<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 Section 240.14a-11(c) or
Section 240.14a-12
PALM HARBOR HOMES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / 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:
- - --------------------------------------------------------------------------------
<PAGE> 2
PALM HARBOR HOMES, INC.
15303 DALLAS PARKWAY, SUITE 800
DALLAS, TEXAS 75248
_____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 17, 1996
_____________________
To the Shareholders of Palm Harbor Homes, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Palm
Harbor Homes, Inc. (the "Company") will be held at 10:30 a.m., Dallas time, on
Wednesday, July 17, 1996, at The Grand Kempinski Hotel, 15201 Dallas Parkway,
Dallas, Texas, to consider and act upon the following matters:
1. To elect seven members of the Company's Board of Directors to hold
office until the next Annual Meeting of Shareholders and until their
respective successors shall have been elected and qualified.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the year ending March 28, 1997.
3. Such other matters as may properly be brought before the Annual
Meeting or any adjournment thereof.
Only shareholders of record of the Company at the close of business on
May 27, 1996 will be entitled to notice of and to vote at the Annual Meeting or
any adjournment thereof.
Your vote is important. To ensure that your shares will be
represented at the Annual Meeting, whether or not you plan to attend the Annual
Meeting, please complete, date, sign and mail the enclosed proxy promptly in
the enclosed postage-paid envelope. Shareholders who attend the Annual Meeting
in person may revoke their proxies and vote in person if they so desire.
By Order of the Board of Directors
James P. Nicholson
Secretary
June 10, 1996
<PAGE> 3
PALM HARBOR HOMES, INC.
___________________
PROXY STATEMENT
___________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 17, 1996
___________________
This Proxy Statement and the accompanying proxy is being furnished to
shareholders in connection with the solicitation of proxies by the Board of
Directors of Palm Harbor Homes, Inc., a Florida corporation (the "Company"),
for use at the Annual Meeting of Shareholders to be held at The Grand Kempinski
Hotel, 15201 Dallas Parkway, Dallas, Texas, at 10:30 a.m., Dallas time, on July
17, 1996, and at any adjournment or postponement thereof. This Proxy Statement
and the related form of proxy are first being sent to shareholders on or about
June 10, 1996.
The close of business on May 27, 1996 (the "Record Date") has been
fixed as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. As of the Record Date, the Company had outstanding
10,920,438 shares of Common Stock, $.01 par value per share ("Common Stock"),
the only outstanding voting security of the Company. Each shareholder of
record on the Record Date is entitled to one vote for each share of Common
Stock. As of the Record Date, the Company had 1,206 shareholders of record. A
majority of the outstanding shares of Common Stock, represented in person or by
proxy, will constitute a quorum at the Annual Meeting; however, if a quorum is
not present or represented at the Annual Meeting, the shareholders entitled to
vote at such meeting, present in person or represented by proxy, have the power
to adjourn the Annual Meeting from time to time, without notice, other than by
announcement at the Annual Meeting, until a quorum is present or represented.
At any such adjourned Annual Meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the original Annual Meeting.
All proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted FOR the proposals described in this Proxy Statement unless otherwise
directed. A shareholder may revoke his or her proxy at any time before it is
voted either by filing with the Secretary of the Company at its principal
executive office a written notice of revocation or a duly executed proxy
bearing a later date, or by attending the Annual Meeting and expressing a
desire to vote his or her shares in person. A notice of revocation need not be
on any specific form.
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no business that will be presented for consideration at the
Annual Meeting other than the matters described in this Proxy Statement. If
any other matters are properly brought before the Annual Meeting, the persons
named in the accompanying form of proxy will vote the proxies in accordance
with their judgment.
Abstentions and broker non-votes (where a nominee holding Common Stock
has not received voting instructions from the beneficial owner with respect to
a particular matter and such nominee does not possess or choose to exercise
discretionary authority with respect thereto) will be included in the
determination of the number of shares of Common Stock present at the Annual
Meeting for quorum purposes. Abstentions and broker non-votes will not be
deemed to be outstanding and, therefore, will not be counted in the tabulations
of votes cast on proposals presented to shareholders.
<PAGE> 4
PROPOSAL ONE: ELECTION OF DIRECTORS
The number of directors to be elected at the Annual Meeting is seven.
