UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Information Required in Proxy Statement
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 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
PHOENIX GOLD INTERNATIONAL, 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] 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:
(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:
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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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(4) Date Filed:
<PAGE>
[LOGO]
9300 North Decatur Street
Portland, Oregon 97203
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 13, 2001
-------------------------
To Our Shareholders:
The 2001 Annual Meeting of Shareholders of Phoenix Gold International, Inc.,
an Oregon corporation (the "Company"), will be held at 3:30 p.m., Pacific
Standard Time, on Tuesday, February 13, 2001 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 or 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 2001; 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 13, 2000 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 5, 2001
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>
[LOGO]
9300 North Decatur Street
Portland, Oregon 97203
-------------------------
PROXY STATEMENT
2001 ANNUAL MEETING OF SHAREHOLDERS
-------------------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Phoenix Gold International, Inc. (the "Company") of
proxies to be voted at the 2001 Annual Meeting of Shareholders of the Company
(the "Meeting") to be held at 3:30 p.m., Pacific Standard Time, on Tuesday,
February 13, 2001 at the Company's executive offices, 9300 North Decatur Street,
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 this 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 or other means without additional compensation. 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 5, 2001.
<PAGE>
VOTING
Holders of record of the Company's Common Stock on December 13, 2000 will be
entitled to vote at the Meeting or any adjournments or postponements thereof. As
of that date, there were 3,026,945 shares of Common Stock outstanding and
entitled to vote. The presence in person or by proxy of a majority, or
1,513,473, 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 2002, 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.
2
<PAGE>
The following table sets forth certain information about the Company's
directors and executive officers:
<TABLE>
<CAPTION>
Director Expiration
or Officer of Current
Name Age Positions Since Term
---- --- --------- ----- ----
<S> <C> <C> <C> <C>
Keith A. Peterson 47 Chairman, President and Chief 1991 2001
Executive Officer
Timothy G. Johnso 55 Executive Vice President, 1991 2001
Chief Operating Officer and
Director
Joseph K. O'Brien 43 Chief Financial Officer and 1997 --
Secretary
Stephen P. Bettini 39 Vice President - Operations 1996 --
Robert A. Brown 50 Director 1998 2001
Edward A. Foehl 58 Director 1998 2001
Frank G. Magdlen 53 Director 1995 2001
</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. 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 1997.
MR. O'BRIEN was appointed Chief Financial Officer and Secretary of the
Company in 1997. From 1981 through 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 a B.S. in business administration and an
M.B.A. from Portland State University.
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 products based on focused charged particle beam technology. From August
1992 to February 1996, he was the manager of an LCD flat panel display assembly
operation for Sharp Microelectronics Technology, Inc. Mr. Bettini received a
B.S. in management from Marylhurst College.
MR. BROWN became a director of the Company in January 1998. 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. in management from the University of
Massachusetts and attended the graduate business school at the University of
Massachusetts.
3
<PAGE>
MR. FOEHL became a director of the Company in January 1998. Mr. Foehl is a
Managing Director of Crown Point Group Ltd. ("Crown Point"). Crown Point
specializes in corporate financial investment services. From June 1998 to June
1999, Mr. Foehl was a consultant to Systran Financial Services Corporation
("Systran"), a company providing billing and collection services to the trucking
industry and other companies. From 1988 to June 1998, he was President and Chief
Executive Officer of Systran. Mr. Foehl received a B.S. in engineering from the
United States Military Academy at West Point and an M.B.A. in finance from
George Washington University.
MR. MAGDLEN became a director of the Company in January 1995. Mr. Magdlen is
a Managing Director of Crown Point. From 1990 to June 1999, Mr. Magdlen was a
Vice President of U.S. Bancorp and was a Managing Director and Portfolio Manager
of First American Asset Management, a division of U.S. Bancorp. From 1993 to
1997, he was 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. Mr. Magdlen received a B.B.A. in finance from the University of
Portland and an M.B.A. 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 2000, the Board of Directors held four meetings. The Company
maintains a standing Audit Committee and Compensation Committee, but does not
maintain a standing nominating committee. During fiscal 2000, the Audit
Committee held three meetings and the Compensation Committee held one meeting.
Each director attended all of the meetings of the Board of Directors and of each
committee of the Board of Directors on which he served during fiscal 2000.
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, 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.
4
<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. 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.
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. On
January 26, 2000, the expiration date of the option was extended to January 26,
2005. The other terms of the option were not modified. 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. On February 18, 1997, February 16,
1999 and February 15, 2000, Mr. Magdlen was also granted nonstatutory options to
purchase 5,000, 1,400 and 1,400 shares of Common Stock, respectively. These
options were not granted under the Option Plan, have exercise prices equal to
the fair market value of the Common Stock on such dates, have terms of ten, five
and five years, respectively, 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. Messrs. Brown and Foehl were automatically granted
options to purchase 1,400 shares of Common Stock on each of February 16, 1999
and February 15, 2000 following the respective annual meetings of the
shareholders of the Company.
