<PAGE>
SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION14(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:
/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-11(c) or Rule 14a-12
TOOTSIE ROLL INDUSTRIES, 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 Rules14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule0-11(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:
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(4) Date Filed:
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<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
7401 SOUTH CICERO AVENUE, CHICAGO, ILLINOIS 60629
March 26, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
your Company to be held on Monday, May 3, 1999, at 9:00 A.M., Eastern Daylight
Savings Time, in Room 1200, Mutual Building, 909 East Main Street, Richmond,
Virginia.
At the meeting, in addition to the election of four directors and a proposal
to ratify the appointment of PricewaterhouseCoopers LLP as independent auditors
of the Company, you are being asked to consider and vote upon a proposal to
amend the Company's Articles of Incorporation to increase the number of
authorized shares of Common Stock and Class B Common Stock.
The formal Notice of the Annual Meeting of Shareholders and the Proxy
Statement follow. It is important that your shares be represented and voted at
the meeting, regardless of the size of your holdings. Accordingly, please
promptly mark, sign and date the enclosed proxy and return it in the enclosed
envelope, whether or not you intend to be present at the Annual Meeting of
Shareholders.
Sincerely,
[SIG] [SIG]
Melvin J. Gordon Ellen R. Gordon
CHAIRMAN OF THE BOARD AND PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER
<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
7401 SOUTH CICERO AVENUE, CHICAGO, ILLINOIS 60629
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 3, 1999
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of TOOTSIE
ROLL INDUSTRIES, INC. will be held in Room 1200, Mutual Building, 909 East Main
Street, Richmond, Virginia, on Monday, May 3, 1999, at 9:00 A.M., Eastern
Daylight Savings Time, for the following purposes:
1. To elect the full board of four directors;
2. To consider and vote upon a proposal to amend Article FOURTH of the
Company's Articles of Incorporation to (i) increase the number of
authorized shares of Common Stock from 50,000,000 shares to 120,000,000
shares and (ii) increase the number of authorized shares of Class B
Common Stock from 20,000,000 shares to 40,000,000 shares;
3. To consider and act upon ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors for the Company for
the fiscal year ending December 31, 1999; and
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on March 9, 1999 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. The relative voting rights of the Company's Common Stock and Class B
Common Stock in respect of the Annual Meeting and the matters to be acted upon
at such meeting are described in the accompanying Proxy Statement.
Your attention is directed to the accompanying Proxy, Proxy Statement and
1998 Annual Report of Tootsie Roll Industries, Inc.
By Order of the Board of Directors
G. Howard Ember Jr., ASSISTANT
SECRETARY
Chicago, Illinois
March 26, 1999
NOTE: PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
7401 SOUTH CICERO AVENUE
CHICAGO, ILLINOIS 60629
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- MAY 3, 1999
------------------------
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Tootsie Roll Industries, Inc. of the accompanying proxy
for the Annual Meeting of Shareholders of the Company to be held on Monday, May
3, 1999, and at any adjournments thereof. The purpose of the meeting is for the
shareholders of the Company to: (1) elect four directors to terms of office
expiring at the 2000 Annual Meeting of Shareholders; (2) consider and vote upon
a proposal to amend Article FOURTH of the Company's Articles of Incorporation to
(i) increase the number of authorized shares of Common Stock from 50,000,000
shares to 120,000,000 shares and (ii) increase the number of authorized shares
of Class B Common Stock from 20,000,000 shares to 40,000,000 shares; (3)
consider and act upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent auditors of the Company for the fiscal
year ending December 31, 1999; and (4) transact such other business as may
properly come before the meeting and any adjournments thereof.
Proxies in the accompanying form, properly executed and received by the
Company prior to the meeting and not revoked, will be voted as directed therein
on all matters presented at the meeting. In the absence of a specific direction
from the shareholder, proxies will be voted for the election of all named
director nominees, for the proposal to amend the Articles of Incorporation and
for ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors. The Board of Directors does not know of any
other matters to be brought before the meeting; however, if other matters should
properly come before the meeting it is intended that the persons named in the
accompanying proxy will vote thereon at their discretion. Any shareholder may
revoke his or her proxy by giving written notice of revocation to the Assistant
Secretary of the Company at any time before it is voted, by executing a later-
dated proxy which is voted at the meeting or by attending the meeting and voting
his or her shares in person.
The Board of Directors has fixed the close of business on March 9, 1999 as
the record date for the determination of shareholders of the Company entitled to
receive notice of and to vote at the Annual Meeting of Shareholders to be held
on May 3, 1999, and at any adjournments thereof. As of the close of business on
March 9, 1999, there were outstanding and entitled to vote 32,474,719 shares of
Common Stock and 15,395,055 shares of Class B Common Stock. Each share of Common
Stock is entitled to one vote and each share of Class B Common Stock is entitled
to ten votes, and therefore the Common Stock will be entitled to a total of
32,474,719 votes and the Class B Common Stock will be entitled to a total of
153,950,550 votes. The Common Stock and the Class B Common Stock will vote
together as a single class with respect to the election of directors and all
other matters submitted to the Company's shareholders at the meeting, except
with respect to the proposal to amend Article FOURTH of the Company's Articles
of Incorporation ("Proposal 2"). The approval of Proposal 2 will require the
affirmative vote of more than two-thirds of the outstanding shares of Common
Stock and Class B Common Stock voting separately. This Proxy Statement and the
enclosed form of proxy are being mailed to shareholders of the Company on or
about March 26, 1999.
