<PAGE> 1
PRELIMINARY COPIES
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 [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
</TABLE>
Talley Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Shareholders' Committee to Remove Entrenched and Arrogant Management.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
[THE TALLEY SCREAMER LOGO]
<TABLE>
<S> <C> <C>
=============================================================================
VOLUME 1, NO. 2 "WHY SCREAM??? WE SCREAM!!!" MARCH 19, 1997
=============================================================================
</TABLE>
TALLEY'S TALES MAKE SHAREHOLDERS
SCREAM
On March 14, William Mallender, Talley's Chairman, signed a letter to
shareholders regarding SCREAM--the Shareholders' Committee to Remove Entrenched
and Arrogant Management. Mr. Malleder's letter is far more a work of fiction
than one of fact. The following is a sampling of the places where Mr.
Mallender's "tale" departs from the facts.
CHAPTER 1 ACCORDING TO MALLENDER: SCREAM seeks to "STRIP AWAY VITAL STOCKHOLDER
PROTECTIONS."
THE FACT IS . . .
- SCREAM wants the Board to act to permit shareholders to (1) abolish
Talley's classified Board of Directors; (2) eliminate certain
supermajority shareholder voting requirements; (3) abolish the ban on
special meetings called by shareholders; and (4) eliminate Talley's
Poison Pill.
- The existing provisions are NOT "STOCKHOLDER PROTECTIONS"--they are,
in fact, MANAGEMENT PROTECTIONS. The Securities and Exchange
Commission has identified each as an "ANTI-TAKEOVER DEVICE" designed
to "INSULATE MANAGEMENT FROM REMOVAL" or as "PREVENTING SHAREHOLDER
CONSIDERATION OF TAKEOVERS OPPOSED BY THE BOARD."
CHAPTER 2 ACCORDING TO MALLENDER: SAAD ALISSA is a "SHORT TERM SPECULATOR"
whose aim is to "BREAK UP THE COMPANY" and "BUY THE PIECES AT BARGAIN
PRICES."
In support of these assertions, Mr. Mallender purports to quote a
newspaper article quoting Mr. Alissa's investment adviser and
apparently relies upon non-public information about a new company
formed by Mr. Alissa.
THE FACT IS . . .
- MR. MALLENDER has MISQUOTED the article and, thereby, TURNED A TRUE
STATEMENT about an UNRELATED INVESTMENT into a FALSE STATEMENT about
Mr. Alissa's investment in TALLEY.
- MR. ALISSA has formed a NEW COMPANY to invest in manufacturing
enterprises. To date, this company has made only one acquisition--in
a manufacturing business ENTIRELY UNRELATED TO TALLEY or its many
businesses.
- MR. ALISSA began to purchase TALLEY SHARES in JULY 1994 and HAS SOLD
NONE OF HIS HOLDINGS. Almost 3 YEARS and counting IS NOT A "SHORT
TERM" investment.
- Mr. Alissa and the other members of SCREAM own nearly 10% OF TALLEY'S
COMMON STOCK. ANY ACTION THAT IS HARMFUL TO TALLEY SHAREHOLDERS IS
HARMFUL TO SCREAM.
- --------------
The Talley SCREAM-er is published from time to time by the Talley Industries
Shareholders' Committee to Remove Entrenched and Arrogant Management--SCREAM.
Certain of the statements contained herein represent the opinions of the
members of SCREAM. Additional information about SCREAM is available through
materials filed with the Securities and Exchange Commission in Washington, D.C.
or by contacting Beacon Hill Partners, Inc., 90 Broad Street, New York, New
York, 10004 -- (212) 843-8500 (call "Collect") or call toll free--(800)
755-5001. Except as shareholders, the members of SCREAM are not affiliated with
Talley Industries.
<PAGE> 3
<TABLE>
<S> <C> <C>
=============================================================================
THE TALLEY SCREAM-ER PAGE 2 MARCH 19, 1997
=============================================================================
</TABLE>
CHAPTER 3 ACCORDING TO MALLENDER: MR. ALISSA has aligned himself with 2
FORMER TALLEY MANAGERS WHO WERE "LET GO" BY THE COMPANY and A FORMER
EXECUTIVE OF TRW, A COMPANY ONLY RECENTLY FOUND LIABLE TO TALLEY.
