarter last year. This positive momentum continued through October when
the West Coast decorative accessory business reported net income of $130,000
compared to a net loss of $682,000 in the same month last year.
(b) "Negative Working Capital and Loan Defaults"
The Broderick letter alleges that Interiors is "experiencing severe
negative working capital" and has defaulted on various lines of credit. We
believe this is a misleading and incomplete statement.
At June 30, 2000, the Company had current assets of $51.0 million and
current liabilities of $40.8* million. This represents working capital of over
$10 million with cash-on-hand of over $6.5 million. While the current liability
classification is appropriate for financial reporting purposes, in fact, neither
of our two primary lenders have issued a notice of default to accelerate their
debt, and our senior lender just increased our loan availability, part of a $25
million line of credit at 1/2 % over prime!
* This amount excludes $30.8 million of long-term debt classified as
short-term due to technical defaults largely a result of the Company's effort to
prevent additional stockholder dilution. Further, the Company is currently
negotiating an amended agreement with the mezzanine lenders, which it expects to
complete shortly, which would re-classify this debt as long-term.
<PAGE>
(c) "Questionable Loans and Cash Payments"
The Broderick letter charges that the company's debt carries an extreme
interest rate. We again believe this is misleading. The fact is the companies
mezzanine debt was incurred by the Company to avoid having other lenders convert
their debt into common stock at the currently depressed stock price of
Interiors, which would have diluted the interest of all common stockholders.
As to the criticism of the debt owed by Mrs. Munn, this does not represent
cash advanced from Interiors, but are actually obligations incurred by her to
buy Interiors stock and on which interest is owed.
The Broderick letter charges that Mr. Munn's relatives have been unfairly
compensated at the expense of Interiors. Furthermore, the letter implies that
Mr. Munn acquiesced in these payments as a favor to his relatives, and that is
simply incorrect.
In fact, the payments to Mr. Munn's father and sister arose out of the
settlement of litigation against Interiors that may have caused Interiors'
bankruptcy and which litigation sought much more than the amounts that were paid
in settlement of those suits. Most importantly, in each of those civil actions,
Mr. Munn fought on behalf of Interiors in opposition to the claims of his sister
and father who were former officers and directors of the Company.
(d) "Max Munn's Compensation Arrangements"
The Broderick letter attacks Mr. Munn's compensation and past business
history. The letter fails to reflect that over the last four years, Mr. Munn's
salary has averaged less than $175,000 and it was only $109,610 as little as
four years ago. In criticizing Mr. Munn's current salary, the Broderick group
ignores the growth of Interiors' gross sales from $4.7 million to approximately
$200 million this year.
With respect to Mr. Munn's "prior business history", the Broderick letter
alleges that Mr. Munn was an officer or director of two companies that filed for
bankruptcy. In fact, Mr. Munn was not an officer or director at the time these
companies did file for bankruptcy and disassociated himself from either company
prior to the time they went into bankruptcy.
We urge you not to be misled by these false statements and half-truths.
Your Board of Directors is continuing to work hard for your investments. Please
vote your proxy in support of your Company today.
<PAGE>
INTERIORS, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 1999
Max Munn, Robert Conologue and David A. Schwartz, and each of them, with
full power of substitution, are hereby authorized to represent and to vote the
shares of Class A Common Stock, $.001 par value, and Class B Common Stock, $.001
par value, of Interiors, Inc. held of record by the undersigned on October 27,
2000, as directed and, in their discretion, on all other matters which may
properly come before the Annual Meeting of Stockholders to be held on December
15, 2000 and at any adjournment or postponement thereof, as if the undersigned
were present and voting at the meeting.
Whether or not you expect to attend the meeting, you are urged to execute
and return this proxy, which may be revoked by you at any time prior to its use.
The shares represented by this proxy will be voted as directed by the
stockholder. Where no direction is given when the duly executed proxy is
returned, such shares will be voted FOR all proposals.
The Board of Directors recommends a vote FOR each of the nominees named in
Proposal No. 1 and FOR Proposal No. 2 and Proposal No, 3.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS: 1) Max Munn, 2) Roger Lourie, 3) Richard Josephberg
and 4) James G. Bloise
|_| For All Nominees |_| Withhold All Nominees
To withhold authority to vote for any individual nominee(s), write the
nominee's names on the space(s) provided below:
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PROPOSAL NO. 2:
RATIFICATION OF APPOINTMENT FOR |_| AGAINST |_| ABSTAIN |_|
OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS.
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PROPOSAL NO. 3:
APPROVAL OF ONE FOR TEN FOR |_| AGAINST |_| ABSTAIN |_|
REVERSE STOCK SPLIT OF THE
COMPANY'S OUTSTANDING COMMON
STOCK WITHOUT ANY DECREASE
IN THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
Dated___________________, 2000 ________________________________________
Signature
Dated___________________, 2000 ________________________________________
Signature if held jointly
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