The election of directors requires the affirmative vote of a majority of
outstanding Common Stock represented in person or by proxy at the Annual
Meeting. Although it is not contemplated that any nominee will decline or be
unable to serve, the proxies will be voted by the proxy holders in their
discretion for another person, or for a lesser number of persons, if such a
contingency should arise. The term of each person elected as a director will
continue until the next annual meeting and until his successor is duly elected
and qualified. Unless such authority is withheld, it is the intention of the
persons named in the enclosed proxy to vote such proxy FOR the election of such
seven nominees. All of the nominees currently serve as directors of the
Company. The following table sets forth the name, age and year of election to
the Board of each person who is a nominee for director of the Company.
<TABLE>
<CAPTION>
NAME AGE YEAR FIRST ELECTED DIRECTOR
---- --- ---------------------------
<S> <C> <C>
Lee Posey 62 1977
Larry H. Keener 46 1980
Willliam R. Thomas 67 1982
Walter D. Rosenberg, Jr. 69 1977
Frederick R. Meyer 68 1994
John H. Wilson 53 1994
A. Gary Shilling 59 1995
</TABLE>
Set forth below is a description of the backgrounds of the directors
of the Company.
LEE POSEY, founder of the Company, has served as Chairman of the Board
and Chief Executive Officer since December 1977 and as President from December
1977 through December 1993. From 1967 through 1977, Mr. Posey served as
President of Redman Industries, Inc., a manufactured housing company. Mr.
Posey has 40 years of experience in the manufactured housing industry.
LARRY H. KEENER, who joined the Company in 1979, has served as
President and Chief Operating Officer since June 1994, as a director from 1980
to May 1994 and as Division President of Florida and other Southeastern
operations from June 1989 through May 1994. He was appointed as a director of
the Company on May 15, 1995. Mr. Keener has 24 years of experience in the
manufactured housing industry.
WILLIAM R. THOMAS has served as a director since 1982. Mr. Thomas
joined Capital Southwest Corporation ("Capital Southwest"), a publicly-owned
venture capital investment company, in 1962 and has served as its President
since 1980 and Chairman of the Board since 1982. He has also served as
President of Capital Southwest Venture Corporation ("CSVC") since 1982. Mr.
Thomas currently serves on the Board of Directors of Alamo Group, Inc. and
Encore Wire Corporation. Mr. Thomas serves as a director pursuant to an
affirmative covenant under an agreement among the Company, Capital Southwest
and CSVC.
WALTER D. ROSENBERG, JR. has served as a director since 1977. Since
June 1991, Mr. Rosenberg has managed his personal investments. From December
1957 to June 1991, he was Chairman of the Board and Chief Executive Officer of
Duro Metal Manufacturing Company, Inc., a manufacturer of steel furniture and
components, acquired in 1991 by Leggett & Platt.
FREDERICK R. MEYER has served as a director since May 1994. Since
July 1985, Mr. Meyer has served as Chairman of the Board of Aladdin Industries,
Inc., a diversified company engaged in the manufacture of children's lunch
kits, thermosware, insulated food delivery systems and related products. Since
October 1995, he has served as President and Chief Executive Officer of Aladdin
Industries. He previously served as its President
2
<PAGE> 5
from May 1987 to September 1994. From July 1983 through December 1986, he
served as President of Tyler Corporation. He currently serves on the Board of
Directors of Tyler Corporation, Arvin Industries, Inc. and Southwest Securities
Group, Inc.
JOHN H. WILSON has served as a director since May 1994. Mr. Wilson
has served as President of U.S. Equity Corporation, a venture capital firm,
since 1983. He currently serves on the Board of Directors of Capital
Southwest, Whitehall Corporation, Norwood Promotional Products, Inc. and Encore
Wire Corporation.
A. GARY SHILLING has served as a director since September 1995. Since
1978, Dr. Shilling has served as President of A. Gary Shilling & Co., Inc.,
economic consultants to a number of financial institutions and industrial
corporations as well as investment advisors, managing individual and
institutional accounts. Before establishing his own firm, he was Senior Vice
President and Chief Economist of White, Weld & Co., Inc. He currently serves
on the Board of Directors of National Life of Vermont, the Heartland Group, and
is an advisory Director of Austin Trust Company.