1
<PAGE>
The entire cost of soliciting proxies in the accompanying form will be borne
by the Company. Proxies will be solicited by mail, and may be solicited
personally by directors, officers or regular employees of the Company who will
not receive special compensation for such services. In addition, the Company has
retained D.F. King & Co., Inc. to assist in the solicitation of proxies and will
pay such firm a fee, estimated to be $5,000, plus reimbursement of direct
out-of-pocket expenses incurred by such firm in soliciting proxies. Upon
request, the Company will reimburse brokers, dealers, banks and trustees, or
their nominees, for reasonable expenses incurred by them in forwarding proxy
material to beneficial owners of shares of the Company's Common Stock and Class
B Common Stock.
VOTING INFORMATION
A shareholder may, with respect to the election of directors (i) vote for
the election of all named director nominees, (ii) withhold authority to vote for
all named director nominees or (iii) vote for the election of all named director
nominees other than any nominee with respect to whom the shareholder withholds
authority to vote by so indicating in the appropriate space on the proxy. A
shareholder may, with respect to each other proposal to be considered and voted
upon at the meeting (i) vote "FOR" the proposal, (ii) vote "AGAINST" the
proposal or (iii) "ABSTAIN" from voting on the proposal. Proxies properly
executed and received by the Company prior to the meeting and not revoked will
be voted as directed therein on all matters presented at the meeting. In the
absence of a specific direction from the shareholder, proxies will be voted for
the election of all named director nominees, for the proposal to amend Article
FOURTH of the Company's Articles of Incorporation and for ratification of the
appointment of PricewaterhouseCoopers LLP as the Company's independent auditors.
If a proxy indicates that all or a portion of the votes represented by such
proxy are not being voted with respect to a particular matter, such non-votes
will not be counted in connection with the vote on such matter, although such
votes may be counted in connection with the vote on other matters and will count
for purposes of determining the presence of a quorum.
The affirmative vote of a plurality of the votes present in person or by
proxy at the meeting and entitled to vote in the election of directors is
required to elect directors. Thus, assuming a quorum is present, the four
persons receiving the greatest number of votes will be elected to serve as
directors. Withholding authority to vote for a director(s) and non-votes with
respect to the election of directors will not affect the outcome of the election
of directors. The affirmative vote of the holders of more than two-thirds of the
outstanding shares of Common Stock and of the Class B Common Stock, each class
voting separately, is required to approve and adopt the proposal to amend
Article FOURTH of the Company's Articles of Incorporation. Therefore, non-votes
and abstentions with respect to such matter have the legal effect of a vote
against such matter. If a quorum is present at the meeting, in order to ratify
the appointment of PricewaterhouseCoopers LLP as the Company's independent
auditors, the number of votes cast favoring the action must exceed the number of
votes cast opposing the action. Accordingly, non-votes and abstentions with
respect to such matter will not affect the determination of whether such matter
is approved.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
It is the intention of the persons named in the accompanying proxy to vote
for the election of each of the four persons named in the table below as a
director of the Company to serve until the 2000 Annual Meeting of Shareholders
and until his or her successor is duly elected and qualified. All of such
nominees are now directors of the Company, having been previously elected as
directors by the shareholders of the Company. In the event any of the nominees,
all of whom have expressed an intention to serve if elected, fail to stand for
election, the persons named in the proxy presently intend to vote for a
substitute nominee designated by the Board of Directors. The information
concerning the nominees and their shareholdings has been furnished by them to
the Company.
The following table sets forth information with respect to the four nominees
for election as directors:
<TABLE>
<CAPTION>
NAME, AGE AND OTHER POSITIONS, PERIOD SERVED AS DIRECTOR AND
IF ANY, WITH COMPANY BUSINESS EXPERIENCE DURING PAST 5 YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Melvin J. Gordon, 79; Chairman of the Director since 1952; Chairman of the Board since 1962; Director and
Board and Chief Executive Officer (1) President of HDI Investment Corp., a family investment company.
(2)
Ellen R. Gordon, 67, President and Chief Director since 1969; President since 1978; Director and Vice-
Operating Officer(1)(2) President of HDI Investment Corp., a family investment company;
director of Bestfoods (formerly CPC International) since 1991.
Charles W. Seibert, 84(3)(4) Director since 1978; retired; Vice-President of Citibank through
February, 1974 and consultant to several banks since 1974.
Lana Jane Lewis-Brent, 52(3)(4) Director since 1988; President of Paul Brent Designer, Inc. since
1992 (art publishing); former President of Sunshine-Jr. Stores,
Inc. (convenience stores).
</TABLE>
- ------------------------
(1) Member of the Executive Committee. When the Board of Directors is not in
session, the Executive Committee has the powers of the Board in the
management of the business and affairs of the Company, other than certain
actions which under the laws of the Commonwealth of Virginia must be
approved by the Board of Directors. The Executive Committee held two
meetings in 1998.
(2) Melvin J. Gordon and Ellen R. Gordon are husband and wife.
(3) Member of the Audit Committee. The Audit Committee (a) annually recommends
to the Board of Directors the appointment of independent public accountants
for the Company and subsidiaries; (b) reviews the scope of audits; (c)
approves the non-audit services of the independent public accountants for
the Company and subsidiaries and their fees for audit and non-audit
services; and (d) receives, reviews and takes action deemed appropriate with
respect to audit reports submitted. The Audit Committee held two meetings
during 1998.
(4) Member of the Compensation Committee. The Compensation Committee administers
the Tootsie Roll Industries, Inc. Bonus Incentive Plan and in this capacity
will make or recommend awards under such plan. The Compensation Committee
held one meeting during 1998.
