<PAGE> 1
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 ss. 240.14a-11(c) or ss. 240.14a-12
AMERICAN COIN MERCHANDISING, INC.
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(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:
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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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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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.
6. Amount Previously Paid:
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7. Form, Schedule or Registration Statement No.:
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8. Filing Party:
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9. Date Filed:
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<PAGE> 2
AMERICAN COIN MERCHANDISING, INC.
5660 CENTRAL AVENUE
BOULDER, CO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 25, 1999
TO THE STOCKHOLDERS OF AMERICAN COIN MERCHANDISING, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of American
Coin Merchandising, Inc., a Delaware corporation (the "Company"), will be held
on Friday, June 25, 1999 at 2:00 p.m. local time at the principal offices of the
Company located at 5660 Central Avenue, Boulder, Colorado 80301, for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the selection of KPMG LLP as independent auditors of the
Company for its fiscal year ending December 31, 1999.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on May 18, 1999, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Randall J. Fagundo
Randall J. Fagundo
Secretary
Boulder, Colorado
May 28, 1999
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
AMERICAN COIN MERCHANDISING, INC.
5660 CENTRAL AVENUE
BOULDER, CO 80301
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 25, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
American Coin Merchandising, Inc., a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders to be held on June 25, 1999, at 2:00
p.m. local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the principal offices of the
Company located at 5660 Central Avenue, Boulder, Colorado 80301. The Company
intends to mail this proxy statement and accompanying proxy card on or about May
28, 1999 to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on May 18,
1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on May 18, 1999 the Company had outstanding and entitled to
vote 6,475,069 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 5660
Central Avenue, Boulder, CO 80301, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 2000 Annual Meeting of Stockholders must be received by the Company
not later than January 29, 2000 in order to be included in the proxy statement
and proxy relating to that Annual Meeting. The deadline for submitting a
stockholder proposal or a nomination for director that is not to be included in
such proxy statement and proxy is February 27, 2000.
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
There are six nominees for the seven Board positions presently authorized
in the Company's By-laws. There is one vacancy on the Board. Each director to be
elected will hold office until the next annual meeting of stockholders and until
his or her successor is elected and has qualified, or until such director's
earlier death, resignation or removal. Each nominee listed below except Mr.
Richard P. Bermingham is currently a director of the Company, all having been
elected by the stockholders.
Shares represented by executed proxies will be voted, if authority to do
so is not withheld, for the election of the seven nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for election
has agreed to serve if elected and management has no reason to believe that any
nominee will be unable to serve.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION/
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
<S> <C> <C>
John A. Sullivan (1) (2)................44 Director of Research and Investments, Relational Investors, LLC,
Chairman of the Board of Directors
Jerome M. Lapin.........................69 President and Chief Executive Officer
Randall J. Fagundo......................39 Senior Vice President and Chief Operating Officer, Secretary and
Director
Richard D. Jones(2).....................57 President, T.R. Baron & Associates, Inc.
J. Gregory Theisen......................53 Vice President of Lorac, Inc.
Richard P. Bermingham...................60 Chairman of Bermingham Investment Company
</TABLE>
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(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
John A. Sullivan has served as Chairman of the Board since April 1999 and
a director since October 1995. Mr. Sullivan has been Director of Research and
Investments since December 1998 and employed by Relational Investors, LLC, an
investment management firm, since March 1998. Mr. Sullivan was employed by
Batchelder & Partners, Inc., an investment advisory and consulting firm, from
May 1996 to February 1998. Mr. Sullivan also served as a Senior Vice President
of The Seidler Companies Incorporated ("Seidler"), the underwriter of the
Company's initial public offering, from August 1993 to April 1996. Prior to
being elected Senior Vice President at Seidler, Mr. Sullivan served as a Vice
President from October 1990 to August 1993. Mr. Sullivan also serves as a
director of the Farr Company.
Jerome M. Lapin has served as President, Chief Executive Officer and a
director since January 1994. Mr. Lapin served as chairman of the Board from July
1995 to January 1999. Prior to joining the Company, he was the Managing Director
for World Hosts Pty. Ltd., a restaurant leasing consulting business, from July
1991 to January 1994. From June 1989 to June 1990, Mr. Lapin was the President
of Sanwa Foods, Inc., a soup manufacturer and marketer ("Sanwa"), and from June
1990 to June 1991 he was a consultant for Sanwa. Mr. Lapin was a co-founder of
the International House of Pancakes, Inc. in 1958.
