SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of 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
Phoenix Gold International, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PHOENIX GOLD
---------------------------------
I N T E R N A T I O N A L, I N C.
---------------------------------
9300 North Decatur Street
Portland, Oregon 97203
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 16, 1999
---------------------
To Our Shareholders:
The 1999 Annual Meeting of Shareholders of Phoenix Gold International,
Inc., an Oregon corporation (the "Company"), will be held at 2:30 p.m., Pacific
Time, on Tuesday, February 16, 1999 at the Company's executive offices, 9300
North Decatur Street, Portland, Oregon, for the following purposes:
1. Electing directors to serve for the following year and until their
successors are elected and qualified;
2. Ratifying the appointment of Deloitte & Touche LLP to serve as the
Company's independent auditors for fiscal 1999; and
3. Transacting such other business as may properly come before the
meeting.
Only holders of the Company's Common Stock at the close of business on
December 16, 1998 are entitled to notice of and to vote at the meeting and any
adjournments or postponements thereof. Shareholders may vote in person or by
proxy.
By order of the Board of Directors,
/s/ Joseph K. O'Brien
Joseph K. O'Brien
Secretary
Portland, Oregon
January 6, 1999
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING IN PERSON, PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE.
<PAGE>
PHOENIX GOLD
---------------------------------
I N T E R N A T I O N A L, I N C.
---------------------------------
9300 North Decatur Street
Portland, Oregon 97203
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PROXY STATEMENT
1999 ANNUAL MEETING OF SHAREHOLDERS
------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Phoenix Gold International, Inc., an Oregon
corporation (the "Company"), of proxies to be voted at the 1999 Annual Meeting
of Shareholders of the Company (the "Meeting") to be held at 2:30 p.m., Pacific
Time, on Tuesday, February 16, 1999 at the Company's executive offices, 9300
North Decatur, Portland, Oregon 97203, and at any adjournments or postponements
thereof. If proxies in the accompanying form are properly executed, dated and
returned prior to the voting at the Meeting, the shares of Common Stock
represented thereby will be voted as instructed on the proxy. If no instructions
are given on a properly executed and returned proxy, the shares of Common Stock
represented thereby will be voted for election of the directors named in this
proxy statement, for ratification of the appointment of the independent auditors
named in the proxy statement and in support of the recommendations of management
on such other business as may properly come before the Meeting or any
adjournments or postponements thereof.
Any proxy may be revoked by a shareholder prior to its exercise by
delivering a written notice of revocation to the Secretary of the Company, by
delivering a duly executed proxy bearing a later date or by the vote of the
shareholder cast in person at the Meeting. The cost of soliciting proxies will
be borne by the Company. In addition to solicitation by mail, proxies may be
solicited personally by the Company's officers and regular employees or by
telephone, facsimile transmission or express mail. The Company will reimburse
brokerage houses, banks and other custodians, nominees and fiduciaries for their
reasonable expenses incurred in forwarding proxies and proxy material to their
principals. This proxy statement and form of proxy are first being mailed to
shareholders on or about January 6, 1999.
<PAGE>
VOTING
Holders of record of the Company's Common Stock on December 16, 1998 will
be entitled to vote at the Meeting or any adjournments or postponements thereof.
As of that date, there were 3,248,745 shares of Common Stock outstanding and
entitled to vote. A majority, or 1,624,373, of these shares will constitute a
quorum for the transaction of business at the Meeting. Each share of Common
Stock entitles the holder to one vote on each matter that may properly come
before the Meeting. Shareholders are not entitled to cumulative voting in the
election of directors or any other matter. Abstentions and broker non-votes will
be counted in determining whether a quorum is present for the Meeting, but will
not be counted either for or against the proposal at issue.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors currently consists of five members. The Board of
Directors has nominated the following persons for election as directors to serve
until the annual meeting of shareholders in 2000, or until their respective
successors are elected and qualified:
Keith A. Peterson
Timothy G. Johnson
Robert A. Brown
Edward A. Foehl
Frank G. Magdlen
Directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. The five nominees for director receiving the highest
number of votes will be elected to the Board of Directors.