5
<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 $100,000 for services rendered to the
Company in all capacities for fiscal years 2000, 1999 and 1998 (the "Named
Executive Officers"). The Company's fiscal year ends on the last Sunday in
September. For convenience of financial statement presentation, the Company
indicates that its fiscal year ends on September 30.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
------------------------------------- ----------------------------- -----------
Name and Other Annual Restricted Securities LTIP All Other
Principal Compensation Stock Under- Payouts Compensation
Position Year Salary ($) Bonus ($) Awards lying Options/ ($) ($)
(1) ($) ($) SARs(#)
----------------------- -------- ------------ --------- -------------- -------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Keith A. Peterson 2000 200,000 - - - - - 830 (2)
Chairman, President 1999 159,615 - - - - - 806 (2)
and Chief Executive 1998 129,020 - - - - - 925 (2)
Officer
Timothy G. Johnson 2000 200,000 - - - - - 97 (3)
Executive Vice 1999 160,212 - - - - - 61 (3)
President and Chief 1998 150,738 - - - - - 48 (3)
Operating Officer
Joseph K. O'Brien 2000 130,468 15,000 - - - - 815 (4)
Chief Financial 1999 110,275 - - - - - 801 (4)
Officer and 1998 102,775 - - - - - 997 (4)
Secretary
Stephen P. Bettini 2000 117,180 15,000 - - - - 58 (6)
Vice President - 1999 109,295 - 7,897 (5) - - - 48 (6)
Operations 1998 105,565 - - - - - 1,171 (6)
</TABLE>
-----------
(1) Includes compensation deferred under the Company's 401(k) plan.
(2) 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 $750, $750 and $877 for
fiscal 2000, 1999 and 1998, respectively, and Company paid premiums
for term life insurance of $80, $56 and $48 for fiscal 2000, 1999 and
1998, respectively.
(3) Consists of Company paid premiums for term life insurance of $97, $61
and $48 for fiscal 2000, 1999 and 1998, respectively.
(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. O'Brien in the amounts of $750, $750 and $949 for
fiscal 2000, 1999 and 1998, respectively, and Company paid premiums
for term life insurance of $65, $51 and $48 for fiscal 2000, 1999 and
1998, respectively.
(5) Mr. Bettini received payment for accrued but unused vacation.
(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. Bettini in the amounts of $0, $0 and $1,123 for fiscal
2000, 1999 and 1998, respectively, and Company paid premiums for term
life insurance of $58, $48 and $48 for fiscal 2000, 1999 and 1998,
respectively.
6
<PAGE>
The following table summarizes certain information concerning the stock
options held by the Named Executive Officers at the end of fiscal 2000:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Options/SARs at FY-End (#) at FY-End ($)
Acquired on Value ----------------------------------- -----------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
-------------------- ----------------- ---------------- ----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Timothy G. Johnson - - 96,000 0 0 0
Joseph K. O'Brien - - 25,000 0 0 0
Stephen P. Bettini - - 40,250 0 0 0
</TABLE>
On January 26, 2000, the expiration date of an option to purchase 48,000
shares of Common Stock granted to Mr. Johnson in January 1995 was extended to
January 26, 2005. The other terms of the option were not modified.
REPORT OF THE COMPENSATION COMMITTEE
During the fiscal year ended September 30, 2000, 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 2000, 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.
7
<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. Due to the financial performance of the
Company in fiscal 1996, the Chief Executive Officer and Chief Operating Officer
voluntarily reduced their base salaries by as much as 50% or more. Their base
salaries remained at decreased levels through July 1999 and were partially
restored to the levels of fiscal 1996 based on the improvements in the operating
results and liquidity of the Company. Effective, July 19, 1999, the base
salaries of the Chief Executive Officer and Chief Operating Officer were
increased to $200,000 per annum. The increased base salaries of the other named
executives were based on considerations related to the contributions of those
officers in improving the financial performance of the Company. The base
salaries of the Chief Executive Officer and Chief Operating Officer have not
changed since July 19, 1999.
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 non-financial achievements of the Company, including
revenue growth, profitability, expansion of the Company's markets and new
product introductions, improvements in working capital management, and other
factors contributing to the overall success of the Company. No bonus
compensation was awarded to the Chief Executive Officer and Chief Operating
Officer for fiscal 2000. The bonus compensation of the other named executives
was based on considerations related to the contributions of those officers in
improving the financial performance of the Company.
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 increases in base salary and bonus
compensation, the Compensation Committee did not award stock options to any of
the Named Executive Officers in fiscal 2000.