Randall J. Fagundo, a co-founder of the Company, has served as Senior Vice
President and Chief Operating Officer since January 1999 and Secretary since May
1991 and as a director since August 1988. Mr. Fagundo served as Vice President
of Operations from May 1991 to January 1999. Prior to joining the Company, he
was one of the founders of Southwest Coin Company.
2
<PAGE> 5
Richard D. Jones, a co-founder of the Company, has served as a director
since August 1988 and served as Chairman of the Board from August 1988 to July
1995 and as President of the Company from August 1988 to April 1991. Mr. Jones
has served as President of T.R. Baron & Associates, Inc., a marketing and
consulting business, since May 1975. Mr. Jones was a co-founder of Colorado Coin
in 1987.
J. Gregory Theisen, a co-founder of the Company, has served as a director
since August 1988. Mr. Theisen has served as a Vice President of Lorac, Inc., an
investment consulting company, since December 1989. Mr. Theisen served as Vice
President of the Company from August 1988 to December 1993. Prior to joining the
Company, Mr. Theisen was a co-founder of Colorado Coin and served as its
Operations Manager from January 1987 to October 1988.
Richard P. Bermingham, has served as Chairman of Bermingham Investment
Company since July 1997 and from July 1994 to July 1997, he served as Vice
Chairman of American Golf Corporation, a golf course management company. From
April 1987 until May 1994, Mr. Bermingham served as the President and Chief
Executive Officer of Sizzler International, Inc., an operator and franchisor of
restaurants. Mr. Bermingham also serves on the Boards of Farr Company and
California Beach Restaurants, Inc. Mr. Bermingham received a B.S. in Finance
from the University of Colorado in 1962.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1998, the Board of Directors
held seven meetings. Each director attended at least 75% of the total number of
Board meetings and meetings of Board Committees on which the director served
during the time they served on the Board or such committees. The Board of
Directors has an Audit Committee and a Compensation Committee.
During the fiscal year ended December 31, 1998, the Audit Committee was
comprised of Messrs. Baldwin and Sullivan and Ms. Stutsman. The Audit Committee
held one meeting during 1998. The functions performed by the Audit Committee
include recommending to the Board of Directors independent auditors to serve the
Company for the ensuing year, reviewing with the independent auditors and
management, the scope and results of the audit, assuring that the independent
auditors act independently, reviewing and approving any substantial change in
the Company's accounting policies and practices, reviewing with management and
the independent auditors the adequacy of the Company's system of internal
controls and reviewing the Company's annual report.
The Compensation Committee is comprised of Messrs. Jones and Sullivan. The
Compensation Committee held two meetings during 1998. The functions performed by
the Compensation Committee include reviewing and approving management's
recommendations as to executive compensation and reviewing, approving and
administering the Company's executive compensation and stock option plans.
3
<PAGE> 6
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 1999 and has further directed
that management submit the selection of independent auditors for ratification by
the stockholders at the Annual Meeting. KPMG LLP has audited the Company's
financial statements since December 31, 1993. Representatives of KPMG LLP are
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Stockholder ratification of the selection of KPMG LLP as the Company's
independent auditors is not required by the Company's By-laws or otherwise.