Unless marked otherwise, proxies received will be voted FOR the election of
each of the nominees named above.
If any nominee is unable or unwilling to serve as a director at the date of
the Meeting or any postponement or adjournment thereof, the proxies may be voted
by the proxy holders named on the enclosed proxy card for a substitute nominee
recommended by the present Board of Directors to fill such vacancy, or the
number of directors may be reduced accordingly. The Board of Directors has no
reason to believe that any of the nominees named above will be unwilling or
unable to serve if elected a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
PETERSON, JOHNSON, BROWN, FOEHL AND MAGDLEN.
<PAGE>
The following table sets forth certain information about the Company's
directors and executive officers:
<TABLE>
<CAPTION>
Director or Expiration
Officer of Current
Name Age Positions Since Term
---- --- --------- ------------- ----------
<S> <C> <C> <C> <C>
Keith A. Peterson 45 Chairman, President and Chief Executive 1991 1999
Officer
Timothy G. Johnson 53 Executive Vice President, Chief Operating 1991 1999
Officer and Director
Joseph K. O'Brien 41 Chief Financial Officer and Secretary 1997 --
David D. Bills 40 Vice President - Finance 1995 --
Stephen P. Bettini 37 Vice President - Operations 1996 --
Robert A. Brown 48 Director 1998 1999
Edward A. Foehl 56 Director 1998 1999
Frank G. Magdlen 51 Director 1995 1999
</TABLE>
Mr. Peterson has been President and a director of the Company since its
incorporation in 1991. He was appointed Chairman and Chief Executive Officer in
January 1995. Mr. Peterson received a B.S. degree in international marketing
from Oregon State University. In 1974 and 1975, he attended Waseda University in
Tokyo, Japan, where he studied Japanese.
Mr. Johnson has served as a director of the Company since its incorporation
in 1991. He was also a Vice President until his appointment as Executive Vice
President and Chief Operating Officer in January 1995. He was Secretary of the
Company from 1991 through February 1997.
Mr. O'Brien was appointed Chief Financial Officer of the Company in January
1997 and Secretary in December 1997. From 1981 through December 1996, Mr.
O'Brien was an accountant with Deloitte & Touche LLP, most recently as a Senior
Audit Manager. Mr. O'Brien, a certified public accountant, received B.S. and
M.B.A. degrees from Portland State University.
Mr. Bills served as the controller of the Company from 1992 to 1995. He was
appointed Vice President - Finance of the Company in February 1995. Mr. Bills, a
certified public accountant, received a B.S. degree in accounting from the
University of Oregon.
Mr. Bettini was appointed Vice President - Operations of the Company in
December 1996. From February 1996 to December 1996, he was the manufacturing
manager of the components group of FEI Company, which designs, manufactures and
sells workstations and components using field emission technology. He was the
manager of an LCD flat panel display assembly operation for Sharp
Microelectronics Technology, Inc. from August 1992 to February 1996. Mr. Bettini
received a B.S. degree in management from Marylhurst College.
<PAGE>
Mr. Brown became a director of the Company in January 1998 and was
reappointed by the Board of Directors in February 1998 following the Company's
1998 Annual Meeting of shareholders. Mr. Brown has been President of Lenbrook
America Corporation ("Lenbrook") since 1991. Lenbrook is a marketing and
distribution company serving the audio and home theater markets. Mr. Brown
received a B.S. degree in management from the University of Massachusetts and
attended the graduate business school at the University of Massachusetts.
Mr. Foehl became a director of the Company in January 1998 and was
reappointed by the Board of Directors in February 1998 following the Company's
1998 Annual Meeting of shareholders. Mr. Foehl has been a consultant to Systran
Financial Services Corporation ("Systran") since June 1998. From 1988 to June
1998, Mr. Foehl was President and Chief Executive Officer of Systran, a company
providing billing and collection services to the trucking industry and other
companies. Mr. Foehl received an M.B.A. degree in finance from George Washington
University and a B.S. degree in engineering from the United States Military
Academy at West Point.