The Company does not have a nominating committee.
The Board of Directors held four meetings during 1998. Mr. and Mrs. Gordon
do not receive fees for their service on the Board of Directors or committees.
Other directors received an annual fee of $21,500 plus $1,250 per meeting
attended for service on the Board of Directors during 1998. Each member of the
Audit Committee and the Compensation Committee received $1,250 per meeting
attended. Mr. Seibert, as the Chairman of the Audit Committee, received an
additional annual fee of $5,500. During 1998, all of the
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<PAGE>
directors attended at least 75 percent of the meetings of the Board of Directors
and (if they were members of the Executive Committee, Audit Committee or
Compensation Committee) the Executive Committee, Audit Committee and
Compensation Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NAMED
DIRECTOR NOMINEES.
OWNERSHIP OF COMMON STOCK AND CLASS B COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 9, 1999, information with
respect to the beneficial ownership of the Company's Common Stock and Class B
Common Stock by each person known to the Company to be the beneficial owner of
more than five percent of such Common Stock or Class B Common Stock. The
information has been furnished to the Company by such persons or derived from
filings with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK AND CLASS B
COMMON STOCK OWNED
BENEFICIALLY AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNERSHIP(1) OUTSTANDING
----------------------------------- SHARES OF
NAME DIRECT INDIRECT CLASS
- --------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Melvin J. Gordon............................. Common 1,012,128 -- 3.1%
.............................. Class B 1,012,128 -- 6.6%
Ellen R. Gordon.............................. Common 6,501,530 30,746(2) 20.1%
............................... Class B 6,501,530 30,746(2) 42.4%
Melvin J. Gordon
and Ellen R. Gordon,
jointly as fiduciaries..................... Common -- 4,090,342(3) 12.6%
.............................. Class B -- 4,090,342(3) 26.6%
Leigh R. Weiner.............................. Common 1,257,368 283,652(4) 4.7%
............................... Class B 1,715,710 373,086(4) 13.6%
</TABLE>
- ------------------------
The address of Mr. and Mrs. Gordon is c/o Tootsie Roll Industries, Inc.,
7401 South Cicero Avenue, Chicago, Illinois 60629. The address of Mr. Weiner
is c/o Becker Ross Stone DeStefano & Klein, 317 Madison Ave., New York, New
York 10017-5372.
(1) The persons named in the above table have sole investment and voting power
over the shares indicated therein as being owned directly and share
investment and voting power over the shares indicated therein as being owned
indirectly.
(2) Held as co-trustee of the Company's pension plan.
(3) Includes 3,639,398 shares each of Common Stock and Class B Common Stock held
by Mr. and Mrs. Gordon as fiduciaries for their children and 450,944 shares
each of Common Stock and Class B Common Stock owned by a charitable
foundation in which members of the Gordon family are interested.
(4) Includes 59,482 shares of Common Stock and 36,442 shares of Class B Common
Stock held by Mr. Weiner's wife (of which he disclaims beneficial
ownership), 150,748 shares of Common Stock and 110,928 shares of Class B
Common Stock held by Mr. Weiner or by his wife as custodian for their
children and 73,422 shares of Common Stock and 225,716 shares of Class B
Common Stock held by a charitable foundation in which Mr. Weiner and members
of his family are interested.
4
<PAGE>
OWNERSHIP OF COMMON STOCK AND CLASS B COMMON STOCK BY MANAGEMENT
The following table sets forth, as of March 9, 1999, information with
respect to the beneficial ownership of the Company's Common Stock and Class B
Common Stock by each director, by each executive officer who is named in the
summary compensation table included in this proxy statement, and by all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK AND
CLASS B COMMON STOCK
OWNED BENEFICIALLY
AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNERSHIP(1) OUTSTANDING
----------------------------------- SHARES OF
NAME DIRECT INDIRECT CLASS
- ------------------------------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Melvin J. Gordon.......................... Common (2) (2) (2)
........................... Class B (2) (2) (2)
Ellen R. Gordon........................... Common (2) (2) (2)
........................... Class B (2) (2) (2)
Charles W. Seibert........................ Common 1,034 -- (3)
........................... Class B 1,034 -- (3)
Lana Jane Lewis-Brent..................... Common 3,438 14,086 (3)
........................... Class B -- -- (3)
John W. Newlin, Jr........................ Common 9,368 1,158 (3)
........................... Class B 9,368 1,158 (3)
Thomas E. Corr............................ Common -- -- (3)
........................... Class B -- -- (3)
G. Howard Ember Jr........................ Common -- 8,070 (3)
........................... Class B -- -- (3)
All directors and executive officers as a
group (9 persons)....................... Common 7,527,498 4,147,492 36.0%
........................... Class B 7,524,060 4,122,246 75.6%
</TABLE>
- ------------------------
(1) The persons named in the above table have sole investment and voting power
over the shares indicated therein as being owned directly and share
investment and voting power over the shares indicated therein as being owned
indirectly.
(2) See the table under the caption "Ownership of Common Stock and Class B
Common Stock by Certain Beneficial Owners" above for shareholdings of Mr.
and Mrs. Gordon.
(3) Less than 1% of the outstanding shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of the
Company's Common Stock or Class B Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and New York
Stock Exchange. Such persons are also required to furnish the Company with
copies of all such reports.