However, the Board is submitting the selection of KPMG LLP to the stockholders
for ratification as a matter of good corporate practice. If the stockholders
fail to ratify the selection, the Audit Committee and the Board will reconsider
whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee and the Board in their discretion may direct the appointment of
different independent auditors at any time during the year if they determine
that such a change would be in the best interests of the Company and its
stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of KPMG LLP. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether
this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
4
<PAGE> 7
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of May 18, 1999 by: (i)
each person (or group of affiliated persons) who is known by the Company to own
beneficially more than 5% of the Common Stock, (ii) each of the Company's
directors and nominees, (iii) each of the officers named in the executive
compensation table, and (iv) all directors and executive officers of the Company
as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED (1) OWNED (1)
------------------------
<S> <C> <C> <C>
Merrill Lynch Asset Management Group (2).................................................. 962,713 14.87%
800 Scudders Mill Road
Plainsboro, NJ 08536
SAFECO Asset Management Company (3)....................................................... 556,300 8.59
601 Union Street
Seattle, WA 98101
Richard D. and Melinda K. Jones (4)....................................................... 523,623 8.09
5660 Central Avenue
Boulder, CO 80301
J. Gregory Theisen (5).................................................................... 493,623 7.62
5660 Central Avenue
Boulder, CO 80301
Jerome M. Lapin (6)....................................................................... 465,932 7.20
5660 Central Avenue
Boulder, CO 80301
Frontier Capital Management Co. Inc. (7).................................................. 400,170 6.18
99 Summer Street
Boston, MA 02110
Abbe M. Stutsman (8)...................................................................... 311,354 4.81
Randall J. Fagundo........................................................................ 304,091 4.70
W. John Cash (9).......................................................................... 55,000 *
Jim D. Baldwin (10)....................................................................... 22,800 *
Richard P. Bermingham..................................................................... -- --
John A. Sullivan (11)..................................................................... 28,000 *
All directors and executive officers as a group (8 persons) (4)-(6) and (8)-(11)..........2,204,423 33.56%
</TABLE>
- ----------------------
* Less than one percent.
(1) Percentage of beneficial ownership is based on 6,475,069 shares of Common
Stock outstanding as of May 18, 1999. Beneficial ownership is determined
in accordance with the rules of Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of Common Stock subject to options or warrants currently
exercisable or exercisable within 60 days of May 18, 1999, are deemed
outstanding for computing the percentage of the person or entity holding
such securities, but not outstanding for computing the percentage of any
other person or entity. Except as indicated by footnote, and subject to
community property laws where applicable, the persons named in the table
above have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
(2) Merrill Lynch & Co., Inc. ("ML&Co."), Hotchkiss and Wiley SmallCap Fund,
Inc. and Merrill Lynch Asset Management Group ("AMG") have together filed
a Schedule 13G pursuant to which they report sole or shared voting and
dispositive power over 962,713 shares owned. ML&Co. is a parent holding
company. AMG is an operating division of ML&Co. consisting of ML&Co.'s
indirectly owned asset management subsidiaries, including Merrill Lynch
Asset Management, L.P., doing business as Merrill Lynch Asset Management
("MLAM") which is comprised of the Merrill Lynch Capital Management Group
and the divisions of Hotchkiss and Wiley. MLAM is an investment adviser
registered under Section 203 of the Investment
5
<PAGE> 8
Advisers Act of 1940, which acts as investment adviser to various
investment companies registered under Section 8 of the Investment Company
Act of 1940. The investment advisers that comprise AMG exercise voting
and investment power over portfolio securities independently from other
direct and indirect subsidiaries of ML&Co. and may therefore be deemed
the beneficial owner of such securities.
(3) SAFECO Asset Management Company is a subsidiary of SAFECO Corporation and
holds 556,300 shares on behalf of its clients, including SAFECO Common
Stock Trust, which holds 391,000 shares. SAFECO Asset Management Company
disclaims beneficial ownership of all shares held by SAFECO Common Stock
Trust.
(4) Includes (i) 15,000 shares held by the Jones Family Charitable Trust
Number 1, (ii) 294,080 shares held by Mrs. Jones Revocable Living Trust,
(iii) 168,079 shares held by Richard D. Jones Revocable Living Trust, and
(iv) 46,464 shares held by T.R. Baron and Associates, Inc. Defined
Benefit Pension Plan, of which Mr. Jones is the Trustee.
(5) Includes 12,464 shares held by Colorado Coin Company Defined Benefit
Keogh Plan of which Mr. Theisen is the Trustee.
(6) Includes 460,932 shares of Common Stock held jointly with Mr. Lapin's
spouse.
(7) Frontier Capital Management Co. Inc. is a registered investment adviser
under the Investment Advisors Act of 1940 and may be deemed to be the
beneficial owner of the securities by virtue of its acting as investment
advisor to one or more institutions and individuals.
(8) Includes 50,519 shares of Common Stock held jointly with Ms. Stutsman's
spouse.
(9) Consists of options to purchase Common Stock exercisable within 60 days
of May 18, 1999 by Mr. Cash.
(10) Includes 540 shares of Common Stock held jointly with Mr. Baldwin's
spouse and options to purchase 10,500 shares of Common Stock granted
under the Directors' Plan which are exercisable within 60 days of May 18,
1999.