THE FACT IS . . .
- RALPH ROCKOW, one of SCREAM's nominees, CHOSE TO RESIGN FROM TALLEY in
1982, over his DIS-AGREEMENT WITH MR. MALLENDER ABOUT THE FUTURE OF
THE AIRBAG INDUSTRY. MR. ROCKOW, who HEADED TALLEY'S AIRBAG
INITIATIVE for MORE THAN 5 YEARS before Mr. Mallender became
President, BELIEVED THAT AIRBAGS WERE THE WAVE OF THE FUTURE--MR.
MALLENDER DID NOT.
- GEORGE SAWYER, another of SCREAM's nominees, ALSO CHOSE TO RESIGN as
President of John J. McMullen Associates, A MAJOR TALLEY SUBSIDIARY,
over FUNDAMENTAL MANAGEMENT DIFFERENCES WITH MR. MALLENDER and other
members of Talley management.
- BOTH MR. ROCKOW AND MR. SAWYER WERE AWARDED SUBSTANTIAL
POST-RESIGNATION COMPENSATION BY TALLEY--MR. ROCKOW A 9-MONTH
SEVERANCE PACKAGE AND MR. SAWYER A 2-YEAR CONSULTING AGREEMENT.
- ROBERT CRAIG, the third SCREAM nominee, SPENT 15 YEARS AS AN OPERATING
EXECUTIVE WITH TRW. However, MR. CRAIG RETIRED IN 1987--2 YEARS
BEFORE Talley sold its airbag business to TRW and 7 YEARS BEFORE the
onset of the Talley/TRW litigation.
- The SUGGESTION that either Mr. Rockow or Mr. Sawyer was fired for
incompetence, wrongdoing, or any other reason is COMPLETELY GROUNDLESS
AND, WE BELIEVE, DELIBERATELY MISLEADING. Mr. Mallender's suggestion
that Mr. Craig is "GUILTY BY ASSOCIATION" with TRW is similarly
BASELESS. Both are AT BEST MISLEADING and AT WORST DEFAMATORY.
CHAPTER 4 ACCORDING TO MALLENDER: Current management has REDUCED THE COMPANY'S
TOTAL DEBT BY APPROXIMATELY $113 MILLION, OR 50%--during calendar year
1996.
THE FACT IS . . .
- While Talley's debt at December 31, 1996 was "ONLY" $113 MILLION, IT
HAS TAKEN MORE THAN A DECADE TO GET THE COMPANY'S DEBT BACK BELOW ITS
1985 LEVEL.
- The Company's TOTAL DEBT BALLOONED TO MORE THAN $334 MILLION IN 1990,
as a consequence of MR. MALLENDER'S DECISION, supported by management,
TO "DABBLE" IN REAL ESTATE. THE LAST 5 YEARS HAVE BEEN SPENT CHIPPING
AWAY AT THIS MOUNTAIN OF DEBT.
- The funds used to pay down debt in 1996 did not come from improved
operations or operating results--THE DEBT REDUCTION WAS FINANCED
LARGELY BY THE DAMAGES PAID BY TRW, which had far more to do with the
SKILLS OF THE COMPANY'S LAWYERS THAN THE EFFECTIVENESS OF MANAGEMENT.
- The debt reduction HAS NOT IMPROVED THE COMPANY'S BALANCE SHEET.
BETWEEN 1986 AND 1995, THE COMPANY'S NET WORTH DWINDLED FROM $141
MILLION TO $58 MILLION--A DECREASE OF ALMOST 60%.
CHAPTER 5 ACCORDING TO MALLENDER: TALLEY'S STOCK provided a TOTAL RETURN OF
111% from 1991 TO 1996.
THE FACT IS . . .
- AT DECEMBER 31, 1991, Talley's common stock was $3.50 PER SHARE. A
111% IMPROVEMENT in such a PROFOUNDLY DEPRESSED PRICE does not
demonstrate management competence.