Based solely on its review of the copies of such reports received by the
Company, and written representations from certain reporting persons, the Company
is pleased to note that its directors, executive officers and greater than ten
percent shareholders filed all required reports during or with respect to fiscal
year 1998, except for Lana Jane Lewis-Brent who inadvertently filed one late
report with respect to 8 shares of Common Stock.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following summary compensation table sets forth the compensation for the
last three calendar years of the Chairman and Chief Executive Officer of the
Company and the four other most highly compensated executive officers of the
Company serving at the end of 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------- --------------------------------
OTHER ANNUAL RESTRICTED
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS/ SARS
- -------------------------------- --------- --------- --------- ------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Melvin J. Gordon................ 1998 $ 955,000 $ 930,000 $ 0 $ 0 0
Chairman and CEO 1997 875,000 760,000 0 0 0
1996 804,000 595,000 0 0 0
Ellen R. Gordon................. 1998 $ 870,000 $ 870,000 $ 0 $ 0 0
President and Chief 1997 798,000 755,000 0 0 0
Operating Officer 1996 733,000 590,000 0 0 0
John W. Newlin, Jr.............. 1998 $ 516,000 $ 285,000 $ 0 $ 0 0
Vice President/ 1997 473,000 246,000 0 0 0
Manufacturing 1996 434,000 195,000 0 0 0
Thomas E. Corr.................. 1998 $ 475,000 $ 300,000 $ 0 $ 0 0
Vice President/ 1997 404,000 260,000 0 0 0
Marketing and Sales 1996 370,000 225,000 0 0 0
G. Howard Ember Jr.............. 1998 $ 315,000 $ 212,000 $ 0 $ 0 0
Vice President/Finance 1997 275,000 185,000 0 0 0
1996 250,000 152,000 0 0 0
<CAPTION>
PAYOUTS ALL OTHER
------------- COMPENSATION
NAME AND PRINCIPAL POSITION LTIP PAYOUTS (1)(2)(3)
- -------------------------------- ------------- -------------
<S> <C> <C>
Melvin J. Gordon................ $ 0 $ 936,595
Chairman and CEO 0 940,852
0 760,014
Ellen R. Gordon................. $ 0 $ 929,805
President and Chief 0 934,145
Operating Officer 0 734,816
John W. Newlin, Jr.............. $ 0 $ 302,923
Vice President/ 0 293,621
Manufacturing 0 314,637
Thomas E. Corr.................. $ 0 $ 280,666
Vice President/ 0 272,795
Marketing and Sales 0 292,121
G. Howard Ember Jr.............. $ 0 $ 192,448
Vice President/Finance 0 185,961
0 230,461
</TABLE>
- ------------------------------
(1) "All Other Compensation" includes (i) contributions to the Company's
pension, profit-sharing and excess benefit plans, (ii) annual awards to the
Company's Career Achievement Plan ("CAP") in the form of deferred
compensation with vesting and forfeiture provisions and (iii) benefits under
the Company's split dollar life insurance plan (see note 3 below).
(2) For 1998, (i) contributions to the Company's pension, profit-sharing and
excess benefit plans, (ii) CAP awards and (iii) split dollar life insurance
benefits were, respectively, as follows: $140,311, $0 and $796,284 for
Melvin J. Gordon; $133,521, $0 and $796,284 for Ellen R. Gordon; $95,323,
$190,000 and $17,600 for John W. Newlin, Jr.; $87,733, $184,000 and $8,933
for Thomas E. Corr; and $59,581, $125,000 and $7,867 for G. Howard Ember Jr.
(3) In 1993, the Board of Directors approved a split dollar life insurance plan
for Melvin J. Gordon and Ellen R. Gordon that replaced benefits that were
already earned under the Company's CAP and previous split dollar insurance
programs pursuant to which Mr. and Mrs. Gordon received awards during the
years 1982 through 1992. In 1993, 1996 and 1997, the Board of Directors
approved additional split dollar life insurance for Mr. and Mrs. Gordon, a
portion of which replaced benefits previously earned under deferred
compensation and excess benefit plans. Although the Company will fully
recover all premiums paid for the split dollar life insurance after
approximately 17 years, the plan includes a compensation element for the
additional benefits attributable to the Company's after-tax cost for
advancing the premium payments. The compensation element represents the
total expected after-tax cost of the benefits provided allocable to the
service provided by Melvin J. Gordon and Ellen R. Gordon during the year.
6
<PAGE>
CHANGE IN CONTROL AGREEMENTS
The Company has entered into severance agreements (the "Agreements") with
five executive officers, excluding Mr. and Mrs. Gordon but including the other
executive officers named in the Summary Compensation Table. The Agreements
generally provide that in the event the executive's employment is terminated by
the Company without "cause" or by the executive for "good reason" within two
years after a "change in control" (as such terms are defined in the Agreements),
the executive will receive a pro-rated bonus for the year of termination plus
three times his annual base salary and three times the higher of his incentive
bonus for the last fiscal year or his average incentive bonus over the prior
three fiscal years. The executive would also be eligible for three years of
coverage under the Company's health, life and disability benefit plans and for a
"gross-up" payment as reimbursement of any federal excise (but not income) taxes
payable. The executive would also become vested in, and be paid, any unvested
accrued benefits under the Company's Pension, Profit Sharing and Excess Benefit
Plans and the maximum award under the CAP Plan. In the event of such a
termination, each executive has agreed to a noncompetition and nonsolicitation
covenant applicable for one year following the termination of his employment.
The Board of Directors believes that the foregoing arrangements are frequently
part of executive compensation practices at major public corporations. Mr. and
Mrs. Gordon have advised the Board of Directors that the Gordon Family intends
to maintain voting control of the Company and, therefore, the Board of Directors
believes that it is unlikely that the Agreements would be utilized.