(11) Includes options to purchase 10,500 shares of Common Stock granted under
the Directors' Plan which are exercisable within 60 days of May 18, 1999
and a warrant held by Mr. Sullivan exercisable to purchase 17,500 shares
of Common Stock.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except for J.
Gregory Theisen who failed to file a timely Form 4 related to the purchase of
20,000 shares of common stock.
6
<PAGE> 9
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers of the Company as of May 18, 1999:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
<S> <C>
Jerome M. Lapin............................69. President and Chief Executive Officer
W. John Cash...............................52. Senior Vice President, Chief Financial Officer and Treasurer
Randall J. Fagundo.........................39. Senior Vice President, Chief Operating Officer, Secretary and
Director
Abbe M. Stutsman...........................46. Senior Vice President of Purchasing and Product Development and
Director
</TABLE>
W. John Cash has served as Senior Vice President since January 1999 and
Chief Financial Officer since July 1995. Prior to joining the Company he was
Vice President and Chief Financial Officer of Kasler Holding Company, a
diversified construction company, from May 1991 to March 1995. From July 1984 to
April 1991, Mr. Cash served as a partner of KPMG Peat Marwick LLP.
Abbe M. Stutsman, a co-founder of the Company, has served as a Senior Vice
President since January 1999 and served as a director from December 1989 until
May 1999. Ms. Stutsman served as a Vice President from January 1994 and as the
Company's Secretary from August 1988 until May 1991, Treasurer from January 1994
until July 1995 and President from May 1991 until January 1994. Prior to joining
the Company, she was the Business Manager of Colorado Coin from April 1988 to
August 1988.
See "Proposal 1--Election of Directors" for biographies of the other
executive officers.
7
<PAGE> 10
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director of the Company, other than Messrs. Jones and
Theisen, receives $2,500 for each regular or special meeting of the Board of
Directors or committee meeting that is held on a date other than the date of a
board meeting. All Directors also receive reimbursement for their reasonable
out-of-pocket expenses related to such attendance. In the fiscal year ended
December 31, 1998, the total compensation paid to non-employee directors was
$15,000.
Each non-employee director of the Company, other than Messrs. Jones and
Theisen, are eligible to receive stock option grants under the 1995 Non-Employee
Director Stock Option Plan (the "Directors' Plan"). Only non-employee directors
of the Company or an affiliate of such directors (as defined in the Code) are
eligible to receive options under the Directors' Plan. Options granted under the
Directors' Plan are intended by the Company not to qualify as incentive stock
options under the Code.
During 1998, the Company did not grant options to non-employee directors
of the Company. As of May 18, 1999, no options had been exercised under the
Directors' Plan.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows for the fiscal years ended December 31, 1998,
1997 and 1996, compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its three other most highly compensated executive
officers for the year ended December 31, 1998 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION -------------------
------------------------------ SECURITIES
SALARY BONUS UNDERLYING ALL OTHER
NAME OF PRINCIPAL POSITION YEAR ($) (1) ($) (2) OPTIONS COMPENSATION(3)
-------------------------- ---- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Jerome M. Lapin............................1998 $ 196,250 26,211 -- $ 12,395
President and Chief Executive 1997 178,750 -- -- 10,351
Officer 1996 155,833 -- -- 6,757
Randall J. Fagundo.........................1998 134,002 16,664 -- 14,411
Vice President of Operations 1997 125,547 -- -- 10,779
and Secretary 1996 111,837 -- -- 9,550
W. John Cash...............................1998 134,002 16,664 -- 12,791
Vice President, Chief Financial 1997 125,547 -- 100,000 10,025
Officer and Treasurer 1996 112,320 -- -- 9,128
Abbe M. Stutsman...........................1998 134,002 16,664 -- 12,584
Vice President of Purchasing 1997 125,837 -- -- 10,385
and Product Development 1996 111,837 -- -- 9,824
</TABLE>
- ----------------
(1) Includes amounts deferred pursuant to Section 401(k) and 125 of the
Internal Revenue Code of 1986, as amended.
(2) Represents bonuses earned in 1997 but not determinable until 1998.
(3) Includes value of Company provided automobile, health insurance premiums
paid by the Company and funds contributed by the Company as matching
contributions to the Named Executive Officers' 401(k) Plan account.