BOARD OF DIRECTOR COMMITTEES
The Company has two standing committees: an Audit Committee and a
Compensation Committee. The Audit Committee recommends to the Board of
Directors the appointment of independent auditors, reviews the plan and scope
of audits, reviews the Company's significant accounting policies and internal
controls and performs such other related duties and functions as are deemed
appropriate by the Audit Committee or the Board of Directors. Messrs. Thomas
and Wilson serve on the Audit Committee. The Compensation Committee reviews
and approves salaries and bonuses for the officers of the Company and
management bonus plans and compensation arrangements. Messrs. Thomas and Meyer
serve on the Compensation Committee. The Company does not have a Nominating
Committee.
MEETINGS OF THE BOARD AND COMMITTEES
During the fiscal year ended March 29, 1996, there were four meetings
of the Board of Directors, two meetings of the Audit Committee and one meeting
of the Compensation Committee. Each Director attended 100% of all meetings of
the Board of Directors and 100% of the Committees on which such Director served
during such period.
DIRECTOR COMPENSATION
During the fiscal year ended March 29, 1996, the Company paid each
director who is not an employee of the Company (an "Independent Director")
$6,000 for services as a director plus $1,000 for each meeting (other than
telephonic meetings) of the Board of Directors attended by each Independent
Director. The total annual compensation paid to any person for his services as
an Independent Director in fiscal 1996 did not exceed $10,000. The Board of
Directors meets at least quarterly.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are William R. Thomas and
Frederick R. Meyer. Neither of the current members of the Compensation
Committee is an executive officer of the Company. Mr. Thomas is President of
Capital Southwest and CSVC. On May 31, 1995, the Company repaid its $2,000,000
indebtedness to Capital Southwest under a 10% revolving credit note dated April
1, 1995 (the "10% Note"). On December 1, 1995, the Company repaid its
aggregate outstanding indebtedness of $3,000,000 to Capital Southwest and CSVC
under certain loan agreements (the "Loans") which, effective October 1, 1995,
had an interest rate of 9% per annum. For the fiscal year ended March 29,
1996, the Company paid an aggregate of $34,520 in interest under the 10% Note
and $281,696 in interest under the Loans.
3
<PAGE> 6
No executive officer of the Company served as a member of the
Compensation Committee or as a director of any other entity, one of whose
executive officers served on the Compensation Committee or as a director of the
Company.
EXECUTIVE OFFICERS
The executive officers of the Company serve at the discretion of the
Board of Directors and are chosen annually by the Board of Directors. Set
forth below are the names, ages and positions of the executive officers of the
Company.
<TABLE>
<CAPTION>
NAME AGE Position
- - ---- --- --------
<S> <C> <C>
Lee Posey 62 Chairman of the Board, Chief Executive Officer and Director
Larry H. Keener 46 President, Chief Operating Officer and Director
Kelly Tacke 38 Vice President-Finance and Chief Financial Officer
</TABLE>
Set forth below is a description of the backgrounds of the executive
officers of the Company. Information concerning the business experience of
Messrs. Posey and Keener is provided in "Proposal One: Election of Directors."
There is no family relationship between any directors or executive officers of
the Company.
KELLY TACKE has served as Vice President-Finance and Chief Financial
Officer since October 1993. From August 1979 through September 1993, Ms. Tacke
was employed by Price Waterhouse LLP where she most recently served as a Senior
Audit Manager.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation paid or accrued during
the Company's fiscal years ended March 29, 1996 and March 31, 1995,
respectively, to the Chief Executive Officer and the two other executive
officers of the Company in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
NAME AND FISCAL ------------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
------------------ ------ -------- -------- ------------
<S> <C> <C> <C> <C>
Lee Posey . . . . . . . . . . . . 1996 $250,000 $512,036 $5,344(2)
Chairman of the Board and Chief 1995 200,000 475,416 7,100(2)
Executive Officer
Larry H. Keener . . . . . . . . . 1996 150,000 363,493 10,069(3)
President and Chief Operating 1995 128,750 224,828 11,791(3)
Officer
Kelly Tacke . . . . . . . . . . . 1996 100,000 100,000 3,168(4)
Vice President-Finance 1995 100,000 79,237 4,915(4)
and Chief Financial Officer
</TABLE>
- - -----------
(1) The named executive officers did not receive any annual compensation not
properly categorized as salary or bonus, except for certain perquisites and
other personal benefits which are not shown because the aggregate
incremental costs of these benefits to the Company for each officer did not
exceed the lesser of either $50,000 or 10% of the total of annual salary
and bonus reported for each such officer.