Mr. Magdlen became a director of the Company in January 1995. Mr. Magdlen
has been a Vice President of U.S. Bancorp since 1990 and is currently a Managing
Director and Portfolio Manager of First American Asset Management, a division of
U.S. Bancorp. From 1993 to 1997, he was been responsible for the investment
management of private company equity interests held in trust by the trust
departments of certain bank subsidiaries of U.S. Bancorp. From 1988 to 1993, he
was a Vice President of United States National Bank of Oregon where he worked in
the Corporate Finance/Merchant Banking Division. Mr. Magdlen received a B.B.A.
degree in finance from the University of Portland and an M.B.A. degree in
finance from the University of Southern California.
Pursuant to the Company's Articles of Incorporation, at any time when the
Board of Directors consists of six or more members, the Board will be divided
into three classes serving staggered three-year terms. Directors are otherwise
elected to serve one year terms. Executive officers serve at the discretion of
the Board of Directors.
During fiscal 1998, the Board of Directors held 8 meetings. The Company
maintains a standing Audit Committee and Compensation Committee, but does not
maintain a standing nominating committee. During fiscal 1998, the Audit
Committee held one meeting and the Compensation Committee held one meeting.
The Audit Committee consists of Messrs. Magdlen (Chairman), Foehl and
Johnson. The function of the Audit Committee is to review and make
recommendations to the Board of Directors with respect to the selection of the
Company's independent auditors and the terms of their engagement; to review the
Company's internal controls and management practices with respect to maintenance
of the Company's books and records; and to review with the independent auditors,
upon completion of their audit, the results of the audit and any recommendations
the auditors may have with respect to the Company's financial accounting or
internal control systems.
The Compensation Committee consists of Messrs. Magdlen (Chairman) and
Foehl. The Compensation Committee considers and makes recommendations to the
Company's Board of Directors regarding the compensation of the senior executives
of the Company; considers, reviews and grants stock options and administers the
Company's Amended and Restated 1995 Stock Option Plan (the "Option Plan") and
considers matters of director compensation, benefits and other forms of
remuneration.
<PAGE>
COMPENSATION OF DIRECTORS
Pursuant to the Option Plan, upon initial election to the Company's Board
of Directors each director who is not an employee or officer of the Company (a
"nonemployee director") is automatically granted an option to purchase 5,775
shares of Common Stock and is automatically granted an option to purchase 1,400
shares of Common Stock at each subsequent meeting of the shareholders of the
Company at which such director is re-elected to the Board of Directors, provided
that no director may be granted automatically options to purchase more than an
aggregate of 8,575 shares of Common Stock under the Option Plan. The exercise
price for these options is the fair market value of the Common Stock on the date
of grant. These options have a term of five years and become exercisable in
three equal installments beginning on the first anniversary of the date of
grant. Upon Messrs. Brown's and Foehl's elections to the Board of Directors in
January 1998, they were each automatically granted an option to purchase 5,775
shares of Common Stock. Upon Mr. Magdlen's election to the Board of Directors in
January 1995, he was automatically granted an option to purchase 5,775 shares of
Common Stock. Mr. Magdlen was automatically granted options to purchase 1,400
shares of Common Stock on each of February 12, 1996 and February 18, 1997
following the respective annual meetings of the shareholders of the Company.
Nonemployee directors of the Company receive an annual retainer of $2,500 and an
additional fee of $500 for each meeting of the Board of Directors attended.
On February 18, 1997, Mr. Magdlen was also granted a nonstatutory option to
purchase 5,000 shares of Common Stock. This option was not granted under the
Option Plan, has an exercise price equal to the fair market value of the Common
Stock on that date, has a term of 10 years and becomes exercisable in three
equal installments beginning on the first anniversary of the date of grant.