8
<PAGE> 11
STOCK OPTION GRANTS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 1998 there were no options
granted to the Named Executive Officers:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table shows for the fiscal year ended December 31, 1998
certain information regarding options exercised and held at year-end by the
Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS AT
SHARES AT 12/31/98 12/31/98
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE(#) UNEXERCISABLE($)(2)
---- -------------- -------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Jerome M. Lapin........................... -- -- -- /-- -- /--
W. John Cash.............................. -- -- 35,000/85,000 $ 20,625/6,875
Randall J. Fagundo........................ -- -- -- /-- -- /--
Abbe M. Stutsman.......................... -- -- -- /-- -- /--
</TABLE>
- ----------------
(1) Based on the fair market value of the Common Stock as of the date of
exercise, minus the exercise price, multiplied by the number of shares
acquired.
(2) Based on the fair market value of the Common Stock as of December 31, 1998
of $5.875 per share, minus the exercise price of "in-the-money" unexercised
options, multiplied by the number of shares represented by such options.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Jerome M. Lapin, W.
John Cash and Abbe Stutsman (each an "Executive") as of June 1, 1996 (the
"Employment Agreements"). Mr. Lapin's Employment Agreement was terminated and
replaced with a management transition agreement as further described below. See
"-- Management Transition Agreement." The Employment Agreement with Mr. Lapin,
as updated by the Compensation Committee, provided that he would receive an
annual salary of $185,000 as of April 1, 1997, increasing to $200,000 on April
1, 1998 and to $215,000 on April 1, 1999. The Employment Agreements with Mr.
Cash and Ms. Stutsman, as updated by the Compensation Committee, provided that
they would each receive an annual salary of $129,470. Additionally, each
Executive was eligible to receive a bonus or salary increase as determined by
the Compensation Committee. Mr. Lapin also was entitled to a minimum bonus of
$60,000 and $45,000 during the years beginning April 1, 1998 and April 1, 1999,
respectively. The Employment Agreements also provided that each Executive would
be entitled to (i) participate in any employee benefits plans the Company makes
available to its other employees, (ii) four weeks vacation, and (iii) use of an
automobile provided by the Company. The Employment Agreements with Mr. Cash and
Ms. Stutsman expired on December 31, 1998. Each Employment Agreement also
provided that the Company could terminate the Executive's employment at any time
for cause and with 60 days' written notice without cause. If the Executive was
terminated without cause, the Company would have been obligated to pay the
Executive's salary for 12 months after the termination date. The Employment
Agreements provided that after a change of control of the Company, if the
Executive was terminated without cause, required to move outside the Boulder,
Colorado area or experiences a material reduction in his or her responsibilities
then the Executive would have been entitled to receive the salary set forth in
the respective Employment Agreement for the remaining term of the Agreement. The
Employment Agreements also contained confidentiality and noncompete provisions
which prohibited the Executives from soliciting employees of the Company,
engaging in business similar to the Company's or disclosing confidential
information for a period of three years after the termination of the Executive's
employment with the Company.
MANAGEMENT TRANSITION AGREEMENT, VOTING AGREEMENT AND STOCK RESTRICTION
AGREEMENT
The Company entered into a management transition agreement with Jerome M.
Lapin (the "Management Transition Agreement"), which took effect upon Mr.
Lapin's resignation as Chairman of the Board of Directors of the Company in
9
<PAGE> 12
January 1999. Under the Management Transition Agreement, Mr. Lapin has agreed to
continue to serve as Chief Executive Officer and Director through the Company's
1999 annual meeting of stockholders to be held on June 25, 1999 (the "Separation
Date") and as a Director of the Company through the Company's 2000 annual
meeting of stockholders. The Management Transition Agreement provides that Mr.
Lapin continue to receive the salary set forth in his Employment Agreement of
$200,000 per year until March 31, 1999, and of $215,000 per year beginning April
1, 1999 until the Separation Date. Mr. Lapin also is entitled to receive his
guaranteed bonus of $60,000 per year through March 31, 1999, but he will not be
entitled to any guaranteed bonus after such date. Additionally, Mr. Lapin will
not be entitled to any additional compensation for serving as a Director of the
Company through December 31, 2000. After December 31, 2000, Mr. Lapin will be
entitled to receive the same compensation paid to continuing outside Directors
as set forth above in "Compensation of Directors." The Management Transition
Agreement also provides that through the Separation Date, Mr. Lapin will be paid
for all accrued and unused vacation earned, the Company will continue to pay for
Mr. Lapin's health insurance coverage provided through the Company's group
health insurance plan, and Mr. Lapin will continue to participate in the
Company's 401(k) plan.
