SCHEDULE 14A INFORMATION
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PRINTWARE, INC.
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(Name of Registrant as Specified In Its Charter)
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Filed by the Company
Pursuant to Section 240.14a-12 of
the Securities Exchange Act of 1934
Subject Company: PRINTWARE, INC.
Commission File Number: 000-20729
HOW WELL DO THE DISSIDENTS KNOW YOUR COMPANY?
May 23, 2000
Dear Fellow Shareholder:
For all their supposedly sophisticated analysis of Printware, you have
to ask yourself: how well do the Dissidents really know my Company?
For example, the most recent Dissidents' letter goes on and on about
leasing rates. We use leasing the same way as other companies in the printing
industry, and the same way as GM, Ford, and Chrysler--to sell product. We are
not a leasing company--it is ridiculous to use some sort of theoretical cost
of capital analysis of Printware's leasing strategy.
The difference between 7 1/2% and 12% on a typical lease is only about
$100 per month, but the inducement of attractive leases increases equipment
and supplies sales. We understand our complex competitive environment--that
is the difference between an arbitrageur analyzing a spreadsheet and your
Board and Management in the trenches of the Internet printing business.
Offering reduced rates on leasing contributed to a 37% increase in first
quarter revenues from 1999, and the Company's largest quarterly pretax profit
since 1998. Equally important is our growing order backlog (see the enclosed
April 18 news release). Ask yourself, how well do the Dissidents really know
my Company?
FOR THE RECORD
The so-called "Shareholders' Committee" is just three individuals and
the entities they control. We believe they have one main goal--to control
Printware and its cash--without using any of their own money to buy your
stock. Their strategy, if you can call it that, seems to us unfocused except
for their ruthless pursuit of Printware's cash. Their first goal was to
pursue a Dutch auction. In our last letter to you we explained in detail why
that is a bad idea at this time.
The last several years have been difficult for Printware. Due to a
restructuring within Deluxe, our largest customer during that period, we lost
over half of our 1997 revenue. It is due only to the Board's prudent
management style that we have been able to survive and rebound. The
Dissidents' recent letter to you talked about declining revenues and profits,
but made no mention of our first-quarter growth and profit. Our plan is
working and the Dissidents have no concrete plan.
The Dissidents' criticism of the incentive stock options awarded Dr.
Baker, Printware's CEO, fails to mention either the exercise price or the
vesting requirements of those options, which are critically important to
keeping the record straight. Most of Dr. Baker's currently exercisable
options are at $6 per share, and the options granted this year do not even
begin to vest until 2001. Dr. Baker's options have had zero impact on
shareholder dilution. Our officers' compensation and option grants are in
line with comparable companies. Officer salaries were frozen this year, and
no bonuses were paid.
FAMOUS LAST WORDS
The Dissidents talk about being long-term shareholders, but in the same
letter they talk about a possible sale of the Company or cannibalizing parts
of it. They can't have it both ways. Either they do not know what they will
do if you give them control, or they will not tell you. Yet they continue to
ask for your vote without a specific plan. Remember, the Dissidents are not
offering to buy your shares or guaranteeing you a specific price for your
shares, they just want control of your Company and its cash. The Dissidents
make promises to you that are non-binding and worded so loosely as to be
meaningless. Perhaps their plan can be summed up best in their own words:
"...trust us..."
Your current Board has that vision and a plan that is working. We urge
you to reject the Dissidents and their takeover attempt of your Company by
voting for the Board's nominees on the WHITE WITH BLUE STRIPE proxy card.
Even if you have already voted a Dissidents' GREEN proxy card, you can
reverse your vote by returning the WHITE WITH BLUE STRIPE proxy card.
Sincerely yours,
/s/Daniel A. Baker
/s/Allen L. Taylor
/s/Brian D. Shiffman
/s/Michael C. Berg
/s/Victor H. Weiss
IMPORTANT
Your vote is important. Please take a moment to sign, date and promptly
mail your new WHITE WITH BLUE STRIPE proxy card in the postage paid envelope
provided. Please be certain that your latest dated proxy card is a WHITE WITH
BLUE STRIPE proxy card voting "FOR" Printware's Directors. Remember, do not
return any GREEN proxy card sent to you by the Shareholders' Committee, not
even as a vote of protest.
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Call Toll-Free--1-(800) 290-6426 (212) 269-5550 (Collect)
Statements made in this letter concerning the Company's or management's
intentions, expectations, or predictions about future results or events are
"forward-looking statements" within the meaning of the Private Securities
Reform Act of 1995. Such statements are necessarily subject to risks and
uncertainties that could cause actual results to vary from stated
expectations, and such variations could be material and adverse. Additional
information concerning the factors that could cause actual results to differ
materially from the Company's current expectations is contained in the
Company's SEC filings.
NEWS RELEASE
For immediate release
Printware, Inc.
1270 Eagan Industrial Rd.
St. Paul, MN 55121
http://PrintwareInc.com
CONTACT--Thomas W. Petschauer, Executive Vice President & CFO--(651) 456-1403
Printware Reports First Quarter Results
Revenues up 37% from prior year
ST. PAUL, MINN., April 18, 2000--Printware, Inc. (Nasdaq-NNM: PRTW) reported
revenues of $1,264,000 for the first quarter of 2000, an increase of 37
percent from revenues of $920,000 for the first quarter of 1999. The company
reported net income of $92,000 or 3 cents per share for the first quarter of
2000, compared to a net loss of $97,000 or 2 cents per share in the same
period of the prior year. Income before income taxes was $141,000 or 4 cents
per share for the first quarter of 2000.
The average number of common shares outstanding decreased to 3.3 million in
the first quarter of 2000 from 4.8 million in the 1999 period as a result of
the repurchase in 1999 of 1,587,690 shares of Printware's common stock from
Deluxe Corporation (NYSE: DLX).
The company attributed the revenue gain to a sharp increase in platesetter
equipment sales and the start-up of a supplies business for its current
generation of platesetters. "This resurgence is clear evidence that our new
strategy, focusing on Internet printing and on supplies, is working,"
commented Daniel A. Baker, Ph.D., Printware's president and chief executive
officer. "With our new silver-halide supplies now becoming available, some of
first-quarter equipment sales included supplies contracts. We expect the
majority of future equipment sales to include supplies contracts, which can
be worth more than each equipment sale over the long term. As further
evidence that our strategic initiatives are proving successful, one of the
systems installed in the first quarter was for a large Internet printer.
Internet printing is key to our future."
"Our backlog had grown considerably and we are well-positioned for the second
quarter," continued Baker. For example, first quarter results do not include
the sale of a watershed Web-to-Press Internet printing announced March 21,
2000, as installation is expected to take place in the second quarter of this
year.
The improvement in profitability was attributed to the increased revenue and
to reduced expenses. "This was our first quarterly operating profit since
1998, which we achieved despite continued investment spending in sales and
marketing and Internet printing software development," noted Baker.
Printware, Inc. designs, builds, and markets "computer-to-plate" systems,
which are used by the printing industry to create printing plates directly
from computers or the Internet. Computer-to-plate systems replace the
traditional platemaking process of typesetting, proofing, paste-up, camera
work, and processing film.
Statements made in this release concerning the Company's or management's
intentions, expectations, or predictions about future results or events are
"forward-looking statements" within the meaning of the Private Securities
Reform Act of 1995. Such statements are necessarily subject to risks and
uncertainties that could cause actual results to vary from stated
expectations, and such variations could be material and adverse. Additional
information concerning the factors that could cause actual results to differ
materially from the Company's current expectations is contained in the
Company's SEC filings.