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
8
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return over a
five-year period beginning September 30, 1995 and ending September 30, 2000 of
the Company's Common Stock to the cumulative total return 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 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 September 30, 1995
and reinvestment of dividends, if any.
<TABLE>
<CAPTION>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS:
9-30-95 9-30-96 9-30-97 9-30-98 9-30-99 9-30-00
<S> <C> <C> <C> <C> <C> <C>
Phoenix Gold International, Inc. $ 100.00 $ 67.06 $ 53.53 $ 15.29 $ 20.00 $ 17.65
Peer Group $ 100.00 $ 136.43 $ 88.07 $ 95.98 $ 82.74 $ 74.51
NASDAQ - U.S. Companies $ 100.00 $ 118.68 $ 162.92 $ 165.50 $ 270.38 $ 358.96
</TABLE>
9
<PAGE>
AUDIT COMMITTEE MATTERS
On December 14, 1999, the Securities and Exchange Commission approved
amendments to The Nasdaq Stock Market, Inc.'s ("Nasdaq") independent director
and Audit Committee listing standards. These changes require, in part, that all
companies included for membership on Nasdaq certify that they have adopted a
formal written Audit Committee charter by June 14, 2000 and will review and
assess the adequacy of the charter on an annual basis. In addition, member
companies must also certify that they comply, and will continue to comply, with
the new Audit Committee structure and membership requirements by June 14, 2001.
Among others, the new requirements include a provision requiring that all
members of the Audit Committee be independent.
The Board of Directors of the Company adopted an Audit Committee Charter on
April 26, 2000, which is included as Appendix A to this Proxy Statement. At
present, a majority of the members of the Audit Committee are independent. Mr.
Johnson, who is the Executive Vice President and Chief Operating Officer of the
Company, was first appointed to serve on the Audit Committee during fiscal 1995.
The Company intends to comply with the new Audit Committee structure and
membership requirements prior to June 14, 2001, and Mr. Johnson's service on the
Audit Committee of the Board of Directors will not continue after the 2001
organization meeting of the Board of Directors following the Meeting.
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of Directors,
the Audit Committee of the Board of Directors assists the Board of Directors in
fulfilling its responsibilities for oversight of the quality and integrity of
the accounting, auditing and financial reporting practices of the Company.
During fiscal 2000, the Audit Committee met three times.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the auditors any relationships that may affect their objectivity
and independence and satisfied itself as to the auditors' independence. The
Audit Committee also discussed with management and the independent auditors the
quality and adequacy of the Company's internal controls. The Audit Committee
reviewed with the independent auditors their audit plan, audit scope and
identification of audit risks.
The Audit Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Audit Committee reviewed the audited financial statements of the Company
as of and for the fiscal year ended September 30, 2000 with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
10
<PAGE>
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board of Directors
that the Company's audited financial statements be included in its Annual Report
on Form 10-K for the fiscal year ended September 30, 2000 for filing with the
Securities and Exchange Commission. The Audit Committee also recommended the
reappointment, subject to shareholder approval, of the independent auditors, and
the Board of Directors concurred in such recommendation.
The Audit Committee,
Frank G. Magdlen (Chairman)
Edward A. Foehl
Timothy G. Johnson
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 13, 2000, 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.
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial of Class
Ownership
--------------------------------- -------------------------- -------------------
Keith A. Peterson (1) 1,642,911 54.3%
Timothy G. Johnson (1)(2) 497,314 15.9%
Wynnefield Group 415,950 13.7%
One Penn Plaza, Suite 4720
New York, NY 10119
Joseph K. O'Brien (1)(3) 28,000 *
Stephen P. Bettini (1)(4) 40,250 1.3%
Robert A. Brown (1)(5) 6,742 *
Edward A. Foehl (1)(6) 6,242 *
Frank G. Magdlen (1)(7) 19,042 *
All executive officers and
directors as a group (7 persons) (8) 2,240,501 69.7%
-------------
* 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. The address for Mr.
Foehl and Mr. Magdlen is 222 N.W. Davis Street, Suite 317, Portland
Oregon 97209.
(2) Includes 96,000 shares issuable pursuant to presently exercisable
options.
(3) Includes 25,000 shares issuable pursuant to options exercisable within
60 days after December 13, 2000.
(4) Includes 40,250 shares issuable pursuant to options exercisable within
60 days after December 13, 2000.
(5) Includes 6,242 shares issuable pursuant to options exercisable within
60 days after December 13, 2000.
(6) Includes 6,242 shares issuable pursuant to options exercisable within
60 days after December 13, 2000.
(7) Includes 14,042 shares issuable pursuant to options exercisable within
60 days after December 13, 2000.
