INTRENET, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 1998
The annual meeting of shareholders of Intrenet, Inc. will
be held at 270 Park Avenue, Conference Room E, Eleventh Floor,
New York, New York, on Wednesday, May 6, 1998, at 9:30 a.m., New
York City time, for the following purposes:
(1) To elect six directors to serve until the next annual
meeting of shareholders and until their successors are elected
and have qualified;
(2) To approve or disapprove the appointment of Arthur
Andersen LLP as auditors for the Company for 1998; and
(3) To transact such other business as may properly come
before the meeting.
All shareholders of record at the close of business on March 27,
1998, will be eligible to vote.
It is important that your shares be represented at this meeting.
Whether or not you expect to be present, please fill in, date,
sign and return the enclosed proxy form in the accompanying
addressed, postage-prepaid envelope. If you attend the meeting,
your proxy will be canceled.
Roger T. Burbage, Secretary
(ANNUAL REPORT CONCURRENTLY MAILED)
INTRENET, INC.
400 Technecenter Drive
Milford, Ohio 45150
PROXY STATEMENT
Annual Meeting of Shareholders May 6, 1998
This statement is being furnished on or about April 13, 1998, in
connection with the solicitation by the Board of Directors of
Intrenet, Inc. (the "Company") of proxies to be voted at the
annual meeting of shareholders to be held at 9:30 a.m., New York
City time, on Wednesday, May 6, 1998 at 270 Park Avenue,
Conference Room E, Eleventh Floor, New York, New York, for the
purposes set forth in the accompanying Notice.
At the close of business on March 27, 1998, the record date for
the meeting, there were 13,550,638 shares of common stock,
without par value, of the Company ("Common Stock") outstanding
and entitled to vote at the meeting. On all matters, including
the election of directors, each shareholder will have one (1)
vote for each share held.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time before it is voted. If a
shareholder executes more than one proxy, the proxy having the
latest date will revoke any earlier proxies. Attendance in
person at the meeting by a shareholder will constitute
revocation of a proxy, and the shareholder may vote in person.
Unless revoked, a proxy will be voted at the meeting in
accordance with the instructions of the shareholder in the
proxy, or, if no instructions are given, for the election as
directors of all nominees listed under Proposal 1 and for the
proposal shown as Proposal 2. Directors will be elected by a
plurality of the votes cast by the shares entitled to vote in
the election at the meeting. Approval of Proposal 2 requires
that the number of votes in favor of the proposal be greater
than the number opposing it. A proxy may indicate that all or a
portion of the shares represented by such proxy are not being
voted with respect to a specific proposal. This could occur,
for example, when a broker is not permitted to vote shares held
in street name on certain proposals in the absence of
instructions from the beneficial owner. Shares that are not
voted with respect to a specific proposal will be considered as
not present and entitled to vote on such proposal, even though
such shares will be considered present for purposes of
determining a quorum and voting on other proposals. Abstentions
on a specific proposal will be considered as present, but not as
voting in favor of such proposal. Neither the non-voting of
shares nor abstentions on a specific proposal will affect the
determination of whether such proposal will be approved.
The Board of Directors knows of no matters, other than those
reported below, which are to be brought before the meeting.
However, if other matters properly come before the meeting, it
is the intention of the persons named in the enclosed form of
proxy to vote such proxy in accordance with their judgment on
such matters.
The cost of this solicitation of proxies will be borne by the Company.
ELECTION OF DIRECTORS
Nominees
At the annual meeting, six directors are to be elected. Each
director will hold office for a term of one year and until his
successor is elected and has qualified. It is the intention of
the persons named in the accompanying form of proxy to vote such
proxy for the election to the Board of Directors of the six
persons identified below, each of whom is now a director. The
Board of Directors has no reason to believe that any of the
nominees will be unable to serve if elected. If, for any
reason, one or more of such persons is unable to serve, it is
the intention of the persons named in the accompanying form of
proxy to nominate such other person(s) as director as they may
in their discretion determine, in which event the shares will be
voted for such other person(s).
The names, ages and principal occupations of the nominees and
other directorships held by them are set forth below. Unless
otherwise indicated in the following table, the principal
occupation of each nominee has been the same for the last five
years.
Director
Name Age Since Principal Occupation
John P. Delavan 45 1996 President and CEO of the Company. Mr. Delavan has
been President and CEO since June 1996. From 1991
to June 1996, he was President and Chief Executive
Officer of Landstar Inway, Inc. (truckload carrier
subsidiary of Landstar Systems, Inc.).
Ned N. Fleming, III 37 1997 President and Director of Spinnaker Industries, Inc.