REPORT ON EXECUTIVE COMPENSATION
During 1998, the entire Board of Directors was responsible for determining
the compensation structure and amounts for the executive officers of the
Company. The Compensation Committee of the Board of Directors (the "Compensation
Committee") was responsible for administering the Tootsie Roll Industries, Inc.
Bonus Incentive Plan (the "Bonus Incentive Plan"). This report describes the
policies and rationale for the Board and the Compensation Committee in
establishing the principal components of compensation for the executive officers
during 1998.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to encourage and reward both
individual effort and teamwork leading to improvement in the Company's financial
performance and attainment of the Company's principal long-term objective of
profitably building the Company's well-known brands. The Company's executive
officer compensation program is balanced between short-term and long-term
compensation and incentives. The program is comprised of base salary, annual
cash incentive bonuses, annual awards to the Company's Career Achievement Plan
("CAP"), split-dollar insurance plans, and pension, profit-sharing and excess
benefit plans generally available to employees of the Company. The Board of
Directors believes that this program will lead to increased shareholder value on
a long-term basis.
BASE SALARY
The Board of Directors annually reviews each executive officer's salary. The
Board considers the following with respect to the determination of an individual
executive officer's base salary:
- Performance and contribution to the Company, including length of service
in the position;
- Comparative compensation levels of other companies, including periodic
compensation studies performed by independent compensation and benefit
consultants;
- Overall competitive environment for executives and the level of
compensation considered necessary to attract and retain executive talent;
and
- Historical compensation and performance levels for the Company.
Companies used in comparative analyses for the purpose of determining each
executive officer's salary are selected periodically with the assistance of
professional compensation consultants. Selection of
7
<PAGE>
such companies is based on a variety of factors, including market capitalization
and industry classification. The companies used in these comparative analyses
include some of the companies in the Peer Group used in the Performance Graph,
as well as other companies. The Board of Directors believes that the Company's
primary competitors for executive talent are companies with a similar market
capitalization and, accordingly, relies on a broad array of companies in various
industries for comparative analyses.
ANNUAL INCENTIVES AND OTHER AWARDS
Effective January 1, 1997, the Compensation Committee established the Bonus
Incentive Plan. The Bonus Incentive Plan was adopted to ensure the tax
deductibility of the annual bonus that may be earned by executive officers of
the Company. Under the Plan, certain key employees (including employees who are
also directors) designated by the Compensation Committee may receive annual
incentive compensation determined by pre-established objective performance
goals. In 1998, the eligible employees for the Bonus Incentive Plan included the
Chairman and Chief Executive Officer and the President and Chief Operating
Officer. Performance goals were based on the measures, objectives and financial
criteria discussed below.
In addition, annual incentive bonuses to other executive officers and CAP
and split-dollar insurance awards are made at the discretion of the Board of
Directors to executive corporate officers in order to recognize and reward each
individual executive officer's contribution to the Company's overall performance
in terms of both financial results and attainment of individual and Company
goals.
The annual cash incentive bonus is designed to reward executives, as well as
other management personnel, for their contributions to the Company's financial
performance during the recently completed year.
The annual CAP award and split dollar life insurance program is principally
designed to provide an incentive to executive officers to achieve both
short-term and long-term financial and other goals, including strategic
objectives. These programs are also designed to provide an incentive for the
executive to remain with the Company on a long-term basis. These awards are
determined by the Board of Directors based on the performance of the Company and
the executive's contribution to the growth and success of the Company.
The Board of Directors considers both achievement of strategic objectives
and financial performance measures in determining compensation levels. Although
the Board of Directors does not use a fixed formula for determining annual
incentive and other awards, the following measures of Company performance were
considered in the determination of 1998 bonuses and awards:
- Earnings per share;
- Increase in sales of core brands and total sales;
- Return on assets;
- Return on equity; and
- Net earnings as a percentage of sales.
The awards for 1998 recognize the Company's achievement of record
profitability for the year and the high level of achievement on other measures
of financial performance.
RATIONALE OF CEO COMPENSATION
The Board of Directors established the compensation of Melvin J. Gordon,
Chairman of the Board of Directors and Chief Executive Officer, using the same
criteria that were used to determine the other executive officers' compensation
as discussed above. In addition, the Board considered Mr. Gordon's leadership of
the Company in achieving the Company's strategic and long-term objectives. A
substantial portion of his compensation was at risk, in the form of annual cash
incentive bonus. As discussed above, the Compensation Committee determined
pre-established objective performance goals to determine
8
<PAGE>
Mr. Gordon's bonus. It is the Board's opinion that Mr. Gordon's compensation
package was based on an appropriate assessment of the Company's performance, his
individual performance and competitive standards.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code limits the tax deductibility of executive
compensation in certain circumstances. In the event a portion of executive
compensation were not tax deductible, the Board of Directors may require the
executive to defer the non-deductible portion of compensation until such time
the compensation may be deductible by the Company. In order to enable the
Company to receive federal income tax deductions for the compensation paid to
the executive officers of the Company in 1998 and in future years, the
Compensation Committee established the Bonus Incentive Plan.
The foregoing report has been approved by the entire Board of Directors, the
members of which are:
Melvin J. Gordon
Ellen R. Gordon
Charles W. Seibert
Lana Jane Lewis-Brent
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above under "Report on Executive Compensation," during 1998 the
Board of Directors of the Company was responsible for determining the
compensation of the executive officers of the Company. Mr. Gordon is the
Chairman of the Board and Chief Executive Officer of the Company and Mrs. Gordon
is President and Chief Operating Officer of the Company.