The Management Transition Agreement also provides for Mr. Lapin to serve
as a consultant to the Company through December 31, 2000 (the "Consulting
Period") for which he will be paid a salary equal to $215,000 per year from the
Separation Date through the remainder of the Consulting Period. During the
Consulting Period and through the end of the lease term, the Company has agreed
to continue to make all lease and insurance payments on Mr. Lapin's automobile
and to purchase such automobile and transfer title to Mr. Lapin as additional
compensation at the end of the lease term. During the Consulting Period, Mr.
Lapin has agreed to render services to the Company equal to approximately 40
hours per month.
The Management Transition Agreement may be terminated by the Company for
cause at any time at which time the Company's obligations under the agreement
will cease and Mr. Lapin will not be entitled to any further compensation or
benefits. The Management Transition Agreement contains confidentiality and
noncompete provisions which prohibit Mr. Lapin from directly or indirectly (i)
soliciting or accepting any business in the amusement vending machine business
or industry, (ii) requesting any customer of the Company to not continue
business with the Company, (iii) disclosing the names of any customers of the
Company, (iv) establishing or providing any assistance to any enterprise
competitive with any business that is conducted at any time prior to or during
the Consulting Period by the Company in the Industry and the Territory, or (v)
soliciting any employee, consultant, or independent contractor of the Company
for a period of three years after the end of the Consulting Period.
The Company also has entered into a Voting Agreement with Mr. Lapin
whereby Mr. Lapin has agreed that at any annual or special meeting of the
stockholders of the Company, the shares of Common Stock held by Mr. Lapin will
be voted by Randall J. Fagundo, Chief Operating Officer of the Company, as
Trustee, as directed by a majority of the Directors of the Company (other than
Mr. Lapin). Additionally, the Company entered into a Stock Restriction Agreement
with Mr. Lapin whereby Mr. Lapin has agreed that, until the termination date of
the Management Transition Agreement, he will not sell or otherwise transfer any
shares of common stock of the Company held by him without the prior consent of
the Company.
10
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE(1)
THE COMPENSATION COMMITTEE
The Compensation Committee's stated purpose is to review and recommend to
the Board the compensation, stock options and employment benefits of all
officers of the Company, administer the Company's Amended and Restated Stock
Option Plan, fix the terms of other employee benefit arrangements and make
awards under such arrangements. The Compensation Committee is composed of two
directors, one of whom has never served as an officer of the Company. The
following is a summary of polices of the Compensation Committee that affect the
compensation paid to executive officers, as reflected in the tables and text set
forth elsewhere in this Proxy Statement.
General Compensation Policy. The Compensation Committee's overall policies
with respect to executive officers is to offer competitive compensation
opportunities for such persons based upon their position and personal
performance, the financial performance of the Company and their contribution to
that performance. Each executive officer's compensation package is comprised of
two elements: (i) base salary that reflects individual performance and is
designed primarily to be competitive with salary levels in similar profitable
size businesses and (ii) stock-based awards designed to strengthen the mutuality
of interests between the executive officers and the Company's stockholders.
Factors. Several important factors considered in establishing the
components of each executive officer's compensation package for the 1997 fiscal
year are summarized below. Additional factors were taken into account to a
lesser degree. The Compensation Committee may, in its sole discretion, apply
entirely different factors, such as different measures of financial performance,
for future fiscal years. However, it is presently contemplated that all
compensation decisions will be designed to further the overall compensation
policy described above.