(diversified manufacturing company) since June 1994,
and a principal of Boyle Fleming & Company, Inc.
(investment banking firm) since May 1993. From 1988
to 1993, Mr. Fleming was an associate with Cardinal
Investment Company, Inc., an investment concern.
Eric C. Jackson 53 1993 Chief Executive Officer, Great Basin Companies
(group of truck dealerships).
Edwin H. Morgens 56 1991 Chairman, Morgens, Waterfall, Vintiadis & Company,
Inc. (financial services firm). Mr. Morgens is a director
of Trans Montaigne Oil Company and Programmers
Paradise, Inc. Mr. Morgens also serves as Chairman
of the Board of the Company.
Thomas J. Noonan, Jr. 58 1990 Executive Vice President and Chief Financial Officer,
Herman's Sporting Goods, from July 1994 to present.
From February 1993 to June 1994, he was a Managing
Director and Chief Executive Officer of TFGII, a
management consulting firm. From March 1990 to
January 1993, Mr. Noonan was Executive Vice
President of the Company. Mr. Noonan is also a
director of Richman Gordman 1/2 Price Stores.
Philip Scaturro 59 1996 Executive Vice President and Managing Director
Allen & Company, Inc. (investment banking firm) for
more than the past five years. Mr. Scaturro is also a
director of United Asset Management Corporation.
The Board of Directors recommends a vote FOR the above nominees.
Meetings and Committees
During 1997, the Board of Directors of the Company held four
meetings. No director attended fewer than 75% of the aggregate
of the total number of meetings held in 1997 by the Board of
Directors and its committees on which such director served.
The Board of Directors had an Audit Committee, a Compensation
Committee, an Incentive Compensation Committee, a Nominating
Committee and a Strategy Committee during 1997.
The Audit Committee, which currently consists of Messrs. Noonan
and Fleming, recommends the appointment of the Company's
auditors and meets with the auditors to discuss accounting
matters and internal controls. The Audit Committee met once
during 1997.
The Compensation Committee, which currently consists of Messrs.
Morgens, Jackson and Scaturro, sets and reviews the compensation
of executive officers. The Compensation Committee held no
meetings during 1997.
The Incentive Compensation Committee, which currently consists
of Messrs. Morgens, Jackson and Scaturro, administer the
Company's 1993 Stock Option and Incentive Plan. The Incentive
Compensation Committee met once in 1997.
The Nominating Committee, which currently consists of Messrs.
Morgens and Scaturro, recommends to the full Board persons for
nomination as directors. In considering persons to nominate,
the Nominating Committee will consider persons nominated by
shareholders. Shareholders who wish to nominate persons for
election as directors must comply with the advance notice
provisions of the Company's By-laws. A copy of such provisions
is available upon request to the Secretary. The Nominating
Committee held no meetings during 1997.
The Strategy Committee, which currently consists of Messrs.
Fleming, Delavan and Jackson, was formed for the purpose of
developing a strategic direction for the Company. The Strategy
Committee held three meetings during 1997.
Director Compensation
Each non-officer director is currently paid a fee of $500 per
quarter and an attendance fee of $750 for each meeting of the
Board, and $500 for each other committee meeting attended.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more
than ten percent of Common Stock, to file reports of ownership
with the Securities and Exchange Commission. Officers,
directors and greater-than-ten-percent shareholders are required
to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of copies of such forms received by
it, or written representations from certain reporting persons
that no Forms 5 were required for those persons, the Company
believes that, during 1997, all filing requirements applicable
to its officers, directors, and greater-than-ten-percent
shareholders were complied with.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the cash and non-cash
compensation for each of the last three years awarded to or
earned by the two persons who served as Chief Financial Officer
during 1997 and the other executive officers of the Company
during 1997.
Long Term
Compensation
Awards
Annual Other Securities
Name and Principal Compensation Annual Underlying All Other
Position Year Salary Bonus Compensation Options Compensation(1)
John P. Delavan 1997 $175,000 $0 $0 0 $1,000
President and Chief 1996 90,865 0 0 233,334 100
Executive Officer 1995 0 0 0 0 0
Jonathan G. Usher 1997 $283,894 $0 $0 0 $1,000
V-President -Finance & 1996 145,000 0 0 0 1,000
Chief Financial Officer 1995 145,000 25,000 0 0 1,000
(2)
Roger T. Burbage 1997 $120,309 $0 $0 100,000 $100
Chief Financial Officer 1996 0 0 0 0 0
(3) 1995 0 0 0 0 0
(1) Represents premiums paid for life and disability insurance coverage, and matching
contributions by the Company under the Intrenet Employee Retirement Savings Plan(401(k) Plan).