(2) Includes $3,175 and $4,620 contributed in fiscal 1996 and 1995,
respectively, by the Company pursuant to the Employee Savings Plan and
$2,169 and $2,480 paid in fiscal year 1996 and 1995, respectively, by the
Company as a car allowance.
(3) Includes $4,069 and $5,791 contributed in fiscal 1996 and 1995,
respectively, by the Company pursuant to the Employee Savings Plan and
$6,000 paid in both fiscal 1996 and 1995 by the Company as a car
allowance. Mr. Keener became President and Chief Operating Officer in
June 1994. In that position, his annualized salary was $150,000. From
June 1989 through May 1994, Mr. Keener served as Division President of
Florida and other Southeastern Operations.
(4) Represents contributions by the Company pursuant to the Employee Savings
Plan.
4
<PAGE> 7
COMPENSATION ARRANGEMENTS
Effective April 1, 1995, the Company entered into a compensation
agreement with Mr. Posey. The agreement was amended effective October 1, 1995
to provide that Mr. Posey's annual base salary for the next two fiscal years
following the date of the agreement is $150,000 and he is entitled to receive
under the Company's Corporate Bonus Plan (the "Plan") an annual bonus equal to
25% of the bonus pool, in an amount not to exceed $900,000. Effective April 1,
1996, Mr. Posey agreed that for a period of eight years from the date he ceases
to be an employee of the Company, he will serve as a consultant to the Company
for a specified number of days per year at an annual fee of $200,000. If the
compensation agreement is terminated for any reason, Mr. Posey or his
beneficiary shall be entitled to receive the lesser of (i) $1,500,000 or (ii)
$16,667 multiplied by the remainder of 132 minus the number of months Mr. Posey
provided services as an employee or as a consultant under the agreement. Any
amounts payable upon termination shall be paid in cash at Mr. Posey's or his
estate's, as applicable, option, (i) in equal monthly installments over a
number of months selected by the recipient of the payments, or (ii) in one lump
sum payment within 30 days of termination.
The Plan, which extends through the fiscal year ending March 28, 1997,
defines the basis for determining a potential bonus pool in each fiscal quarter
equal to 20% of the excess of Actual Earnings (as defined in the Plan) over
Base Earnings (as defined in the Plan), but limited in any Plan year to 10% of
Actual Earnings. The Base Earnings level is increased at a compound rate of
20% each year from fiscal 1994. The Plan defines Actual Earnings in each
fiscal period to be the Company's consolidated earnings (excluding its equity
in the earnings or losses of its affiliate and excluding its earnings or losses
from any finance company subsidiary) before deducting bonuses determined
pursuant to the Plan and before state and federal income taxes. Bonuses under
the Plan are paid promptly following each quarter. Upon expiration of the
current Plan, another corporate bonus plan will be established.
Mr. Keener is entitled to receive 15% of the bonus pool under the Plan
in an amount not to exceed 250% of his base salary and Ms. Tacke is entitled to
receive 5% of the bonus pool in an amount not to exceed 100% of her base
salary.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, precludes a public corporation from taking a
deduction in 1994 or subsequent years for compensation in excess of $1 million
paid to its chief executive officer or any of its four other highest-paid
officers (the "Section 162(m) Limitation"). Based on the Treasury Regulations
promulgated under Section 162(m) of Code, any compensation derived by Mr. Posey
from the Plan and his compensation agreement in excess of $1,000,000 may not be
deductible by the Company.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with certain of
its officers and each of its directors, requiring the Company to indemnify such
persons against judgments, claims, damages, losses and expenses incurred as a
result of the fact that such officer or director, in his or her capacity as
such, is made or threatened to be made a party to any suit or proceeding, to
the maximum extent permitted by Florida law. The indemnification agreements
provide for the advancement of expenses to such officers and directors in
connection with any such suit or proceeding.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE OFFICER COMPENSATION
Decisions on compensation of the Company's executive officers are made
by the two member Compensation Committee of the Board of Directors (the
"Committee"). Each member of the Committee is an outside director. None of
the members of the Committee has ever been an officer or employee of the
Company or any of its subsidiaries. The Committee, in consultation with the
Company's Chief Executive Officer, is responsible for establishing the policies
that govern compensation of the executive officers and key employees at the
corporate level of the Company.