9
<PAGE>
PERFORMANCE GRAPH
The following performance graphs compare the Company's cumulative total
shareholder return on the Company's Common Stock for a ten-year period (December
31, 1988 to December 31, 1998) and a five-year period (December 31, 1993 to
December 31, 1998) with the cumulative total return of Standard & Poor's 500
Stock Index ("S&P 500") and the Dow Jones Industry Food Index ("Peer Group",
which includes the Company).
TEN-YEAR CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOOTSIE ROLL S&P 500 PEER GROUP
<S> <C> <C> <C>
1988 $100.00 $100.00 $100.00
1989 $126.21 $131.68 $138.08
1990 $145.99 $127.58 $152.82
1991 $271.97 $166.47 $211.48
1992 $297.01 $179.20 $214.32
1993 $281.62 $197.26 $209.22
1994 $252.93 $199.87 $222.28
1995 $337.91 $274.98 $276.86
1996 $350.69 $338.12 $324.45
1997 $573.33 $450.93 $449.84
1998 $743.22 $579.79 $491.43
</TABLE>
FIVE-YEAR CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOOTSIE ROLL S&P 500 PEER GROUP
<S> <C> <C> <C>
1993 $ 100.00 $ 100.00 $ 100.00
1994 89.81 101.32 106.24
1995 119.99 139.40 132.33
1996 124.53 171.41 155.08
1997 203.58 228.60 215.01
1998 263.91 293.92 234.89
</TABLE>
- ------------------------
* Assumes (i) $100 invested on December 31 of the first year of the chart in
each of the Company's Common Stock, S&P 500 and the Dow Jones Industry Food
Index and (ii) the reinvestment of dividends.
10
<PAGE>
PROPOSAL 2
PROPOSAL TO AMEND ARTICLE FOURTH OF THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK AND CLASS B COMMON STOCK
GENERAL
At its meeting of February 23, 1999, the Company's Board of Directors
unanimously approved and recommended for adoption by the shareholders an
amendment to Article FOURTH of the Company's Articles of Incorporation ("Article
FOURTH"), which would (i) increase the number of authorized shares of Common
Stock, par value 694/9 cents per share, from 50,000,000 shares to 120,000,000
shares and (ii) increase the number of authorized shares of Class B Common
Stock, par value 694/9 cents per share, from 20,000,000 shares to 40,000,000
shares. While the proposed amendment to Article FOURTH will affect the number of
shares of Common Stock and Class B Common Stock authorized to be issued, no
rights, preferences, powers, qualifications, limitations or restrictions as
currently exist for either class of common stock will be affected in any way by
the proposed amendment.
BACKGROUND AND PURPOSE OF THE PROPOSED AMENDMENT
As of March 9, 1999, there were 32,474,719 shares of Common Stock and
15,395,055 shares of Class B Common Stock issued and outstanding. In addition,
as of that date, there were 15,395,055 shares of Common Stock reserved for
issuance upon the conversion of the outstanding shares of Class B Common Stock.
Therefore, the Company has only 2,130,226 shares of Common Stock and 4,604,945
shares of Class B Common Stock available for future issuance as of March 9,
1999.
Although there are no current plans to issue further shares of either class
of common stock other than the annual three percent (3%) stock dividend on
outstanding shares of Common Stock and Class B Common Stock and issuances which
may be made upon the conversion of Class B Common Stock, the Board of Directors
believes the proposal to increase the number of authorized shares of both
classes of common stock is in the best interests of the Company and its
shareholders. If the proposed amendment to Article FOURTH is approved by the
shareholders, the Company would have additional shares available for issuance,
and the Board of Directors would have the flexibility to act in a timely manner
to take advantage of favorable market conditions and other opportunities with
respect to stock splits, stock dividends, financings, acquisitions or other
appropriate corporate actions. Such availability of an increased number of
authorized shares will eliminate the delays and expense involved in first
conducting a special meeting of shareholders in order to issue additional shares
when needed.
DESCRIPTION OF COMMON STOCK AND CLASS B COMMON STOCK
Each share of Common Stock and Class B Common Stock is equal in respect of
rights to dividends and other distributions in cash, stock or property of the
Company (including distributions in liquidation), and neither the Common Stock
nor the Class B Common Stock carries preemptive rights. However, the two classes
of common stock differ in several respects as is more fully described below.
The Common Stock is entitled to one vote for each share outstanding on all
matters, and the Class B Common Stock is entitled to ten votes for each share
outstanding on all matters. Each action submitted to a vote of shareholders
(including the election of directors) is generally voted on by holders of the
Common Stock and the Class B Common Stock voting together as a single class.
However, the affirmative vote of the holders of more than two-thirds of the
outstanding shares of Common Stock and of the Class B Common Stock, each voting
separately as a class, is required to authorize (i) additional shares of either
class of common stock, (ii) any merger or consolidation of the Company with or
into any other corporation or any statutory exchange of shares to which the
Company is a party or (iii) any dissolution of the Company; provided that, in
the case of any such merger or consolidation, the holders of the Common Stock
and of the Class B Common Stock will not each be entitled to vote separately as
a class on any such matter if the other party to such merger or consolidation is
a majority-owned subsidiary of the Company.
11
<PAGE>
The affirmative vote of the holders of the Common Stock and of the Class B
Common Stock, each voting separately as a class, is also required to approve
other amendments to the Articles of Incorporation of the Company that alter or
change the powers, preferences or special rights of their respective class of
stock so as to affect them adversely and any other matters as may require class
votes under the Virginia Stock Corporation Act. There is no provision in the
Company's Articles of Incorporation permitting cumulative voting.