(2) Mr. Usher served as Vice President - Finance and Chief Financial Officer through May 16,
1997. Includes amounts paid as severance benefits and exercised option compensation.
(3) Mr. Burbage has served as Chief Financial Officer since March 10, 1997.
Option Grants in 1997
The following table sets forth information with respect to
options to purchase Common Stock granted to the persons named in
the Summary Compensation Table in 1997. The table also shows
the potential gain that could be realized if the fair market
value of the Company's Common Stock were to appreciate at either
a 5% or 10% annual rate over the period of the option term.
Number of % of Total Potential Realizable Value
Securities Options at Assumed Annual Rates of
Underlying Granted to Stock Price Appreciation for
Options Employees in Exercise Expiration Option Term
Name Granted (#)(1) Fiscal Year Price ($/sh) Date 5% 10%
Roger T. Burbage 100,000 40% $2.125 03/10/02 $58,123 $128,936
(1) The Company has not granted any stock appreciation rights (SARs).
Option Exercises and Company's Year-End Values
Shown below is information with respect to the unexercised
options to purchase the Company's Common Stock granted in 1997
and prior years to the persons named in the Summary Compensation
Table and held by them at December 31, 1997.
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised In-the-Money Options at
Name On Exercise Realized Options at December 31, 1997 December 31, 1997(1)
Exercisable Unexercisable Exercisable Unexercisable
John P. Delavan --- --- 100,000 133,334 $75,000 $100,000
Jonathan G. Usher 57,000 $92,000 --- --- --- ---
Roger T. Burbage --- --- 100,000 --- 75,000 ---
(1) The closing price of the Company's Common Stock as reported
by NASDAQ for December 31, 1997 was $2.875. Value is calculated
as the difference between the exercise price and $2.875,
multiplied by the number of shares underlying "in-the-money"
options.
Employment Contracts and Change in Control Arrangements
The Company has an employment agreement with Mr. Delavan for a
term through June 30, 1998. The agreement provides for an
annual base compensation of $175,000. The agreement may be
terminated by the Company's Board of Directors with or without
"cause". If the Company terminates the agreement without cause
during the first two years of the term, Mr. Delavan would be
entitled to receive an amount equal to the base compensation
payable for the remaining portion of such two-year period. If
the Company terminates the agreement with cause, or if Mr.
Delavan terminates the agreement, dies or becomes disabled,
there is no similar payment.
Effective January 30, 1997, the Company and Mr. Usher entered
into an agreement regarding his employment. Mr. Usher agreed to
remain an employee of the Company through May 16, 1997 or for
such other period that both parties agree and to assist in the
transition of certain of his responsibilities to a new Chief
Financial Officer. When Mr. Usher's employment was terminated,
the Company agreed to pay him a severance payment equal to
$145,000, to extend the exercise period of his options through
May 15, 1999 and provide certain other post-employment benefits.
On March 10, 1997, the Company entered into an employment
agreement with Roger T. Burbage to serve as Chief Financial
Officer for a period of two years. The agreement provides for
an annual base compensation of $150,000. The agreement may be
terminated by the Company's Board of Directors with or without
"cause". If the Company terminates the agreement without cause
during the first two years of the term, Mr. Burbage would be
entitled to receive an amount equal to the base compensation
payable for the remaining portion of such two-year period. If
the Company terminates the agreement with cause, or if Mr.
Burbage terminates the agreement, dies or becomes disabled,
there is no similar payment.
Option Plans
On August 15, 1992, the Board of Directors adopted the Company's
1992 Non-qualified Stock Option Plan (the "1992 Plan"). The
1992 Plan authorized the Board of Directors to grant options to
purchase up to 590,000 shares of Common Stock. Recipients of
the options were employees of the Company or its affiliates and
certain independent contractors. No further options may be
granted under the 1992 Plan. At December 31,1997, there were a
total of 35,000 options outstanding under the 1992 Plan. These
options were extended to August 15, 1999.
On April 6, 1993, the Board of Directors adopted the Company's
1993 Stock Option and Incentive Plan (the "1993 Plan"). The
1993 Plan was approved by shareholders on May 19, 1993. The
1993 Plan authorizes the Incentive Compensation Committee of the
Board of Directors to make awards of non-qualified and incentive
stock options and restricted stock to officers or key employees
of the Company and its subsidiaries. The total number of shares
of Common Stock available for awards is 1,000,000, subject to
antidilution adjustments. The 1993 Plan will terminate no later
than April 6, 2003. At December 31, 1997, 786,334 unexercised
options were outstanding under the 1993 Plan.