Stock-Based Incentive Compensation. The Company adopted the Amended and
Restated Stock Option Plan (the "Option Plan") in order to provide equity based
performance incentives to its employees. The Option Plan authorizes the Company
to award incentive stock options and nonqualified stock options to purchase
Common Stock to officers and other employees of the Company. The purpose of the
Option Plan is to attract, retain and motivate officers and employees. Stock
options may be exercised at a purchase price as recommended by the Compensation
Committee and determined by the Board of Directors, provided that the exercise
price per share under the Option Plan shall be an amount not less than 100% of
the fair market value on the date of grant for incentive stock options and not
less than 85% of the fair market value on the date of grant for nonqualified
stock options. Options granted to beneficial owners of 10% or more of the
Company's outstanding shares shall not be granted at less than 110% of fair
market value. The grants are designed to align the interests of the optionees
with those of the stockholders and provide each individual with a significant
incentive to manage the Company from the perspective of an owner with an equity
stake in the business, even though certain executive officers of the Company are
already significant shareholders of the Company (see "Security Ownership of
Certain Beneficial Owners and Management"). Moreover, the long-term vesting
schedules encourage a long-term commitment to the Company by its executive
officers and other optionees. The size of the option grant to each optionee is
set at a level that the Compensation Committee deems appropriate in order to
create a meaningful opportunity for stock ownership based upon the individual's
current position with the Company, but also takes into account the individual's
potential for future responsibility and promotion over the option vesting
period, and the individual's performance in recent periods. The Compensation
Committee periodically reviews the number of shares owned by, or subject to
options held by, each executive officer, and additional awards are considered
based upon past performance of the executive officer.
CHIEF EXECUTIVE OFFICER
In fiscal 1998, Jerome M. Lapin, Chairman, President and Chief Executive
Officer of the Company received total cash payments of $196,250 in salary and
$26,211 in bonuses earned in 1997 that were not determinable until 1998. The
Compensation Committee notes that the Company under the leadership of Mr. Lapin
produced significant growth in sales and operating earnings during the period.
The Compensation Committee considers this level of compensation appropriate in
light of Mr. Lapins' leadership of a growth oriented company which has
experienced significant increases in fiscal 1998 revenue and operating earnings
of 65.4% and 25.0%, respectively, as compared to fiscal 1997. Mr. Lapin's
employment agreement with the Company was terminated upon Mr. Lapin's
resignation as Chairman of the Board of Directors of the Company in January 1999
and replaced with a management transition agreement. See "Executive
Compensation--Employment Agreements" and "--Management Transition Agreement,
Voting Agreement and Stock Restriction Agreement."
11
<PAGE> 14
LIMITATION ON DEDUCTIBILITY
The Compensation Committee has reviewed the Company's informal
compensation policies in light of amendments to the Internal Revenue Code
enacted during 1993 that generally limit deductions for compensation paid to
certain executive officers to $1,000,000 per annum (certain performance based
compensation is not subject to that limit). At present levels of compensation,
these amendments do not limit the deductions to which the Company is entitled
and the Compensation Committee has therefore concluded that no changes in the
Company's compensation policies as a result of these amendments are appropriate.
SUMMARY
The Compensation Committee believes that the compensation programs of the
Company and the administration of those programs well serve the interest of the
Company's stockholders. These programs allow the Company to attract, retain and
motivate exceptional management talent and to compensate executives in a manner
that reflects their contributions to both the short and long-term performance of
the Company. The Company intends to continue to emphasize programs that it
believes positively affect shareholder value.
- ----------------
(1) Notwithstanding anything to the contrary set forth in any of the
Company's filings under the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act that might incorporate future
filings by reference, including this Proxy Statement, in whole or in
part, the following Report of the Compensation Committee and the
Performance Graph shall not be incorporated by reference into any such
filings, and shall not be deemed soliciting material under the Securities
Act or the Exchange Act.
COMPENSATION COMMITTEE MEMBERS
Richard D. Jones and John A. Sullivan
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's Common Stock from October 13, 1995 (the date the Company became a
public company) until December 31, 1998, with the cumulative total return of the
NASDAQ Stock Market index and the Russell 2000 index. The graph assumes the
investment of $100 in the Company's Common Stock and in each of the indexes on
October 13, 1995 and reinvestment of all dividends. The initial public offering
price of the Company's Common Stock was $7 per share.
COMPARISON OF CUMULATIVE TOTAL RETURN*
FOR THE PERIOD ENDED DECEMBER 31, 1998
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
AMCN
<TABLE>
<CAPTION>
Cumulative
Total Return
------------
10/16/95 12/95 12/96 12/97 12/98
-------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
American Coin Merchandising, Inc.................. 100 88 71 252 84
NASDAQ Stock Market (U.S.)........................ 100 101 124 153 215
Russell 2000...................................... 100 102 119 146 145
Cumulative Total Return*
- ------------------------
American Coin Merchandising, Inc........................................................................ 84
NASDAQ Stock Market (U.S.).............................................................................. 215
Russell 2000............................................................................................ 145
</TABLE>
*Annual return assumes reinvestment of dividends. There were no dividends paid
by the company during the period presented. Cumulative total return assumes an
initial investment of $100 on October 16, 1995.