5
<PAGE> 8
The goals of the Company's compensation program are to attract, retain
and motivate competent executive officers and key employees who have the
experience and ability to contribute materially to the long-term success of the
Company. The Company's compensation philosophy for its executive officers and
key employees is predicated on base salaries which are in most instances below
salaries for comparable industry positions and potential bonuses which,
depending on the Company's earnings performance in relation to pre-established
base levels, may be relatively high or relatively low in comparison with bonus
payments by companies of comparable size and type. The significant influence
of earnings growth on compensation levels effectively aligns the interests of
the executive officers and key employees with the interests of the Company's
shareholders.
Base salaries are determined by the Committee for each of the executive
officers on an individual basis, taking into consideration level of
responsibility, individual contributions to the Company's performance, length
of tenure with the Company, compensation levels of comparable positions and
internal equities among positions. In most instances, base salaries are set at
subjectively-determined levels below base salaries paid to executives in
similar positions in companies of comparable size in the same industry or
similar industries.
Bonuses are determined on the basis of a three year plan which has been
in effect for the past two fiscal years and will also govern bonuses for the
next fiscal year. The bonus plan provides for a corporate level bonus pool to
be distributed on a predetermined basis among those executives and key
employees specified by the Committee. The amount of the bonus pool and
individual bonuses in each year are based on the extent to which the Company's
annual earnings exceed a base level which was established at the inception of
the bonus plan and has been increased by 20% each year thereafter. The
combined effect of low base salaries and a profit-sharing plan which generates
bonuses only after earnings exceed an increasing annual hurdle level, results
in low executive compensation if the Company's performance is unfavorable and a
significantly higher level if performance is favorable, thereby increasing the
importance of performance-based bonuses as a material determinant of total
compensation.
During the fiscal year ended March 29, 1996, the Company's net income
and earnings per share increased by 33.4% and 26.7%, respectively, over the
previous year. During the same period, the combined base salary and bonus of
the Chairman and Chief Executive Officer, Lee Posey, increased by 12.8% and the
combined base salary and bonus of the President and Chief Operating Officer,
Larry H. Keener, increased by 45.2%. Consistent with the Company's
compensation practices, the base salaries paid to Mr. Posey and Mr. Keener
represented 32.8% and 29.2%, respectively, of each officer's combined base
salary and bonus.
The Company's executives and key employees, especially Mr. Posey, own a
significant amount of the Company's stock. The Company has not adopted an
incentive stock option plan and does not at this time intend to adopt any type
of stock option plan. Instead, the management of the Company believes that a
bonus plan similar to the present plan is a more equitable and effective
compensation device.
William R. Thomas - Chairman
Frederick Meyer
6
<PAGE> 9
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
the Company, the Standard & Poor's MidCap 400 Composite Stock Index and the
Company's peer group (the "PHH Peer Group"), assuming the investment of $100 on
July 31, 1995 (the date the Common Stock began trading) and the reinvestment of
dividends. The companies in the PHH Peer Group are as follows: Cavalier
Homes, Inc., Champion Enterprises, Inc., Clayton Homes, Inc., Fleetwood
Enterprises, Inc., Liberty Homes, Inc., Oakwood Homes Corporation, Schult Homes
Corporation and Skyline Corporation.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------
7/95 3/96
- - ------------------------------------------------------------------------
<S> <C> <C>
Palm Harbor Homes, Inc. $100 $215
- - ------------------------------------------------------------------------
S&P MidCap 400 $100 $112
- - ------------------------------------------------------------------------
Peer Group $100 $139
- - ------------------------------------------------------------------------
</TABLE>
CERTAIN TRANSACTIONS
Pursuant to a Warrant Agreement dated August 11, 1989, between the
Company and each of Capital Southwest and CSVC, as modified, the warrants held
by such persons were exercisable at the holder's option at an exercise price of
$.64 per share and, if exercised at the Company's request in the event of an
initial public offering, at an exercise price of $.39744 per share. In
connection with the Company's initial public offering, the Company requested
that Capital Southwest and CSVC exercise their warrants. Mr. Posey sold to
Capital Southwest, as of July 31, 1995 (immediately prior to the consummation
of the Company's initial public offering), warrants to purchase 769,231 shares
of Common Stock for $11.60256 per underlying share. Capital Southwest and CSVC
exercised all of their warrants (including the warrants purchased from Mr.
Posey) for an aggregate of 3,706,248 shares of Common Stock prior to the
consummation of the Company's initial public offering on July 31, 1995. As of
July 31, 1995, Mr. Posey exercised his remaining warrants to purchase 1,776,949
shares of Common Stock at an exercise price of $.39744 per share.