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION PAID TO CERTAIN EXECUTIVE OFFICERS
The following table summarizes the compensation earned by or paid to the
Company's Chief Executive Officer and each of the Company's executive officers
who received compensation in excess of $100,000 for services rendered to the
Company in all capacities for fiscal years 1998, 1997 and 1996 (the "Named
Executive Officers"). The Company's fiscal year ends on the last Sunday in
September. For convenience of financial statement presentation, the Company
indicates that its fiscal year ends on September 30.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term Compensation
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Annual Compensation Awards Payouts
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name and Other Annual Restricted Securities LTIP All Other
Principal Compensation Stock Under- Payouts Compensation
Position Year Salary ($) Bonus ($) ($) Awards lying Options/ ($)
(1) ($) SARs(#) ($)
- ------------------------------------------------------------------------------------------------------------------------------
Keith A. Peterson 1998 129,020 - - - - - 925 (4)
Chairman, President 1997 144,495 - - - - - 671 (4)
and Chief Executive 1996 230,000 - - - - - 48 (4)
Officer
Timothy G. Johnson 1998 150,738 - - - - - 48 (5)
Executive Vice 1997 161,167 - - - - - 48 (5)
President and Chief 1996 201,250 - - - - - 48 (5)
Operating Officer
Joseph K. O'Brien 1998 102,775 - - - - - 997 (6)
Chief Financial 1997 70,280 - - - 25,000 - 587 (6)
Officer and Secretary 1996 - - - - - - -
(2)
Stephen P. Bettini 1998 105,565 - - - - - 1,171 (7)
Vice President - 1997 73,317 7,900 - - 40,250 - 413 (7)
Operations (3) 1996 - - - - - - -
- -----------
</TABLE>
(1) Includes compensation deferred under the Company's 401(k) plan.
(2) Mr. O'Brien joined the Company in January 1997.
(3) Mr. Bettini joined the Company in December 1996.
(4) Consists of the Company's contributions to the Phoenix Gold
International, Inc. Profit Sharing and 401(k) Savings Plan for
the benefit of Mr. Peterson in the amounts of $877, $623 and $0
for fiscal 1998, 1997 and 1996, respectively; and Company paid
premiums for term life insurance of $48, $48 and $48 for fiscal
1998, 1997 and 1996, respectively.
(5) Consists of Company paid premiums for term life insurance of $48,
$48 and $48 for fiscal 1998, 1997 and 1996, respectively.
(6) Consists of the Company's contributions to the Phoenix Gold
International, Inc. Profit Sharing and 401(k) Savings Plan for
the benefit of Mr. O'Brien in the amounts of $949 and $551 for
fiscal 1998 and 1997, respectively; and Company paid premiums
for term life insurance of $48 and $36 for fiscal 1998 and 1997,
respectively.
(7) Consists of the Company's contributions to the Phoenix Gold
International, Inc. Profit Sharing and 401(k) Savings Plan for
the benefit of Mr. Bettini in the amounts of $1,123 and $377 for
fiscal 1998 and 1997, respectively; and Company paid premiums for
term life insurance of $48 and $36 for fiscal 1998 and 1997,
respectively.
<PAGE>
The following table summarizes the stock options held by the Named
Executive Officers at the end of fiscal 1998:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Options/SARs at FY-End (#) at FY-End ($)
Acquired on Value -------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Timothy G. Johnson - - 96,000 0 0 0
Joseph K. O'Brien - - 12,500 12,500 0 0
Stephen P. Bettini - - 20,250 20,000 0 0
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
During the fiscal year ended September 30, 1998, the Compensation Committee
of the Board of Directors was responsible for establishing and administering the
compensation policies which govern annual salary, bonuses, and stock-based
incentives (currently stock options) for directors and officers.
Overview
The Company has historically established levels of executive compensation
that provide for a base salary intended to allow the Company to hire and retain
qualified management. The Company has from time to time provided annual cash
incentive bonuses based on the Company's performance during the fiscal year to
reward executives for their contributions to the Company's achievements. The
Company has also granted stock options to executives and key employees to align
management's interests with those of the shareholders. The Compensation
Committee believes that the Company's past and present executive compensation
practices provide an overall level of compensation that is competitive with
companies of similar size, complexity and financial performance and that its
executive compensation practices have allowed it to retain key personnel who
have contributed to the Company's profitability.
The Compensation Committee determines the compensation of the Chief
Executive Officer and Chief Operating Officer. The Chief Executive Officer and
Chief Operating Officer make recommendations to the Compensation Committee
regarding the compensation of the other executive officers of the Company, but
do not participate in the determination of their own compensation. The
Compensation Committee reviews the recommendations of the Chief Executive
Officer and Chief Operating Officer relating to compensation of the other
executive officers to ensure consistency throughout the officer compensation
programs. In fiscal 1998, the Compensation Committee determined compensation for
the other executive officers based largely on the recommendations by the Chief
Executive Officer and Chief Operating Officer.