(8) Includes 187,776 shares issuable pursuant to presently exercisable
options or options exercisable within 60 days after December 13, 2000.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 12, 1999, the Company purchased 30,000 shares of Common Stock
from Timothy G. Johnson, Executive Vice President, Chief Operating Officer and
Director, at a price of $3.00 per share (the "closing bid" price reported on The
Nasdaq Stock Market on November 12, 1999). The value realized by Mr. Johnson in
this transaction was $90,000.
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 ten 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 2000 all filing requirements applicable
to its directors, executive officers and greater than ten 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, 2001. 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 2001.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL 2001.
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.
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SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
To be eligible for inclusion in the Company's proxy materials for the 2002
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 in accordance with the
Company's Bylaws be received not earlier than August 8, 2001 and not later than
September 7, 2001 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 also require that nominations for director, in
order to be considered at the 2002 annual meeting, must also be received by the
Secretary of the Company at the above address not earlier than August 8, 2001
nor later than September 7, 2001. A shareholder proposal must include certain
specified information concerning the proposal 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 2002 annual meeting. The
Secretary of the Company should be contacted in writing at the above address to
obtain additional information as to the proper form and content of submissions.
-----------
A COPY OF THE COMPANY'S 2000 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 STREET,
PORTLAND, OREGON 97203.
By order of the Board of Directors,
/s/ Joseph K. O'Brien
Joseph K. O'Brien
SECRETARY
Dated: January 5, 2001
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APPENDIX A
PHOENIX GOLD INTERNATIONAL, INC.
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the Board of Directors to be known as the Audit
Committee. The Audit Committee shall be composed of directors who are
independent of the management of the Company and are free of any relationship
that, in the opinion of the board of directors, would interfere with their
exercise of independent judgment as a committee member.
Statement of Policy
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibilities to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the corporation, and the quality and integrity of the financial reports of
the corporation. In doing so, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors and the financial management of the Company.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Company are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
o Confirm the independence of the independent auditor.
o Review and recommend to the directors the independent auditors to be selected
to audit the financial statements of the Company.
o Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof review
such audit, including any comments or recommendations of the independent
auditors.
o Review with the independent auditors and the financial and accounting
personnel the adequacy and effectiveness of the accounting and financial
controls, and elicit any recommendations for the improvement of such internal
control procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to the adequacy
of such controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of the
financial statements to be presented to the shareholders. Any changes in
accounting principles should be reviewed.
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o Advise the independent auditor and financial management that they are
expected to provide timely analysis of significant financial reporting issues
and practices.
o Provide sufficient opportunity for the independent auditors to meet with the
members of the Audit Committee without members of management present. Among
the items to be discussed in these meeting(s) are the independent auditors'
evaluation of the Company's financial accounting and accounting personnel and
the cooperation that the independent auditors received during the course of
the audit.
o Review accounting and financial resources succession planning within the
Company.
o Submit the minutes of all meetings of the Audit Committee to, or discuss the
matters discussed at each committee meeting with, the Board of Directors.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel or experts for this purpose
if, in its judgment, that is appropriate.
o Review and assess the adequacy of this charter on an annual basis.
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Proxy PHOENIX GOLD INTERNATIONAL, INC. Proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON FEBRUARY 13, 2001
The undersigned appoints Keith A. Peterson and Timothy G. Johnson, and each
of them, proxies for the undersigned, each with full power of substitution, to
attend the Annual Meeting of Shareholders of Phoenix Gold International, Inc. to
be held on February 13, 2001 at 3:30 p.m., Pacific Standard Time, and at any
adjournments or postponements of the Annual Meeting, and to vote as specified in
this Proxy all the shares of Common Stock of the Company which the undersigned
would be entitled to vote if personally present. This Proxy when properly
executed will be voted in accordance with the indicated directions. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND
FOR THE RATIFICATION OF THE APPOINTMENT OF AUDITORS. IN ADDITION, THE PROXIES
MAY VOTE IN THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING.
The Board of Directors recommends a vote FOR the election of Directors and
FOR the ratification of the appointment of auditors as noted in proposals 1 and
2, respectively.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY
ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE
(Continued and to be signed on reverse side)
----------------------------------------------
PHOENIX GOLD INTERNATIONAL, INC.
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PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK
ONLY: / /
1. ELECTION OF DIRECTORS -- FOR WITHHOLD
Nominees: Keith A. Peterson, ALL ALL FOR ALL (EXCEPT
Timothy G. Johnson, Robert A. NOMINEE(S)
Brown, Edward A. Foehl and / / / / WRITTEN BELOW)
Frank G. Magdlen
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--------------
--------------
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2. Proposal to ratify the FOR AGAINST ABSTAIN
appointment of Deloitte &
Touche LLP as the Company's
auditors for fiscal 2001 / / / / / /
Dated: , 2001
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Signature(s)
---------------------------
---------------------------------------
Please sign exactly as your name appears.
Joint owners should each sign personally.
Where applicable, indicate your official
position or representative capacity.
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