On May 31, 1995, the Company repaid its $2,000,000 indebtedness to
Capital Southwest under the 10% Note. On December 1, 1995, the Company repaid
its aggregate outstanding indebtedness of $3,000,000 to Capital Southwest and
CSVC under the Loans which, effective October 1, 1995, had an interest rate of
9%. For the fiscal year ended March 29, 1996, the Company paid an aggregate of
$34,520 in interest under the Note and $281,696 in interest under the Loans.
On September 29, 1995, the Company repaid its indebtedness of
approximately $700,000 to Mr. Posey. The interest rate on such indebtedness
was 10% per annum. During the fiscal year ended March 29, 1996, the Company
paid $38,163 in interest to Mr. Posey with respect to the repaid indebtedness.
7
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of May 27, 1996 by (i) each person who
is the beneficial owner of more than 5% of the Company's outstanding Common
Stock; (ii) each director of the Company; (iii) each executive officer named in
the Summary Compensation Table; and (iv) all directors and executive officers
of the Company as a group. Unless otherwise indicated, each of the
shareholders listed below has sole voting and investment power with respect to
the shares beneficially owned.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- - ------------------- --------------------- --------
<S> <C> <C>
Lee Posey . . . . . . . . . . . . . . 2,420,892 22.17%
15303 Dallas Parkway
Suite 800
Dallas, Texas 75248
Capital Southwest Corporation and
Capital Southwest Venture
Corporation(3) . . . . . . . . . . 4,021,820 36.83
12900 Preston Road
Suite 700
Dallas, Texas 75230
Larry H. Keener(2) . . . . . . . . . 226,232 2.07
Kelly Tacke . . . . . . . . . . . . . 25,538 *
W.D. Rosenberg, Jr. . . . . . . . . . 136,719 1.25
William R. Thomas(3)(4) . . . . . . . 197,193 1.81
Frederick R. Meyer(5) . . . . . . . . 60,938 *
John H. Wilson(3) . . . . . . . . . . 200 *
A. Gary Shilling(6) . . . . . . . . . 35,600 *
All directors and executive officers
as a group (8 persons)(2)(4)(5)(6) . 3,103,312 28.42
</TABLE>
- - ----------------
* Represents less than 1%
(1) The information contained in this table with respect to Common Stock
ownership reflects "beneficial ownership" as defined in Rule 13d-3
under the Exchange Act.
(2) Includes an aggregate of 62,500 shares owned by Mr. Keener's spouse
and three daughters, over which he exercises voting and investment
power.
(3) Mr. Thomas is President and Chairman of the Board of Capital Southwest
and CSVC, both of which are principal shareholders of the Company.
Mr. Wilson is a member of the Board of Directors of Capital Southwest
and CSVC. Mr. Thomas and Mr. Wilson may be deemed to share voting and
investment power with respect to the shares of Common Stock
beneficially owned by Capital Southwest and CSVC. Mr. Thomas and Mr.
Wilson each have disclaimed beneficial ownership of such shares.
(4) Mr. Thomas has sole voting and investment power with respect to 58,000
shares personally held by Mr. Thomas. Mr. Thomas also has sole voting
and investment power with respect to 41,305 shares held by a family
partnership. Mr. Thomas is a trustee of certain trusts pursuant to
employee stock ownership plans for employees of Capital Southwest and
its wholly-owned subsidiaries owning 97,888 shares, with the power as
one of three trustees to participate in the voting of such shares.
Under the rules and regulations of the Securities and Exchange
Commission, Mr. Thomas is deemed to be the beneficial owner of such
97,888 shares which are included in the shares owned by Mr. Thomas.
(5) Includes 25,000 shares owned by a family partnership over which Mr.
Meyer exercises voting and investment power.
(6) Dr. Shilling is one of five members of an investment committee to
participate in the voting and investment decision relating to 32,400
shares owned by clients of A. Gary Shilling & Co., Inc. Under the
rules and regulation of the Securities and Exchange Commission, Dr.
Shilling is deemed to be the beneficial owner of such 32,400 shares
which are included in the shares owned by Dr. Shilling.
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8
<PAGE> 11
PROPOSAL TWO: RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors
of the Company has appointed the firm of Ernst & Young LLP as the Company's
independent auditors for the year ending March 28, 1997. The affirmative vote
of the majority of the Common Stock present or represented and entitled to vote
at the Annual Meeting is required to ratify the appointment of Ernst & Young
LLP.