13
<PAGE> 16
CERTAIN TRANSACTIONS
INTEREST EXPENSE AND PRINCIPAL PAYMENTS RELATED TO NOTES PAYABLE TO CONTROL
GROUP
On August 31, 1995, the Company acquired substantially all of the
inventory, property and equipment and assumed certain facilities leases and
contracts of Performance Merchandising, Inc., Inland Merchandising, Inc.,
Chicago Toy Company, Georgia Toy Company, Lehigh Valley Toy Company, and
Southwest Coin Company (the "Entities") for an aggregate purchase price of
$3,351,417. The Entities were owned in varying percentages by J. Gregory
Theisen, Abbe M. Stutsman, Richard D. Jones and Randall J. Fagundo and their
respective spouses (the "Founders").
The purchase price for the Entities was paid with cash in the amount of
$2,002,795 and three year promissory notes with an aggregate principal amount of
$1,348,622 with an interest rate on the principal amount of 8% per annum (the
"Notes"). During the fiscal year ended December 31, 1998, the Company made the
following interest and principal payments on the Notes held by the Founders:
<TABLE>
<CAPTION>
PRINCIPAL INTEREST
<S> <C> <C>
Richard D. Jones................................................................... $ 119,314 $ 7,159
J. Gregory Theisen................................................................. 101,058 6,063
Randall J. Fagundo................................................................. 141,931 8,516
Abbe M. Stutsman................................................................... 312,007 18,720
</TABLE>
OTHER
On May 1, 1998, the Company acquired the operating assets of American Coin
Company of Minneapolis, for approximately $334,000. James Kevin Theisen, brother
of J. Gregory Theisen, owned 100% of American Coin Company of Minneapolis.
The Company purchases certain kiddie rides from Theisen Vending, Inc.,
which is wholly owned by Thomas N. Theisen, the brother of J. Gregory Theisen,
one of the Company's Directors. The Company purchased approximately $549,000 of
kiddie rides from Theisen Vending, Inc. in the fiscal year ended December 31,
1998.
Management believes the terms of the foregoing transactions were fair to
the Company. All future transactions with affiliates will be subject to the
approval of the Company's disinterested directors and will be on terms believed
by such directors to be no less favorable to the Company than those available
from unaffiliated third parties.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Randall J. Fagundo
Randall J. Fagundo
Secretary
Boulder, Colorado
May 28, 1999
14
<PAGE> 17
AMERICAN COIN MERCHANDISING, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- JUNE 25, 1999
The undersigned hereby appoints John A. Sullivan and W. John Cash (the
"Proxies"), each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of American Coin Merchandising, Inc., held of record by the undersigned on
May 18, 1999, at the ANNUAL MEETING OF STOCKHOLDERS to be held on June 25, 1999,
or any adjournment thereof.
(1) To elect Directors to hold office until the next Annual Meeting of
Stockholders and until their successors are elected.
<TABLE>
<S> <C> <C>
JEROME M. LAPIN RANDALL J. FAGUNDO RICHARD D. JONES
J. GREGORY THEISEN RICHARD P. BERMINGHAM JOHN A. SULLIVAN
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
<TABLE>
<S> <C>
FOR all nominees WITHHOLD AUTHORITY
(except as marked below) to vote for nominees listed
</TABLE>
- --------------------------------------------------------------------------------
(2) To ratify and approve the appointment of KPMG LLP, independent auditors of
the Company for its fiscal year ending December 31, 1999.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
</TABLE>
(Continued, and to be completed and signed on the reverse side)
(Continued from the other side)
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED IN
FAVOR OF THE PROPOSALS.
Dated: , 1999
-------------------
Signed:
-------------------------
Signature of Stockholder
Signed:
-------------------------
Signature of Stockholder
Please vote, date and
sign this proxy as your
name is printed hereon.
When signing as
attorney, executory
administrator, trustee,
guardian, etc. give full
title as such. If the
stock is held jointly,
each owner should sign.
If a corporation, please
sign in full corporate
name by President or
other authorized
officer. If a
partnership, please sign
in partnership name by
authorized person.