- From December 31, 1986 to December 31, 1991, THE PRICE OF TALLEY'S
COMMON STOCK FELL FROM $14.41 TO $3.50, representing a LOSS OF MORE
THAN 75% OF ITS VALUE. In other words, all management has done in the
last 5 years IS DIG TALLEY A SMALL PART OF THE WAY OUT OF THE DEEP
HOLE MANAGEMENT DUG IN THE PRIOR 5 YEARS.
<PAGE> 4
<TABLE>
<S> <C> <C>
=============================================================================
THE TALLEY SCREAM-ER PAGE 3 MARCH 19, 1997
=============================================================================
</TABLE>
CHAPTER 6 ACCORDING TO MALLENDER: Mr. Alissa is "THE SON OF A SAUDI ARABIAN
AUTO DEALER" who wants to "TAKE CREEPING CONTROL" of Talley and would
"JEOPARDIZE CRITICAL RELATIONSHIPS" IN THE AUTO INDUSTRY AND THE
DEPARTMENT OF DEFENSE.
THE FACT IS . . .
- Mr. Alissa is not merely the "son of a Saudi Arabian auto dealer." He
was EDUCATED IN THE U.S. and GREAT BRITAIN and HOLDS A DEGREE IN
BUSINESS ADMINISTRATION. He serves as PRESIDENT OF HIS FAMILY'S
BUSINESS, which operates dealerships for General Motors and Isuzu
automobiles in Saudi Arabia, and has interests in the distribution of
GM and Isuzu parts in Saudi Arabia, and investments in publishing,
commercial real estate and other industries, both within and outside
of that country. That business has a NET WORTH IN EXCESS OF $150
MILLION--NEARLY 3 TIMES TALLEY'S NET WORTH. And, Mr. Alissa is
primarily responsible for the administration, operation and financial
well-being of this extensive enterprise.
- MR. ALISSA has NO INTENTION OF TAKING ANY ACTION THAT COULD HARM
TALLEY'S BUSINESS OR GOVERNMENTAL RELATIONS. In particular, MR.
ALISSA HAS DEMONSTRATED HIS ABILITY TO WORK WITH THE AUTO INDUSTRY.
And, as a MAJOR SHAREHOLDER, MR. ALISSA'S INTERESTS ARE FAR MORE
CLOSELY ALIGNED WITH THOSE OF OTHER SHAREHOLDERS THAN ARE THOSE OF
WILLIAM MALLENDER AND THE REST OF TALLEY'S CURRENT SENIOR MANAGEMENT.
- MR. ALISSA IS NOT ALONE IN THIS ENDEAVOR. HE HAS BEEN JOINED IN
SCREAM BY 3 OTHER SHAREHOLDERS WITH SUBSTANTIAL EXPERIENCE AS
OPERATING EXECUTIVES AND INVESTORS, AND BY GEORGE SAWYER, WHO HAS VAST
EXPERIENCE IN OPERATIONS AND IN EVALUATING OPERATING COMPANIES.
- MR. MALLENDER'S not-so-subtle ATTACKS ON THE INTEGRITY, CHARACTER AND
REPUTATION of the members OF SCREAM are INAPPROPRIATE AND OFFENSIVE.
If this were not enough, Mr. Mallender is financing his campaign with
TALLEY CORPORATE FUNDS--FUNDS THAT OTHERWISE MIGHT BE USED TO BENEFIT
TALLEY'S BUSINESS AND ITS SHAREHOLDERS.
MALLENDER'S ULTIMATE FAIRY TALE . . .
IS THAT "TALLEY HAS BEEN A GOOD INVESTMENT FOR ITS SHAREHOLDERS."
THE SCREAM STORY . . .
IS THAT TALLEY MANAGEMENT HAS NOT ADDRESSED THE CRITICAL ISSUES RAISED BY THE
MEMBERS OF SCREAM AND OTHER TALLEY SHAREHOLDERS. WE BELIEVE THAT THE MARKET'S
EVALUATION OF TALLEY, UNDER MR. MALLENDER, SPEAKS FOR ITSELF. MR. MALLENDER
HAS NO PRINCIPLED DEFENSE, SO HE HAS RESORTED TO DISTORTIONS, HALF-TRUTHS AND
INNUENDOS TO ATTACK THE GOOD NAMES AND REPUTATIONS OF THE MEMBERS OF SCREAM.