The Compensation Committee expects to review annually the compensation of
all of the Company's executives to assure that all of the Company's executives
continue to be properly motivated to serve the interests of the Company's
shareholders.
<PAGE>
Base Salary
Base salary is generally set within the ranges of salaries of executive
officers with comparable qualifications, experience and responsibilities at
other companies of similar size, complexity and financial performance taking
into account the position involved and the level of the executive's experience.
In addition, consideration is given to other factors, including an officer's
contribution to the Company as a whole. Since fiscal year 1996, the base
salaries for the Chief Executive Officer and Chief Operating Officer have
decreased due to the financial performance of the Company during fiscal 1997 and
1998. The compensation of the other named executives was based on considerations
involved in recruiting those officers to the Company in fiscal 1996 and 1997.
Bonus Compensation
The Company has awarded cash bonuses to its executive officers on a
discretionary basis. In determining bonus awards, the Compensation Committee
considers the financial and nonfinancial achievements of the Company, including
revenue growth, profitability, expansion of the Company's markets and new
product introductions, improvement in working capital management, and other
factors contributing to the overall success of the Company. In view of the
Company's financial performance, no bonus compensation was awarded to the Named
Executive Officers for fiscal 1998.
Stock Option Compensation
The Compensation Committee believes that stock ownership by executive
officers and key employees provides valuable incentives for such persons to
benefit as the Company's Common Stock price increases and that stock
option-based incentive compensation arrangements help align the interests of
executives, employees and shareholders. To facilitate these objectives, the
Compensation Committee, since 1995, has from time-to-time granted stock options
to executive officers and key employees through the 1995 Stock Option Plan. The
size of awards has historically been based on position, responsibilities, and
individual performance. In view of the Company's financial performance, the
Compensation Committee did not award any stock options to the Named Executive
Officers in fiscal 1998.
The Compensation Committee believes that the policies and plans described
above provide competitive levels of compensation and effectively link executive
and shareholder interests. Moreover, the members of the Compensation Committee
believe such policies and plans are consistent with the long-term investment
objectives appropriate to the business in which the Company is engaged.
The Compensation Committee,
Frank G. Magdlen (Chairman)
Edward A. Foehl
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of
the Company's Common Stock against the cumulative total return over a period
beginning May 4, 1995, the date of the Company's initial public offering, and
ending September 30, 1998 for the NASDAQ Stock Market (U.S. Companies) and a
Company-selected peer group index consisting of: Boston Acoustics, Inc., Harmon
Industries, Inc., Koss Corporation, Polk Audio, Inc. and Recoton Corp. The peer
group index was formed on a weighted average basis based on market
capitalizations, adjusted at the end of each year. Cumulative total return is
measured assuming an initial investment of $100 on May 4, 1995 and reinvestment
of dividends, if any.
<TABLE>
<CAPTION>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS:
<S> <C> <C> <C> <C> <C>
5-4-95 9-30-95 9-30-96 9-30-97 9-30-98
Phoenix Gold International, Inc. $ 100.00 $ 157.41 $ 105.56 $ 84.25 $ 24.07
Peer Group $ 100.00 $ 143.15 $ 126.17 $ 136.78 $ 118.59
NASDAQ - U.S. Companies $ 100.00 $ 139.28 $ 165.24 $ 226.81 $ 231.84
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 16, 1998, certain
information as to the stock ownership of (i) each person known by the Company to
own beneficially five percent or more of the Company's outstanding Common Stock,
(ii) by each director of the Company, (iii) the Named Executive Officers and
(iv) all executive officers and directors as a group. The Company believes each
named beneficial owner has sole voting and investment power with respect to the
shares listed.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent
Beneficial Owner Of Beneficial Ownership of Class
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Keith A. Peterson (1) 1,642,911 50.6%
Timothy G. Johnson (1)(2) 527,314 15.5%
Wynnefield Group 410,650 12.6%
One Penn Plaza, Suite 4720
New York, NY 10119
Joseph K. O'Brien (1)(3) 15,500 *
Stephen P. Bettini (1)(4) 20,250 *
Robert A. Brown (1)(5) 2,025 *
Edward A. Foehl (1)(6) 1,925 *
Frank G. Magdlen (1)(7) 14,308 *
All executive officers and directors as a group
(8 persons) (8) 2,244,683 65.8%
- -------------
</TABLE>
* less than 1%
(1) The address for Messrs. Peterson, Johnson, O'Brien and Bettini is 9300
North Decatur Street, Portland, Oregon 97203. Mr. Brown's address is 6
Merchant Street, Sharon, Massachusetts 02067. Mr. Foehl's address is
Suite 551, 10220 S.W. Greenburg Road, Portland, Oregon 97223. Mr.