Compensation Committee Interlocks and Insider Participation
During 1997, the Compensation Committee included, Messrs.
Morgens, Jackson and Scaturro. No member of the Compensation
Committee is involved in a relationship requiring disclosure as
an interlocking executive officer/director or under Item 404 of
Regulation S-K or as a former officer or employee of the Company.
Compensation Committee Report on Executive Compensation
General. The Compensation Committee decides, or recommends to
the Board for its decision, all matters of policy relating to
compensation of executive management. During 1997, the
Compensation Committee consisted of Messrs. Morgens, Jackson and
Scaturro. The Incentive Compensation Committee approves grants
of stock and options to purchase stock under the 1993 Stock
Option and Incentive Plan. During 1997, the Incentive
Compensation Committee consisted of Messrs. Morgens, Jackson and
Scaturro.
Compensation programs for the Company's executive officers are
designed to attract, retain and motivate employees who will
contribute to achievement of corporate goals and objectives.
Elements of executive compensation include salaries, bonuses,
and awards of stock and options to purchase stock, with the
latter two being discretionary. The Incentive Compensation
Committee takes into account factors relevant to the specific
compensation component being considered, including compensation
paid by other business organizations of comparable size and
complexity, the generation of income and cash flow by the
business, the attainment of annual individual and business
objectives and an assessment of business performance against
peer groups of companies in the Company's business.
CEO Compensation. No actions were taken with respect to John
P. Delavan's compensation nor was he granted any stock options
in 1997.
The Compensation Committee
Edwin H. Morgens
Eric C. Jackson
Philip Scaturro
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return
on the Common Stock for the last five years with a cumulative
total return on the NASDAQ Stock Market (US) Index (the "NASDAQ
Index") and the NASDAQ Trucking and Transportation Stock Index
(the "Trucking Index") over the same period assuming the
investment of $100 in the Company's Common Stock, the NASDAQ
Index and the Trucking Index on January 2, 1993. The
shareholder return shown on the graph is not necessarily
indicative of future performance.
01/02/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
Intrenet 100.00 383.33 400.00 155.56 211.11 255.56
NASDAQ Index 100.00 114.79 112.21 158.69 195.18 239.57
Trucking Index 100.00 121.49 110.17 128.46 141.78 181.59
NO GRAPH AVAILABLE
APPOINTMENT OF AUDITORS
The appointment of Arthur Andersen LLP as auditors for the
Company during 1998 is recommended by the Audit Committee of the
Board of Directors and will be submitted to the meeting in order
to permit the shareholders to express their approval or
disapproval. In the event that the votes cast against the
proposal exceed those cast in favor, the selection of auditors
will be made by the Board of Directors. A representative of
Arthur Andersen LLP is expected to be present at the meeting and
will be given an opportunity to make a statement if he desires
and to respond to appropriate questions.
The Board of Directors recommends that shareholders vote FOR the
ratification of the selection of Arthur Andersen LLP as auditors
for the Company during 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the number of shares of Common
Stock owned by any person (including any group) known by
management to beneficially own more than 5% of the Common Stock
as of March 27, 1998. Unless indicated otherwise in a footnote,
each individual or group possesses sole voting and investment
power with respect to the shares indicated as beneficially owned.
Number of Shares Percent
Name and Address of Beneficially of
Beneficial Owner Owned Class
Morgens, Waterfall, Vintiadis &
Company, Inc. (1) 2,903,734 20.4%
10 East 50th Street, 26th Floor
New York, NY 10020
Hanseatic Corporation and
Wolfgang Traber (2) 2,753,923 19.3%
450 Park Avenue
Suite 2302
New York, NY 10022
Allen Holdings, Inc., et al. (3) 2,509,660 17.6%
711 Fifth Avenue
New York, NY 10022
Brookhaven Capital Management Co., Ltd. (4) 707,223 5.0%
3000 Sandhill Road, Building 4, Suite 130
Menlo Park, CA 94025
(1) The source of the information relating to this group of
shareholders is Amendment No. 2 to a statement filed with the
Securities and Exchange Commission by such group and dated
January 19, 1993. Other members of the group are: Phoenix
Partners, Betje Partners, Phaeton International N.V., Morgens,
Waterfall, Vintiadis Investments N.C., Restart Partners, L.P.,
Restart Partners II, L.P., Morgens, Waterfall, Vintiadis & Co.,
Inc. Employees' Profit Sharing Plan, Morgens Waterfall Income
Partners, Edwin H. Morgens and Bruce Waterfall. Mr. Morgens is
a director of the Company. Each member of the group has
disclaimed beneficial ownership of the securities owned by other
members of the group.