Ernst & Young LLP served as the Company's independent auditors for the
fiscal year ended March 29, 1996. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting. The representative will be
afforded the opportunity to make a statement and to respond to appropriate
questions of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST
& YOUNG LLP AS THE COMPANY'S AUDITORS FOR THE YEAR ENDING MARCH 28, 1997.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires that Company directors,
executive officers and persons who own more than 10% of the Common Stock of the
Company file initial reports of ownership and reports of changes in ownership
of Common Stock with the Securities and Exchange Commission (the "SEC").
Officers, directors and shareholders who own more than 10% of the Common Stock
are required by the SEC to furnish the Company with copies of all Section 16(a)
reports they file.
To the Company's knowledge, based solely upon the review of the copies
of such reports furnished to the Company during the fiscal year ended March 29,
1996, the Company's officers, directors and 10% shareholders complied with all
Section 16(a) filing requirements applicable to them.
PROPOSALS OF SHAREHOLDERS
A proper proposal submitted by a shareholder for presentation at the
Company's 1997 Annual Meeting and received at the Company's executive offices
located at 15303 Dallas Parkway, Suite 800, Dallas, Texas 75248, no later than
February 10, 1997, will be included in the Company's Proxy Statement and form
of proxy relating to the 1997 Annual Meeting.
EXPENSES
The entire cost of soliciting proxies will be borne by the Company.
Solicitation may be made by mail, telephone, facsimile and personal contact by
officers and other employees of the Company, who will not receive additional
compensation for such services. The Company will request brokerage houses,
nominees, custodians, fiduciaries and other like parties to forward soliciting
material to the beneficial owners of the Company's Common Stock held of record
by them and will reimburse such persons for their reasonable charges and
expenses in connection therewith.
GENERAL
The Company's Annual Report for the fiscal year ended March 29, 1996
is being mailed to shareholders together with this Proxy Statement. The Annual
Report is not to be considered part of the soliciting materials.
The information set forth in this Proxy Statement under the caption
"Executive Compensation -- Report of the Compensation Committee on Executive
Officer Compensation" and "-- Performance Graph" shall not be deemed to be (i)
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent that
in any such filing the Company expressly so incorporates such information by
reference, and (ii) "soliciting material" or to be "filed" with the Securities
and Exchange Commission.
9
<PAGE> 12
PROXY
PALM HARBOR HOMES, INC.
To ensure that your shares will be represented at the Annual Meeting, whether
or not you plan to attend the Annual Meeting, please complete, date, sign and
mail this proxy promptly in the enclosed postage-paid envelope. Shareholders
who attend the Annual Meeting in person may revoke their proxies and vote in
person if they so desire.
The undersigned shareholder of Palm Harbor Homes, Inc. does hereby nominate,
constitute and appoint Kelly Tacke and Colleen Rogers, or either one of them,
as Proxies, each with full power to appoint her substitute, to represent and
vote all of the shares of Common Stock of Palm Harbor Homes, Inc. held of
record by the undersigned at the Annual Meeting of Shareholders to be held at
10:30 a.m., Dallas time, on July 17, 1996 at The Grand Kempinski Hotel, 15201
Dallas Parkway, Dallas, Texas and at any adjournments thereof, as follows:
Election of Directors, Nominees:
Lee Posey, Larry H. Keener, William R. Thomas, Walter D. Rosenberg, Jr.,
Frederick R. Meyer, John H. Wilson, A. Gary Shilling
(change of address)
- - --------------------------------------------------------
- - --------------------------------------------------------
- - --------------------------------------------------------
- - --------------------------------------------------------
(If you have written in the above space, please mark
the corresponding box on the reverse side of this card.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE. IF A CHOICE IS
NOT INDICATED WITH RESPECT TO ITEMS (1) AND (2) ABOVE, THIS PROXY WILL BE VOTED
"FOR" SUCH PROPOSALS. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 13
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
1. ELECTION OF DIRECTORS (SEE REVERSE)
FOR [ ] WITHHELD [ ]
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
--------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS FOR THE YEAR ENDING MARCH 28, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
SIGNATURE(S) DATE
------------------------------------- -------------------
SIGNATURE(S) DATE
------------------------------------- -------------------
(Joint owners must each sign. Please sign exactly as your name(s) appear(s)
on this card. When signing as attorney, trustee, executor, administrator,
guardian or corporate officer, please give your full title.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