Article FOURTH further provides that Class B Common Stock is generally not
transferrable by a holder; however, each holder of shares of Class B Common
Stock has the right at any time to convert each such share into one share of
Common Stock, which shares are fully transferrable. In addition, the Class B
Common Stock is transferrable by a holder to or among "Permitted Transferees,"
which are principally the Class B shareholder's spouse or children (including
adopted children); any lineal descendant of a great grandparent of such Class B
shareholder (and their spouses); an executor, administrator, guardian or
conservator of the Class B shareholder; trusts for the sole benefit of the Class
B shareholder's family members; and certain types of charitable and other
organizations.
The Company may not issue additional shares of Class B Common Stock except
in connection with stock splits, stock dividends or similar distributions. In
addition, the Company's Board of Directors may not declare a stock split or
dividend on the Class B Common Stock without declaring a similar stock split or
dividend on the Common Stock.
If at any time the number of "outstanding" shares of Class B Common Stock as
reflected on the stock transfer books of the Company falls below 14% of the
aggregate number of "outstanding" shares of Common Stock and Class B Common
Stock, then, immediately upon the occurrence of such event, all the outstanding
shares of Class B Common Stock shall be automatically converted into shares of
Common Stock, on a share-for-share basis. For purposes of the immediately
preceding sentence: (1) the number of shares of Common Stock "outstanding" at
any time shall not include any shares of Common Stock which, after May 15, 1987,
are (a) issued in exchange for the assets or stock of other entities (including
pursuant to a merger or other business combination), (b) sold by the Company for
value, (c) issued upon conversion of convertible securities issued in exchange
for the assets or stock of other entities or sold by the Company for value or
(d) issued as a stock split or dividend with respect to shares issued or sold
pursuant to clauses (a), (b) or (c) above; and (2) any shares of Common Stock or
Class B Common Stock repurchased by the Company shall no longer be deemed
"outstanding" from and after the date of repurchase.
In the event the Common Stock is delisted from the New York Stock Exchange
("NYSE") or the NYSE commences proceedings for delisting and the Common Stock
will be precluded by rule or law from being quoted on the National Association
of Securities Dealers Automated Quotation System or a successor automated
quotation system, the Board of Directors will have the right to immediately
convert each share of Class B Common Stock into one share of Common Stock.
POSSIBLE EFFECTS OR CONSEQUENCES OF THE PROPOSED AMENDMENT
If the proposed amendment is approved by the shareholders, the authorized
but unissued and unreserved shares of Common Stock may be issued by the Board of
Directors at such times, to such persons and for such consideration as the Board
may deem appropriate without further shareholder approval, except as may be
required by Virginia law, the rules of any national securities exchange on which
the shares of Common Stock are listed at the time, or other applicable laws or
regulations as may be in effect from time to time. As indicated above,
additional shares of Class B Common Stock may not be issued except in connection
with stock splits, stock dividends or similar distributions with respect to both
classes of common stock. The Company has regularly paid an annual three percent
(3%) stock dividend on outstanding shares of Common Stock and Class B Common
Stock. There are no commitments relating to the issuance of additional shares at
this time except those shares of Common Stock to be issued upon conversions of
Class B Common Stock. The Company does, from time to time, investigate possible
acquisitions, but it is not possible to state whether any such acquisition will
materialize or, if so, whether the issuance of additional stock would be
desirable or required.
12
<PAGE>
Although it is not the purpose of the proposed amendment to Article FOURTH,
the unissued and unreserved shares of Common Stock could be used by the Board of
Directors in an attempt to discourage or make more difficult a change in control
of the Company or otherwise be used to defend against a merger or takeover
attempt. For example, additional shares of Common Stock could be issued by the
Company, thereby diluting the stock ownership of all existing shareholders
(including that of management and of persons seeking to obtain control of the
Company) and increasing the cost of acquiring a given percentage of the
Company's outstanding stock. The Board of Directors has no knowledge of any
effort by any person or group to obtain control of the Company.
Depending on the purpose, terms and conditions of any issuance of stock, the
issuance of additional shares of Common Stock could have the effect of diluting
earnings and book value per share of both the Common Stock and the Class B
Common Stock and the shareholders' proportionate interests in the Company. In
addition, stock splits or dividends on the Common Stock and the Class B Common
Stock will have an effect on the relative voting power of the classes of common
stock as to matters which are voted on by holders of the Common Stock and the
Class B Common Stock voting together as a single class. However, as indicated
above, certain extraordinary matters require the affirmative vote of both
classes of common stock, each voting separately by class.
PROPOSED AMENDMENT
Only the first paragraph of Article FOURTH of the Company's Articles of
Incorporation is proposed to be amended. All of the other provisions of Article
FOURTH will remain unchanged. If the proposed amendment is approved by the
shareholders, the first paragraph of Article FOURTH will be as follows:
1. AUTHORIZED SHARES. The total number of shares of all classes of
capital stock which the corporation shall have authority to issue is 160
million (160,000,000), consisting of 120 million (120,000,000) shares of
Common Stock, par value 694/9 cents per share ("Common Stock"), and 40
million (40,000,000) shares of Class B Common Stock, par value 694/9 cents
per share ("Class B Common Stock").
The proposed amendment to Article FOURTH of the Articles of Incorporation
requires the affirmative vote of more than two-thirds of the outstanding shares
of Common Stock and Class B Common Stock, each voting separately as a class.
It is anticipated that Mr. and Mrs. Gordon and the officers and directors of
the Company, who may be deemed to own beneficially 36.0% and 75.6% of the Common
Stock and the Class B Common Stock, respectively, will vote in favor of the
proposed amendment. In light of the importance of the proposed amendment, the
Board of Directors urges all shareholders to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO ARTICLE FOURTH OF THE COMPANY'S ARTICLES OF INCORPORATION.