Magdlen's address is Suite 600, 111 S.W. Fifth Avenue, Portland,
Oregon 97208.
(2) Includes 96,000 shares issuable pursuant to options exercisable within
60 days after December 16, 1998.
(3) Includes 12,500 shares issuable pursuant to options exercisable within
60 days after December 16, 1998.
(4) Includes 20,250 shares issuable pursuant to options exercisable within
60 days after December 16, 1998.
(5) Includes 1,925 shares issuable pursuant to options exercisable within
60 days after December 16, 1998.
(6) Includes 1,925 shares issuable pursuant to options exercisable within
60 days after December 16, 1998.
(7) Includes 9,308 shares issuable pursuant to options exercisable within
60 days after December 16, 1998.
(8) Includes 161,108 shares issuable pursuant to options exercisable within
60 days after December 16, 1998.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
persons who own more than 10 percent of the Company's Common Stock to file with
the Securities and Exchange Commission reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company. Such
persons are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such reports furnished to the Company or
written representations from these persons that no other reports were required,
the Company believes that during fiscal 1998 all filing requirements applicable
to its directors, executive officers and greater than 10 percent owners were
complied with.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending September 30, 1999. Deloitte & Touche LLP has served as the
Company's independent public accountants since 1992. A representative of
Deloitte & Touche LLP is expected to be present at the Meeting, will have the
opportunity to make a statement and will be available to respond to appropriate
questions.
Unless marked to the contrary, proxies received will be voted FOR
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for fiscal 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
FISCAL 1999.
OTHER BUSINESS
The Board of Directors knows of no other matters that will be presented for
action at the Meeting. However, the enclosed proxy gives discretionary authority
to the persons named in the proxy in the event that any other matters should be
properly presented at the Meeting.
<PAGE>
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
To be eligible for inclusion in the Company's proxy materials for the 2000
annual meeting of shareholders, a proposal intended to be presented by a
shareholder for action at that meeting, in addition to complying with the
shareholder eligibility and other requirements of the Securities and Exchange
Commission's rules governing such proposals, must be received not later than
September 7, 1999 by the Secretary of the Company at the Company's principal
executive offices, 9300 North Decatur Street, Portland, Oregon 97203. In
addition, the Company's Bylaws require that notice of shareholder proposals and
nominations for director to be considered at the 2000 annual meeting be received
by the Secretary of the Company at the above address not earlier than December
16, 1999 nor later than January 10, 2000, unless with respect to shareholder
proposals notice of the date of the meeting occurs less than forty days prior to
the date of such meeting, in which event such proposals must be received not
later than the tenth day following the day on which notice of the date of the
meeting was mailed. The proposal must include certain specified information
concerning the proposal or nominee, as the case may be, and information as to
the proponent's ownership of Common Stock of the Company. Proposals not meeting
these requirements will not be considered at the 2000 annual meeting.
------------------
A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K WILL BE MADE
AVAILABLE TO ANY SHAREHOLDER WITHOUT CHARGE UPON WRITTEN REQUEST TO: SHAREHOLDER
RELATIONS, PHOENIX GOLD INTERNATIONAL, INC., 9300 NORTH DECATUR, PORTLAND,
OREGON 97203.
By order of the Board of Directors,
/s/ Joseph K. O'Brien
Joseph K. O'Brien
Secretary
Dated: January 6, 1999