APPARENTLY, THE MEMBERS OF SCREAM HAVE FAR MORE RESPECT FOR THE INTELLIGENCE
AND JUDGMENT OF THEIR FELLOW TALLEY SHAREHOLDERS THAN DOES WILLIAM MALLENDER.
PLEASE DO NOT LET MR. MALLENDER AND HIS CRONIES SUCCEED IN THIS TRANSPARENT AND
DEMEANING ATTEMPT TO DISTRACT TALLEY'S SHAREHOLDERS FROM THEIR VERY REAL
PROBLEMS WITH CURRENT MANAGEMENT. IF YOU SHARE SCREAM'S BELIEF THAT TALLEY HAS
SIGNIFICANTLY UNDERPERFORMED THE MARKET AS A RESULT OF THE DECISIONS OF CURRENT
(MIS)MANAGEMENT, ACT WITH SCREAM TO INSTALL NEW, RESPONSIVE AND RESPONSIBLE
MANAGEMENT AT THE UPCOMING ANNUAL MEETING.
<PAGE> 5
<TABLE>
<S> <C> <C>
=============================================================================
THE TALLEY SCREAM-ER PAGE 4 MARCH 19, 1997
=============================================================================
</TABLE>
ADDITIONAL INFORMATION REGARDING THE MEMBERS OF SCREAM
The following information is provided pursuant to Rule 14a-11(b) of
Regulation 14A under the Securities Exchange Act of 1934, as amended.
IDENTITY OF THE MEMBERS OF SCREAM
SCREAM is composed of four Talley shareholders--Saad A. Alissa, Robert T.
Craig, William B. Danzell and Ralph A. Rockow--all of whom may be deemed to be
"participants" in SCREAM's upcoming proxy solicitation efforts by virtue of
their agreement to act together in forming SCREAM and soliciting proxies on its
behalf. In addition, George W. Sawyer may be deemed a "participant" by reason
of his status as one of the SCREAM nominees for election to Talley's Board of
Directors.
SHARE OWNERSHIP INFORMATION
The following table sets forth the number of shares of voting securities
owned beneficially by each of the participants in SCREAM's proxy solicitation
as of February 24, 1997. No such participant owns any Talley securities other
than shares of Talley Common Stock or owns any such shares of record but not
beneficially.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES HELD
------------------ ---------------------------
<S> <C>
Saad A. Alissa 1,121,000 Common Shares (1)
Robert T. Craig 1,000 Common Shares
William B. Danzell 4,950 Common Shares
Ralph A. Rockow 350,000 Common Shares
George A. Sawyer -0- Common Shares
</TABLE>
(1) Consists of (i) 34,000 shares held directly by Mr. Alissa; (ii) 721,100
shares held by Financial Investors Limited ("FIL"), a wholly owned subsidiary
of Abdullatif Ali Alissa Est., a sole proprietorship organized under the laws
of the Kingdom of Saudi Arabia, of which Mr. Alissa is the President; and (iii)
365,900 shares held by General Investors Limited ("GIL"), a Cayman Islands
corporation of which Mr. Alissa is the sole shareholder. Mr. Alissa serves as
the sole director and Secretary of FIL and GIL.
INTERESTS OF PARTICIPANTS IN THE SCREAM PROXY SOLICITATION
Except through the Common Stock ownership set forth above, none of the
participants have any interest, by security holdings or otherwise, in the
Company.
SCREAM intends to bear the costs of its proxy solicitation. However,
because SCREAM believes that its solicitation is in the interest of the
Company and its shareholders, SCREAM expects to seek reimbursement of its
expenses for the solicitation from Talley's Board of Directors. In addition,
Saad A. Alissa has agreed to indemnify the SCREAM nominees against liabilities
incurred as a consequence of their status as such.