13
<PAGE>
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP, independent
public accountants, as the independent auditors for the Company for the fiscal
year ending December 31, 1999. PricewaterhouseCoopers LLP has been the Company's
independent auditors since 1968. Although not required by the Company's Articles
of Incorporation or Bylaws, the Board of Directors deems it to be in the best
interest of the Company to submit to the shareholders a proposal to ratify the
appointment of PricewaterhouseCoopers LLP and recommends a vote in favor of such
ratification. It is not expected that representatives of PricewaterhouseCoopers
LLP will attend the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials for
the 2000 Annual Meeting of Shareholders, any shareholder proposals should be
addressed to Tootsie Roll Industries, Inc., 7401 South Cicero Avenue, Chicago,
Illinois 60629, Attention: Ellen R. Gordon, President, and must be received no
later than December 1, 1999. In addition, the Company's Bylaws establish an
advance notice procedure for shareholder proposals to be brought before any
annual meeting of shareholders, including proposed nominations of persons for
election to the Board of Directors. Shareholders at the 1999 Annual Meeting of
Shareholders may consider shareholder proposals or nominations brought by a
shareholder of record on March 12, 1999, who is entitled to vote at the 1999
Annual Meeting of Shareholders and who has given the Assistant Corporate
Secretary timely written notice, in proper form, of the shareholder's proposal
or nomination. A shareholder proposal or nomination intended to be brought
before the 1999 Annual Meeting of Shareholders must have been received by the
Assistant Corporate Secretary on or after February 2, 1999 and on or prior to
March 4, 1999. The Assistant Corporate Secretary did not receive notice of any
shareholder proposals or nominations relating to the 1999 Annual Meeting of
Shareholders. The 2000 Annual Meeting of Shareholders is expected to be held on
May 1, 2000. A shareholder proposal or nomination intended to be brought before
the 2000 Annual Meeting of Shareholders must be received by the Assistant
Corporate Secretary on or after February 1, 2000 and on or prior to March 2,
2000.
GENERAL
The Board of Directors does not know of any matters other than the foregoing
that will be presented for consideration at the Annual Meeting. However, if
other matters should be properly presented at the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote thereon in
accordance with their best judgment pursuant to the discretionary authority
granted in the proxy.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1998 is being mailed herewith.
A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K WITHOUT EXHIBITS MAY
BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO TOOTSIE ROLL INDUSTRIES,
INC., 7401 SOUTH CICERO AVENUE, CHICAGO, ILLINOIS 60629, ATTENTION: G. HOWARD
EMBER JR., VICE PRESIDENT/FINANCE AND ASSISTANT SECRETARY. A REASONABLE CHARGE
WILL BE MADE FOR REQUESTED EXHIBITS.
By Order of the Board of Directors
G. Howard Ember Jr.
ASSISTANT SECRETARY
Chicago, Illinois
March 26, 1999
14
<PAGE>
PROXY
TOOTSIE ROLL INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of TOOTSIE ROLL INDUSTRIES, INC. (the
"Company") hereby appoints ELLEN R. GORDON, MICHAEL L. SOFFIN and AUGUSTUS C.
EPPS, JR., and each of them, as the undersigned's proxies (with the power of
substitution) to vote all the shares of Common Stock and /or Class B Common
Stock of the Company which the undersigned would be entitled to vote at the
annual meeting of shareholders of such Company to be held on May 3, 1999, at
9:00 A.M. (EDST) and any adjournment thereof, on the matters set forth on the
reverse side hereof.
This Proxy will be voted in accordance with instructions specified on
the reverse side, but in the absence of any instructions will be voted "FOR"
Items (1), (2), (3) and (4). If any other business is presented at the
meeting, the proxies are authorized to vote thereon in their discretion. The
undersigned hereby revokes any proxy heretofore given.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
A RETURN ENVELOPE IS ENCLOSED.
FOLD AND DETACH HERE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD OF DIRECTOR'S NOMINEES
AND FOR THE PROPOSALS LISTED BELOW.
your votes as
indicated in X
this example
- -------------------------------------------------------------------------------
1) Election of Directors: Melvin J. Gordon, Ellen R. Gordon, Lana Jane
Lewis-Brent, Charles W. Siebert.
FOR all nominees WITHHOLD (Instructions: To withhold authority to
listed above (except AUTHORITY vote for any individual nominee, strike
as marked to the to vote for a line through the nominee's name in the
contrary above) all nominees list above.)
/ / / /
- -------------------------------------------------------------------------------
2) Amend the Company's Articles of Incorporation to increase the number of
authorized shares of Common Stock from 50,000,000 to 120,000,000 and
Class B Common Stock from 20,000,000 to 40,000,000.
FOR AGAINST ABSTAIN
/ / / / / /
- -------------------------------------------------------------------------------
3) Ratify the appointment of PriceWaterhouseCoopers LLP as auditors for the
fiscal year 1999.
FOR AGAINST ABSTAIN
/ / / / / /
- -------------------------------------------------------------------------------
4) In their discretion, transact any other business that may properly come
before such meeting.
FOR AGAINST ABSTAIN
/ / / / / /
- -------------------------------------------------------------------------------
Signature ____________________ Signature _______________________ Date _________
Please date and sign exactly as name appears hereon. Executors,
Administrators, Trustees, etc. should so indicate when signing. If shares are
held jointly, both shareholders should sign.
FOLD AND DETACH HERE