(2) The source of the information relating to this group of
shareholders is a statement filed with the Securities and
Exchange Commission by such group and dated January 19, 1993.
Mr. Traber and management officials of Hanseatic Corporation
share beneficial ownership of the securities owned by the group.
(3) The source of the information relating to this group of
shareholders is a statement filed with the Securities and
Exchange Commission by such group and dated January 8, 1997.
Other members of the group are Allen & Company Inc., Allen
Value Partners, L.P., and Allen Value Limited. According to
such statement, the number of shares beneficially owned by the
group are: Allen Holdings, Inc. - 2,509,659; Allen & Company
Inc. - 313,442; Allen Value Partners, L.P. - 1,962,545 and Allen
Value Limited - 233,673. Philip Scaturro, a director of the
Company, is Executive Vice President and a Managing Director of
Allen & Company, Inc.
(4) The source of the information relating to this group of
shareholders is a statement filed with the Securities and
Exchange Commission by such group and dated October 26, 1994.
Other members of the group are: Cadence Fund, L.P., Vincent A.
Carrino and Daniel R. Coleman. Certain members of the group
have disclaimed beneficial ownership of Common Stock by other
members of the group.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common
Stock beneficially owned by all directors and nominees, each of
the persons named in the Summary Compensation Table and
directors, nominees and executive officers as a group as of
March 27, 1998. Unless indicated otherwise in a footnote, each
person possesses sole voting and investment power with respect
to the shares indicated as beneficially owned.
Number of Shares Percent
Name of Beneficially of
Beneficial Owner Owned Class
Roger T. Burbage 100,000 (1) *
John P. Delavan 143,500 (1) 1.0%
Ned N. Fleming, III 47,000 (2) *
Eric C. Jackson 322,673 (3) 2.3%
Edwin H. Morgens 2,903,734 (4) 20.4%
Thomas J. Noonan, Jr. 30,610 *
Philip Scaturro 2,509,660 (5) 17.6%
All directors, nominees and executive 6,057,177 (6) 42.5%
officers as a group (7 persons)
* Less than one percent
(1) Includes 100,000 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
(2) Includes 24,000 shares held by Mr. Fleming's minor children.
(3) Includes 322,673 shares as to which Mr. Jackson shares voting and
investment power.
(4) Represents shares owned of record by various entities who
may be deemed affiliates of Mr. Morgens. Mr.
Morgens has disclaimed beneficial ownership of such securities.
(5) Represents shares owned of record by various entities who
may be deemed affiliates of Mr. Scaturro.
(6) Includes 200,000 shares that may be purchased pursuant to
stock options that are exercisable within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Great Basin Companies ("Great Basin"), a Salt Lake City-based
truck dealership, is an affiliate of director Eric C. Jackson.
In 1997, Great Basin sold approximately 144 tractors to
unaffiliated leasing companies which leased the tractors to the
Company's subsidiaries. The tractors had an aggregate fair
market value of approximately $10.5 million. As selling dealer,
Great Basin was paid a commission by the lessors equal to
approximately 2% of the fair market value of the tractors.
During 1998, the Company expects to lease an additional 100
tractors that will be sold by Great Basin to unaffiliated
lessors. Such tractors will have an aggregate fair market value
of approximately $7.5 million. The lessors will pay Great Basin
a commission of approximately 2%. The terms of the leases
entered into with such leasing companies are the result of
arm's-length negotiations between the Company and the lessors.
The Company believes that the involvement of Great Basin as
selling dealer has not resulted and will not result in lease
terms that are less favorable to the Company than would
otherwise be available to it. The Company also purchases
maintenance parts and services from Great Basin from time to
time. Total payments to Great Basin in 1997 for these services
were $466,000.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The date by which shareholder proposals must be received by the
Company for inclusion in proxy materials relating to the 1999
Annual Meeting of Shareholders is December 15, 1998.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for 1997 as
filed with the Securities and Exchange Commission, including
financial statements, but excluding exhibits, may be obtained
without charge upon request to Secretary, Intrenet, Inc., 400
Technecenter Drive, Suite 200, Milford, Ohio 45150, (513)
576-6666.
INCORPORATION BY REFERENCE
To the extent this Proxy Statement has been or will be
specifically incorporated by reference into any filing by the
Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, the sections of
this Proxy Statement entitled "Compensation Committee Report on
Executive Compensation" and "Comparative Stock Performance"
shall not be deemed to be so incorporated unless specifically
otherwise provided in any such filing.